UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

 

FORM 8-K/A

 

(Amendment No. 2)

 _______________________________________

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): January 31, 2013

_______________________________________

 

GLOBAL EAGLE ENTERTAINMENT INC.

(Exact name of registrant as specified in its charter)

_______________________________________

 

Delaware 001-35176 27-4757800
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)

 

4353 Park Terrace Drive. Westlake Village, California 91361

(Address of principal executive offices, including zip code)

 

Registrant’s telephone number, including area code : (818) 706 -3111

 

Not Applicable

(Former name or former address, if changed since last report)

_______________________________________

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

£ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

£ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

£ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

£ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

Explanatory Note

 

On February 6, 2013, Global Eagle Entertainment Inc. (the “Company”) filed a Current Report on Form 8-K dated January 31, 2013 (the “Original 8-K”) with the Securities and Exchange Commission (“SEC”). The Original 8-K was amended on March 18, 2013 (the “Amended 8-K”). This Amendment No. 2 to the Original 8-K is being filed solely for the purpose of re-filing Exhibits 10.7, 10.8, 10.9, 10.10, 10.11 and 10.12 to the Original 8-K (the “Exhibits”) pursuant to comments received from the Staff of the SEC on the Company’s application for confidential treatment of certain information that was redacted from the Exhibits. All other disclosures contained in the Original 8-K and the Amended 8-K remain unchanged.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

Exhibit No.   Document
2.1 *   Agreement and Plan of Merger and Reorganization, dated as of November 8, 2012, by and among Global Eagle Acquisition Corp., EAGL Merger Sub Corp., Row 44, Inc. and PAR Investment Partners, L.P. (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (File No. 001-35176) filed with the SEC on November 14, 2012).
2.2 *   Stock Purchase Agreement, dated as of November 8, 2012, by and between Global Eagle Acquisition Corp. and PAR Investment Partners, L.P. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on November 14, 2012).
3.1   Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
3.2   Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
4.1   Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on May 11, 2011).
4.2   Form of Warrant Agreement by and between the Company and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 4.4 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on April 6, 2011).
4.3   Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-172267) and included as an exhibit in the Warrant Agreement, filed with the SEC on March 21, 2011).
10.1   Amended and Restated Registration Rights Agreement, dated as of January 31, 2013, by and among the Company and the parties named on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
10.2   Amended and Restated Common Stock Purchase Agreement, dated as of November 8, 2012, by and between Global Eagle Acquisition Corp. and PAR Investment Partners, L.P. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on November 14, 2012).
10.3   Common Stock Purchase Agreement, dated as of November 8, 2012, by and among Global Eagle Acquisition Corp., Putnam Capital Spectrum Fund and Putnam Spectrum Equity Fund. (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on November 14, 2012).
10.4   Executive Employment Agreement, dated January 31, 2013, between the Company and John LaValle (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
10.5   Executive Employment Agreement, dated January 31, 2013, between the Company and David M. Davis (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013)
10.6   Global Eagle Entertainment Inc. 2013 Equity Incentive Plan (incorporated by reference to Annex D of the Company’s Definitive Proxy Statement on Schedule 14A (File No. 001-35176) filed with the SEC on January 17, 2013).

 

 
 

 

