Exhibit 10.19
AGREEMENT
dated January 8, 1997
between
HOUSTON TRACKER SYSTEMS, INC.
and
ECHOSTAR SATELLITE CORPORATION
and
EXPRESSVU INC.
THIS AGREEMENT is made this 8th day of January, 0000,
X X X X X X X:
HOUSTON TRACKER SYSTEMS, INC., a corporation incorporated
under the laws of Colorado,
(hereinafter referred to as "HTS")
OF THE FIRST PART,
- and -
ECHOSTAR SATELLITE CORPORATION, a corporation incorporated
under the laws of Colorado,
(hereinafter referred to as "ESC")
OF THE SECOND PART,
- and -
EXPRESSVU INC., a corporation incorporated under the laws of
Canada
(hereinafter referred to as "ExpressVu")
OF THE THIRD PART.
WHEREAS ESC operates a DTH Service in the United States;
AND WHEREAS ExpressVu wishes to operate a DTH Service in Canada;
AND WHEREAS the EchoStar Parties are able to provide programming signals
and equipment and services required by ExpressVu in connection with its DTH
Service;
NOW THEREFORE, in consideration of the mutual covenants contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by each of the parties, the parties agree as
follows:
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ARTICLE 1
DEFINITIONS
In this Agreement the following terms shall have the following meanings,
unless the context otherwise requires:
"ACCEPTANCE CERTIFICATE" - a certificate to be signed by ExpressVu and
delivered to HTS indicating ExpressVu's final acceptance of the Successful
Completion of a test against the Specifications in respect of each of the
milestones to be achieved by HTS on the XXXXX Chart;
"ACCEPTANCE TEST PROCEDURES" - the procedures used to determine compliance
of the performance of the various systems, sub-systems and units of Hardware and
Software against the Specifications, more specifically set forth in Schedule 5
and conducted in accordance with the provisions of Article 9;
"AFFILIATE" - with respect to any Person, any other Person directly or
indirectly Controlling, Controlled by or under direct or indirect common Control
with, such Person;
"AGREEMENT" - means this Agreement and all schedules hereto and instruments
in amendment or confirmation hereof; "hereof", "hereto" and "hereunder" and
similar expressions mean and refer to this Agreement and not to any particular
Article, Section or other subdivision; "Article", "Section", or other
subdivision of this Agreement followed by a number means and refers to the
specified Article, Section or other subdivision of this Agreement;
"APPLICATION" - the unique functionality of the Smart Card and its unique
interaction with other components developed by HTS or a third party to enable
and turn-off subscribers to the various programming services offered by pay TV
operators using such components, which functionality is more fully set out in
Schedule 1;
"BOX" - the digital integrated receiver decoder and incorporating the
relevant parts of the Conditional Access System, the Verifier and the Box
Software, which is intended for use by Subscribers for receiving and decoding
programming and data signals and is more fully described in Schedule 2;
"BOX MANUFACTURER" - any manufacturer licensed by HTS or one of its
Affiliates and authorized by ExpressVu to manufacture Boxes;
"BOX SOFTWARE" - any Software embedded in the Box, including the HTS
Software;
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"BUSINESS DAYS" - any day of the year, other than a Saturday, Sunday or any
day on which Canadian or U.S. national banks are required or authorized to
close;
"CA COMPONENTS" - the hardware components of the Conditional Access System
made by Nagra and supplied to ExpressVu by HTS;
"CA SOFTWARE" - the computer software necessary for the Conditional Access
System to function in accordance with the Specifications, including, without
limitation, the Box Software and all software in the Smart Cards and the
supporting computer hardware;
"CLOSED CAPTION SERVICE" - means transmission of closed captioned
information throughout the System such that all data contained in line 21 of the
vertical blanking interval (VBI) of the television program signal at the input
of the Hardware will be reconfigured within the Box and inserted back into line
21 of the VBI at the output;
"CONDITIONAL ACCESS SYSTEM" - comprises the DVB scrambler (which is
technically a part of the DVC Multiplex, as further specified in Schedule 1) the
IMS, the conditional access interface hardware to the IMS (comprising GTW (SMS
GaTeWay), Access Control System, EMM Encryptor, ECM Encryptor, Call Collector
and EMM Broadcaster), the conditional access interface to the IMS, Supplier
Smart Card Registration System, portions of the Software, and the Smart Cards
all with a specific Verifier, cryptology and keyset, as further specified in
Schedule 7;
"CONTROL" - in relation to a Person, means control of such Person in any
manner that results in control in fact, whether directly through the ownership
of securities or indirectly through a trust, agreement or arrangement, the
ownership of securities of a corporation or other Person or otherwise.
"CSG" - is defined in Section 8.1;
"CUSTOMER MODIFICATION" - means any modification to the Specifications
requested by ExpressVu pursuant to Section 7.2;
"DEVICE" - the secure microprocessor as specified by HTS from time to time,
incorporating the Application, which is downloaded with manufacturer access
codes, Rom mask and security fuses, and which is incorporated into a module
embedded into a Smart Card;
"DIVICOM" - DiviCom, Inc., the supplier to HTS of certain of the Hardware
and the Software, including the Encoders;
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"DOCUMENTATION" - all documents, notes and drawings necessary for
installing, operating and administering the Conditional Access System as set out
in Schedule 3;
"DOMINION AGREEMENT" - is defined in Section 19.3(e)(iii);
"DTH SERVICE" - a digital television, audio and/or data and other
programming and non-programming service which is delivered direct to
subscribers' homes or businesses by satellite;
"ECHOSTAR DBS SATELLITE" - a DBS satellite on which the majority of
transponders are owned by ESC and/or its Affiliates or which satellite is owned
ESC and/or its Affiliates;
"ECHOSTAR FSS SATELLITE" - an FSS satellite on which the majority of
transponders are owned by ESC and/or its Affiliates or which satellite is owned
by ESC and/or its Affiliates;
"ECHOSTAR PARTIES" - HTS and ESC, collectively;
"ECN" - an engineering change notice, the acceptance of which requires the
approval of the Chief Executive Officer of ExpressVu;
"EFFECTIVE DATE" - the day on which all conditions set forth in Section
32.1, 32.2 and 32.3 have been satisfied or complied with or waived by the party
or parties entitled to waive the same;
"ENCODERS" - the equipment and associated software required to digitally
compress audio and video signals into a multiplexed, digital stream, modulated
into a QPSK signal described in Schedule 2;
"ENCODER SOFTWARE" - the System software under license by HTS from DiviCom
for use in that part of the Hardware and Software supplied by DiviCom to HTS as
described in Schedule 2;
"EPG" - HTS' electronic programme guide entry system and related software
in the System;
"EXCLUSIVE LICENSED TRADE MARKS" - is defined in Section 21.1(a);
"FINAL SYSTEM ACCEPTANCE DATE" - the date of delivery by ExpressVu to HTS
of the Acceptance Certificate in respect of System Completion;
"FORCE MAJEURE" - is defined in Section 35.3(b);
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"FORECAST" - the forecast with respect to the manufacturing and supply of
Units pursuant to Article 14;
"XXXXX CHART" - the progress and milestone chart for the installation,
integration and implementation by HTS of the System, attached hereto as Schedule
4;
"HARDWARE" - all hardware or equipment purchased by ExpressVu pursuant to
this Agreement necessary for the functionality of the System (excluding, for
greater certainty, Units) and which conforms to the Specifications, as more
specifically described in Schedules 1 and 2;
"HTS SOFTWARE" - the computer software which is solely owned by HTS or an
Affiliate thereof, or as to which HTS or an Affiliate has sufficient rights to
perform the obligations set forth in this Agreement or the Source Code Deposit
Agreement and which is contained in the Box, which software is listed in
Schedule 20 hereto;
"IMPROVEMENT" - any improvement, modification or adaption which may be made
or which is acquired by either HTS or ExpressVu after the Final System
Acceptance Date and which enhances the usefulness, efficiency, profitability and
cost effectiveness of the System regardless of whether or not the improvement in
question is patentable or constitutes an Intellectual Property Right;
"IMS" - the integrated network management control system developed by HTS
as specified in Schedule 2;
"INTEGRATION SERVICES" - integration service obligations to be performed by
HTS with respect to the System pursuant to the terms of this Agreement;
"INTELLECTUAL PROPERTY RIGHT" - any patent, registered design, copyright,
design right, topography right, trade xxxx, service xxxx, application to
register any of the aforementioned rights, rights in the nature of any of the
aforementioned rights, trade secrets, rights in unpatented know-how, right of
confidence and any other intellectual or industrial property rights of any
nature whatsoever in any part of the world;
"LNB" - is defined in Section 14.9;
"LICENSED TRADE MARKS" - the Exclusive Licensed Trade Marks and the
Non-Exclusive Licensed Trade Marks, collectively;
"MARKETING PLAN" - the marketing plan for the sale, distribution and
promotion of the Units and ExpressVu's DTH Service prepared by HTS and ExpressVu
in consultation with each other and modified and updated by them (in
consultation as aforesaid) from time to time;
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"MPEG 2" - Motion Pictures Experts Group - ISO 13818 - the international
standard for digital compression;
"NAGRA" - Kudelski SA, a corporation incorporated under the laws of
Switzerland, carrying on business under the name Nagravision, the supplier to
HTS of the Conditional Access System and the Smart Cards;
"NON-EXCLUSIVE LICENSED TRADE MARKS" - is defined in Section 21.1(a);
"NON-PROGRAMMING SIGNALS" - is defined in Section 3.5;
"OUTDOOR UNIT" - means the antenna apparatus for receiving satellite
signals including a standard parabolic antenna, standard mounting hardware and
standard length of cable, all as more particularly described in Schedule 2;
"PERSON" - any individual, company, partnership, trust, unincorporated
association, government authority or agency or any other entity;
"PERSONALIZATION" - the process by which the Box Manufacturer loads each
Smart Card with a serial number and manufacturer information and prints the
serial number on the Smart Card (with a barcode option);
"PURCHASE PRICE" - the price paid by ExpressVu to HTS pursuant to
Section 10.1, subject to adjustment as provided elsewhere herein, for purchase
of the Hardware, the Integration Services and the license of the Software;
"REMOTE SITE" - any alternative Canadian or American location designated by
ExpressVu for its uplink/multiplexing facility which is subject to the same
security controls and measures as the Site and which has been approved by HTS,
such approval not to be unreasonably withheld;
"SATELLITE INFRASTRUCTURE" - the satellite system used for transmitting
ExpressVu's DTH Service;
"SITE" - the site of ExpressVu's main uplink/multiplexing facility in
Ontario, Canada;
"SMART CARD" - a plastic card which complies with ISO 7816 specifications
incorporating the Device and Personalized uniquely for ExpressVu as directed by
HTS in accordance with Section 13.11;
"SMART CARD PRICE" - is defined in Section 14.8;
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"SMS" - services provided to ExpressVu by a third party in connection with
the authorization of access to ExpressVu's DTH Service by Subscribers and the
management of the payment process by Subscribers for such access;
"SMS SOFTWARE" - the integrated computer software system for installing,
administering and maintaining the SMS System;
"SMS SYSTEM" - the subscriber management system selected by ExpressVu to
provide subscriber management for ExpressVu's DTH Service and which is
technically capable of being interfaced to ExpressVu's Conditional Access
System;
"SOFTWARE" - the computer software necessary for the installation,
administration, maintenance and functionality of the System in accordance with
the Specifications, including, without limitation, the CA Software, the Encoder
Software and the Box Software which Software is listed in Schedule 6 attached
hereto, and including, except as otherwise provided herein, the HTS Software
which is listed in Schedule 20 hereto;
"SOURCE CODE DEPOSIT AGREEMENT"- the deposit agreement to be entered into
between ExpressVu and HTS pursuant to Sections 23.1 and 32.3 relating to the HTS
Software;
"SPECIALTY LANGUAGE CHANNELS" - three channels (or services) offered by
ESC's DTH Service which provide programming primarily in the Arabic, Greek and
Italian languages, respectively;
"SPECIALTY LANGUAGE SUBSCRIBER" - a subscriber to ESC's DTH Service who
subscribes only for one or more of the Specialty Language Channels;
"SPECIFICATION(S)" - the specifications, attached hereto as Schedules 1 and
2, detailing the performance, capabilities, functions and standards of all
elements of the System;
"STANDARD RATES" - HTS' standard rates for labour and expenses as set out
in Schedule 11, which shall be firm until the end of 1997, and may be increased
thereafter in accordance with increases under the "United States Bureau of Labor
Statistics Indices SIC Code 3761 for Guided Missiles and Space Vehicles, Average
Hourly Earnings";
"STATISTICAL MULTIPLEXING" (OR "STAT MUXING") - means that allocation of
digital bandwidth referred to as megabits per second (Mbs) to an individual
program channel within a transponder multiplex that can be made on a dynamic
basis, such that the total digital bits available for program information at any
point in time can be shared between some or all of the program channels within
the multiplexer;
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"SUBSCRIBER" - any Person in the Territory who is a party to a subscription
contract with ExpressVu and who is authorized by virtue of such contract to
receive one or more of the services which are part of ExpressVu's DTH Service;
"SUCCESSFUL COMPLETION" - when used in this Agreement with respect to any
test, means where the results of such test substantially comply with the
Specifications in Schedules 1 and 2 required to validate the performance of the
System provided that any failure to meet the Specifications is not material to
the successful operation of the System;
"SUPPLIER SMART CARD REGISTRATION SYSTEM" - a registration system developed
by HTS for maintaining the Smart Card database for stock/status registration;
"SYSTEM" - the end-to-end system comprised of the Hardware and the
Software, being the multiple channel, direct-to-home, transmission system which
accords with the MPEG 2 standard and which will be capable of providing
satellite-delivered audio, video and/or data services available to in excess of
500,000 Subscribers with access to in excess of 100 channels in the Territory
(assuming ExpressVu has available to it adequate satellite carriage and
transmitting capacity and subject to ExpressVu purchasing and installing
sufficient incremental Hardware and Software to permit the theoretical System
capacity of 100 channels to be realized), as more fully described in Schedules
1, 2 and 6, and which, for greater certainty, is to be integrated with the
Conditional Access System, the SMS System, the Encoders, Closed Caption Service
and the Units;
"SYSTEM COMPLETION" - means Successful Completion of the last Acceptance
Test Procedure in respect of the System; for greater certainty, System
Completion shall be deemed to have been achieved if ExpressVu has commenced
commercial operation of its DTH Service and the System is operating at least as
well as the system used by ESC to provide its DTH Service in the U.S;
"TCI" - is defined in Section 22.2(e);
"TERRITORY" - all of the provinces and territories which currently comprise
Canada as of the date hereof;
"UNITS" - is defined in Section 14.1; and
"VERIFIER" - the specific Software which is used to safeguard the integrity
of ExpressVu's DTH Service, on its own behalf and on behalf of its programme and
service providers.
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Capitalized terms used in this Agreement and not defined in this Article 1 have
the respective meanings given to such terms elsewhere in this Agreement or the
Schedules hereto.
ARTICLE 2
TERM
2.1 TERM. This Agreement shall take effect as and from the date hereof and,
subject to the terms contained herein, shall continue in force without limit of
period unless or until terminated pursuant to the terms herein.
ARTICLE 3
PROGRAMMING TRANSMISSION SERVICES
3.1 PROVISION OF PROGRAMMING SIGNAL TRANSMISSION SERVICES BY ESC TO EXPRESSVU.
From and after the Effective Date, ESC shall permit ExpressVu to re-uplink to
its satellite facilities for use only in the Territory all video (including,
without limitation, pay-per-view) and audio programming signals which are part
of EchoStar's DTH Service and which are from time to time on the CRTC-authorized
satellite lists and which ExpressVu may wish to include as part of its DTH
Service.
3.2 PROVISION OF CANADIAN PROGRAMMING SIGNAL TRANSMISSION SERVICES BY EXPRESSVU
TO ESC. From and after the Effective Date, ExpressVu shall permit ESC to re-
uplink to its satellite facilities for use only in the United States all video
(including, without limitation, pay-per-view) and audio programming signals
which are part of ExpressVu's DTH Service and which can be distributed in the
United States and which ESC may wish to include as part of its DTH Service.
3.3 PAYMENT FOR PROGRAMMING SIGNAL TRANSMISSION SERVICES. Notwithstanding
anything else herein contained, the obligations of each of ESC and ExpressVu to
provide programming transmission services to each other pursuant to Sections 3.1
and 3.2 are subject to and conditional upon their agreement as to the fee to be
paid by the recipient to the provider thereof. ESC and ExpressVu shall
negotiate in good faith with respect to such fees but, for greater certainty,
neither party shall be under any obligation to provide any such transmission
services to the other if such good faith negotiations do not result in an
agreement on the fees to be charged and paid with respect to all or any such
transmission services which one party may request the other party to provide
pursuant to either Section 3.1 or 3.2
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3.4 APPROVAL OF CONTENT PROGRAMMERS. The obligations of a party hereunder (the
"Providing Party") to provide transmission services to the other party (the
"Receiving Party") pursuant to either Section 3.1 or 3.2 shall further be
subject to and conditional upon:
(a) the Receiving Party having obtained rights to programming to be
transmitted through such services from content programmers and to such
programmers having agreed the Receiving Party may obtain the signals
directly from the Providing Party; and
(b) each of the Providing Party and the Receiving Party having obtained
all required approvals from governmental regulatory authorities in the
United States and Canada, it being understood that each of the parties
hereto shall use their commercially reasonable efforts to obtain any
such approvals which it may require from time to time to provide or
receive such services; provided that the Receiving Party shall pay all
reasonable costs and expenses (including, without limitation, legal
fees) incurred by the Providing Party in order to obtain such
approvals unless the Receiving Party is ExpressVu and ESC is required
to provide such transmission services to ExpressVu as a result of
ESC's purchase or lease of transponders pursuant to Section 31.1(b),
in which case ESC shall bear all such costs and expenses (provided
that ExpressVu shall bear the further incremental costs and expenses
of obtaining approvals from any governmental authorities for any such
signals to be provided to ExpressVu by ESC).
3.5 RIGHTS OF ACCESS TO NON-PROGRAMMING SIGNALS. Each of ESC and ExpressVu
shall make available to the other the same third party Non-Programming Signals
(as hereinafter defined) it makes available to cable television operators, MMDS
operators and other retail programming providers on terms no less favourable
than such signals are provided to such third parties, assuming like numbers of
subscribers and assuming other like terms and conditions which would have an
effect on the price at which a party is prepared to offer to make available such
signals. Notwithstanding the foregoing, neither ESC nor ExpressVu shall be
required to make Non-Programming Signals available to the other if it is
precluded from doing so by the terms of any agreement with the originators of
such signals or if the other party does not possess all necessary rights to use
any technology required to receive such Non-Programming Signals. "Non-
Programming Signals" shall include but not be limited to:
(i) software and other data delivery to computers;
(ii) data services such as internet access;
(iii) business television;
(iv) educational services;
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(v) communications;
(vi) interactive services such as video games; and
(vii) digital news services.
If the provisions of this Section 3.5 conflict with the provisions of any other
Section of this Agreement, the provisions of such other Section shall prevail.
ARTICLE 4
PURCHASE AND SUPPLY
4.1 PURCHASE. HTS hereby agrees to sell, assign and transfer to ExpressVu, and
ExpressVu hereby agrees to purchase from HTS, all right, title and interest of
HTS to the Hardware, and HTS hereby similarly agrees to transfer and assign to
ExpressVu any and all warranties provided by the suppliers of the Hardware to
HTS (unless prohibited by the terms of the warranty, in which case HTS commits
to attempt to enforce the warranties on behalf of ExpressVu (at ExpressVu's
expense) if reasonably possible), free and clear of all mortgages, liens,
pledges, charges, restrictions and encumbrances of any nature whatsoever and
upon and subject to the terms and conditions of this Agreement.
4.2 SUPPLY. Throughout the term of this Agreement HTS shall supply Units in
accordance with the provisions hereof. HTS acknowledges that, following System
Completion, ExpressVu shall purchase spare parts for the Encoders (excluding,
for greater certainty, Smart Cards) directly from DiviCom and CA Components
directly from Nagra.