10.7†   System and Services Agreement dated January 2011 by and between Norwegian Air Shuttle and Row 44, Inc.
10.8†   OEM Purchase and Development Agreement, dated October 12, 2009, by and between TECOM Industries, Inc. and Row 44, Inc., as amended on December 19, 2011, December 23, 2011, January 6, 2012 and January 18, 2012.
10.9†   Master Equipment Purchase Agreement, dated December 21, 2007, by and between Hughes Network Systems, LLC and Row 44, Inc.
10.10†   Master Services Agreement, dated December 21, 2007, by and between Hughes Network Systems, LLC and Row 44, Inc., as amended on June 6, 2008, June 30, 2009, November 15, 2010, November 18, 2010, January 15, 2011, March 30, 2011, July 29, 2011, August 3, 2011, September 7, 2011, December 19, 2011, January 23, 2012, September 11, 2012 and January 18, 2013.
10.11†   Agreement by and among Cathay Pacific Airways Limited, Hong Kong Dragon Airlines Limited and Inflight Productions Limited for the Supply of Programming and Production Services for Inflight Entertainment, as amended.
10.12†   Amended and Restated Supply and Services Agreement dated February 1, 2013 by and between Row 44, Inc. and Southwest Airlines Co.
10.13   Letter Agreement, dated January 31, 2013, between the Company and Wellington Management Company, LLP (incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
10.14   Escrow Agreement, dated January 31, 2013, by and among the Company, Wellington Management Company, LLP (“Wellington”) and certain affiliates of Wellington (incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
10.15   Form of Indemnity Agreement for the Company’s directors and executive officers (incorporated by reference to Exhibit 10.8 to Amendment No. 1 of the Company’s Registration Statement on Form S-1 (File No. 333-172267) filed with the SEC on March 21, 2011).
10.16   Amendment to Securities Escrow Agreement, dated May 8, 2012 by and among the Company, American Stock Transfer & Trust Company, LLC, Cole A. Sirucek and the other persons party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 001-35176) filed with the SEC on May 9, 2012).
10.17   Amended and Restated Letter Agreement, dated as of May 10, 2011, among the Company, Global Eagle Acquisition LLC and each of the members of Global Eagle Acquisition LLC (incorporated by reference to Exhibit 10.2(a) to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on May 11, 2011).
10.18   Amended and Restated Letter Agreement, dated as of May 10, 2011, between the Company and James M. McNamara (incorporated by reference to Exhibit 10.2(b) to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on May 11, 2011).
10.19   Amended and Restated Letter Agreement, dated as of May 10, 2011, between the Company and Dennis A. Miller (incorporated by reference to Exhibit 10.2(c) to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on May 11, 2011).
10.20   Letter Agreement, dated May 8, 2012, by and between the Company and Cole A. Sirucek (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K (File No. 001-35176) filed with the SEC on May 9, 2012).
14.1   Form of Code of Ethics (incorporated by reference to Exhibit 14 to Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on March 21, 2011).
21.1   List of Subsidiaries (incorporated by reference to Exhibit 21.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 6, 2013).
99.1   Audited Financial Statements of Row 44 as of December 31, 2012 and 2011 and for the three years ended December 31, 2012 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K/A (File No. 001-35176) filed with the SEC on March 18, 2013).
99.2   Audited Financial Statements of AIA as of December 31, 2012 and 2011 and for the three years ended December 31, 2012 (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K/A (File No. 001-35176) filed with the SEC on March 18, 2013).
99.3   Pro Forma Financial Information of Global Eagle Entertainment Inc. as of and for the year ended December 31, 2012 (incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K/A (File No. 001-35176) filed with the SEC on March 18, 2013).

 

* The exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request.

 

† Confidential treatment has been requested or granted for certain portions omitted from this Exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated:  May 16, 2013 GLOBAL EAGLE ENTERTAINMENT INC.
   
  By: /s/ Michael Pigott
    Michael Pigott
    General Counsel, Vice President and Secretary

 

 
 

 

EXHIBIT INDEX

 

Exhibit No.   Document
2.1 *   Agreement and Plan of Merger and Reorganization, dated as of November 8, 2012, by and among Global Eagle Acquisition Corp., EAGL Merger Sub Corp., Row 44, Inc. and PAR Investment Partners, L.P. (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (File No. 001-35176) filed with the SEC on November 14, 2012).
2.2 *   Stock Purchase Agreement, dated as of November 8, 2012, by and between Global Eagle Acquisition Corp. and PAR Investment Partners, L.P. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on November 14, 2012).
3.1   Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
3.2   Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
4.1   Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on May 11, 2011).
4.2   Form of Warrant Agreement by and between the Company and American Stock Transfer & Trust Company, LLC (incorporated by reference to Exhibit 4.4 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on April 6, 2011).
4.3   Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 (File No. 333-172267) and included as an exhibit in the Warrant Agreement, filed with the SEC on March 21, 2011).
10.1   Amended and Restated Registration Rights Agreement, dated as of January 31, 2013, by and among the Company and the parties named on the signature pages thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
10.2   Amended and Restated Common Stock Purchase Agreement, dated as of November 8, 2012, by and between Global Eagle Acquisition Corp. and PAR Investment Partners, L.P. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on November 14, 2012).
10.3   Common Stock Purchase Agreement, dated as of November 8, 2012, by and among Global Eagle Acquisition Corp., Putnam Capital Spectrum Fund and Putnam Spectrum Equity Fund. (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on November 14, 2012).
10.4   Executive Employment Agreement, dated January 31, 2013, between the Company and John LaValle (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
10.5   Executive Employment Agreement, dated January 31, 2013, between the Company and David M. Davis (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013)
10.6   Global Eagle Entertainment Inc. 2013 Equity Incentive Plan (incorporated by reference to Annex D of the Company’s Definitive Proxy Statement on Schedule 14A (File No. 001-35176) filed with the SEC on January 17, 2013).
10.7†   System and Services Agreement dated January 2011 by and between Norwegian Air Shuttle and Row 44, Inc.
10.8†   OEM Purchase and Development Agreement, dated October 12, 2009, by and between TECOM Industries, Inc. and Row 44, Inc., as amended on December 19, 2011, December 23, 2011, January 6, 2012 and January 18, 2012.
10.9†   Master Equipment Purchase Agreement, dated December 21, 2007, by and between Hughes Network Systems, LLC and Row 44, Inc.
10.10†   Master Services Agreement, dated December 21, 2007, by and between Hughes Network Systems, LLC and Row 44, Inc., as amended on June 6, 2008, June 30, 2009, November 15, 2010, November 18, 2010, January 15, 2011, March 30, 2011, July 29, 2011, August 3, 2011, September 7, 2011, December 19, 2011, January 23, 2012, September 11, 2012 and January 18, 2013.

 

 
 

 

10.11†   Agreement by and among Cathay Pacific Airways Limited, Hong Kong Dragon Airlines Limited and Inflight Productions Limited for the Supply of Programming and Production Services for Inflight Entertainment, as amended.
10.12†   Amended and Restated Supply and Services Agreement dated February 1, 2013 by and between Row 44, Inc. and Southwest Airlines Co.
10.13   Letter Agreement, dated January 31, 2013, between the Company and Wellington Management Company, LLP (incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
10.14   Escrow Agreement, dated January 31, 2013, by and among the Company, Wellington Management Company, LLP (“Wellington”) and certain affiliates of Wellington (incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K (File No. 001-35176) filed with the SEC on February 6, 2013).
10.15   Form of Indemnity Agreement for the Company’s directors and executive officers (incorporated by reference to Exhibit 10.8 to Amendment No. 1 of the Company’s Registration Statement on Form S-1 (File No. 333-172267) filed with the SEC on March 21, 2011).
10.16   Amendment to Securities Escrow Agreement, dated May 8, 2012 by and among the Company, American Stock Transfer & Trust Company, LLC, Cole A. Sirucek and the other persons party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 001-35176) filed with the SEC on May 9, 2012).
10.17   Amended and Restated Letter Agreement, dated as of May 10, 2011, among the Company, Global Eagle Acquisition LLC and each of the members of Global Eagle Acquisition LLC (incorporated by reference to Exhibit 10.2(a) to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on May 11, 2011).
10.18   Amended and Restated Letter Agreement, dated as of May 10, 2011, between the Company and James M. McNamara (incorporated by reference to Exhibit 10.2(b) to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on May 11, 2011).
10.19   Amended and Restated Letter Agreement, dated as of May 10, 2011, between the Company and Dennis A. Miller (incorporated by reference to Exhibit 10.2(c) to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on May 11, 2011).
10.20   Letter Agreement, dated May 8, 2012, by and between the Company and Cole A. Sirucek (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K (File No. 001-35176) filed with the SEC on May 9, 2012).
14.1   Form of Code of Ethics (incorporated by reference to Exhibit 14 to Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-172267), filed with the SEC on March 21, 2011).
21.1   List of Subsidiaries (incorporated by reference to Exhibit 21.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 6, 2013).
99.1   Audited Financial Statements of Row 44 as of December 31, 2012 and 2011 and for the three years ended December 31, 2012 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K/A (File No. 001-35176) filed with the SEC on March 18, 2013).
99.2   Audited Financial Statements of AIA as of December 31, 2012 and 2011 and for the three years ended December 31, 2012 (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K/A (File No. 001-35176) filed with the SEC on March 18, 2013).
99.3   Pro Forma Financial Information of Global Eagle Entertainment Inc. as of and for the year ended December 31, 2012 (incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K/A (File No. 001-35176) filed with the SEC on March 18, 2013).

  

* The exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request.

 

† Confidential treatment has been requested or granted for certain portions omitted from this Exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

 

 

 

 

Exhibit 10.7

 

CONFIDENTIAL TREATMENT REQUESTED FOR PORTIONS OF THIS DOCUMENT. PORTIONS FOR WHICH CONFIDENTIAL TREATMENT IS REQUESTED HAVE BEEN MARKED WITH THREE ASTERISKS [***] AND A FOOTNOTE INDICATING “CONFIDENTIAL TREATMENT REQUESTED”. MATERIAL OMITTED HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

SYSTEM AND SERVICES AGREEMENT

 

by and between

 

norwegian air shuttle

 

and

 

ROW 44, INC.

 

 
 

 

THIS SYSTEM AND SERVICES AGREEMENT (this “ Agreement ”) is made and effective as of this ___ day of January, 2011 (the “ Effective Date ”) by and between Row 44, Inc., a Delaware corporation (“ Row 44 ”), and Norwegian Air Shuttle, a company incorporated under the laws of Norway (“ Customer ”). Row 44 and Customer are sometimes referred to herein individually as a “Party” and collectively as the “Parties.” Terms used herein and not otherwise defined shall have meaning for such terms as set forth in the glossary attached hereto as Appendix A.