ARTICLE 5
LICENSE
5.1 LICENSE.
(a) As is necessary to operate the System, HTS hereby grants to ExpressVu,
and ExpressVu hereby accepts, a license or sub-license, as the case
may be, in perpetuity (subject to the earlier termination of such
license in accordance with the provisions herein), with absolutely no
right to further transfer, license or sublicense (except as otherwise
expressly set forth herein), to install, operate, utilize and
administer the Software identified in Schedule 6 as Software at the
Site and/or the Remote Sites for the purpose of providing ExpressVu's
DTH Service in the Territory. ExpressVu acknowledges that HTS and its
Affiliates do not provide any proprietary software necessary for
operation of the Uplink facility at the Site or Remote Sites.
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(b) With respect to all Software listed in Schedule 6 attached hereto at
the date hereof not referred to in Section 5.1(a), HTS acknowledges
and agrees that it is the responsibility of HTS to use its
commercially reasonable efforts to ensure, prior to installation of
such Software in the System, that HTS has obtained the right from any
third party owner thereof to install such Software therein and to
permit ExpressVu to use the same in the System for the purpose of
providing ExpressVu's DTH Service in the Territory. To the extent
that HTS is unable to obtain such rights in accordance with this
Section 5.1(b), ExpressVu may exercise its rights to obtain such
Software in accordance with Section 10.6.
(c) If at any time HTS determines to install in the System any Software
not listed in Schedule 6 attached hereto at the date hereof, such
Software shall be added to such Schedule and the provisions of Section
5.1(a) and Section 5.1(b), as applicable, shall apply thereto.
(d) HTS shall use its commercially reasonable efforts to assign to
ExpressVu the full benefit of any indemnity rights provided to HTS by
any third party owner of Software from time to time listed on Schedule
6 attached hereto. If HTS does not obtain such an assignment, HTS
commits to attempt to enforce the full benefit of the indemnity on
behalf of ExpressVu (at ExpressVu's expense) if reasonably possible.
5.2 RIGHT. HTS furthermore grants to ExpressVu a right in the Territory to:
(a) install and operate the System only at the Site or one or more Remote
Sites;
(b) address the Conditional Access System and maintain a database of
enabled Boxes;
(c) receive all the Documentation;
(d) use the computer programs forming part of the Software on one or more
computers forming part of the Conditional Access System, by loading or
transmitting the programs into computers for the processing of the
Conditional Access System instructions or statements contained in the
programs;
(e) make as many copies of the Software supplied by HTS, for backup
purposes, for the Site, and as many copies of the Software supplied by
HTS, for backup purposes, for each Remote Site as are permitted by the
applicable Software developer;
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(f) to interface, integrate and use the System; and
(g) to use the source code of the HTS Software as listed in Schedule 20
only in accordance with the terms and conditions of the Source Code
Deposit Agreement.
5.3 LIMITATIONS ON RIGHTS. The Software and Intellectual Property Rights
comprised in the Hardware shall at all times remain the exclusive property of
HTS, or its licensors, as the case may be, and ExpressVu shall not act as the
agent of HTS and shall not grant sub-licenses in respect of the Software without
HTS' prior written consent, which consent may be withheld by HTS in its absolute
discretion. ExpressVu shall not copy or correct any errors or otherwise
modify, disassemble, decompile or reverse engineer any of the Software or
incorporate any of the Software in any other software or products without HTS'
prior written consent, which consent may be withheld by HTS in its absolute
discretion, except as permitted by the Source Code Deposit Agreement. For
greater certainty, the HTS Software is not being licensed or sub-licensed to
ExpressVu, except as necessary to sell the Boxes in accordance with the terms
hereof or as permitted by the Source Code Deposit Agreement.
5.4 TITLE TO TECHNICAL SPECIFICATIONS, ETC. All Specifications, patterns,
drawings and information created by or at the expense of either party shall
remain the supplying party's property and must be returned in good order and
condition on termination of this Agreement and shall not be copied or used for
any other purpose other than for the carrying out of this Agreement.
Notwithstanding the foregoing, all Specifications, patterns, drawings and
information created by HTS with respect to ExpressVu's Canadian uplink centre
shall become the property of ExpressVu provided that such Specifications,
patterns, drawings and information shall be used by ExpressVu solely for
operational purposes in connection with its DTH Service and shall not be used by
any Person for any other purpose.
ARTICLE 6
IMPLEMENTATION OF THE SYSTEM
6.1 PHASED IMPLEMENTATION. The parties acknowledge that a phased
implementation approach has been agreed for the delivery, installation,
commissioning and acceptance of the System as set out in the XXXXX Chart.
6.2 MILESTONES. HTS shall use its commercially reasonable efforts to complete
its Integration Services and System installation obligations hereunder so as to
attain the milestones in accordance with the XXXXX Chart. HTS shall promptly
notify ExpressVu if HTS becomes aware of any delays in its Integration Services
or in the installation of the System which are likely to prevent HTS from
meeting such milestones.
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Notwithstanding anything else herein contained, ExpressVu acknowledges that its
sole right to damages for failure to attain System Completion in a timely manner
is as set forth in Article 27.
ARTICLE 7
INSTALLATION
7.1 DELIVERY AND INSTALLATION. HTS shall use its commercially reasonable
efforts to deliver the Hardware and install the Hardware, Software and the
System at ExpressVu's premises at the times set forth in the XXXXX Chart and in
accordance with the provisions of Schedule 1.
7.2 MODIFICATIONS. HTS shall as soon as reasonably practicable after the date
hereof arrange a meeting(s) with ExpressVu in order to discuss any modifications
to the Specifications for the System which are specific to ExpressVu (a
"Customer Modification"). Any necessary modifications and/or revisions to the
Specifications for the System shall be recorded in writing and thereafter such
modified Specifications for the System will replace the Specifications for the
System for the purposes of this Agreement. For the purpose of such meeting(s),
both HTS and ExpressVu shall make available as many properly qualified and
authorized personnel as are necessary to finalise the Specifications for the
System. In the event that modifications requested by ExpressVu could, in the
reasonable opinion of HTS, result in the failure of the System to comply with
the Specifications for the System, HTS shall advise ExpressVu in writing of such
anticipated non-compliance in advance of its implementation and, in the event
ExpressVu insists in writing by means of the ECN on implementing such
modification and HTS' opinion as aforesaid remains unchanged, HTS shall be
released from its integration obligations hereunder.
7.3 STANDARD RATES. Customer Modifications to the Specifications for the
System referred to in Section 7.2 shall be charged to ExpressVu on a project
basis at the Standard Rates and the Purchase Price shall be adjusted
accordingly. HTS shall present ExpressVu with a detailed plan and pricing for
ExpressVu's approval prior to commencement of such modifications.
ARTICLE 8
SYSTEM INTEGRATION
8.1 INTEGRATION. HTS shall use its commercially reasonably efforts to
integrate the System in accordance with the timeframe established in the XXXXX
Chart and in accordance with the Specifications. HTS only commits that the HTS
System will interface properly with the SMS Software if ExpressVu chooses CSG
Systems Inc.
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("CSG") for its SMS Software, and the CSG SMS Software system chosen by
ExpressVu is the same as that which was chosen and customized by HTS for the
integration of its own system. In the event that ExpressVu chooses an alternate
SMS system, HTS will at its Standard Rates use its reasonable efforts to cause
to be integrated such SMS Software with the System and the Purchase Price shall
be adjusted accordingly.
8.2 CHARGE FOR INTEGRATION SERVICES. Except as otherwise provided herein, the
cost for the provision by HTS of Integration Services is included in the payment
by ExpressVu of the Purchase Price.
8.3 PREPARATION OF THE SITE. HTS shall supply sufficient instructions for the
preparation of the Site and shall have primary responsibility in connection
therewith and ExpressVu shall cooperate with HTS in the implementation of such
instructions. The parties acknowledge that the timely preparation of the Site
is essential to the System Completion in the time set out in the XXXXX Chart.
HTS shall deliver the instructions to ExpressVu within 14 days of selection of
the Site by ExpressVu. Upon receiving the instructions, ExpressVu shall at its
own expense prepare the Site in accordance with HTS' instructions. HTS shall
notify in writing ExpressVu of any amendment to the instructions thereafter,
which notice shall not relieve HTS of its obligations with respect to attaining
System Completion in accordance with the XXXXX Chart. Notwithstanding the
foregoing, in the event that any amendment to the instructions shall, as
determined by ExpressVu and HTS acting together in good faith, result in the
delay of the System Completion in the times set out in the XXXXX Chart and the
cause of such delay is not directly attributable to any fault of HTS in
connection with its obligations to provide instructions under this Section, then
the XXXXX Chart shall be deemed to be amended accordingly to take into account
such delay and HTS shall not be liable to pay liquidated damages under Article
27 which would otherwise be payable as a result of such delay. ExpressVu shall
prepare the Site so as to ensure that there will be, for the purpose of
installation of the Hardware, Software and the System:
(a) an adequate supply of electricity in accordance with the
Specifications for the System or as otherwise directed by HTS by
written notice to ExpressVu within a reasonable time prior to the
installation of the System;
(b) adequate electrical and mechanical items and fittings in accordance
with the Specifications for the System or as otherwise directed by HTS
by written notice to ExpressVu within a reasonable time prior to the
installation of the System;
(c) appropriate environmental conditions in accordance with the
Specifications for the System or as otherwise directed by HTS by
written notice to ExpressVu within a reasonable time prior to the
installation of the System; and
-16-
(d) secure Site and storage areas for the various components of the
Hardware.
8.4 HEALTH AND SAFETY. ExpressVu shall take all reasonable precautions to
safeguard the health and safety of HTS' staff and sub-contractors working with
equipment and materials belonging to ExpressVu. Furthermore, ExpressVu shall
ensure that such equipment and materials comply at all times with all relevant
statutory regulations and approved codes of practice.
8.5 OPERATING RECORDS. During any applicable warranty period, ExpressVu shall
maintain operating records of the Encoders and copies of such records shall be
readily available to HTS, together with such additional information as HTS may
reasonably require.
8.6 PRIORITY FOR COMPLETION OF INTEGRATION SERVICES. The parties acknowledge
that the EchoStar Parties have limited resources available for the completion of
the Integration Services. The EchoStar Parties therefore covenant with
ExpressVu that they and their Affiliates shall give first preference and top
priority to the completion of the Integration Services for ExpressVu over the
completion of services similar to the Integration Services by the EchoStar
Parties or their Affiliates for any third party located in the Territory and, in
order to ensure that the Integration Services are completed on this basis,
further covenant that (i) the EchoStar Parties and their Affiliates will not
begin any other substantial systems integration undertaking in the Territory
prior to the completion of the Integration Services for ExpressVu and (ii) the
EchoStar Parties and their Affiliates shall not, prior to the completion of the
Integration Services, provide to a third party an aggregate of more than three
man weeks of work on any other substantial systems integration undertaking in
progress in the Territory as of the date of this Agreement. Notwithstanding
anything to the contrary in the Agreement, the provisions of this Section 8.6
shall cease to apply on the earlier of (i) the 90th day after the invocation by
ExpressVu of Force Majeure to excuse it from the performance of any material
obligation under this Agreement if such Force Majeure has continued in effect
for 90 consecutive days, or (ii) December 31, 1997.
8.7 CESSATION OF INTEGRATION SERVICES. If at any time prior to System
Completion, the EchoStar Parties determine in their good faith judgment that the
aggregate sum of the guarantees provided to the EchoStar Parties by ExpressVu's
shareholders pursuant to Section 32.2(b) (the "Guaranteed Amount") is within
U.S.$500,000 of their good faith estimate of the full amount of the Purchase
Price (including all adjustments thereto) which is due and payable or expected
to become due and payable on or before System Completion (the "Expected Purchase
Price"), the EchoStar Parties may, upon 14 days written notice to ExpressVu,
cease (i) the performance of all integration and other services to be rendered
by the EchoStar Parties in exchange for payment of the Purchase Price (including
all adjustments thereto); and (ii) the processing of orders for, and delivery to
ExpressVu of, all items to be supplied by the EchoStar Parties in exchange
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for payment of the Purchase Price (including all adjustments thereto), until
such time as the EchoStar Parties have received such satisfactory additional
financial assurances as are determined in the good faith discretion of the
EchoStar Parties (provided that, a guarantee of the amount by which the Expected
Purchase Price exceeds the Guaranteed Amount, substantially in the form of the
guarantee in Schedule 17, shall be deemed to be satisfactory) of such amounts
which the EchoStar Parties, acting in good faith, estimate are necessary to
fully cover the full amount of the Purchase Price (including all adjustments
thereto) which is due and payable or expected to become due and payable on or
before System Completion. Notwithstanding the obligation of the EchoStar
Parties to give notice to ExpressVu as set out above, the EchoStar Parties shall
only be obligated to fulfil the obligations set out in clauses (i) and (ii)
above during such notice period until the point in time at which the EchoStar
Parties, acting reasonably, estimate that the expenditures of ExpressVu for the
fulfilment of such obligations by the EchoStar Parties are equal to the
Guaranteed Amount or, with the fulfilment of the next step in the Integration
Services, would exceed the Guaranteed amount. In no event shall the EchoStar
Parties be liable for any liquidated damages or any other amount whatsoever for
delays in System Completion resulting from the exercise of their rights under
this Section 8.7 provided that, after amendment of the XXXXX Chart by mutual
agreement of the parties to adjust for the delay caused by a cessation of
activities in accordance with this Section, nothing in this Section shall be
construed as reducing the obligations of the EchoStar Parties to attain System
Completion by such time as is established by such revised XXXXX Chart.
ARTICLE 9
ACCEPTANCE TESTING
9.1 SKILLED PERSONNEL AND CONSULTANTS. The parties shall make available
suitably skilled personnel and consultants to conduct the Acceptance Test
Procedures on the System as stipulated in Schedule 5 for each milestone of the
XXXXX Chart.
9.2 TIMELY MANNER. HTS shall use its commercially reasonable efforts to
conduct the Acceptance Test Procedures in a timely manner in co-operation with
ExpressVu within the timeframe established in the XXXXX Chart, provided that HTS
shall be primarily responsible for ensuring that they are correctly carried out.
9.3 FAILURE. If the System fails to pass any one or more of the acceptance
tests established in accordance with Schedule 5, then HTS shall remedy all
material defects which are the cause of such failure except if:
(a) the defect is caused by a Customer Modification or is attributable to
alterations or modifications to the System not authorized in writing
by HTS;
-18-
(b) the defect is the result of the use by ExpressVu of the Conditional
Access System other than in the operating environment reasonably
recommended by HTS; or
(c) the defect is the result of ExpressVu's failure to meet an obligation
under this Agreement;
in which circumstances HTS shall notify ExpressVu as soon as reasonably
practicable after it becomes aware that the defect is so caused.
9.4 NOTICE. ExpressVu shall be given reasonable prior notice of the
commencement of, and the reasonable opportunity to observe, all Acceptance Tests
Procedures being conducted under this Article.
9.5 ACCEPTANCE CERTIFICATES.
(a) Upon ExpressVu being satisfied that any Acceptance Test Procedures
detailed on the XXXXX Chart have reached Successful Completion,
ExpressVu shall verify its acceptance as indicated by the signature of
a duly appointed representative of ExpressVu on an Acceptance
Certificate, such approval and signature to be promptly provided and
not to be unreasonably withheld, and if reasonably withheld notice
thereof with specific reasons for withholding shall promptly be
provided to HTS. In the event it is determined under arbitration
hereunder that approval should have been provided by ExpressVu in the
circumstances, ExpressVu shall, in addition to all remedies available
to HTS available at law, pay interest on any payment due at a rate of
24% per annum from the date due until such payment obligations are
satisfied in full. ExpressVu acknowledges that the Successful
Completion of the Stat Muxing system shall be later and not form a
part of the acceptance of the System Completion.
(b) Notwithstanding anything else herein contained, an acceptance test
shall be deemed to have been passed, and ExpressVu shall issue an
Acceptance Certificate in respect thereof, if the results of the test
demonstrate that the System (or the component thereof subject to any
particular Acceptance Test Procedures) is performing in all material
respects at least as well as the system used by EchoStar to provide
its DTH Service.
-19-
ARTICLE 10
SYSTEM PRICE AND PAYMENT
10.1 PRICE AND TERMS. Subject to the obligations of HTS hereunder, ExpressVu
shall pay, as full and complete consideration (subject to adjustment as
otherwise provided for herein) for the purchase of the Hardware, the license of
the Software and the provision of Integration Services, the amounts based on the
unit costs as described in Schedule 2 and summarized in Schedule 9, F.O.B.
California (the "Purchase Price"). The Purchase Price shall be paid by
ExpressVu to HTS as follows:
(a) 25% of the Purchase Price on the Effective Date;
(b) 65% of the Purchase Price in periodic payments five Business Days
prior to the date HTS is required to make corresponding payments to
any of its contractors or suppliers who are providing any item
required to be delivered by HTS hereunder or performing on behalf of
HTS any of the Integration Services provided that (i) no such periodic
payment shall be required to be made except to the extent of the value
of any such item delivered to the Site or work performed and (ii) HTS
shall give ExpressVu five Business Days' notice of any payment
required pursuant to this Section 10.1(b) together with appropriate
documentation relating thereto;
(c) 9% of the Purchase Price (the "Penultimate Instalment") on System
Completion or if System Completion is delayed due to the fault of
ExpressVu, such earlier date as System Completion would have been
achieved had ExpressVu not delayed HTS in achieving System Completion
provided that if having received payment of the Penultimate Instalment
HTS subsequently fails (through no fault of ExpressVu) to achieve
System Completion on the date to which its obligation to so complete
is extended due to the fault of ExpressVu, it shall forthwith
reimburse to ExpressVu the Penultimate Instalment and ExpressVu shall
not thereafter be required to repay the Penultimate Instalment to HTS
until System Completion is achieved; and
(d) 1% of the Purchase Price on the date of the Acceptance Certificate in
respect of Stat Muxing or if issuance of such Acceptance Certificate
is delayed due to the fault of ExpressVu, such earlier date as it
would have been issued had ExpressVu not delayed HTS in achieving
completion of the Stat Muxing.
10.2 PRICE EXCLUSIONS. Unless otherwise agreed in writing, the Purchase Price
is exclusive of delivery, freight, insurance and packaging costs and all other
applicable taxes, duties, imposts or similar charges (including without
limitation any export or
-20-
import duties). In the event that such taxes, duties, imposts or similar
charges become due, these will be for ExpressVu's sole account, provided that
ExpressVu will not in any circumstances be liable to pay any taxes on the income
or profits of HTS. Invoices in respect of amounts payable under this Section
shall be paid by ExpressVu forthwith upon receipt of the invoice by ExpressVu.
10.3 FUTURE SERVICES. HTS acknowledges that as a result of the successful
implementation of the System, ExpressVu will be dependent on continued access to
and support of the various components and services of HTS and its suppliers,
including Nagra and DiviCom for the supply of Smart Cards, the Conditional
Access System and Encoders, respectively, and in connection therewith, ExpressVu
intends to enter into long term support and maintenance agreements with each of
Nagra and DiviCom. Notwithstanding such contractual relationships between
ExpressVu and Nagra and DiviCom, HTS shall use its commercially reasonable
efforts to provide all necessary support services at its Standard Rates to
ensure the continued integration of the components of the System for a minimum
of two years from the date hereof.
10.4 CHANGE OF TECHNOLOGY.
(a) If at any time during the term of this Agreement, the EchoStar Parties
determine to change the basic technology relating to either set top
boxes or the uplink centre they employ to provide ESC's DTH Service in
the United States, they will advise ExpressVu of such decision and, at
ExpressVu's option, either (i) use their commercially reasonable
efforts to ensure ExpressVu is able, at ExpressVu's sole cost and
expense, to make the same change in technology, or (ii) ensure that
appropriate arrangements are in place to provide ExpressVu with the
right to use and modify the HTS Software in the event that HTS at any
time ceases to support and further develop the HTS Software.