 

RECITALS

 

WHEREAS, Row 44 and its Third Party Partners have developed a proprietary system for providing satellite-based in-flight broadband data communication to certain commercial passenger airliners (the “ Product ”);

 

WHEREAS, the Product consists of the production-level equipment set forth on Schedule A attached hereto, including, as applicable, the related documentation and specifications for such equipment (the “ Product Kit ”), and the related satellite and backhaul data communication services, all having the features described herein and as ordered by Customer (collectively, the “ Service ”); and

 

WHEREAS, Customer desires to obtain the Product by purchasing Product Kits and subscribing to the Service, all pursuant to the terms hereof.

 

NOW, THEREFORE, in consideration of the foregoing, and for such other consideration and mutual covenants as described herein, the Parties agree as follows:

 

1.          PRODUCT KITS

 

1.1.           Initial Fleet Order; Additional Orders . Customer hereby commits to the installation of *** Product Kits from Row 44 for installation on Customer’s 737-800 series aircraft and initial spare parts provisioning. With respect to these *** Product Kits, Customer will (ii) issue a purchase order to Row 44 for the first *** of such Product Kits within five (5) business days of the Effective Date (which, when added to the previous *** Product Kits ordered prior to the Effective Date includes Product Kits targeted for *** installation on Customer’s fleet); (ii) issue the purchase order(s) for the remaining *** Product Kits in alignment with the agreed installation schedule and product kit lead times and (iii) issue purchase orders for such remaining Product Kits by end of Q2 2012 and respecting the applicable lead time for shipment of Product Kits per Section 1.2 below (collectively, the order sequence above is referred to herein as the “ Initial Fleet Order ”). Following the Initial Fleet Order, Customer may order additional Product Kits for use by Customer by delivering to Row 44 a firm order, on Row 44’s standard form purchase order, for additional Product Kits as specified by Customer on such purchaser order. No purchase order shall be valid until accepted in writing by Row 44. Accepted orders issued pursuant to this Agreement may not be cancelled or adjusted by Customer without the express written consent of Row 44. . Customer shall meet and confer with Row 44 immediately following the Effective Date to set an installation plan and will commence regular installations of the Product Kits on its fleet upon receipt by Row 44 of the STC, all subject to Customer’s reasonable discretion regarding aircraft availability and Row 44’s ability to deliver Product Kits within the applicable lead time.

 

 

*** Confidential treatment requested.

 

1
 

 

1.2.           Lead Time . The lead time for orders for Product Kits and Spare Parts shall be as provided by Row 44 from time to time during the Term. As of the Effective Date hereof, the lead time for first delivery of a Product Kit is *** from order to shipment; provided, that, such lead time shall not apply for Product Kits subject to the Initial Fleet Order (as each order in connection therewith is accepted by Row 44 per Section 1.1) and scheduled for delivery within such lead time.

 

1.3.           Shipment and Delivery . All Product Kits shall be shipped FOB shipping point; provided that, Row 44 shall retain a security interest in any such items not fully paid for by Customer prior to shipment. Row 44 or its applicable Third Party Partner will pack the Product Kits according to the specifications for such items and will ship such items to the location designated by Customer. Row 44 may ship components of a Product Kit in different containers and from different shipping points. Except as provided above with respect to Row 44’s security interest, title to and risk of loss will pass to Customer upon shipment. The satellite antenna assembly component of the Product Kits may be shipped to Customer in a re-usable ATA-300 Category 1 container, which container shall at all times remain the property of Row 44 and shall be returned to Row 44, at Row 44’s expense, in order to be used for later shipments of satellite antenna assemblies to customer of Row 44, including Customer.

 

1.4.           Installation .

 

1.4.1.           Cooperation . Customer acknowledges and agrees Row 44 is not responsible for the installation of the Product Kits on Customer’s aircraft. For the fees set forth on Schedule F, Row 44 shall provide onsite installation training and support to Customer until the installation target time of *** for the Product Kit is met. With respect to such installation support, Customer agrees to provide Row 44 with all reasonably requested data regarding the configuration of Customer’s aircraft to enable Row 44 and its applicable Third Party Partners to create installation manuals and related items to be utilized by Customer in installing the Product Kit. Notwithstanding the foregoing, the installation training and support provided by Row 44 shall not include the costs of any third party engineering or “DER” support if required with respect to an installation, the costs of which shall be paid for by Customer or Customer’s installation vendor.

 

 

*** Confidential treatment requested.

 

 
 

 

1.4.2.           FAA and EASA Approval . Row 44 shall be responsible for obtaining Federal Aviation Administration (“ FAA ”) and European Aviation Safety Agency (“ EASA ”) approval for installation of the Product Kits on Customer’s 737-800 aircraft. Customer shall pay Row 44 the amount for such services as set forth on Schedule F. Subsequent to obtaining the foregoing EASA approval, Row 44 will file an FAA Supplemental Type Certificate (“ STC ”) amendment with respect to placarding aircraft equipped with Honeywell Phase III Cockpit Display Units without further cost to Customer.

 

1.4.3.           Commissioning . As part of the installation of a Product Kit, Customer and/or its applicable installer will be required to complete a commissioning procedure provided by Row 44, including, registering the Product Kit components installed on such aircraft and other related aircraft specific information with the Service and conducting ground tests of the Service. Commissioning of an aircraft shall not be deemed completed until Row 44 receives all confirmations and consents from the installer and Customer, including a final Customer Acceptance in accordance with Row 44’s commissioning procedures that Row 44 reasonably requests in order to verify installation was successful and the Service is functioning properly. Each aircraft of Customer that passes the commissioning procedures shall be referred to as a “ Commissioned Aircraft ” herein.

 

1.5.           Maintenance . Customer shall be responsible for all regular maintenance of the Product Kits, including, as applicable, removal and replacement of spare parts for Customer replaceable components and regular maintenance on the Product Kits or in connection with the Service; provided, that, in connection with the Service, Row 44 will remotely monitor the health and performance of the Product Kits and provide regular updates regarding the status of any hardware component of the Product Kits.

 

1.6.           Warranty – Product Kit . Row 44 warrants each Product Kit sold and delivered under this Agreement to be free from defects in material, workmanship and construction, and that when used in accordance with its intended use will perform to applicable specifications for a period of *** after shipment or *** from installation, whichever occurs first. For an additional fee of *** of the purchase price per Product Kit (payable at the same time and on the same terms as payment for the Product Kit), Row 44 will extend the foregoing warranty periods by ***. If examination by Row 44 discloses that the product has been defective, then Row 44’s obligation is limited to repair or replacement, at Row 44’s option, of the defective unit or its components. Subject to applicable EASA and FAA rules regarding tagging of repaired components and direct shipment of repaired goods from Row 44’s Third Party Partners, Row 44 shall act as single point of contact with respect to all warranty issues for all component parts related to a Product Kit and spares ordering unless otherwise advised by Customer.

 

 

*** Confidential treatment requested.

 

 
 

 

1.7.           Aircraft Directives . In the event the FAA or EASA issues an airworthiness or similar directive that directly applies to a Row 44 Product Kit, Row 44 shall promptly coordinate with Customer and Row 44’s Third Party Partners to implement such directive. In the event the FAA or EASA issues a directive that does not directly apply to a Row 44 Product Kit, but Customer believes there is an impact to its aircraft due to the Row 44 Product Kit, Row 44 will assist Customer in the evaluation of the impact of such directive, including allocating Row 44 engineering resources to such evaluation by Customer.

 

1.8.           Row 44 System Directives . In the event the Row 44 Product Kit is ruled by an applicable regulatory body to constitute an “unsafe condition” because of its design pursuant to applicable FAA regulations (CFR Title 14, Part 21, Subpart H, Section 21.181) or EASA equivalent or is otherwise required to be re-certified the responsibility to correct and provide the amended FAA/EASA certification to Customer will be entirely Row 44’s. Row 44 shall pay the reasonable costs of any aircraft downtime as a result of such a regulatory action, including lease costs for replacement aircrafts if required.

 

1.9.           AOG Support. Row 44 shall provide telecommunications based Customer aircraft on ground (“ AOG ”) engineering support 7 days a week, 24 hours a day, including contact with Row 44 (or a third party service provider) engineering resources in support of such service. Row 44 will provide Customer its European AOG contact information prior to first production install on Customer’s aircraft. Row 44 will provide this service free of charge.

 

1.10.         ***

 

1.11.          Improvements and Customer Requested Changes . Customer and Row 44 acknowledge and agree that it is the intent of Row 44 to work with its Third Party Partners to improve the Product Kit during the Term. In that regard, Row 44 may cause design modifications, engineering changes and/or improvements to be implemented and correspondingly may make changes to the Product Kit design during the Term. Any such changes that affect the form, fit, function of any component of the Product Kit shall require Customer’s consent, such consent not to be unreasonably withheld or delayed. Customer may also request design changes to the Product Kit. Row 44 will thereafter promptly advise Customer whether such change is technically and operationally feasible, and, if so, the effect on unit price, delivery schedule, component interchangeability or expected technical performance. If Row 44 agrees to implement such Customer proposed design change, the terms of such agreement shall be as the Parties mutually agree following good faith negotiations. ***

 

 

*** Confidential treatment requested.

 

 
 

 

2.          SUBSCRIPTION TO THE SERVICE

 

2.1.           Subscription to the Service. Customer hereby subscribes to and agrees to pay for access to the Service upon the terms set forth herein. The Service shall include the features and restrictions (in addition to the restrictions set forth herein) set forth on Schedule D. ***

 

2.2.           Network Operations and Service Maintenance. During the Term, Row 44 shall maintain a network operations center with the responsibility of monitoring the functionality and performance of the Service on Commissioned Aircraft. Row 44 shall also maintain a 24/7 technical s upport phone number/e-mail for technical support inquiries from Customer regarding operation of the Service.