(b) ExpressVu may cease to use the basic technology relating to either set
top boxes or the uplink centre it employs to provide its DTH Service,
other than as a result of a decision made by the EchoStar Parties
under Section 10.4(a), only (i) after the second anniversary of the
date of this Agreement, and (ii) in accordance with the terms of this
Section 10.4(b). ExpressVu's decision hereunder shall be made in good
faith only on the basis that the technical functionality of the new
technology provides substantial performance gains for ExpressVu and
only after ExpressVu has, no less than 14 days prior to making such a
decision, provided to HTS (to the extent allowed under any third party
agreement to which ExpressVu is a party, after reasonable efforts by
ExpressVu to ensure that it can do so), a written analysis describing
such functionality and performance gains and HTS, if it so chooses,
has supplied (and ExpressVu has considered), a
-21-
written rebuttal by HTS to such analysis. ExpressVu, after
considering any such rebuttal and determining that it wishes to
proceed with such technology change, will immediately advise the
EchoStar Parties of such decision in writing (a "Technology Change
Notice") and ExpressVu will use its commercially reasonable efforts to
ensure that ESC is able, at ESC's sole cost and expense, to make the
same change in technology and that HTS is granted a non-exclusive
right to manufacture set top boxes based on such technology. ESC shall
have the option, for a period of 30 days after receiving a Technology
Change Notice, to terminate this Agreement upon not less than 90 days
written notice to ExpressVu, and ESC may, at its option and
concurrently with exercising such right of termination, require
ExpressVu to purchase any equity interest in ExpressVu, or any
successor thereof, then held by ESC or an Affiliate thereof for a
purchase price equal to the fair market value thereof at such time,
such fair market value to be determined by a firm of chartered
accountants or business valuators to be mutually agreed by ESC and
ExpressVu.
(c) For the purposes of this Section 10.4, "basic technology" means the
technology which makes possible the transmission, processing and
reception of programming signals to Boxes, including, without
limitation, the Software and Hardware but for the purposes of this
definition a changeover from FSS to DBS will not be considered a
change in basic technology.
10.5 FAILURE TO PAY BY DUE DATE. If ExpressVu fails to pay any sum owed when
due in accordance with Section 10.1 and such payment default is not remedied
within 15 Business Days of being notified in writing of such default by
EchoStar, HTS shall have the right, without prejudice to its other rights or
remedies hereunder, to cancel delivery in respect of any Hardware or Software
due to be delivered or may suspend further contractual performance in respect of
which ExpressVu is in default of payment.
10.6 PURCHASE PRICE ADJUSTMENTS IN CERTAIN CIRCUMSTANCES. In the event that the
EchoStar Parties cannot provide the benefit of any third party warranty, license
or indemnity in respect of any component of Hardware or Software being supplied
by a third party, ExpressVu may, in its sole discretion, purchase such component
directly from its manufacturer and the Purchase Price shall be reduced according
to the amount specified for such item in Schedule 9, provided that, for the
purposes of Section 27.1 only, the amount of any such adjustment shall continue
to be included in the Purchase Price. For greater certainty, any such
adjustment in the Purchase Price made in accordance with this Section shall not
affect the amount payable by ExpressVu in respect of Integration Services under
Schedule 9.
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ARTICLE 11
BOX STANDARDS/APPROVALS
11.1 STANDARDS.
(a) The Boxes to be provided by HTS hereunder shall be identical to the
"Xxxxx" set top boxes used by HTS to make available its DTH Service to
its subscribers or, subject to HTS having the necessary rights to do
so (which rights HTS shall use its commercially reasonable efforts to
obtain), any other model of set top box that is at such time widely
distributed by HTS in the United States (provided that, for greater
certainty, any such set top box shall be backward compatible with
existing Smart Cards and Boxes provided to Subscribers to ExpressVu's
DTH Service) except that:
(i) the Boxes will have dual FSS/DBS capability;
(ii) the Boxes will be capable of functioning as an FSS set top box
which can be converted into a DBS functioning set top box (such
conversion to take place by way of software modification using
data signals downloaded to the Box from ExpressVu's DTH
Service); and
(iii) the Boxes will have received all necessary approvals for sale
in Canada as required by Section 11.2.
(b) In addition to its obligations under Section 11.1(a), HTS will use its
commercially reasonable efforts to make available in Canada for use in
ExpressVu's DTH Service such other upgraded set top boxes as HTS may
at any time be making available for sale to consumers in the United
States subject to HTS having the necessary rights to do so (which
rights HTS shall use its commercially reasonable efforts to obtain).
(c) For greater certainty, ExpressVu recognizes that it may be required to
change the Outdoor Units and LNBs at its cost when it moves its DTH
Service from an FSS satellite to a DBS satellite.
11.2 APPROVALS. HTS shall obtain all necessary regulatory approvals for the
design and manufacture of the Boxes and the Smart Cards and the sale of the
Boxes and the Smart Cards in the Territory (including, without limitation, any
requirements imposed by Industry Canada or Underwriters Laboratory Canada (ULC))
prior to System Completion.
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ARTICLE 12
MANUFACTURING
12.1 MANUFACTURE OF BOXES, SMART CARDS AND OUTDOOR UNITS. Subject to the terms
and conditions contained herein, HTS shall manufacture, or cause to be
manufactured, Boxes, Smart Cards and Outdoor Units for use by Subscribers to
ExpressVu's DTH Service.
12.2 SUB-LICENSE. ExpressVu acknowledges that the Box design is proprietary to
HTS and the Box incorporates certain Intellectual Property Rights of HTS. At
the request of ExpressVu, HTS shall, to the extent that it is within HTS' power
to do so (after using its commercially reasonable efforts to obtain the rights
to do so), grant to third parties all of the rights necessary to manufacture
Boxes, the EPG and Outdoor Units for use by Subscribers to ExpressVu's DTH
Service provided that any such third party:
(a) executes HTS' standard manufacturing license agreement, the principal
terms of which shall be no more onerous than those set forth in
Schedule 12 attached hereto;
(b) either pays HTS a one-time license fee which shall not exceed
U.S.[CONFIDENTIAL MATERIAL REDACTED] during 1997 or 1998 (and any
increase thereafter shall not exceed increases in the "United States
Bureau of Labor Statistics Indices SIC Code 3761 for Guided Missiles
and Space Vehicles, Average Hourly Earnings" after 1998) or agrees to
pay HTS a per unit licensing fee negotiated by such third party and
HTS;
(c) is not engaged in the business of providing a DTH service in the
United States and does not own, directly or indirectly, more than 20%
of the equity shares of any corporation which is engaged in the
business of providing a DTH service in the United States and is not an
Affiliate of any person engaged in the business of providing a DTH
service in the United States; and
(d) is able to meet such manufacturing quality standards as may reasonably
be required by HTS.
12.3 HTS RIGHT OF SUBSTITUTION. Notwithstanding that any particular third party
may otherwise satisfy the conditions set forth in Section 12.2, HTS may refuse
to grant such third party manufacturing rights pursuant thereto provided that
HTS has reasonable commercial grounds for such refusal and further provided that
in such event HTS and ExpressVu will jointly use their commercially reasonable
efforts to arrange for another third party manufacturer of worldwide stature
that has acceptable distribution capability in
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the Territory to manufacture Boxes, the EPG and Outdoor Units for use by
Subscribers to ExpressVu's DTH Service.
12.4 SPECIFICATIONS AND QUANTITIES. Throughout the term, HTS shall manufacture
or cause to be manufactured all Boxes, Outdoor Units and Smart Cards in
accordance with the Specifications, as may be amended from time to time by HTS
allowing for backward compatibility with the System, in such quantities as are
necessary to satisfy the monthly supply requirements imposed upon HTS hereunder
as set forth in the Forecast. HTS shall provide for the sourcing and stocking
of Outdoor Units with 60 and 75 cm. diameter antennas and LNBs with a .8 dB
noise performance or LNBFs with a 1.1 dB noise performance. Subject to the
provisions of Section 14.9, HTS shall make available sufficient numbers of
Outdoor Units to match the sale of the Boxes as determined in the Forecast.
12.5 MODIFICATIONS. In the event that a failure of the Satellite Infrastructure
necessitates a modification to the Boxes, HTS will carry out the necessary
modifications to the Boxes at the request and sole expense of ExpressVu.
Modifications carried out by HTS in accordance with this Section will be charged
to ExpressVu at HTS' Standard Rates and the Purchase Price will be adjusted
accordingly.
12.6 SMART CARD FLOAT. HTS shall supply ExpressVu at the Smart Card Price with
a float of Smart Cards to replace Smart Cards which are reported by Subscribers
as having been lost, stolen or broken in a quantity per 1,000 Subscribers
consistent with the Smart Card replacement history of EchoStar's DTH Service.
HTS shall provide replacement Smart Cards in excess of such quantity provided
that ExpressVu can adequately justify its need therefor for purposes permitted
pursuant to this Agreement.
12.7 PACKAGING AND LABELLING. HTS shall, at its expense, ensure that all
packaging and labelling of the Boxes, Smart Cards and Outdoor Units conform to
the Specifications and in all respects with the requirements of Canadian law,
rules and regulations, including, without limitation, bar code identification,
bilingual labels (which bilingual labels, notwithstanding the foregoing, shall
be provided at ExpressVu's expense), serial number identification or lot control
coding as applicable, and shall provide the same packaging and protective
material used by HTS from time to time in the U.S. market intended to protect
against product damage in normal shipping and handling conditions. For greater
certainty and notwithstanding anything else herein contained, ExpressVu shall be
responsible for providing HTS, at ExpressVu's cost, with a French language
version of any English language instruction manuals provided by HTS for the
Boxes and Outdoor Units and bilingual labels. Except as required by Canadian
law, rules and regulations, the Boxes and Outdoor Units shall bear the same
logos and have the same look as those used by HTS in the United States.
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ARTICLE 13
SALES AND DISTRIBUTION
13.1 APPOINTMENT. ExpressVu hereby appoints HTS as ExpressVu's non-exclusive
distributor of Boxes, Smart Cards and Outdoor Units throughout the Territory and
HTS hereby accepts such appointment. Subject to the provisions of this
Agreement, ExpressVu confers upon HTS the non-exclusive rights and
responsibilities to sell and distribute the Boxes, Smart Cards and Outdoor Units
within the Territory. HTS may appoint distributors and dealers of the Boxes,
Smart Cards and Outdoor Units in the Territory provided that any such
distributor is not a competitor of ExpressVu's and such distributor is otherwise
approved by ExpressVu, such approval not to be unreasonably withheld.
13.2 INCREASING SALES. During the term of this Agreement, HTS shall diligently
and faithfully fulfil its obligations hereunder and shall use reasonable efforts
to further increase the sale of the Boxes and ExpressVu's DTH Service to benefit
the mutual business interests of ExpressVu and HTS by the methods described in
the Marketing Plan. In furtherance of this obligation, but without limitation,
HTS agrees to:
(a) maintain an adequately trained and effective sales force of adequate
size to effectively represent and promote the sale of the Boxes and
Outdoor Units to customers in the Territory; and
(b) provide sales literature, product literature and other appropriate
promotional materials to ExpressVu's customers and personnel.
13.3 DISTRIBUTION. HTS shall distribute the Boxes, Smart Cards and Outdoor
Units from its warehouse facilities for use in the System and shall cooperate
with ExpressVu's effort to sell and distribute its DTH Service throughout the
Territory. Immediately upon commencing its distribution responsibilities
hereunder, HTS shall distribute Boxes, Smart Cards and Outdoor Units to those
distributors and dealers it is mutually agreed by ExpressVu and HTS should be
granted rights to sell Boxes, Smart Cards and Outdoor Units in the Territory.
For greater certainty, HTS shall not be required to extend credit to any
distributor or dealer except upon such terms and conditions as it may, in its
sole discretion, determine and HTS shall not be required to supply any dealer's
or distributor's order which is for less than 60 Boxes, Smart Cards and Outdoor
Units.
13.4 PROMOTION. HTS and ExpressVu shall cooperate in the marketing and
promotion of the Boxes, Outdoor Units and ExpressVu's DTH Service in the
Territory in accordance with the Marketing Plan.
13.5 SHIPPING. HTS shall take all reasonable steps to protect the Boxes, Smart
Cards and Outdoor Units throughout shipping.
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13.6 PRICES AND BOX SUPPLY.
(a) [CONFIDENTIAL MATERIAL REDACTED]
(b) In the event that ExpressVu, after reasonable notice and time to cure
being provided to HTS (such period not to exceed 60 days in the
aggregate), is unsatisfied with any aspect of the sales and
distribution services being provided by HTS, including, without
limitation, lack of sales and distribution penetration of the Boxes
and Outdoor Units in all regions of the Territory or ineffective sales
or distribution performance, HTS shall throughout the remainder of the
term hereof, sell and supply to ExpressVu and/or its appointed
distributor for re-sale Boxes and Outdoor Units at prices not
exceeding the prices then being charged by HTS to distributors
purchasing like quantities of Boxes and Outdoor Units on like terms
and conditions as ExpressVu and/or its appointed distributor wishes to
purchase the same.
13.7 PRICES TO DISTRIBUTORS AND DEALERS. Subject to Section 13.6(a) and
excluding later generation Boxes with additional features supplied by HTS
pursuant to its obligations under Section 11.1(b) (the prices for which will be
mutually agreed upon by the parties), the prices to be charged by HTS for Boxes
and Outdoor Units to distributors and dealers in the Territory purchasing not
less than 60 Units per order shall not exceed those set forth in Schedule 17
attached hereto. HTS shall further ensure that the prices for Boxes and Outdoor
Units charged to distributors and dealers in the Territory do not exceed the
prices from time to time charged by HTS to distributors in the United States or
Canada purchasing like quantities of set top boxes and outdoor units on like
terms and conditions as any distributor in the Territory which wishes to
purchase Boxes and Outdoor Units. Notwithstanding the foregoing, if HTS
subsidizes the price of the Boxes, the provisions of this Section 13.7 shall not
apply. For greater certainty, all prices referred to in this Section 13.7 are
F.O.B. at point of shipment.
13.8 PRICE CHANGES. HTS shall communicate all price changes in writing to all
distributors and dealers of the Boxes, Smart Cards and Outdoor Units. Without
limiting the generality of the foregoing, HTS shall provide at least 30 days
notice of any permitted price increases.
13.9 BOX AND SUBSCRIPTION INFORMATION. HTS shall keep and promptly supply to
ExpressVu, on a shipment by shipment basis, information relating to the serial
numbers of each Box shipped into the Territory by HTS and/or other manufacturers
and shall keep
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and supply to ExpressVu the names and addresses of the first purchasers of each
Box in the Territory. ExpressVu shall supply to HTS on a monthly basis, records
of the number of new Subscribers received by ExpressVu in the Territory
reconciled to the serial code of the serial numbers of the Boxes. ExpressVu
shall throughout the term of this Agreement provide details to HTS on the number
of Boxes ordered by ExpressVu from any other source and shall provide to HTS
Smart Card serial numbers together with the serial numbers of the Boxes to which
they are mated in the event ExpressVu is entitled to purchase Smart Cards from
other sources pursuant to Section 14.8.
13.10 UPGRADING. HTS may from time to time during the term of this Agreement
upgrade the Smart Cards with regard to their functionality and security.
Unless the upgrade is part of a security measure, such upgraded Smart Cards
will be backward compatible with existing Smart Cards and Boxes provided to
Subscribers to ExpressVu's DTH Service.
13.11 PERSONALIZATION DATA. Each Smart Card shall be Personalized for
ExpressVu as directed by HTS by setting the following data as dictated by
ExpressVu:
(a) vendor identity;
(b) Smart Card serialization;
(c) Cryptographic Keys;
(d) S/W Revision ID; and
(e) any other viewing rights information as agreed between the parties.
ARTICLE 14
[Confidential Material Redacted]
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ARTICLE 15
WARRANTY
15.1 CUSTOMER WARRANTY. HTS hereby covenants that it will provide to purchasers
of the Units the same warranties it provides to purchasers of such products in
the United States provided that HTS shall not be required to extend the term of
any such warranties beyond a period of 90 days from the date of purchase.
15.2 BREACH OF CUSTOMER WARRANTY. HTS shall provide quarterly reports of all
warranty returns for the Units. After a period of six (6) months from the Final
System Acceptance Date, in the event that the failure rate for returns on Units
under customer warranty on an annualized basis exceeds 10% percent of all Units
shipped to such date in the Territory, the defect for which is not identified
and remedied by HTS within 45 days of notice thereof by ExpressVu, then HTS
shall waive the U.S.$250,000 license fee with respect to the first third party
manufacturer that HTS agrees, pursuant to ExpressVu's request, to grant the
right to manufacture Boxes to, in accordance with Section 12.2.
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ARTICLE 16
[CONFIDENTIAL MATERIAL REDACTED]
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ARTICLE 17
REPAIR AND SERVICE AND TRAINING
17.1 REPAIR FACILITIES. HTS shall specify and describe to ExpressVu, within 90
days of the date hereof, repair service centre facilities to be used for both
warranty and out-of-warranty equipment repairs and service and which will be
available to Subscribers.
17.2 REPAIR PROGRAM. HTS shall forthwith develop for approval by ExpressVu (and
in no case later than 90 days from the date hereof) a service centre repair
program that defines:
(a) the number and location(s) of manufacture designated repair centres;
(b) provision for setting up authorized repair centre agents;
(c) process for repair and service;
(d) policy and plan for providing Subscribers with immediate replacement
of Units while Subscribers' Units are being serviced or repaired; and
(e) a dealer service and repair support program.
HTS shall also establish procedures to permit ExpressVu to request approval to
issue return authorizations to Subscribers.
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17.3 SUPPORT SERVICES.
(a) At ExpressVu's request, HTS shall provide at HTS' facilities such
training of ExpressVu personnel as may be reasonably required to
permit ExpressVu to provide technical support service to its
Subscribers. Such training shall be provided at no charge to
ExpressVu except that ExpressVu shall bear the travel and living
expenses of such personnel.
(b) If the technical know-how required by an HTS technical service
representative (a "TSR") to effectively advise an ExpressVu TSR is
substantially similar to the technical know-how required by an HTS TSR
to provide advice with respect to ESC's DTH Service, HTS shall at all
times make TSRs available to ExpressVu by telephone at a cost of
U.S.$2.00 a minute (subject to adjustment for increases in HTS' costs
for such personnel). If the technical know-how required by an HTS TSR
to effectively advise an ExpressVu TSR is not substantially similar to
the technical know-how required by an HTS TSR with respect to ESC's
DTH Service, HTS shall make HTS TSRs available to ExpressVu by
telephone on terms mutually agreeable to the parties (subject to
adjustment for increases in HTS' costs for such personnel).
(c) Emergency support services shall be provided by HTS to ExpressVu at
Standard Rates. In that regard, HTS shall provide ExpressVu with a
list of key contact support personnel who may be contacted by
ExpressVu on a 24-hour, 365-day basis for troubleshooting purposes.
ARTICLE 18
SIGNAL PROTECTION
18.1 SIGNAL SEPARATION. ExpressVu and ESC acknowledge that there is a
significant threat of members of the public in one jurisdiction attempting to
subscribe to the DTH Service provided by the other party from the other
jurisdiction. ExpressVu and ESC shall cooperate throughout the term hereof in
preventing members of the public from the other's jurisdiction subscribing to
its DTH Service. To such end, ESC and ExpressVu hereby agree to achieve the
separation of broadcasting signals by cooperating together in respect of the
following (provided that, for greater certainty, each of the parties'
obligations under this Section 18.1 shall be limited to the extent of such
party's reasonable technical capability to perform any of the following and
further provided that each party shall use its commercially reasonable efforts
to perform the following):
(a) ExpressVu shall provide to ESC a monthly list (including names,
addresses and telephone numbers) of all requests for subscriptions to
its DTH Service
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from customers providing a U.S. telephone number (or identified as
being in the U.S. via an automatic number identification), address
and/or residency or other U.S. data, and shall refer such requests for
service to EchoStar;
(b) ESC shall provide to ExpressVu a monthly list (including names,
addresses and telephone numbers) of all requests for subscriptions to
its DTH Service from customers providing a Canadian telephone number
(or identified as being in Canada via an automatic number
identification), address and/or residency or other Canadian data, and
shall refer such requests for service to ExpressVu;
(c) to ensure that no Boxes intended for use in ExpressVu's DTH Service
are mated with a Smart Card intended for use in ESC's DTH Service and
vice-versa, ExpressVu and ESC shall, as stated in Section 13.9, keep
and supply to each other serial numbers of Boxes (whether such Boxes
are manufactured by HTS or by a third party licensed by it) and Smart
Cards in the Territory, and shall permit independent audits by
recognized accounting firms of each other's records for compliance
purposes provided that reasonable notice of a party's intention to
have such audit performed shall be provided to the other party and any
such audit shall be conducted in a manner so to minimize disruption of
normal business of the party whose records are being audited;
(d) ExpressVu and ESC shall keep a record of all telephone calls received
(including those received during set top "polling") by their
respective call centres or by a call collector at their respective
uplink centres and identified as being placed from the jurisdiction of
the other and shall supply such information to the other on a monthly
basis;
(e) ExpressVu and ESC shall keep a record of all telephone numbers and
addresses of every subscriber within their own jurisdiction having
four or more subscriptions for one telephone number or street address,
and each of ESC and ExpressVu shall provide such records to the
independent auditor so as to determine the residency of such
subscribers;
(f) ExpressVu and ESC shall use reasonable commercial efforts to
investigate the residency of any of their respective subscribers
having the same telephone numbers or address as four or more other of
their subscribers and each shall provide the conclusions of such
reports to the other;
(g) ExpressVu and ESC shall use reasonable commercial efforts to ensure
that design and implementation of the end-to-end security system
minimizes the
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ability of any subscriber to purchase a Box or ESC's set top box in
one country and obtain programming services from the other country;
(h) ExpressVu and ESC shall use reasonable commercial efforts to ensure
that Smart Cards intended to provide subscribers with access to one of
the party's DTH Service cannot also be used to provide subscribers
with access to the other party's DTH Service;
(i) ExpressVu and ESC shall use reasonable commercial efforts to ensure
that Smart Cards which are lost, stolen or damaged may be replaced
without the need to replace the Box; and
(j) notwithstanding the foregoing and without detracting from the other
obligations of ESC contained in this Section, ExpressVu and ESC agree
that ESC shall not be obliged to provide ExpressVu with a list of such
subscribers to ESC's DTH Service, who would fall under the provisions
of this Article 18 and who were subscribers as at the date of this
Agreement, until the first anniversary of the date of this Agreement.