 

2.3.           Training . In connection with the operation of the Service, Row 44 will provide training in the operation and functionality of the Service to Customer’s employees who will operate the Service on board Commissioned Aircraft, such training to be provided on a “train the trainer” basis and for the fees set forth on Schedule F. Row 44 will also provide a computer based training (CBT) aid to facilitate training dissemination. In support of the foregoing, Row 44 shall provide Customer the following training materials: Aircraft Maintenance Manuals (Antenna Provision and System Activation), Airplane Flight Manual Supplement, Instructions for Continued Airworthiness, On Aircraft Test Plan, Radome/Ring Structural Repair Manual, Component Maintenance Manuals, Instruction Sheet for Activating System and Understanding Basic Operations (For Cabin Crew Use).

 

2.4.           Reports . Row 44 shall provide Customer regular reports and/or access to a reporting web service with respect to such reports and information as Row 44 generally collects and makes available to its Customers regarding the performance of the Service on Customer’s aircraft. Upon request, with respect to Customer’s use of Product Kits and the Service, Customer shall have access to all reasonably requested data or information controlled by Row 44 relating to the Product Kit. Access will be web accessible and user privilege controlled.

 

2.5.           Legal Process Compliance . During the Term and solely as the same related to providing the Service, Row 44 shall be responsible for technical compliance associated with the Communications Assistance for Law Enforcement Act, the European Council Resolution regarding Lawful Interception of Telecommunications and such similar laws, rules, regulations or agreements binding on Row 44 and/or which Row 44 has agreed to perform. Where permitted under applicable law, Row 44 shall keep Customer informed of all compliance actions taken by Row 44 in support of such technical compliance, and, upon request from Row 44, Customer shall provide reasonably requested cooperation to Row 44 to support such compliance.

 

 

*** Confidential treatment requested.

 

 
 

 

2.6.           Service Limitations . Customer acknowledges and agrees that receipt of the Service is subject to certain limitations due to the nature of satellite based internet access, including, without limitation, atmospheric or space-based signal interference leading to degraded signal or loss of signal and governmental requirements applicable to satellite providers. Row 44 shall not be held liable for any interference in accessing the Service due to network conditions generally affecting satellite transponder access and/or coverage or due to the actions of an applicable governmental authority reducing or eliminating the availability of normal satellite network access. Row 44 agrees to meet the quoted SLA terms and will provide commensurate compensation, as set forth herein, when applicable targets set in the SLA are not achieved.

 

2.7.           Terms of Service; Privacy Policy . Customer shall provide the Service to its customers subject to terms of service and a privacy policy reasonably acceptable to Row 44, and, in any event, at least including the minimum terms of service set forth on Schedule E attached hereto and such additional requirements under applicable law or customer industry practice for internet service providers as the same may change during the Term. Customer shall use Row 44’s standard landing page or develop and maintain a landing page (the “ Landing Page ”) as the first accessible web page when a Customer accesses the Service. The Landing Page will require each customer of Customer accept the terms of service described above before continuing to use the Service and disclose Customer’s privacy policy.

 

2.8.           Network Security; Prohibited Actions . Customer acknowledges and agrees protection of the Row 44’s network systems is of critical importance, and, therefore, Customer shall not engage in, or knowingly permit customers of Customer to engage in, any of the following activities: (i) any course of action that compromises the performance, security or integrity of the servers, computer systems, satellites or any other devices or software connected directly or indirectly to the network comprising the Service; (ii) any material increase in traffic levels for malicious or illegal purposes or with the result that such traffic level causes a substantial degradation of performance to Row 44 or other customers of Row 44; (iii) tampering, hacking or other intrusion or unauthorized access to any system controlled by Row 44 or through which Row 44 network access is dependent; or (iv) the infringement of the legal rights of other network users (including other users of the Service or the internet), service providers and content providers. In the event Customer, or any customer of Customer, undertakes any of the above activities, Customer acknowledges and agrees Row 44 is authorized to disable access to the Service (including for a particular customer of Customer) until such activity ceases. Notwithstanding the foregoing, Row 44 shall be under no obligation to monitor the content Customer or customers of Customer transmit using the Service, except as may be required by applicable law (including, without limitation, lawful intercept requirements). Customer may not resell or redistribute (whether for a fee or otherwise) the Services provided by Row 44, or any portion thereof, except for the sale of access to the Service from Customer to Customer’s customers on board Customer’s aircraft.

  

 
 

 

2.9.           Content Filtering and Web Analytics . Customer acknowledges and agrees Row 44 may be providing unfiltered internet access via the Service and Row 44 neither controls nor assumes any responsibility for any internet content accessed, acquired or transmitted by Customer or customers of Customer using the Service. Customer further acknowledges that except for access to Row 44’s standard web portal regarding use and performance of the system, Row 44 does provide any customer usage analytics. Upon written request from Customer, Row 44 will provide a then-current quote to implement content filtering and web analytics and the fees associated therewith.

 

2.10.          OOOI data . For the purposes of Service performance tracking, Out, On, Off, In (OOOI) data will be provided to Row 44 in a format and on a schedule to be agreed to in good faith by the Parties.

 

3.           Representations and Warranties

 

3.1.           General Representations . Each Party represents and warrants to the other Party that: (i) it is duly organized and validly existing under the laws of its jurisdiction or incorporation or formation; and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof; (ii) it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person or persons executing this Agreement on its behalf has been duly authorized to do so by all requisite organizational action; (iii) this Agreement is legally binding upon it, enforceable in accordance with its terms, except as limited by bankruptcy or other general principals of equity; and (iv) the execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, whether oral or written, to which it is a party or by which it may be bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

3.2.           Third Party Consents . Customer represents and warrants that it has obtained all third party authorization and consent to install the Product Kits on Customer’s aircraft, including, without limitation, authorization from any leasing or financing company with respect to such aircraft, and excluding any governmental authorizations that Row 44 or its Third Party Partners are required to obtain in order to provide the Product Kits and Service.

  

 
 

 

4.           Additional TERMS AND CONDITIONS

 

4.1.           Confidential Information .

 

4.1.1.           Definition. For purposes of this Agreement, “Confidential Information” means any information disclosed by either Party to the other Party, either directly or indirectly, in writing, orally, by inspection of tangible objects, or by operation of the services provided by the Parties hereunder, which is confidential, trade secret or proprietary to the disclosing party or any third party that has furnished such information to the disclosing party. Without limiting the generality of the foregoing, Confidential Information of Row 44 shall include all information related to the intellectual property comprising the Product Kit, the Service and the business models and methodologies associated therewith. Notwithstanding the foregoing, Confidential Information shall not include any information to the extent it: (i) was publicly known or generally available in the public domain prior to disclosure or becomes publicly known or generally available in the public domain through not act or omission of the receiving party; (ii) was rightly known by the receiving party, without restriction, prior to the time of first disclosure by disclosing party; (iii) was independently developed by the receiving party without the use of the Confidential Information of the disclosing party; or (iv) was rightfully obtained by receiving party without restriction from a third party who has the right to make such disclosure and without breach of any duty of confidentiality to the disclosing party.

 

4.1.2.           Restrictions on Use and Disclosure of Confidential Information. The Parties agree that during the Term and so long as Confidential Information of the disclosing Party remains in the receiving Party’s possession: (i) to hold the Confidential Information of the disclosing party in trust and strictest confidence; (ii) to use the Confidential Information of the disclosing party only for the benefit of the disclosing party; (iii) not to use the Confidential Information of the disclosing party in any manner or for any purpose not expressly set forth in this Agreement; (iv) to reproduce the Confidential Information of the disclosing party only to the extent reasonably required to fulfill the receiving party’s obligations hereunder; (v) to keep the Confidential Information of the disclosing party in a secure facility when not in use; and (vi) not to disclose, deliver, provide, disseminate or otherwise make available, directly or indirectly, any Confidential Information of the disclosing party to any third party without first obtaining the disclosing party’s express written consent on a case-by-case basis. A Party may disclose the other Party’s Confidential Information to its employees and representatives who have a need to know such Confidential Information, and, in connection with a potential transaction or as a reporting obligation pursuant thereto, to fundraising sources and their respective advisors. Each Party shall take at least the same degree of care that it uses to protect its own most highly confidential and proprietary information of similar nature and importance (but in no event less than reasonable care) to protect the confidentiality and avoid the unauthorized use, disclosure, publication or dissemination of the Confidential Information of the disclosing party. Notwithstanding the foregoing, a Party may disclose the Confidential Information of the other Party to the extent specifically required by applicable law; provided, that, such Party shall first give reasonable advance notice of such compelled disclosure to disclosing party, and shall cooperate with the disclosing party in connection with any efforts to prevent or limit the scope of such disclosure and/or use of the applicable Confidential Information.

  

 
 

 

4.2.           Indemnification .

 

4.2.1.           Indemnification by Row 44. Row 44 indemnifies and holds Customer harmless from and against any and all third party claims, actions, damages, liabilities, or expenses, including reasonable attorneys’ fees and costs, to the extent arising out of Row 44’s gross negligence or willful misconduct and resulting in injury to or death to any person or material loss or damage to any property.