18.2 SHUT-OFF INDEMNITY. Upon either of ESC or ExpressVu determining that a
subscriber in the jurisdiction of one is subscribing to the service in the
jurisdiction of the other, the aggrieved party may require that the other party
terminate the signal subscription to such subscriber whereupon the requesting
party shall indemnify and hold the party terminating the service harmless from
any claims, damages or costs in respect of the subscriber whose service has been
terminated if it is subsequently determined that such subscriber is in fact not
in the jurisdiction of the aggrieved party. Notwithstanding the foregoing, the
provisions of this Section 18.2 shall not (i) take effect until the date on
which ExpressVu commences to provide its DTH Service to Subscribers in the
Territory and (ii) apply to Specialty Language Subscribers.
18.3
[CONFIDENTIAL MATERIAL REDACTED]
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18.4 AUDIT. Either ESC or ExpressVu (the "Auditing Party") may, through a
nationally recognized independent accounting firm, upon reasonable prior written
notice to the other (the "Audited Party"), obtain access to the records of the
Audited Party during normal business hours for the purposes of determining the
Audited Party's compliance with obligations undertaken in this Agreement,
including without limitation the anti-grey marketing provisions of the foregoing
provisions of this Article 18 and the restrictions imposed on the Audited Party
with respect to set top box and Smart Card security; provided however, that: (i)
the audit shall not unreasonably disrupt the normal business operations of the
Audited Party; (ii) the Audited Party shall not be under any obligation to
disclose information to the Auditing Party which is subject to confidentiality
restrictions imposed by a third party; (iii) audits may not take place more than
once per 12 month period, unless such restriction is waived in writing by the
Audited Party; and (iv) the Auditing Party shall bear all expenses in connection
therewith, except that if the audit reveals the Audited Party to not be in
compliance with its obligations hereunder in any material respect in which case
the Audited Party shall bear all reasonable expenses of such audit.
18.5 GREY MARKETING-DISTRIBUTORS AND DEALERS.
(a) The EchoStar Parties shall use their commercially reasonable efforts
to obtain the agreement of their existing distributors and dealers
that they will not directly or indirectly sell Units or programming
into Canada (and shall obtain the agreement of all such future
distributors and dealers to so comply with such provisions) so as to
preclude such distributors and dealers from, directly or indirectly,
offering for sale set top boxes and/or programming intended for use in
the United States by subscribers to ESC's DTH Service to Persons
resident in Canada.
(b) ExpressVu shall use its commercially reasonable efforts to obtain the
agreement of its existing distributors and dealers that they will not
directly or indirectly sell Units or programming into the U.S. (and
shall obtain the agreement of all such future distributors and dealers
to so comply with such provisions) so as to preclude such distributors
and dealers from, directly or indirectly, offering for sale set top
boxes and/or programming intended for use in Canada by Subscribers to
ExpressVu's DTH Service to Persons resident in the United States.
18.6 THIRD PARTY SIGNAL PROTECTION PROVISIONS.
(a) Each of ESC and its Affiliates will use its commercially reasonable
efforts to ensure that any agreement into which it enters, that
contemplates the provision to a third party DTH Service provider in
North America of technology similar to the System and the Boxes (a
"Third Party
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Agreement"), will contain provisions which are reasonably designed to
preclude such third parties from using or authorizing the reception of
ExpressVu's Canadian programming signals, Boxes and Outdoor Units
intended for use by subscribers to ExpressVu's DTH Service to receive
programming from the DTH Service of the third party (the "Protective
Terms"). If it comes to the attention of ESC or its Affiliates (in
which case, ESC will immediately inform ExpressVu of such), or if
ExpressVu offers satisfactory evidence to ESC, that the Protective
Terms of a Third Party Agreement are being violated by a third party,
ESC or its applicable Affiliate shall take commercially reasonable
actions permitted under such Third Party Agreement to enforce the
Protective Terms against such third party, including, if necessary,
the termination of such Third Party Agreement. For the purposes of
this Section, no violation of the Protective Terms by a third party
shall be deemed to have occurred unless ESC or its Affiliates
determine, or ExpressVu is able to reasonably demonstrate to ESC, that
5000 or more Boxes and/or Outdoor Units intended for use by
subscribers of ExpressVu's DTH Service are being used to receive
programming from the DTH Service of the third party. If, after a
request from ExpressVu to enforce the Protective Terms against such
third party, ESC or its applicable Affiliate fails within 30 days to
(i) use its commercially reasonable efforts to cause such third party
to commence complying with the Protective Terms or (ii) terminate such
third party agreement, then (as the sole remedy of ExpressVu under
this Section 18.6(a)) the EchoStar Parties' rights under Section 31.1
of this Agreement shall immediately terminate.
(b) Subject to its conversion rights under Section 18.3 specifically with
respect to subscribers to ESC's DTH Service, ExpressVu agrees to
ensure that it does not use set top boxes and outdoor units intended
for use by subscribers to a third party DTH Service, licenced by the
CRTC to provide DTH Services in the Territory, to receive programming
from ExpressVu's DTH Service, provided that, if such a third party
ceases to provide their subscribers with DTH Services for a period of
not less than 30 days, ExpressVu's obligations under this Section in
respect of such third party shall terminate.
18.7 SURVIVAL OF CERTAIN TERMS. The parties agree that the rights and
obligations of the parties under Section 18.1(c) shall survive the termination
of this Agreement, provided that the reporting and auditing obligations
contained therein shall terminate with this Agreement.
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ARTICLE 19
[CONFIDENTIAL MATERIAL REDACTED]
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ARTICLE 20
BREACH OF SECURITY
20.1 BREACH OF SECURITY. HTS and ExpressVu shall use their best efforts to
protect the security of all elements of the System. Notwithstanding any
provision to the contrary in this Agreement, if either party becomes aware of
any breach of security in respect of any aspect of the System or HTS' system
which results or may result in unauthorized third parties gaining access to one
or more channels carried by the Smart Cards (a "Breach of Security"), it shall
immediately give full written details of the breach to the other.
20.2 REMEDY. ExpressVu acknowledges that the primary responsibility for
remedying a Breach of Security shall be Nagra's and ExpressVu's but not HTS'
except as the Breach of Security pertains to the Boxes. On becoming aware of a
Breach of Security that does not pertain to the Boxes, HTS and ExpressVu
together with Nagra shall evaluate the Breach of Security and jointly determine
the appropriate remedy therefor. In the event that a similar Breach of Security
has affected the business of HTS in the United States, HTS shall, at ExpressVu's
request and at ExpressVu's cost, remedy the Breach affecting ExpressVu's System
in the same manner as HTS is remedying its own breach. If the Breach of
Security relates in whole or in part to the Boxes, HTS shall, at HTS' cost,
promptly use its reasonable efforts to remedy the Breach of Security and if new
Boxes are required in order to do so, they shall be supplied by HTS at its cost
of such Boxes. ExpressVu and HTS agree furnish to one another with all
reasonable assistance and information in connection with any Breach of Security.
20.3 RECOMMENDATIONS. Throughout the term hereof, HTS shall consult with
ExpressVu and make recommendations to ExpressVu regarding the steps HTS intends
to take to remedy any Breach of Security. HTS' obligation to remedy any Breach
of Security promptly pursuant to Section 20.2 is subject to any request by
ExpressVu, in its sole discretion, to delay the implementation of such remedy
provided that, for greater certainty, HTS shall at all times be free to remedy
any Breach of Security affecting its own system.
ARTICLE 21
TRADE MARKS
21.1 GRANT OF USE.
(a) Subject as hereinafter provided and only to the extent that ESC
possesses such rights, ESC hereby grants ExpressVu the exclusive and
royalty-free right to use in Canada, in connection with ExpressVu's
DTH Service, (i) all marks and logos in use by ESC, as of the date
hereof or at any time during the term of this Agreement (unless
otherwise terminated pursuant to
-39-
Section 21.8), which have as a primary component "Dish" or "HTS",
including, without limitation, the trade marks and logos set forth in
Sections A and C, respectively, of Schedule 13 attached hereto and
(ii) such other marks and logos as may be agreed upon by the parties
from time to time (collectively, the "Exclusive Licensed Trade
Marks"). Subject as hereinafter provided and only to the extent that
ESC possesses such rights, ESC hereby grants ExpressVu the
non-exclusive and royalty-free right to use in Canada, in connection
with ExpressVu's DTH Service, (i) all marks and logos in use by ESC,
as of the date hereof or at any time during the term of this Agreement
(unless otherwise terminated pursuant to Section 21.8), which have as
a primary component "Echostar" including, without limitation, the
trade marks and logos set forth in Section B of Schedule 13 attached
hereto and (ii) such other marks and logos as may be agreed upon by
the parties from time to time (collectively, the "Non-Exclusive
Licensed Trade Marks"). ExpressVu agrees that the nature and quality
of its use of the Licensed Trade Marks shall conform to standards set
by and under the control of ESC. Accordingly, ExpressVu shall consult
with ESC with respect to any actual intended use of the Licensed Trade
Marks and ExpressVu shall refrain from so using the Licensed Trade
Marks if ESC objects to any such use, provided that any such objection
must be based on reasonable grounds. ESC hereby confirms ExpressVu
may identify its DTH Service as "Dish Network Canada" or "Dish Network
by ExpressVu" or to similar effect.
(b) Without limiting the generality of the foregoing, ExpressVu shall not
change the look and feel of any logos included in the Licensed Trade
Marks but shall be permitted to use and depict them in various sizes
and ExpressVu shall ensure that no Licensed Trade Xxxx is used as part
of its corporate name or confusingly associated with such corporate
name. Notwithstanding anything else herein contained, ESC
acknowledges that it shall not object to use by ExpressVu of the
Licensed Trade Marks on the basis of an objection to the programming
provided by ExpressVu on its DTH Service so long as such programming
is in compliance with all applicable Canadian regulatory and legal
requirements and so long as the Licensed Trade Marks are not
associated directly with any adult programming.
21.2 RIGHT TO SUB-LICENSE. Subject as hereinafter provided, ESC hereby further
grants ExpressVu the right to grant rights to use the Licensed Trade Marks to
distributors of Units in the Territory in connection with the sale by such
distributors of subscriptions to ExpressVu's DTH Service in accordance with the
sub-licensing agreement in the form attached hereto as Schedule 14.
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21.3 RESTRICTIONS ON ESC'S USE. Subject as hereinafter provided, ESC will not
use or permit any Person to use the Exclusive Licensed Trade Marks in Canada in
connection with any broadcast distribution undertaking or other
telecommunications-related service, including, without limitation, a DTH
Service, cable television service, MMDS or LMCS, without ExpressVu's prior
written consent. Notwithstanding the foregoing, ESC may (a) continue to use
such of the Exclusive Licensed Trade Marks as it is currently using in
connection with ESC's C-Band business in the Territory in such manner as it is
currently using such marks and (b) grant rights to use the Exclusive Licensed
Trade Marks (subject to the permitted business uses set out elsewhere herein) to
distributors and dealers of Units in the Territory in connection with the sale
by such distributors or dealers of subscriptions to ExpressVu's DTH Service.
21.4 NOTIFICATIONS. ESC and ExpressVu will promptly notify the other of any and
all third party activity which might adversely affect the Licensed Trade Marks
and which comes to their attention.
21.5 ACTIONS BY ESC. ESC may, in its sole discretion and at its own expense
mount any actions or proceedings against a third party for infringement of the
Licensed Trade Marks in the Territory or for any other activity in the Territory
which it xxxxx xxx adversely affect the Licensed Trade Marks. ExpressVu will,
at request of ESC, join in such actions or proceedings and, at the expense of
ESC, will provide all reasonable assistance to ESC in connection with such
actions or proceedings. The conduct of such actions and proceedings will be at
the sole discretion of ESC. Any costs, damages or profits awarded in such
actions or proceedings will be for the account of ESC.
21.6 ACTIONS BY EXPRESSVU. In the event that ESC does not mount an action or a
proceeding within 30 days of ExpressVu giving notice that it wishes an action or
proceeding to be brought against a third party, ExpressVu may, at its own
expense, bring such action or proceeding against a third party for infringement
of the Licensed Trade Marks in the Territory or any other activity which it
xxxxx xxx adversely affect the Licensed Trade Marks in the Territory. ESC will,
at ExpressVu's request, join in such action or proceeding and, at ExpressVu's
request, will provide all reasonable assistance to ExpressVu in connection with
such action or proceeding. Any costs, damages, or profits awarded in such
action or proceeding will be for the account of ExpressVu.
21.7 PROTECTION OF LICENSED TRADE MARKS. ESC shall take such steps as are
necessary to register and maintain the Licensed Trade Marks in Canada with the
appropriate government authorities and the maintenance of such registrations
provided that ESC shall not be required to so register or maintain any such
Licensed Trade Xxxx which it does not otherwise wish to register or maintain in
Canada unless ExpressVu pays all of ESC's costs and expenses in registering and
maintaining the Licensed Trade Marks which ExpressVu wishes ESC to so register
and maintain (provided further that, if ESC wishes to register and maintain any
such Licensed Trade Marks in Canada other than as pursuant
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to an ExpressVu request, this shall be done at ESC's cost and expense).
ExpressVu shall provide such co-operation and assistance in the protection of
the Licensed Trade Marks as ESC may reasonably request. The parties'
obligations under this Section shall not alter or detract from the obligations
of the parties set out in Sections 21.5 and 21.6. For greater certainty,
ExpressVu acknowledges and agrees that its license to the Licensed Trade Marks
provided hereunder and any of its actions conducted in respect of the Licensed
Trade Marks in accordance with the provisions of this Article, shall not confer
upon ExpressVu any proprietary rights or interest to any Licensed Trade Marks.
21.8 TERMINATION OF EXPRESSVU'S RIGHT TO USE THE LICENSED TRADE MARKS. ESC may
terminate ExpressVu's rights to use the Licensed Trade Marks and all of its
other obligations under the foregoing provisions of this Article 21 if, but only
if:
(a) [CONFIDENTIAL MATERIAL REDACTED]
(b) [CONFIDENTIAL MATERIAL REDACTED]
(c) an Affiliate of ExpressVu (provided that, for greater certainty,
neither WIC Western International Communications Ltd. nor Canadian
Satellite Communications Inc. - nor any of their Affiliates shall be
considered to be Affiliates of ExpressVu) provides a DTH Service
(excluding a data distribution business, subject to the invocation of
the provisions of Section 19.2 by the EchoStar Parties in accordance
with the terms thereof) in the U.S. in competition to the DTH Service
provided by ESC;
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(d) if ExpressVu or any other Person to whom this Agreement is assigned by
ExpressVu pursuant to Section 35.1 is at any time Controlled by a
Person (or an Affiliate of any such Person) owning a Controlling
interest in a Person providing a DTH Service (excluding a data
distribution business, subject to the invocation of the provisions of
Section 19.2 by the EchoStar Parties in accordance with the terms
thereof) in the U.S. in competition to the DTH Service provided by
ESC; or
(e) if this Agreement is terminated in accordance with its terms.
21.9 NOTICE OF TERMINATION. If ESC terminates ExpressVu's rights to use the
Licensed Trade Marks pursuant to Section 21.8, ExpressVu shall nevertheless
continue to have non-exclusive rights with respect to the Licensed Trade Marks
provided for in Sections 21.1 through 21.7, inclusive, until one year after the
date it receives written notice from ESC of such termination, provided that if
at any time after receipt of such written notice of termination ExpressVu begins
using another brand name in association with its DTH Service, it shall cease to
have such rights 90 days after it first begins to use such other brand name.
21.10 EFFECT OF TERMINATION. Notwithstanding any termination of ExpressVu's
rights to use the Licensed Trade Marks pursuant to Section 21.8, any Units sold
to Subscribers which bear the Licensed Trade Marks prior to the date such
termination becomes effective shall continue to be permitted to be used by
Subscribers and any Units or other inventory bearing the Licensed Trade Marks on
hand on the date such termination becomes effective may be used by ExpressVu in
the normal course of business after such effective date of termination.
Furthermore, ExpressVu shall be required to purchase from HTS all Outdoor Units,
Smart Cards, LNBs and other parts held in stock by HTS as contemplated by
Section 14.9 on the effective date of such termination at a price equal to HTS'
cost thereof.
21.11 INDEMNITY FOR COSTS OF CERTAIN CLAIMS.
(a) ExpressVu shall indemnify and hold the EchoStar Parties harmless from
and against all legal costs and expenses, subject to the limitations
set out below, which the EchoStar Parties may suffer or incur arising
out of or resulting from any claim or action against the EchoStar
Parties by a third party where the naming of the EchoStar Parties by a
third party in such claim or action arises from the association of the
EchoStar Parties with ExpressVu as a result of the use by ExpressVu of
the Licensed Trade Marks. Any indemnity claim made by the EchoStar
Parties under this Section shall be limited to a maximum of
U.S.$25,000. Nothing in this Section shall be construed as providing
an indemnity to the EchoStar Parties from ExpressVu in those instances
where the EchoStar Parties are
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actually found to be properly named in an action or claim by a third
party or as providing for an indemnity for the payment of any damages
found payable by the EchoStar Parties as a result of such a claim or
action and nothing in this Section shall be construed as detracting
from or limiting in any manner other indemnity rights provided
elsewhere in this Agreement.
(b) The EchoStar Parties shall indemnify and hold ExpressVu harmless from
and against all legal costs and expenses, subject to the limitations
set out below, which ExpressVu may suffer or incur arising out of or
resulting from any claim or action against ExpressVu by a third party
where the naming of ExpressVu by a third party in such claim or action
arises from the association of ExpressVu with the EchoStar Parties as
a result of the use by ExpressVu of the Licensed Trade Marks. Any
indemnity claim made by ExpressVu under this Section shall be limited
to a maximum of U.S.$25,000. Nothing in this Section shall be
construed as providing an indemnity to ExpressVu from the EchoStar
Parties in those instances where ExpressVu is actually found to be
properly named in an action or claim by a third party or as providing
for an indemnity for the payment of any damages found payable by
ExpressVu as a result of such a claim or action and nothing in this
Section shall be construed as detracting from or limiting in any
manner other indemnity rights provided elsewhere in this Agreement.
ARTICLE 22
REPRESENTATIONS AND WARRANTIES
22.1 REPRESENTATIONS AND WARRANTIES BY THE ECHOSTAR PARTIES. The EchoStar
Parties hereby represent and warrant as follows to ExpressVu and acknowledge and
confirm that ExpressVu is relying upon such representations and warranties in
connection with the entering into of this Agreement:
(a) Each of the EchoStar Parties is a corporation incorporated and validly
existing under the laws of its jurisdiction of incorporation as stated
at the beginning of this Agreement and has the necessary corporate
power to enter into and perform its obligations under this Agreement;
(b) the execution, delivery and performance by the EchoStar Parties of
this Agreement and the consummation of the transactions contemplated
hereby:
(i) subject to satisfaction of the condition precedent set forth in
Section 32.2(c), have been duly authorized by all necessary
corporate action on the part of each of the EchoStar Parties;
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(ii) do not (or would not with the giving of notice, the lapse of time
or the happening of any other event or condition) result in a
violation or a breach of, or a default under or give rise to a
right of termination, amendment or cancellation or the
acceleration of any obligation under (1) any charter or by-law
instruments of either of the EchoStar Parties; (2) any material
contracts or instruments to which either of the EchoStar Parties
is a party or by which either of the EchoStar Parties is bound;
or (3) of any laws applicable to either of the EchoStar Parties;
and
(iii) except as otherwise provided herein, do not require that
either of the EchoStar Parties give any notice to, or obtain
any license, permit, authorization, approval or consent
from, any governmental authority pursuant to any applicable
law or any other Person pursuant to any contract or
instrument by which either of the EchoStar Parties is bound,
except such consents as may be required from the Department
of Defense, the State Department and the Department of
Commerce of the United States Government in connection with
the export to Canada by HTS of certain technology and
technical services contemplated under this Agreement which
consents HTS covenants to use its commercially reasonable
efforts to obtain as soon as possible;
(c) each of the EchoStar Parties is in compliance with (i) all applicable
statutes, laws, regulations, orders, judgements, injunctions or
rulings of any government or governmental agency and (ii) all
contracts or instruments to which it is a party or by which it is
bound, which in either case relate to the System or the Software
except where the failure to comply would not have a material adverse
effect on the System or the Software or the ability of the EchoStar
Parties to perform their obligations hereunder;
(d) except as set forth in Schedule 18 attached hereto, to the best of the
EchoStar Parties' knowledge, there is no action, suit or proceeding at
law or in equity, by any person, nor any arbitration, administrative
or other proceeding by or before any governmental entity, pending or
threatened, against the EchoStar Parties or any of their Affiliates
relating to the use of the System or the Software by the EchoStar
Parties;
(e) subject to this Agreement becoming effective on the Effective Date and
except as otherwise specifically provided herein, HTS has, or will
have prior to delivery, title free and clear of all liens and
encumbrances to all
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Hardware provided herein or, in the case of Software, the right to
license or sub-license the same to ExpressVu as contemplated herein;
(f) HTS has used or will use its commercially reasonable efforts to obtain
all necessary rights and approvals to assign to ExpressVu the benefit
of any manufacturers' warranties relating to any component of the
System, where the underlying product has a cost in excess of
U.S.$20,000.00;
(g) to the best of their knowledge, the Specifications, whether in
original form or as amended by the EchoStar Parties (not requested by
ExpressVu) to incorporate the customization modifications, will be
prepared in such a way that if the System is implemented in the
Territory in accordance with the Specifications, then the System will
be capable of operating and functioning as a multiple channel, direct-
to-home, transmission system which accords with the MPEG 2 DVB
standard and which will be capable of providing satellite-delivered
audio, video and/or data services available to in excess of 500,000
Subscribers with access to in excess of 100 channels in the Territory
(assuming ExpressVu has available to it adequate satellite carriage
and transmitting capacity and subject to ExpressVu purchasing and
installing sufficient incremental Hardware and Software to permit the
theoretical System capacity of 100 channels to be realized);
(h) to the best of their knowledge, the System and/or any components
thereof, will comply with and provide, in all material respects, the
performance levels, functions, capabilities and standards specified in
the Specifications;
(i) neither of the EchoStar Parties nor any of their Affiliates have
entered into and, until the Acceptance Certificate for the System has
been issued, they will not enter into, any contract with any customer
for an undertaking similar to the systems integration obligations
undertaken hereunder, the liquidated damages provisions of which are
more onerous than the liquidated damages provisions contained herein;
(j) ESC has been granted full right, power and authority by EchoStar
Communications Corporation and each of its Affiliates which has rights
to the Licensed Trade Marks to grant ExpressVu the rights granted to
it pursuant to Article 21;
(k) it is not necessary that any other Affiliates of EchoStar
Communications Corporation be a party to this Agreement in order for
ExpressVu to acquire the rights it is intended ExpressVu will acquire
pursuant to this Agreement; and
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(l) the terms and conditions of the Dominion Agreement as at the date
hereof directly and indirectly provide certain protections to the
competitive market position of the EchoStar Parties which protections
effectively place ExpressVu in a competitive position which is not
worse than that of the EchoStar Parties with regard to the permitted
activities of Dominion Video Satellite Inc. under the Dominion
Agreement.
22.2 REPRESENTATIONS AND WARRANTIES BY EXPRESSVU. ExpressVu represents and
warrants as follows to the EchoStar Parties and acknowledges and confirms that
the EchoStar Parties are relying upon such representations and warranties in
connection with the entering into of this Agreement:
(a) ExpressVu is a corporation incorporated and existing under the laws of
Canada and has the necessary corporate power to enter into and perform
its obligations under this Agreement;
(b) the execution, delivery and performance by ExpressVu of this Agreement
and the consummation of the transactions contemplated hereby:
(i) subject to satisfaction of the condition precedent set forth in
Section 32.1(c), have been duly authorized by all necessary
corporate action on the part of ExpressVu; and
(ii) do not (or would not with the giving of notice, the lapse of time
or the happening of any other event or condition) result in a
violation or a breach of, or a default under or give rise to a
right of termination, amendment or cancellation or the
acceleration of any obligation under (i) any charter or by-law
instruments of ExpressVu; (ii) any contracts or instruments to
which ExpressVu is a party or by which ExpressVu is bound; or
(iii) of any laws applicable to it;
(iii) except as otherwise provided for herein and for approvals
required by ExpressVu from the Canadian Radio-television and
Telecommunications Commission (the "CRTC") with respect to
certain changes in the ownership of its shares and from Industry
Canada with respect to construction and operation of the uplink
facility and any local building and other permits required in
connection with the Site, do not require that ExpressVu give any
notice to, or obtain any license, permit, authorization, approval
or consent from, any governmental authority pursuant to any
applicable law or any other Person pursuant to any contract or
instrument by which ExpressVu is bound;
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(c) ExpressVu is not bound by the provisions of any other Agreement with
any third party which would prevent ExpressVu from entering into and
performing this Agreement;
(d) subject as noted in Section 22.2(b)(iii) with respect to the need to
obtain approval of the CRTC of certain changes in the ownership of its
shares, ExpressVu currently has in effect a valid license from all
necessary Canadian governmental authorities required to operate a DTH
Service in the manner contemplated under this Agreement; and
[CONFIDENTIAL MATERIAL REDACTED]
22.3 SURVIVE AGREEMENT. Except as otherwise expressly provided therein, the
representations and warranties of the parties contained in Sections 22.1 and
21.2 are made as of the date of this Agreement and shall not be deemed to have
been made as at subsequent date. Except as otherwise expressly provided in this
Agreement, the covenants, representations and warranties of the parties
contained in this Agreement shall not merge on, and shall survive the date
hereof, and, notwithstanding the execution and delivery of this Agreement, or
any investigation made by or on behalf of any party hereto, shall continue in
full force and effect. The execution of this Agreement shall not prejudice any
right of any party against the other parties in respect of anything done or
omitted hereunder or in respect of any right to damages or other remedies.
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ARTICLE 23
SOURCE CODE ESCROW
23.1 ACCESS. HTS acknowledges that ExpressVu proposes to enter into a source
code deposit agreement with Nagra with respect to the portions of the Software
being provided by Nagra. HTS shall provide access to source code and related
documentation of the HTS Software as specifically provided for in, and supplied
in accordance with the terms and conditions of, the Source Code Deposit
Agreement. ExpressVu and HTS shall execute, and shall use all reasonable
endeavours to ensure that the escrow agent executes, the Source Code Deposit
Agreement as soon as reasonably practicable after the date hereof. ExpressVu
will pay any fees which are from time to time payable to the escrow agent under
the Source Code Deposit Agreement.
ARTICLE 24
INTELLECTUAL PROPERTY RIGHTS
AND INDEMNIFICATION
24.1 INTELLECTUAL PROPERTY. ExpressVu acknowledges that, as between HTS and
ExpressVu, HTS shall be the sole and exclusive owner of all Intellectual
Property Rights arising in respect of the initialisation and Personalization of
the Smart Cards, the Application and any Improvements of the same, the
Conditional Access System, the CA Components, the Software, the Documentation,
the DVB scrambler and data encryptor and the interfaces developed by HTS in
collaboration with the supplier of the compression equipment between the
Conditional Access System and the compression equipment. Where HTS is co-owner
or licensee of these Intellectual Property Rights with or from the supplier of
the underlying technology, it warrants, represents and undertakes that it is and
shall remain entitled to grant the rights granted hereunder except where
ExpressVu has obtained such rights directly with the owner of such rights.
24.2 IMPROVEMENTS. HTS and ExpressVu shall consult and co-operate with each
other from time to time as may be reasonably necessary with respect to
Improvements. Each of such parties shall inform the other party in a timely
manner of any significant Improvements developed or acquired by such party and,
at the request of the other party, disclose the details thereof to the other
party, except insofar as such disclosure would disclose information which is
subject to confidentiality obligations in favour of a third party, which in the
case of HTS would include, without limitation, a specific development performed
by HTS for another customer.
24.3 RIGHTS VESTING. With respect to rights (including all Intellectual
Property Rights) to all Improvements made or developed either by HTS or
ExpressVu, it is agreed that:
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(a) in the case of Improvements developed solely by ExpressVu, such
Improvements shall belong exclusively to HTS; provided, however, that
ExpressVu shall be entitled to a limited, non-transferable, royalty-
free right to use the Improvements in connection with ExpressVu's DTH
Service in the Territory during the term of this Agreement;
(b) in the case of Improvements made or developed by HTS specifically at
ExpressVu's request, which enable the Software to perform functions
differently or to perform new functions: (i) such Improvements will be
charged for by HTS at Standard Rates; and (ii) such Improvements shall
belong exclusively to HTS; provided, however, that ExpressVu shall be
entitled to a limited, non-transferable, royalty-free right to use the
Improvements in connection with ExpressVu's DTH Service in the
Territory during the term of this Agreement; and
(c) in the case of Improvements other than those referred to in Sections
24.3(a) and 24.3(b), if ExpressVu wishes to use such Improvements, it
shall be entitled to do so against payment to HTS of such royalties
and fees as HTS may reasonably determine from time to time.
24.4 REGISTRATION. HTS and ExpressVu undertake to co-operate with one another,
in the utmost good faith, in order to arrange or obtain registration of
Intellectual Property Rights in Improvements, and to this end they shall execute
and arrange for the signature of all documents and forms in pursuance of any
application for registration of Intellectual Property Rights in the
Improvements.
24.5 USE. ExpressVu shall not, otherwise than as specifically permitted by the
terms of this Agreement, use, disclose, apply, sell or in any way turn to
account, whether directly or indirectly, the Intellectual Property Rights.
24.6 OBLIGATION. ExpressVu shall:
(a) not, other than as permitted by this Agreement, copy or reproduce or
translate the Software and shall not communicate, whether
electronically or otherwise, the Software to any third party, without
the prior written consent of HTS which may be withheld by HTS in its
absolute discretion;
(b) supervise and control the use of the Software to ensure that it takes
place in accordance with the terms of this Agreement;
(c) reproduce and include HTS' copyright notices on all copies, including
screen-based displays, of the Documentation and of the Software made
by ExpressVu in accordance with the terms of this Agreement;
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(d) during this Agreement and thereafter, maintain the confidentiality of
the Documentation and the Software and not make it available, either
partly or completely, to any Person other than those employees,
consultants and advisors who will not be able to fulfil their duties
without access thereto; or
(e) ensure that there shall at all times during the term of this Agreement
be in existence currently binding confidentiality undertakings given
by each such employee, consultant or advisor in favour of ExpressVu,
and ExpressVu shall be responsible for any breach of such undertaking
committed by any such employee, consultant or advisor and, at HTS'
request, will use its reasonable commercial efforts to enforce any
such undertaking.
24.7 RESTRICTIONS ON USE. All copies of the Software made by ExpressVu,
including computer programs and Documentation, shall be subject to the same
restrictions on use and disclosure as are contained in this Agreement with
respect to the original program copies and Documentation supplied by HTS.
24.8 DOCUMENTATION. ExpressVu specifically acknowledges and agrees that the
Documentation whether prepared by or on behalf of HTS or not, for the purpose of
implementing the System, falls within the scope of this Agreement and that all
rights in and to the Documentation, including the right of ownership of the
Documentation, vests in HTS.
24.9 THIRD PARTY INTELLECTUAL PROPERTY CLAIMS.
(a) Except with respect to the persons, entities and technology listed on
Schedule 19 attached hereto, as to which the indemnification and other
obligations of HTS set forth in this Section 24.9 shall not apply, HTS
shall indemnify and hold harmless ExpressVu from and against all
losses, damages, costs and expenses (including, without limitation,
reasonable legal costs and expenses) which ExpressVu may suffer or
incur arising out of or resulting from any claim or action against
ExpressVu by a third party alleging that (i) the use by ExpressVu of
the HTS Software or (ii) the sale of the Boxes in Canada or (iii) any
Software or other Intellectual Property Rights (excluding Intellectual
Property Rights associated with the Hardware) incorporated into the
System by HTS and which is not listed in Schedule 6 attached hereto,
infringes any Intellectual Property Right of such third party.
Nothing herein shall be construed as or deemed an admission by HTS of
any ownership or other rights of the Persons or entities listed on
Schedule 19 attached hereto with respect to any technology.
Notwithstanding the foregoing, in respect of the Persons and
technology listed on Schedule 19, HTS and its applicable Affiliates
agree to
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use their commercially reasonable efforts to obtain for ExpressVu the
benefit of any settlement, at ExpressVu's expense, entered into with
such Persons or in respect of such technology for the dismissal or
withdrawal of claims or actions brought against HTS or its applicable
Affiliates by such Persons or in respect of such technology.
(b) If ExpressVu intends to make a claim for indemnity against HTS as
contemplated by Section 24.9(a), ExpressVu shall as soon as is
reasonably possible notify HTS in writing of such claim, which notice
shall specify, in reasonable detail, the nature and estimated amount
of the claim. HTS shall have 30 days after receipt of such notice to
undertake, conduct and control, through counsel of its own choosing
and at its expense, the settlement or defence thereof, and ExpressVu
shall cooperate with HTS in connection therewith provided that with
respect to settlements entered into by HTS (i) the consent of
ExpressVu shall be required if the settlement provides for equitable
relief against ExpressVu, which consent shall not be unreasonably
withheld or delayed; and (ii) HTS shall obtain the release of
ExpressVu from any further liability relating to such claim. If HTS
undertakes, conducts and controls the settlement or defence of such
claim (i) HTS shall permit ExpressVu to participate in such settlement
or defence through counsel chosen by ExpressVu, provided that the fees
and expenses of such counsel and any other costs which would not have
been incurred by ExpressVu had it not elected to participate in such
settlement or defence shall be borne by ExpressVu; and (ii) HTS shall
promptly reimburse ExpressVu for the full amount of any loss resulting
from any claim and all related expenses (other than the fees and
expenses of counsel as aforesaid) incurred by ExpressVu. ExpressVu
shall not pay or settle any claim so long as HTS is reasonably
contesting any such claim in good faith on a timely basis.
Notwithstanding the foregoing, ExpressVu shall have the right to pay
or settle any such claim, provided that in such event it shall waive
any right to indemnity therefor by HTS and no such payment or
settlement shall constitute any agreement of HTS to take or refrain
from taking any action or create any liability or obligation on the
part of HTS except with the prior written consent of HTS.
(c) If HTS does not notify ExpressVu within 30 days after the receipt of
ExpressVu's notice of a claim of indemnity under Section 24.9(a) that
it elects to undertake the defence thereof, ExpressVu shall have the
right, but not the obligation, to contest, settle or compromise the
claim in the exercise of its reasonable judgment at the expense of HTS
on reasonable prior notice to HTS.
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(d) In the event of any claim by a third party against ExpressVu, the
defence of which is being undertaken and controlled by HTS, ExpressVu
will use all reasonable efforts to make available to HTS those
employees whose assistance, testimony or presence is necessary to
assist HTS in evaluating and in defending any such claims; provided
that HTS shall be responsible for the expense associated with any
employees made available by ExpressVu to HTS, which expense shall be
equal to an amount to be mutually agreed upon per person per hour or
per day or each day or portion thereof that such employees are
assisting HTS and which expenses shall not exceed the actual cost to
ExpressVu associated with such employees.
(e) ExpressVu shall make available to HTS or its representatives on a
timely basis all documents, records and other materials in its
possession, at the expense of HTS, reasonably required by HTS for its
use in defending any claim and shall otherwise cooperate on a timely
basis with HTS in the defence of such claim.
24.10 INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS. Except for the
potential claims listed in Schedule 19 attached hereto, HTS represents and
warrants to ExpressVu that as at the date of this Agreement it is not aware
of any claim by any third party that (i) the use by ExpressVu of the HTS
Software or (ii) the sale of the Boxes in Canada or (iii) any Software or
other Intellectual Property Rights (excluding Intellectual Property Rights
associated with Hardware) incorporated into the System by HTS and which is
not listed in Schedule 6 attached hereto, infringes or would infringe, as
applicable, any Intellectual Property Right belonging to a Third Party.
24.11 INJUNCTION.
(a) If any Hardware or Software manufactured or supplied by HTS to
ExpressVu to which the indemnity of HTS contained in Section 24.9
applies is held to infringe any valid letters of patent, copyright,
mask work, trademark, trade secret or any other Intellectual Property
Rights of any third party and ExpressVu is enjoined from using the
same, or if HTS believes such infringement is likely, HTS shall do
one or more of the following:
(i) exert all reasonable efforts at its option and expense to procure
for ExpressVu the right to use such Hardware or Software free of
any liability for such infringement; or
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(ii) modify such Hardware or Software so that it becomes non-
infringing while remaining in compliance with the
Specifications in all material respects; or
(iii) replace such Hardware or Software with a non-infringing item
while remaining in compliance with the Specifications in all
material respects.
(b) If the infringement is alleged prior to completion of delivery of the
Hardware, HTS has the right to decline to make further shipments
without being in breach of contract in which case HTS will refund to
ExpressVu any payments on account of the Purchase Price which it has
made prior thereto.
24.12 LIMITATION OF ECHOSTAR'S INDEMNITY. EchoStar's indemnity in this
Article shall not extend to any infringement to the extent it arises from any
design or instruction in writing supplied by ExpressVu or where ExpressVu uses,
modifies or sells the Hardware or Software in a combination other than that
recommended by EchoStar.
24.13 HTS' ENTIRE OBLIGATION. This Article states the entire obligation and
liability of HTS, and the sole remedy of ExpressVu, in respect of any
infringement or alleged infringement of any Intellectual Property Rights.
ARTICLE 25
INDEMNITY
25.1 EXPRESSVU INDEMNITY. ExpressVu agrees to indemnify the EchoStar Parties
against all reasonably foreseeable damages, including loss of revenues and
profits, arising as a consequence of ExpressVu breaching its obligations under
Sections 18.1 and 19.1.
25.2 ECHOSTAR PARTIES' INDEMNITY. The EchoStar Parties agree to indemnify
ExpressVu against all reasonably foreseeable damages, including loss of revenues
and profits arising as a consequence of the EchoStar Parties breaching their
obligations under Sections 5.1, 18.1, 18.2 and 19.1.
ARTICLE 26
[CONFIDENTIAL MATERIAL REDACTED]
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ARTICLE 27
27.1 [CONFIDENTIAL MATERIAL REDACTED]
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27.2 EXCEPTIONS. EchoStar shall not be required to make payment of liquidated
damages pursuant to Section 27.1 if the reason it fails to attain System
Completion as therein provided is due to:
(a) the Hardware being detained at customs or failure of suppliers to make
timely delivery thereof (except where caused by the negligence of
EchoStar, including failure to place orders in a timely manner);
(b) ExpressVu's failure to timely perform its obligations hereunder;
(c) the negligence, gross negligence or wilful misconduct of ExpressVu;
or
(d) Customer Modifications or the choice by ExpressVu of SMS Software
other than that provided by CSG.
27.3 WAIVER OF DAMAGES. The parties hereby agree that ExpressVu, in its sole
discretion, may waive any amount arising as liquidated damages as a consequence
of HTS failing to attain System Completion in a timely manner as aforesaid.
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ARTICLE 28
TERMINATION
28.1 TERMINATION OF AGREEMENT. This Agreement may be terminated:
(a) forthwith by the EchoStar Parties in the event that, except as
permitted by the Source Code Escrow Agreement, ExpressVu (i) adapts,
reverse engineers or decompiles the whole or any part of the
Conditional Access System or any other Intellectual Property Rights of
HTS; or (ii) causes any other Person to do so, without, in either
case, HTS' prior written consent which may be withheld at its sole
discretion;
(b) forthwith by ExpressVu or the EchoStar Parties, as the case may be, if
the other of them (the "defaulting party", which term means, for
greater certainty, in the case of termination by ExpressVu, either of
the EchoStar Parties) has made or attempted to make any assignment for
the benefit of its creditors or if any action or proceedings under any
bankruptcy or insolvency laws are taken by or against it, or if the
defaulting party has effected a compulsory or voluntary liquidation,
(and has not been discharged within 90 days), or if any event
analogous to any of the foregoing under the law of any jurisdiction
has occurred in respect of the defaulting party;
(c) forthwith by ExpressVu or the EchoStar Parties, as the case may be,
(the "notifying party") if the other of them (the "defaulting party",
which term means, for greater certainty, in the case of termination by
ExpressVu, either of the EchoStar Parties) commits a material breach
or is in material default of any of its obligations under this
Agreement which has not been cured within 30 days after the notifying
party gives written notice to the defaulting party of such breach or
default unless the defaulting party is using and continues to use its
best efforts to remedy such breach or default and no material
prejudice to the interests of the notifying party has occurred as a
result of such breach or default;
(d) upon not less than 30 days written notice by ExpressVu or the EchoStar
Parties, as the case may be, (the "notifying party") if the other of
them (the "Force Majeure Party", which term means, for greater
certainty, in the case of termination by ExpressVu, either of the
EchoStar Parties) has invoked Force Majeure to excuse it from
performance of any material obligation hereunder and such Force
Majeure continues in effect for more than 60 days;
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(e) by ExpressVu in the event that an Acceptance Certificate is not issued
in respect of the System Completion within 120 days of the date such
System Completion is required to be achieved as stated in the XXXXX
Chart, provided that, for greater certainty, ExpressVu shall have no
right to terminate this Agreement if the reason the Acceptance
Certificate has not been issued is due to the fault of ExpressVu;
(f) by the EchoStar Parties in the event that ExpressVu has not paid any
portion of the Purchase Price within 60 days of the due date
hereunder;
[CONFIDENTIAL MATERIAL REDACTED]
(j) by ExpressVu on the later to occur of the following:
(i) the end of the useful life of the first DBS satellite on which
ExpressVu acquires the right to use transponders to provide its
DTH Service, provided that if ExpressVu does not obtain such
right by the 10th anniversary of the date of this Agreement,
ExpressVu may exercise its right under this Section 28.1(j) on or
after the 10th anniversary of this Agreement; or
(ii) on or after the 10th anniversary of the date of this Agreement;
(k) by the Echostar Parties pursuant to Section 10.4(b); and
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(l) by either the EchoStar Parties or ExpressVu pursuant to Section 32.4.
28.2 SURVIVAL. Any termination of this Agreement pursuant to Section 28.1 shall
be without prejudice to any other rights or remedies to which a party may be
entitled hereunder or at law and shall not affect any accrued rights or
liabilities of either party or the coming into or continuance in force of any
provision hereof which is expressly or by implication intended to come into or
continue in force on or after such termination.
28.3 OBLIGATIONS ON TERMINATION OF AGREEMENT. In the event that this Agreement
is terminated by either party pursuant to Section 28.1, all rights and
obligations of the parties hereunder shall cease (except as otherwise provided
herein), including, but not limited to, the following:
(a) ExpressVu shall cease to use any part of HTS' Intellectual Property
Rights licensed pursuant to Section 5.1(a), subject to any right of
ExpressVu to source code and related documentation in accordance with
the provisions of the Source Code Deposit Agreement;
(b) ExpressVu shall return to HTS all copies of the HTS Software, subject
to any right of ExpressVu to source code and related documentation in
accordance with the provisions of the Source Code Deposit Agreement;
(c) ExpressVu shall satisfy all amounts owing to HTS pursuant to Section
14.9 and in respect of Smart Cards, CA Components and/or Boxes ordered
by ExpressVu or its designee(s) for which HTS has not been paid as at
the date of termination of the Agreement;
(d) ExpressVu's rights to use of the Licensed Trade Marks will terminate,
subject to provisions of Sections 21.9 and 21.10; and
(e) the EchoStar Parties' obligations under Section 4.2 and Articles 11
and 12 terminate.
ARTICLE 29
SECURITY INTEREST
29.1 GRANT OF SECURITY INTEREST. ExpressVu hereby (i) mortgages and charges to
HTS as and by way of a fixed mortgage and charge; (ii) pledges to HTS; (iii)
assigns and transfers to HTS as and by way of a specific transfer and
assignment; and (iv) grants to HTS a security interest in:
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(a) all of the Hardware purchased by ExpressVu from HTS pursuant to this
Agreement;
(b) all substitutions and replacements of and increases, additions and
accessions to the Hardware; and
(c) all proceeds in any form derived directly or indirectly from any
dealing with all or any part of the Hardware and all or any part of
the substitutions and replacements thereof and increases, additions
and accessions thereto or the proceeds therefrom, including, without
limitation, any payment representing indemnity or compensation for all
or any part of the Hardware, or all or any part of the substitutions
and replacements thereof and increases, additions and accessions
thereto, lost, damaged, destroyed, expropriated or taken.
29.2 SECURE PAYMENT. The charges, pledges, transfers, assignments and security
interest granted hereby secure the payment by ExpressVu to HTS of the Purchase
Price. ExpressVu shall from time to time, at the request of HTS, execute and
deliver all such documents as may be reasonably required to give effect to, or
to record, register or evidence, the charges, pledges, transfers, assignments
and security interest hereby granted.
29.3 REALIZATION. HTS may realize on the security interest granted hereunder
upon failure by ExpressVu to pay any portion of the Purchase Price within
45 days of the due date thereof.
29.4 DISCHARGE. The security interest shall be discharged upon receipt by HTS
of payment in full of the Purchase Price, whether any such amount is paid by
ExpressVu or by a guarantor of its obligation to pay the same. In furtherance
of the discharge of the security interest, HTS shall at such time deliver to
ExpressVu such releases and discharges as ExpressVu may reasonably require.
ARTICLE 30
[CONFIDENTIAL MATERIAL REDACTED]
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ARTICLE 31
[CONFIDENTIAL MATERIAL REDACTED]
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ARTICLE 32
CONDITIONS PRECEDENT TO PERFORMANCE
32.1 CONDITIONS TO EXPRESSVU'S PERFORMANCE. The obligations of ExpressVu under
the Agreement shall be subject to the satisfaction of, or compliance with, each
of the following conditions precedent, at or before the Effective Date (each of
which conditions is hereby acknowledged to be for the exclusive benefit of
ExpressVu and may be waived by it in whole or in part, in its sole discretion):
(a) ExpressVu shall have entered into arrangements satisfactory to
ExpressVu, acting reasonably, with each of DiviCom, Nagra and CSG
relating to ExpressVu's ongoing requirements for supplies or services
relating to the System and ExpressVu's DTH Service;
(b) EchoStar Communications Corporation shall have executed and delivered
to ExpressVu a guarantee substantially in the form of the guarantee
attached hereto as Schedule 16; and
(c) ExpressVu's board of directors shall have ratified the execution and
delivery of this Agreement by ExpressVu and authorized ExpressVu to
perform its obligations hereunder.
32.2 CONDITIONS TO ECHOSTAR PARTIES' PERFORMANCE. The obligation of the
EchoStar Parties under this Agreement shall be subject to the satisfaction of,
or compliance with, each of the following conditions precedent, at or before the
Effective Date (each of which conditions is hereby acknowledged to be for the
exclusive benefit of EchoStar Parties and may be waived by them in whole or in
part in their sole discretion):
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(a) HTS shall have entered into arrangements satisfactory to it, acting
reasonably, with each of DiviCom and Nagra relating to the supply by
them to HTS of certain equipment and services to permit HTS to perform
its obligations hereunder;
(b) the full amount of the Purchase Price as at the date hereof plus an
added amount which will, in the aggregate, amount to U.S.$13,200,000,
will have been guaranteed by one or more of ExpressVu's shareholders
by the execution and delivery to the EchoStar Parties of a guarantee
substantially in the form of the guarantee attached hereto as Schedule
15; and
(c) the boards of directors of each of the EchoStar Parties shall have
ratified the execution and delivery of this Agreement by the EchoStar
Parties and authorized the EchoStar Parties to perform their
obligations hereunder.
32.3 CONDITION TO ALL PARTIES' PERFORMANCE. The obligations of ExpressVu and
the EchoStar Parties under Articles 4 through 21, inclusive, Articles 23 through
27, inclusive, and Articles 29 through 31, inclusive, shall be subject to the
satisfaction of, or compliance with, the condition precedent that, at or before
the Effective Date ExpressVu and HTS shall have entered into the Source Code
Deposit Agreement on terms and conditions mutually satisfactory to them, acting
reasonably. Without limiting the generality of the foregoing, the Source Code
Deposit Agreement shall contain provisions permitting ExpressVu to obtain access
to the HTS Software and related documentation in the event that HTS or any
Affiliate, as applicable, at any time ceases to support and further develop the
HTS Software as well as in the event that HTS commits certain specified acts of
bankruptcy or otherwise gives rise to rights of access to the HTS Software and
documentation in accordance with the terms of the Source Code Deposit Agreement.
The parties hereto hereby acknowledge that the foregoing condition is for the
mutual benefit of the parties and may only be waived by all of them.
32.4 COVENANTS TO CAUSE CONDITIONS TO BE SATISFIED OR COMPLIED WITH. Each of
the parties hereto covenants with the other parties hereto that it shall use its
commercially reasonable efforts to cause the conditions set forth in Sections
32.1, 32.2 and 32.3 to be satisfied or complied with as soon as is reasonably
possible and in any event on or before January 17, 1997. In the event that any
such condition has not been satisfied or complied with or waived by a party
entitled to waive the same by January 17, 1997 either ExpressVu or the EchoStar
Parties may terminate this Agreement on written notice to the other and no party
shall thereafter have any continuing liability hereunder except with respect to
any breach of such party's obligations as may have occurred prior to the date of
such termination and pursuant to Article 34, as to which liability shall survive
such termination.
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ARTICLE 33
GOVERNING LAW AND ARBITRATION
33.1 GOVERNING LAW. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York. Accordingly,
any dispute arising out of or having any connection with this Agreement shall be
decided exclusively in accordance with the laws of the State of New York,
provided that all such disputes shall to be referred, in the first instance, to
the respective chief executive officers of the parties for resolution.
33.2 ARBITRATION. If a dispute, after having been referred to the said chief
executive officers is not resolved by them within a maximum of 14 days, either
EchoStar or ExpressVu shall have the right to require that the dispute shall be
finally settled by arbitration in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce. Such arbitration shall be
held in New York, New York before a panel of three arbitrators, one of whom
shall be appointed by ExpressVu, one by the EchoStar Parties and one by the
first two arbitrators or, in default of appointment or agreement within a period
of 90 days, such arbitrators, or the third such arbitrator, as the case may be,
shall be appointed by the International Court of Arbitration under such Rules.
33.3 INTERIM RELIEF. The referral of a dispute to arbitration under Section
30.2 shall not preclude either party from obtaining interim relief on an urgent
basis from a court of competent jurisdiction pending any decision of the
arbitrator.
33.4 DECISION FINAL. Any decision of the arbitrator(s) shall be final,
conclusive and binding on the parties, and the parties agree to exclude, so far
as it is lawfully possible to exclude, any right of application or appeal to the
courts in connection with any question of law arising in the arbitration or in
connection with any award or decision made by the arbitrator, except as may to
be necessary to enforce such award or decision.
33.5 SEVERABILITY. The provisions of this section are severable from the rest
of this Agreement and shall remain in effect despite the termination of or
invalidity for any reason of this Agreement.
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ARTICLE 34
CONFIDENTIALITY
34.1 CONFIDENTIALITY REGARDING TERMS AND EXISTENCE OF AGREEMENT; CONFIDENTIAL
INFORMATION.
(a) Neither ExpressVu nor the EchoStar Parties will issue any press
release or make any other public announcement regarding this Agreement
or the transactions contemplated hereby without the consent of the
other of them. Each party will hold, and will cause its employees,
consultants, advisors, agents and Affiliates to hold, in confidence,
the terms of this Agreement, except to the extent the terms of this
Agreement are or become a matter of public record.
(b) Each of the EchoStar Parties and ExpressVu agrees to hold all
Confidential Information received by it from the other of them
pursuant to this Agreement in confidence.
(c) A party receiving Confidential Information shall use such information
only for the purpose of fulfilling its obligations under this
Agreement. Each document containing Confidential Information which is
circulated to employees, Affiliates or agents of a party receiving
such information shall bear a legend to the effect that the
information contained therein is confidential to the disclosing party
and that such information shall not be disclosed to other Persons.
(d) Upon expiration or termination of this Agreement, or at any other
time, all Confidential Information in the possession of a party shall,
if requested in writing by the party that disclosed such information,
be either returned to the disclosing party or, at the receiving
party's option, destroyed. In all events, the receiving party may
retain a single copy of all Confidential Information, as an archive
record of the contents thereof, accessed solely in the event of a
dispute between the parties concerning such contents.
(e) The confidentiality and non-disclosure obligations set forth in this
Article 34 shall become effective with respect to any item of
Confidential Information immediately upon disclosure to the receiving
party and shall continue during the term of the Agreement and for a
period of three years thereafter.
(f) Notwithstanding the other provisions of this Article 34, a party may
disclose the terms and existence of this Agreement and Confidential
Information to the extent required by any legal requirement (including
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disclosure requirements under federal, provincial and state securities
laws) or by any governmental authority, but the party proposing to
disclose such information will first notify and consult with the other
party concerning the proposed disclosure, to the extent reasonably
feasible. Each party also may disclose the terms and existence of
this Agreement and Confidential Information to its employees,
consultants, advisors, agents, Affiliates and actual or potential
lenders whose knowledge is necessary to facilitate the consummation of
the transactions contemplated by this Agreement; provided that such
Persons will be required to observe the terms of this Article 34.
Each party's obligation to hold information in confidence will be
satisfied if it exercises the same care with respect to such
information as it would exercise to preserve the confidentiality of
its own similar information.
(g) For the purposes of Article 34, "Confidential Information" means all
proprietary or confidential information disclosed by the EchoStar
Parties or ExpressVu to the other of them in connection with this
Agreement; provided that such information shall satisfy the following
criteria in order to constitute "Confidential Information": (a) if
disclosed in written or other tangible format, such information shall
be accompanied by reasonably prominent "Confidential" or similar
legends; or (b) if disclosed orally or by way of observation, such
information shall be described by the disclosing party as Confidential
Information at the time of disclosure. Notwithstanding the foregoing,
the term "Confidential Information" shall not include any information
which: (i) was previously known to the party receiving such
Confidential Information if such party can prove such prior knowledge
by BONA FIDE documentation dated prior to the time of disclosure by
the disclosing party and the receiving party did not learn such
information from a person whom the receiving party knew was under a
duty to the disclosing party not to disclose the information; or (ii)
is or becomes part of the public domain; or (iii) the receiving party
receives from an independent third party whom the receiving party
knows is under no obligation to the disclosing party not to disclose
it; or (iv) is independently developed by the receiving party as
evidenced by documentation dated prior to the time of disclosure by
the disclosing party.
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ARTICLE 35
MISCELLANEOUS
35.1 ASSIGNMENT.
(a) ExpressVu may assign its right, title and interest in this Agreement
to (i) an Affiliate of ExpressVu, provided that ExpressVu guarantees
performance by the assignee of ExpressVu's obligations under this
Agreement, (ii) Telesat Canada, provided that ExpressVu guarantees
performance by Telesat Canada of ExpressVu's obligations under this
Agreement or (iii) any partnership or other entity into which
ExpressVu is reorganized pursuant to Article 30 but may not otherwise
assign or transfer any rights or obligations acquired under this
Agreement except with the consent of EchoStar, such consent not to be
unreasonably withheld. Notwithstanding the foregoing, ExpressVu shall
not be entitled to assign its right, title and interest in this
Agreement to any Person prior to payment in full of the Purchase Price
unless each of the shareholders of ExpressVu confirms in writing to
EchoStar that its guarantee provided pursuant to Section 32.2(b)
remains in full force and effect regardless of such assignment.
(b) Each of the EchoStar Parties may assign their right, title and
interest in this Agreement to an Affiliate of EchoStar, provided that
EchoStar guarantees performance by the assignee of the EchoStar
Parties' obligations under this Agreement, but may not otherwise
assign or transfer any rights or obligations acquired under this
Agreement except with the consent of ExpressVu, such consent not to be
unreasonably withheld. Notwithstanding the foregoing, the EchoStar
Parties shall not be entitled to assign their right, title and
interest in this Agreement to any Person at any time unless EchoStar
Communications Corporation confirms in writing to ExpressVu that its
guarantee provided pursuant to Section 32.1(b) remains in full force
and effect regardless of such assignment.
35.2 NO PARTNERSHIP. Nothing in this Agreement shall be deemed to create any
joint venture, partnership or principal and agent relationship between the
EchoStar Parties and ExpressVu and none of them shall hold itself out in its
advertising or otherwise in any manner which would indicate or imply any such
relationship with the other.
35.3 FORCE MAJEURE.
(a) If by reason of Force Majeure, the EchoStar Parties or ExpressVu is
unable, wholly or in part, to perform or comply with their respective
obligations hereunder, then all parties shall be relieved of liability
and shall
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suffer no prejudice for failing to perform or comply during the
continuance and to the extent of the inability so caused from and
after the happening of the event of Force Majeure provided that the
party invoking Force Majeure gives to the other party prompt notice,
written or oral (but if oral, promptly confirmed in writing) of such
inability and reasonably full particulars of the cause thereof. If
notice is not promptly given then the parties shall only be relieved
from such performance or compliance from and after the giving of such
notice. The party invoking Force Majeure shall use all reasonable
efforts to remedy the situation and remove, so far as possible and
with reasonable dispatch, the cause of its inability to perform or
comply, provided, however, that settlement of strikes, lockouts and
other industrial disturbances shall be wholly within the discretion of
the party involved. The party invoking Force Majeure shall give
prompt notice of the cessation thereof. For greater certainty, if a
party invokes Force Majeure to excuse it from performance of an
obligation hereunder, the other party shall be relieved of its
obligation to make any payment to the party invoking Force Majeure on
account of such obligation which is not being performed.
(b) The term "Force Majeure" shall mean any cause of any kind whatsoever
not within the control of a party and which such party could not, by
reasonable diligence, have foreseen or avoided which may include
without limitation by the following enumeration, acts of God and the
public enemy; the elements; fire, accidents; breakdowns; vandalism;
sabotage; breakage or accident to equipment; satellite or equipment
failure; the necessity of making repairs to equipment, strikes,
lockouts and any other industrial, civil or public disturbances; any
laws, orders, rules, regulations, acts or restraints of any government
or governmental body or authority, civil or military, including the
orders and judgment of courts; provided, however, that the term "Force
Majeure" shall not include the revocation or modification of any
necessary governmental consent, authorization or approval caused by a
violation of the terms thereof or consented to by the party holding
such consent, authorization or approval.
35.4 VALIDITY. If any provision of this Agreement is found or held to be
invalid or unenforceable, the validity of all the other provisions hereof shall
not be affected thereby and the parties agree to meet and review the matter and
if any valid and enforceable means is reasonably available to achieve the same
commercial objective as the invalid or unenforceable provision, the parties
shall adopt such means by way of variation of this Agreement.
35.5 SEVERABILITY. In the event that any of the terms of this Agreement are
found to be invalid, unlawful or unenforceable, such terms (provided that they
are not fundamental to
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the Agreement) shall be severable from the remaining terms, which shall continue
to be valid and enforceable.
35.6 VARIATION. No variation of or addition to this Agreement shall be of any
force or effect unless reduced to writing and signed by or on behalf of all
parties and such writing expressly states that it amends this Agreement.
35.7 ENTIRE AGREEMENT. Except for any agreements or other instruments executed
by the parties contemporaneously herewith, this Agreement replaces all prior
agreements and arrangements between the parties and constitutes the entire
understanding between the parties relating to the subject matter of this
Agreement and no oral representations, warranties or promises shall be implied
as terms of this Agreement unless expressly incorporated herein. In particular,
there are no conditions, warranties, or other terms, express or implied,
including as to merchantable quality, fitness for a particular purpose or any
other kind whatsoever, that are binding on HTS concerning the Hardware or Units
except as specifically stated in this Agreement. Any condition, warranty or
other term concerning the Hardware which might otherwise be implied into or
incorporated within this Agreement, whether by statute, common law or otherwise,
is hereby expressly excluded.
35.8 WAIVER. A waiver by any party of a breach of any term or condition of this
Agreement in any one instance shall be in writing and shall not be deemed as a
continuing waiver or a waiver of any other or subsequent breach unless such
writing so provides.
35.9 NOTICES. The parties choose the following addresses as the address at
which they will accept service of all documents and notices relating to this
Agreement:
The EchoStar Parties:
c/o Echostar Communications Corporation
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx
X.X.X.
Attention: Mr. Xxxxx Xxxxxxxxx
Fax: 000-000-0000
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ExpressVu: ExpressVu Inc.
0000 Xxxxxxx Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxx
X0X 0X0
Attention: The Chief Executive Officer
Fax: 000-000-0000
Any notice to be given by a party to the other parties pursuant to this
Agreement shall be given in writing in the English language by prepaid
registered post, by facsimile or shall be delivered by hand, provided that:
(a) any notice given by prepaid registered post shall be deemed to have
been received by the addressee, in the absence of proof to the
contrary, 14 days after the date of postage;
(b) any notice delivered by hand during normal business hours shall be
deemed to have been received by the addressee, in the absence of proof
to the contrary, at the time of delivery; and
(c) any notice given by facsimile shall be deemed to have been received by
the addressee, in the absence of proof to the contrary, immediately
upon the issuance by the transmitting facsimile machine, of a report
confirming correct transmission of all the pages of the document
containing the notice or upon receipt by the transmitting facsimile
machine, at the end of the notice being transmitted, of the automatic
answer-back of the receiving facsimile machine.
35.10 FURTHER ASSURANCES. Each party shall sign all documents and otherwise
do or procure that there shall be done all acts or things within its reasonable
powers as may be necessary to give effect or further effect to the operation of
the provisions of this Agreement.
35.11 CURRENCY. Except as expressly otherwise provided, all dollar amounts
referred to in this Agreement are expressed in the currency of the United States
of America.
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35.12 TAXES.
(a) Any and all payments required under this Agreement to be made by a
party hereto (the "Paying Party") to another party hereto (the
"Receiving Party") shall be made free and clear of and without
deduction or withholding for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto (all such taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes") unless such Taxes are required by law or the
administration thereof to be deducted or withheld. If the Paying
Party shall be required by law or administration thereof to deduct or
withhold any Taxes from or in respect of any sum payable hereunder,
(i) subject as hereinafter provided, the sum payable shall be
increased as may be necessary so that after making all required
deductions or withholdings (including deductions or withholdings
applicable to additional amounts paid under this Section 35.12) the
Receiving Party receives an amount equal to the sum it would have
received if no such deduction or withholding had been made, (ii) the
Paying Party shall make such deductions or withholdings; and (iii)
the Paying Party shall forthwith pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance
with applicable law. Within 30 days after the date of any payment of
Taxes, the Paying Party will furnish to the Receiving Party the
original or a certified copy of a receipt evidencing payment thereof.
Notwithstanding the foregoing, if the reason any such Taxes are
required to be deducted or withheld is due to the Receiving Party
having failed to use its commercially reasonable efforts to obtain
the waiver referred to in Section 35.12(c), the Paying Party shall
have no obligation under the foregoing clause (i) to increase the sum
payable to the Receiving Party, provided that no such failure will be
deemed to have occurred unless the parties agree as such or unless,
after the submission of any such dispute to binding arbitration, the
arbitration determines that a failure has occurred, in which
instance, amounts paid by the Paying Party will be reimbursed by the
Receiving Party with interest calculated in accordance with Section
35.13.
(b) If following the payment by a Paying Party of any Tax required to be
deducted or withheld pursuant to Section 35.12(a), the Receiving
Party determines acting in good faith that it has obtained a refund
of taxes otherwise payable by it or obtained or used a credit or any
other relief against other taxes on its profit or income (any of the
foregoing being hereinafter referred to as a "Tax Credit") which the
Receiving Party is able to quantify and identify as attributable to
the Taxes paid by the Paying Party, then, if the Receiving Party can
do so without any adverse
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consequences for itself, the Receiving Party shall reimburse the
Paying Party such proportion of the Tax Credit as the Receiving Party
determines acting in good faith will leave the Receiving Party (after
that reimbursement) in no better or worse position in respect of its
overall tax liabilities than it would have been in if the Paying
Party had not been required to pay such Tax.
(c) Notwithstanding anything else herein contained, the EchoStar Parties
covenant to use their commercially reasonable efforts to obtain a
waiver of Taxes which may otherwise be payable in respect of any
services rendered by them to ExpressVu hereunder from Revenue Canada
pursuant to Regulation 105 of the INCOME TAX ACT (Canada) and the
equivalent provisions of any applicable provincial income tax
legislation.
35.13 INTEREST ON OVERDUE PAYMENTS. If a party hereto fails to pay any sum
payable hereunder when due in accordance with the provisions of this Agreement,
such party shall be liable to pay interest on the overdue amount at the rate of
24% per annum, which interest shall accrue daily from the date when payment
becomes overdue until payment of the overdue amount has been paid in full.
35.14 EQUITABLE RELIEF. The parties hereto acknowledge that damages may not
be an adequate remedy if a party breaches its obligations hereunder and,
accordingly, that any party hereto may seek an order for specific performance,
an injunction or other equitable remedy, to ensure the performance by any other
party hereto of its obligations hereunder and that such remedy may be sought in
lieu of or in addition to damages.
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The parties hereto have entered into this Agreement as of the date first
written above.
ECHOSTAR SATELLITE CORPORATION
Per: /s/ XXXXXXX XXXXX
-------------------------------
Name: Xxxxxxx Xxxxx
Title: CEO
HOUSTON TRACKER SYSTEMS, INC.
Per: /s/ XXXXXXX XXXXX
-------------------------------
Name: Xxxxxxx Xxxxx
Title: CEO
EXPRESSVU INC.
Per: /s/ XXXXXXX XXXXXX
-------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
Per: /s/ XXXX XXXXXXXXXXX
-------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: Corporate Secretary
SCHEDULE 1:
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 2:
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 3: DOCUMENTATION
A complete system user manual relating to all parts of the System will be
provided. The System documentation will include documentation relating to:
1. conditional access
2. encryptors
3. scheduling system
4. network management system integration
5. DVC encoding
6. multiplexing
7. modulation
8. boxes
9. subscriber management system integration
10. EPG
11. IMS
12. Ethernet design documentation
SCHEDULE 4:
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 5: ACCEPTANCE TESTS
The acceptance test documents, dates and procedures will be agreed between
ESC and ExpressVu prior to acceptance testing of the equipment. Acceptance
Testing procedures, to be set as milestones on the XXXXX Chart, for the
following equipment and systems will be provided as a minimum:
* Encoder operation
* Redundancy
* Stat Muxing
* Software Downloads
* IPPV
* CA and Smart Card
* Network Management System (NMS)
* Conditional Access Control System (CA System)
* Box functionality tests
* System failure test
(Refer to DTH acceptance test procedure document)
Except as otherwise provided in Article 9, the acceptance test protocols
shall be formulated by ESC in conjunction with ExpressVu, and the final
procedures will be subject to ExpressVu's prompt and reasonable approval.
SCHEDULE 6:
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 7:
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 8: SUPPORT CONTACT PERSONNEL
EXPRESSVU
CA Supervisor: Xxxxx Snazel
--------------------------------
Tel: (000) 000-0000
Fax: (000) 000-0000
ECHOSTAR
Account Executive: Xxx Provenmire
--------------------------------
Tel: (000) 000-0000 (ext. 5274)
Fax: (000) 000-0000
SCHEDULE 9:
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 10:
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 11: ECHOSTAR'S STANDARD RATES
Reimbursable Expenses and Hourly Rates
--------------------------------------
Category Rate per hour
-------- -------------
Executive Management U.S.$225
Sr. Engineering Management U.S.$175
Sr. Engineering U.S.$125
Engineering U.S.$100
Restrictions and Limitations
All amounts due hereunder shall be payable on a monthly basis on or before the
last day of month following the month in which the services were rendered.
SCHEDULE 12:
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 13: LICENSED TRADE MARKS
A. EXCLUSIVELY LICENSED TRADE MARKS
CANADIAN U.S. FILING
TRADE XXXX APPLICATION NO. SERIAL NO. DATE
---------- --------------- ---------- ------
DISH - 75-116274 -
DISH & Design 823,772 - 09/19/96
- 75- 53038 -
- 75- 53040 -
- 75- 53042 -
- 75-125808 -
DISH CD - 75- 92013 -
DISH DIRECT - 75- 92135 -
DISH MOVIES - 75- 92001 -
DISH NET - 75- 92134 -
DISH NETWORK & 823,769 - 09/19/96
Design
- 75- 53037 -
- 75- 53049 -
- 75-116265 -
DISH NEWS - 75- 92112 -
DISH ON DEMAND - 75- 92000 -
DISH PIX - 75-116264 -
DISH RV - 75- 92106 -
DISH SPORTS - 75- 92012 -
DISH TV - 75- 92016 -
DISH-ON-DEMAND - 75-116266 -
XXXXXXX - 75- 91893 -
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THE BEST TELEVISION - 75-116273 -
COMES ON A DISH
THE BEST TV COMES - 75- 92004 -
ON A DISH
A DISH IN EVERY - 75-123420 -
HOME
DESIGN MARKS - 75- 53039 -
- 75- 53043 -
B. NON-EXCLUSIVELY LICENSED TRADE MARKS
CANADIAN U.S. FILING
TRADE XXXX APPLICATION NO. REGIS. NO. DATE
---------- --------------- ---------- ------
ECHOSTAR & Design 823,770 - 09/30/96
C. DESIGN MARKS
[SEE ATTACHED]
SCHEDULE 14: SUB-LICENSING AGREEMENT RELATING TO LICENSED TRADE MARKS
TRADEMARK SUB-LICENSE AGREEMENT
THIS TRADEMARK SUB-LICENSE AGREEMENT (the "Agreement") is made and
entered into as of the ________ day of _____________ , 199_ by and between
ExpressVu Inc. ("ExpressVu"), a corporation incorporated under the laws of
Canada, with a place of business at Xxxxx 0000, 0000 Xxxxxxx Xxxxxxx Xxxx,
Xxxxxxxxxxx, Xxxxxxx, Xxxxxx and ________________________________, a
corporation organized under the laws of _________________________, with its
principal place of business at ____________________________________________
("Sub-licensee").
A. ExpressVu is in the business, among other things, of providing direct-to-
home satellite services to subscribers in the geographic territory of Canada
("DTH Services");
B. ExpressVu has obtained the Canadian rights to certain trademarks, service
marks and trade names (the "Trademarks") of Echostar Communications Corporation
and its affiliates ("Echostar"); and
C. Sub-licensee desires to be permitted to use such Trademarks as ExpressVu,
in its sole discretion, may authorize from time to time, under a non-exclusive
sub-license, to solicit orders for ExpressVu DTH Services;
NOW THEREFORE, the parties hereto agree as follows:
1. ExpressVu hereby grants to Sub-licensee a non-exclusive, non-transferable,
revocable sub-license (the "Sub-license") to use the Trademarks and such other
trademarks as ExpressVu may from time to time expressly in writing permit the
Sub-licensee to use during the term of this Agreement, and no other term or
license whatsoever, in its local advertising and promotional materials and at
its business locations. Sub-licensee shall have no right to use the logos,
service marks and trademarks of any programming providers, other than the logos,
services marks and trademarks of programming providers that are contained in the
advertising and promotional material provided to Sub-licensee by ExpressVu. No
such materials shall indicate that any agreement of agency, partnership, joint
venture, franchise or of exclusive or non-exclusive distributor exists between
Sub-licensee and ExpressVu or Sub-licensee and Echostar, unless ExpressVu and
Sub-licensee or Sub-licensee and EchoStar, as applicable, enter into a separate
written agreement permitting Sub-licensee to do so. Notwithstanding the above,
Sub-licensee shall provide to ExpressVu, at least thirty (30) days prior to
first use, an example of any advertising or promotional materials in which Sub-
licensee intends to use any Trademarks, and any such other trademarks, which use
has not, within the past twelve months, been approved by ExpressVu in exactly
the form intended for use. ExpressVu may reject and prohibit Sub-licensee from
using such materials, for any reason or reasons in its sole discretion. If Sub-
licensee is required to, but fails to provide ExpressVu with proposed
advertising or promotional materials at least thirty (30) days prior to first
use, ExpressVu shall have just cause to immediately
-2-
terminate the Sub-license by providing written notice to the Sublicensee to that
effect. This Agreement is not intended, nor shall it be construed, as creating
any agreement of agency, partnership, joint venture, franchise or of exclusive
or non-exclusive distributor, or as creating any obligation on the part of
ExpressVu or EchoStar to enter into any such agreement with Sub-licensee.
Further, this Agreement is not intended, nor shall it be construed, as providing
any rights to Sub-licensee to purchase or sell products or programming
manufactured and/or distributed by ExpressVu or Echostar. Sub-licensee
expressly recognizes and agrees that any goodwill now existing or hereafter
created through any sales by Sub-licensee of products or programming
manufactured and/or distributed by ExpressVu or Echostar, shall inure to the
sole benefit of ExpressVu or Echostar, as applicable. This Sub-license shall be
effective until terminated by either party in accordance with its terms, or
until termination of (i) the dealer agreement between ExpressVu and the Sub-
licensee or (ii) the license of the Trademarks granted by Echostar to ExpressVu.
2. The Sub-license granted by ExpressVu is granted to Sub-licensee and its
Affiliates only. Sub-licensee has no authority to transfer or grant any sub-
sub-license to any other entity or individual for any reason, and if Sub-
licensee does so, such action shall terminate the Sub-license granted herein, at
ExpressVu's option, at any time thereafter. Sub-licensee shall immediately
cease using Trademarks upon termination or expiration of this Agreement for any
reason. Upon expiration or termination of this Agreement, at ExpressVu's
option, Sub-licensee shall immediately destroy or deliver to ExpressVu any and
all advertising and promotional materials in Sub-licensee's possession with
Trademarks on them. If ExpressVu requests destruction of advertising and
promotional materials, Sub-licensee shall promptly execute an affidavit
representing at a minimum that such materials were destroyed, and the date and
means of destruction.
3. Sub-licensee expressly recognizes and acknowledges that the Sub-license, as
well as any past use of the Trademarks in any manner whatsoever by Sub-licensee
(including but not limited to use on signs, business cards or in
advertisements), shall not confer upon Sub-licensee any proprietary rights or
interest to any Trademarks including, but not limited to, any existing or future
goodwill in the Trademarks. All goodwill in the Trademarks shall inure to
ExpressVu's or EchoStar's sole benefit, as the case may be. Further, Sub-
licensee waives any and all past, present or future claims it has or might have
to the Trademarks, and acknowledges that as between ExpressVu, Echostar and Sub-
licensee, ExpressVu has the exclusive license to use the Trademarks in Canada,
and that Echostar retains full ownership of the Trademarks notwithstanding the
Sub-license granted herein. Sub-licensee's obligations in this paragraph shall
survive the expiration or termination of this Agreement.
4. Nothing in this Agreement shall be construed to bar ExpressVu or Echostar
from protecting their respective rights to the exclusive license or the
ownership and use, as the case may be, of the Trademarks against infringement
thereof by any party or parties, including Sub-licensee, either during the term
of this Agreement or following any expiration or termination of Sub-licensee's
right to use the Trademarks pursuant to this
-3-
Agreement. Sub-licensee will promptly and fully advise ExpressVu of any use of
any xxxx that may appear to infringe the Trademarks. Sub-licensee will also
fully co-operate with ExpressVu or Echostar in defense and protection of the
Trademarks, at the expense of ExpressVu or Echostar, as the case may be.
Similarly, nothing in this Agreement shall be construed to require that
ExpressVu or Echostar take any action to protect the Trademarks in any instance,
and ExpressVu and Echostar shall not be liable to Sub-licensee in any manner
whatsoever for failure to take any such action.
5. Sub-licensee shall indemnify and hold harmless ExpressVu from and against
all losses, damages, costs and expenses (including, without limitation,
reasonable legal costs and expenses) which ExpressVu may suffer or incur arising
out of or resulting from any claim or action against ExpressVu by a third party
arising from any violation by the Sub-licensee of the terms of this Sub-license
or unauthorized use of the Trademarks.
6. This Agreement shall continue for a period of time equal to the term of any
dealer agreement between ExpressVu and Sub-licensee, unless terminated earlier
for a reason provided herein.
7. Notwithstanding that EchoStar is not a signatory to this Sub-license, the
parties hereto acknowledge that EchoStar is a beneficiary of the agreements and
covenants contained herein and agree that EchoStar may enforce such agreements
and covenants on its own behalf (and at its own cost and expense) as if it were
a party hereto.
8. Any and all disputes, claims or actions that may arise under or out of this
Agreement shall be governed, interpreted and enforced in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
9. This Agreement may be executed in two or more counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized representatives as of the day and year above first
written.
EXPRESSVU INC. SUB-LICENSEE
------------------------------------ --------------------------------------
Name: Name:
Title: Title:
Date: Date:
SCHEDULE 15:
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 16: FORM OF GUARANTEE OF ECHOSTAR COMMUNICATIONS CORPORATION
[SEE ATTACHED]
ACKNOWLEDGEMENT AND GUARANTEE
WHEREAS the undersigned (the "Guarantor") is the indirect controlling
shareholder of EchoStar Satellite Corporation and Houston Tracker Systems, Inc.
(together, the "EchoStar Parties") and the direct or indirect controlling
shareholder of a group of companies which are affiliated with the EchoStar
Parties (collectively referred to herein as the "EchoStar Affiliates");
AND WHEREAS the EchoStar Parties have entered into an agreement with
ExpressVu Inc. ("ExpressVu") dated January 7, 1997 (the "System Agreement"),
whereby, among other things, the Echostar Parties agree to provide to ExpressVu
certain equipment and services in connection with ExpressVu's proposed direct-
to-home satellite service;
AND WHEREAS the System Agreement requires the Guarantor to provide
ExpressVu with a guarantee of certain commitments and obligations of the
EchoStar Parties and EchoStar Affiliates under the System Agreement;
AND WHEREAS the Guarantor, has agreed to provide ExpressVu with such a
guarantee;
NOW THEREFORE THIS GUARANTEE WITNESSES that in consideration of the
premises and covenants and agreements contained herein and in the System
Agreement, and other good and valuable consideration (the sufficiency and
receipt of which are hereby acknowledged), the Guarantor covenants with
ExpressVu as follows.
ARTICLE ONE - GUARANTEE
1.01 GUARANTEE
(a) The Guarantor hereby unconditionally and irrevocably guarantees
payment of any and all financial obligations of the EchoStar Parties to
ExpressVu (including, without limitation, costs or damages) arising from the
System Agreement (the "Obligations"), subject to the limitations set forth
therein including, without limitation, the terms and conditions of Section 26.1.
(b) The Guarantor agrees to comply, and to cause the EchoStar Parties and
EchoStar Affiliates to comply, with the provisions of Sections 8.6 and 31.2, and
Articles 18 and 19 of the System Agreement, subject to the limitations specified
in those Articles. Subject to Section 2.02 below, with respect only to those
obligations of the Guarantor and the EchoStar Affiliates contained in Sections
18.1, 18.2 and 19.1 of the System Agreement, the Guarantor agrees to indemnify
ExpressVu against all reasonably foreseeable damages, including loss of revenues
and profits arising as a consequence of a
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breach of the provisions of this Section 1.01(b) by any of the Guarantor or the
Echostar Affiliates.
1.02 CONDITION PRECEDENT
The obligations of the Guarantor under this Acknowledgement and
Guarantee shall be subject to and conditioned upon the fulfilment or waiver of
the conditions precedent to performance of ExpressVu and the EchoStar Parties
under Article 32 of the System Agreement.
ARTICLE TWO - DEALINGS WITH THE GUARANTOR AND OTHERS
2.01 EXHAUSTION OF REMEDIES
ExpressVu shall exhaust its recourse against the EchoStar Parties,
including the realization of any security or collateral it may hold, before
being entitled to demand payment or performance from the Guarantor hereunder.
For the purposes of this Section, ExpressVu shall be considered to have
exhausted its remedies if, after one or both of the EchoStar Parties commits a
breach or is in default of any of the Obligations, such breach or default has
not been cured within 30 days after ExpressVu gives written notice to HTS of
such breach or default.
2.02 SET-OFF
In the case of any claim by ExpressVu against the Guarantor, the
Guarantor may assert any defence, set-off or counterclaim that either the
Guarantor or the EchoStar Parties may have against ExpressVu.
ARTICLE THREE - DEMAND
3.03 DEMAND
ExpressVu shall be entitled, by the issuance of a written notice to
the Guarantor, to make demand upon the Guarantor at any time after having
exhausted its remedies in accordance with Section 2.01. No more than thirty
(30) days after receiving such notice, the Guarantor shall make payment to
ExpressVu of amounts guaranteed. The Guarantor shall make payment to ExpressVu
upon demand of all costs and expenses incurred by ExpressVu in enforcing this
Acknowledgement and Guarantee.
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ARTICLE FOUR - SUBROGATION
4.01 SUBROGATION
The Guarantor will be entitled to subrogation in respect of amounts
paid hereunder forthwith upon payment of such amounts. Thereafter, ExpressVu
will, at the Guarantor's request, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation and warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Obligations resulting from such performance or payment by the
Guarantor.
ARTICLE FIVE - TERMINATION
5.01 TERMINATION BY TERMINATION OF THE SYSTEM AGREEMENT
The Guarantor's liability under this Acknowledgment and Guarantee
terminates immediately upon the termination of the System Agreement in
accordance with the terms thereof, provided that, to the extent that Obligations
survive the termination of the System Agreement in accordance with the terms
thereof, the Acknowledgement and Guarantee shall continue in respect of such
Obligations.
ARTICLE SIX - GENERAL
6.01 BENEFIT OF THE GUARANTEE
This Acknowledgement and Guarantee will enure to the benefit of and be
binding upon the permitted successors and permitted assignees of the Guarantor.
This Acknowledgment and Guarantee is made for the benefit of ExpressVu and is
enforceable by ExpressVu is accordance with its terms. This Acknowledgment and
Guarantee shall not be for the benefit of, or enforceable by, any other person
or entity who is not a permitted successor or permitted assign of ExpressVu.
6.02 ENTIRE AGREEMENT
This Acknowledgement and Guarantee constitutes the entire agreement
between the Guarantor and ExpressVu with respect to the subject matter hereof
and cancels and supersedes any prior understandings and agreements between such
parties with respect thereto. There are no representations, warranties, terms,
conditions, undertakings or collateral agreements, express, implied or
statutory, between the parties except as
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expressly set forth herein. ExpressVu shall not be bound by any representations
or promises made by the EchoStar Parties to the Guarantor. The Guarantor shall
not be bound by any representations or promises made by the EchoStar Parties to
ExpressVu with respect to the Guarantor or its liability or obligations
hereunder without the Guarantor's prior written consent.
6.03 AMENDMENTS AND WAIVERS
No amendment to this Guarantee will be valid or binding unless set
forth in writing and duly executed by the Guarantor and ExpressVu. No waiver of
any breach of any provision of this Guarantee will be effective or binding
unless made in writing and signed by the party purporting to give the same and,
unless otherwise provided in the written waiver, will be limited to the specific
breach waived. No amendment to the System Agreement which affects the
Obligations shall be binding upon the Guarantor without the Guarantor's prior
consent.
6.04 SEVERABILITY
If any provision of this Guarantee is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability will
attach only to such provision or part thereof and the remaining part of such
provision and all other provisions hereof will continue in full force and
effect.
6.05 NOTICES
Any demand, notice or other communication to be given in connection
with this Guarantee must be given in writing and may be given by personal
delivery, by registered mail or by electronic means of communication, addressed
to the Guarantor as follows:
EchoStar Communications Corporation
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx
00000
Telecopier No. 000-000-0000
Attention: Xxxxx Xxxxxxxxx
or such other address, individual or electronic communication number as may be
designated by notice given by the Guarantor to ExpressVu. Any demand, notice or
other communication given by personal delivery will be conclusively deemed to
have been given on the day of actual delivery thereof and, if given by
registered mail, on the third
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business day following the deposit thereof in the mail and, if given by
electronic communication, on the day of transmittal thereof if given during the
normal business hours of the recipient and on the next business day during which
such normal business hours next occur if not given during such hours on any day.
If the party giving any demand, notice or other communication knows or ought
reasonably to know of any difficulties with the postal system that might affect
the delivery of mail, any such demand, notice or other communication must not be
mailed but must be given by personal delivery or by electronic communication.
6.07 EXECUTED COPY
The Guarantor acknowledges receipt of a fully executed copy of this
Guarantee.
IN WITNESS WHEREOF the Guarantor has executed this Guarantee.
DATED the _______ day of January, 1997.
ECHOSTAR COMMUNICATIONS CORPORATION
Per:
---------------------------------
Name:
Title:
SCHEDULE 17:
[CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 18: CLAIMS AGAINST THE ECHOSTAR PARTIES
1. Potential patent infringement claim of Starsight Telecast, Inc. or an
affiliate thereof
2. Potential patent infringement claim of Personalized Media Corp. or an
affiliate thereof
3. Potential patent infringement claim of Mitel or an affiliate thereof
4. Potential patent and/or copyright infringement claim of Accelerated
Technologies, Inc. or an affiliate thereof
SCHEDULE 19: PERSONS, ENTITIES AND TECHNOLOGY NOT COVERED BY INDEMNIFICATION
PROVISIONS
- Any and all technology, intellectual property rights of, or obligation to
pay royalties to Starsight Telecast, Inc. or any Affiliate thereof.
- Any and all technology, intellectual property rights or obligation to pay
royalties relating to the MPEG 2 standard.
- Any and all technology, intellectual property rights or obligation to pay
royalties relating to the DVB standard and its implementation by HTS.
- Any and all technology, intellectual property rights of, or obligation to
pay royalties relating to, Personalized Media Corp or any Affiliate
thereof.
- Any and all technology, intellectual property rights of, or obligation to
pay royalties relating to, Accelerated Technologies, Inc. or any Affiliate
thereof (Nuclear Plus).
- Any and all technology, intellectual property rights of, or obligation to
pay royalties relating to, Mitel Corporation or any Affiliate thereof, or
Sunrise Communication Services or any Affiliate thereof.
- Any and all technology or intellectual property rights of, or obligation to
pay royalties relating to, Feature Film Services or any Affiliate thereof.
- Any and all technology or intellectual property rights of, or obligation to
pay royalties relating to, the Smart Cards and the reading of the Smart
Cards by the Digital Satellite Receiver System.
SCHEDULE 20: HTS SOFTWARE
Primary categories of HTS software include the following areas:
1. Receivers: Software to support receiver products described below excluding
Conditional Access task/verification source code.
(a) XXXXX: A cost reduced version of HTS's initial product development,
including software improvements incorporated by HTS. SEE ATTACHED
SPECIFICATION SHEET FOR PRODUCT FEATURES.
(b) Nucleus Plus OS (Operating System) Shell
2. Accessories:
(a) REMOTE CONTROL: Certain IR and UHF remote control technology developed
and/or implemented by HTS for use in conjunction with the HTS receiver
family.
(b) LNBF: Certain LNBF technology developed and/or implemented by HTS for
use in conjunction with the HTS receiver family.
(c) DISK: Certain dish (antenna) technology developed and/or implemented
by HTS for use in conjunction with the HTS receiver family.
(d) MANUAL: User Manual text and graphics implemented by HTS to describe
the installation and operation of the DISH Satellite system.
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
ARTICLE 2
TERM
2.1 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 3
PROGRAMMING TRANSMISSION SERVICES
3.1 Provision of Programming Signal Transmission
Services by ESC to ExpressVu. . . . . . . . . . . . . . . . . . . 9
3.2 Provision of Canadian Programming Signal
Transmission Services by ExpressVu to ESC.. . . . . . . . . . . . 9
3.3 Payment for Programming Signal Transmission
Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Approval of Content Programmers. . . . . . . . . . . . . . . . . . . . 10
3.5 Rights of Access to Non-Programming Signals.. . . . . . . . . . . . . . 10
ARTICLE 4
PURCHASE AND SUPPLY
4.1 Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 5
LICENSE
5.1 License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 Limitations on Rights . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.4 Title to Technical Specifications, Etc. . . . . . . . . . . . . . . . . 13
ARTICLE 6
IMPLEMENTATION OF THE SYSTEM
6.1 Phased Implementation . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Milestones. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 7
INSTALLATION
7.1 Delivery and Installation . . . . . . . . . . . . . . . . . . . . . . . 14
7.2 Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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7.3 Standard Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 8
SYSTEM INTEGRATION
8.1 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.2 Charge for Integration Services . . . . . . . . . . . . . . . . . . . . 15
8.3 Preparation of the Site . . . . . . . . . . . . . . . . . . . . . . . . 15
8.4 Health and Safety.. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.5 Operating Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.6 Priority for Completion of Integration Services.. . . . . . . . . . . . 16
8.7 Cessation of Integration Services . . . . . . . . . . . . . . . . . . . 16
ARTICLE 9
ACCEPTANCE TESTING
9.1 Skilled Personnel and Consultants . . . . . . . . . . . . . . . . . . . 17
9.2 Timely Manner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.3 Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.4 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.5 Acceptance Certificates . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 10
SYSTEM PRICE AND PAYMENT
10.1 Price and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.2 Price Exclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.3 Future Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.4 Change of Technology. . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.5 Failure to Pay by Due Date. . . . . . . . . . . . . . . . . . . . . . . 21
10.6 Purchase Price Adjustments in
Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 11
BOX STANDARDS/APPROVALS
11.1 Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.2 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 12
MANUFACTURING
12.1 Manufacture of Boxes, Smart Cards and
Outdoor Units . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.2 Sub-license . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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12.3 HTS Right of Substitution. . . . . . . . . . . . . . . . . . . . . . . 23
12.4 Specifications and Quantities. . . . . . . . . . . . . . . . . . . . . 24
12.5 Modifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.6 Smart Card Float . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.7 Packaging and Labelling. . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 13
SALES AND DISTRIBUTION
13.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.2 Increasing Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.3 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.4 Promotion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.5 Shipping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.6 Prices and Box Supply. . . . . . . . . . . . . . . . . . . . . . . . . 26
13.7 Prices to Distributors and Dealers . . . . . . . . . . . . . . . . . . 26
13.8 Price Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.9 Box and Subscription Information . . . . . . . . . . . . . . . . . . . 26
13.10 Upgrading. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.11 Personalization Data . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 14
[CONFIDENTIAL MATERIAL REDACTED]
ARTICLE 15
WARRANTY
15.1 Customer Warranty. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
15.2 Breach of Customer Warranty. . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 16
[CONFIDENTIAL MATERIAL REDACTED]
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ARTICLE 17
REPAIR AND SERVICE AND TRAINING
17.1 Repair Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
17.2 Repair Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
17.3 Support Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 18
SIGNAL PROTECTION
18.1 Signal Separation.. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
18.2 Shut-Off Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
18.3 [CONFIDENTIAL MATERIAL REDACTED]
18.4 Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
18.5 Grey Marketing-Distributors and Dealers.. . . . . . . . . . . . . . . . 36
18.6 Third Party Signal Protection Provisions. . . . . . . . . . . . . . . . 36
18.7 Survival of Certain Terms.. . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 19
[CONFIDENTIAL MATERIAL REDACTED]
ARTICLE 20
BREACH OF SECURITY
20.1 Breach of Security. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
20.2 Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
20.3 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 21
TRADE MARKS
21.1 Grant of Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
21.2 Right to Sub-license. . . . . . . . . . . . . . . . . . . . . . . . . 43
21.3 Restrictions on ESC's Use.. . . . . . . . . . . . . . . . . . . . . . . 44
21.4 Notifications.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
21.5 Actions by ESC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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21.6 Actions by ExpressVu . . . . . . . . . . . . . . . . . . . . . . . . . 44
21.7 Protection of Licensed Trade Marks . . . . . . . . . . . . . . . . . . 44
21.8 Termination of ExpressVu's Right to Use the
Licensed Trade Marks.. . . . . . . . . . . . . . . . . . . . . . . 45
21.9 Notice of Termination. . . . . . . . . . . . . . . . . . . . . . . . . 46
21.10 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . 46
21.11 Indemnity for Costs of Certain Claims. . . . . . . . . . . . . . . . . 46
ARTICLE 22
REPRESENTATIONS AND WARRANTIES
22.1 Representations and Warranties by the
EchoStar Parties. . . . . . . . . . . . . . . . . . . . . . . . . 47
22.2 Representations and Warranties by ExpressVu. . . . . . . . . . . . . . 50
22.3 Survive Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 23
SOURCE CODE ESCROW
23.1 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 24
INTELLECTUAL PROPERTY RIGHTS
AND INDEMNIFICATION
24.1 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . 52
24.2 Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
24.3 Rights Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
24.4 Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
24.5 Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
24.6 Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
24.7 Restrictions on Use. . . . . . . . . . . . . . . . . . . . . . . . . . 54
24.8 Documentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
24.9 Third Party Intellectual Property Claims . . . . . . . . . . . . . . . 54
24.10 Infringement of Intellectual Property Rights . . . . . . . . . . . . . 56
24.11 Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
24.12 Limitation of EchoStar's Indemnity . . . . . . . . . . . . . . . . . . 57
24.13 HTS' Entire Obligation . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 25
INDEMNITY
25.1 ExpressVu Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . 57
25.2 EchoStar Parties' Indemnity. . . . . . . . . . . . . . . . . . . . . . 57
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ARTICLE 26
[CONFIDENTIAL MATERIAL REDACTED]
ARTICLE 27
LIQUIDATED DAMAGES
27.1 [CONFIDENTIAL MATERIAL REDACTED] . . . . . . . . . . . . . . . . . . . 58
27.2 Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
27.3 Waiver of Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 28
TERMINATION
28.1 Termination of Agreement. . . . . . . . . . . . . . . . . . . . . . . . 60
28.2 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
28.3 Obligations on Termination of Agreement . . . . . . . . . . . . . . . . 62
ARTICLE 29
SECURITY INTEREST
29.1 Grant of Security Interest. . . . . . . . . . . . . . . . . . . . . . . 62
29.2 Secure Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
29.3 Realization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
29.4 Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE 30
[CONFIDENTIAL MATERIAL REDACTED]
ARTICLE 31
[CONFIDENTIAL MATERIAL REDACTED]
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ARTICLE 32
CONDITIONS PRECEDENT TO PERFORMANCE
32.1 Conditions to ExpressVu's Performance. . . . . . . . . . . . . . . . . 70
32.2 Conditions to EchoStar Parties' Performance. . . . . . . . . . . . . . 70
32.3 Condition to All Parties' Performance. . . . . . . . . . . . . . . . . 71
32.4 Covenants to cause Conditions to be Satisfied
or Complied with.. . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE 33
GOVERNING LAW AND ARBITRATION
33.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
33.2 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
33.3 Interim Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
33.4 Decision Final . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
33.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE 34
CONFIDENTIALITY
34.1 Confidentiality Regarding Terms and Existence
of Agreement; Confidential Information.. . . . . . . . . . . . . 73
ARTICLE 35
MISCELLANEOUS
35.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
35.2 No Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
35.3 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
35.4 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
35.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
35.6 Variation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
35.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
35.8 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
35.9 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
35.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 78
35.11 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
35.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
35.13 Interest on Overdue Payments.. . . . . . . . . . . . . . . . . . . . . 80
35.14 Equitable Relief.. . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SCHEDULE 1: [CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 2: [CONFIDENTIAL MATERIAL REDACTED]
-viii-
SCHEDULE 3: DOCUMENTATION
SCHEDULE 4: [CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 5: ACCEPTANCE TESTS
SCHEDULE 6: [CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 7: CONDITIONAL ACCESS SYSTEM
SCHEDULE 8: SUPPORT CONTACT PERSONNEL
SCHEDULE 9: [CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 10: [CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 11: ECHOSTAR'S STANDARD RATES
SCHEDULE 12: [CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 13: LICENSED TRADE MARKS
SCHEDULE 14: SUB-LICENSING AGREEMENT RELATING TO LICENSED TRADE MARKS
SCHEDULE 15: [CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 16: FORM OF GUARANTEE OF ECHOSTAR COMMUNICATIONS CORPORATION
SCHEDULE 17: [CONFIDENTIAL MATERIAL REDACTED]
SCHEDULE 18: CLAIMS AGAINST THE ECHOSTAR PARTIES
SCHEDULE 19: PERSONS, ENTITIES AND TECHNOLOGY NOT COVERED BY INDEMNIFICATION
PROVISIONS
SCHEDULE 20: HTS SOFTWARE
AMENDMENT
WHEREAS Houston Tracker Systems, Inc. and EchoStar Satellite Corporation
(collectively, the "EchoStar Parties") and ExpressVu Inc. ("ExpressVu" have
entered into an agreement dated January 8, 1997 (the "Integration Agreement")
which provides, among other things, for the supply by the EchoStar Parties of
programming signals, equipment and services required by ExpressVu in
connection with its direct-to-home satellite service in Canada;
AND WHEREAS Article 32 of the Integration Agreement provides that the
rights and obligations under the Integration Agreement shall not become
effective until the fulfilment of certain conditions precedent to performance
of the EchoStar Parties and ExpressVu;
AND WHEREAS Section 32.4 of the Integration Agreement provides that the
deadline for the fulfilment or waiver of the conditions precedent under
Article 32 is January 17, 1997;
AND WHEREAS the EchoStar Parties and ExpressVu wish to amend the
Integration Agreement to provide for the extension of the deadline to January
21, 1997;
NOW THEREFORE IN CONSIDERATION OF the mutual covenants contained herein
and within the Integration Agreement and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
each of the parties, the parties hereby agree as follows:
1. References to the date "January 17, 1997" within Section 32.4 of the
Integration Agreement are hereby deleted and the date "January 21, 1997"
shall be substituted in place thereof.
2. The parties acknowledge that this Amendment is made pursuant to Section
35.6 of the Integration Agreement.
The parties hereto have entered into this Amendment to the Integration
Agreement as of January 17, 1997.
ECHOSTAR SATELLITE CORPORATION
Per: /s/ XXXXX X. XXXXXXXXX
------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: SVP and General Counsel
-2-
HOUSTON TRACKER SYSTEMS INC.
Per: /s/ XXXXX X. XXXXXXXXX
------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: SVP and General Counsel
EXPRESSVU INC.
Per: /s/ XXXX XXXXXXXXXXX
------------------------------
Xxxx Xxxxxxxxxxx
Corporate Secretary
AMENDMENT NO 2
TO
AGREEMENT DATED JANUARY 8, 0000
XXXXXXX
XXXXXXX TRACKER SYSTEMS, INC./ECHOSTAR SATELLITE CORPORATION/EXPRESSVU INC.
INTRODUCTION
Houston Tracker Systems, Inc., EchoStar Satellite Corporation, and ExpressVu
Inc. agree to amend Schedule 9 of the agreement between them dated January 8,
1997 in order to:
[CONFIDENTIAL MATERIAL REDACTED]
PAGE 1
AMENDMENT NO. 2
(CONTINUED)
The parties hereto have entered into this agreement as of the date first written
above.
ECHOSTAR SATELLITE CORPORATION
Per: /s/ XXXXXXX XXXXX
-------------------------------
Name: Xxxxxxx Xxxxx
Title: CEO
HOUSTON TRACKER SYSTEMS, INC.
Per: /s/ XXXXXXX XXXXX
-------------------------------
Name: Xxxxxxx Xxxxx
Title: CEO
EXPRESSVU, INC.
Per: /s/ M. A. XXXXXX
-------------------------------
Name: M. A. Xxxxxx
Title: CEO
Per: /s/ XXXXX XXXXX
-------------------------------
Name: Xxxxx Xxxxx
Title: Chairman
PAGE 2
EXHIBIT A
(AMENDMENT NO.2)
[CONFIDENTIAL MATERIAL REDACTED]
PAGE 3
EXHIBIT A
(AMENDMENT NO.2)
[CONFIDENTIAL MATERIAL REDACTED]
PAGE 4