 

4.2.2.           Indemnification by Customer . Customer indemnifies and holds Row 44 harmless from and against any and all third party claims, actions, damages, liabilities, or expenses, including reasonable attorneys’ fees and costs, to the extent arising out of Customer’s gross negligence or willful misconduct and resulting in injury to or death to any person or material loss or damage to any property.

 

4.2.3.           Indemnification Generally. Each Party’s indemnification obligations shall be conditioned on the other Party providing prompt notice to such indemnifying Part of any claim or threatened claim for which indemnification may be applicable, and permitting the indemnifying Part to control the defense of such claim or threatened claim. For purposes of the indemnification obligations herein, Customer and Row 44 shall be deemed to include each of their respective officers, directors, agents and employees.

 

4.3.           Intellectual Property Ownership . Customer acknowledges and agrees that the sale of Product Kits and provision of the Service by Row 44 pursuant to this Agreement does not in any way sell, transfer, license or assign any intellectual property rights associated with such Product Kits or Service (except for the implied limited license to use the intellectual property incorporated into Product Kits or the Service solely in connection with the use of such items pursuant to the terms hereof), and that all such intellectual property rights are retained by Row 44 and its Third Party Partners, as applicable.

 

4.4.           Insurance . Row 44 will maintain comprehensive general liability insurance, including aircraft products and completed operations liability, with a combined single limit for bodily injury and property damage in an amount of not less than *** per occurrence. Customer will maintain comprehensive general liability insurance, with a combined single limit for bodily injury and property damage in an amount of not less than *** per occurrence.

 

4.5.           Additional Work. Any additional services provided by Row 44 and not specifically set forth herein as included with the fees set forth herein shall be provided pursuant to a written, mutually agreeable statement of work and purchase order covering, without limitation, the scope of work, respective responsibilities and estimated fees associated therewith.

 

 

*** Confidential treatment requested.

 

 
 

 

5.           Payment Terms

 

5.1.           Pricing and Payment for Product Kits and Spare Parts . The price for each Product Kit for the Initial Fleet Order and for Product Kit shall be as set forth on Schedule F; provided, that, following the initial three (3) year term of this Agreement, Row 44 may amend Schedule F with prices for any Renewal Term of this Agreement in an amount not to exceed the year over year percentage changes from the Effective Date in accordance with the formula set forth on Schedule F-1; provided, that, the amount of such increase shall not be more than *** per year since that most recent adjustment. In addition, the prices for any improved version of the Product Kit or features and services not set forth in this Agreement shall be as Row 44 provides Customer from time to time; provided, that Row 44 will have a feature/performance equivalent version of the current Product Kit available for purchase by Customer at the price set forth herein during the Term. Row 44 shall be paid by Customer for each Product Kit or Spare Part Customer orders according to the following schedule: (i) on the date of the specific purchase orders, *** of the total price for the Product Kits or Spare Parts ordered will be invoiced as per standard terms (30 days); and (ii) on defect free receipt (pursuant to an identified inspection procedure provided to Row 44) and 2 weeks after delivery of each Product Kit or Spare Part, *** of the total price of such Product Kit or Spare Part will be invoiced as per standard terms (30 days).

 

5.2.           Pricing and Payment for Service . Pricing for the Service shall be as set forth on Schedule F. ***

 

 

5.3.          ***

 

5.4.           General Payment Terms .

 

5.4.1.           Account.  All payments made by Customer to Row 44 hereunder shall be made by electronic funds transfer to an account and account beneficiary as designated by Row 44 from time to time. All payments shall be in United States Dollars.

 

5.4.2.           Interest. In addition to any other remedies, in the event any payment due from Customer hereunder has not been received by Row 44 on the applicable due date, such payment shall accrue interest at the lesser of (i) 1.00% per month for each month, pro-rated for the actual number of days between the due date and the date payment is received or (ii) the maximum rate allowed under applicable law.

 

 

*** Confidential treatment requested.

 

 
 

 

5.4.3.           Audit Rights. Row 44 (or its designated representative) shall have the right to audit Customer’s books and records, including retaining copies thereof, to verify the correct payment of all fees due Row 44 hereunder. In the event such audit determines that Row 44 was underpaid by Customer, Customer shall reimburse Row 44 the amount of such underpayment and the reasonable costs of the audit, provided that reimbursement of audit costs shall never exceed the amount of the underpayment. All records and information obtained by Row 44 in connection with such audit shall be deemed Confidential Information; provided, that, Row 44 may use such information in a claim or other dispute resolution proceeding regarding amounts due and payable to Row 44.

 

5.4.4.           Fees, Surcharges and Taxes . Customer acknowledges that the prices set forth in this Agreement are exclusive of all applicable fees, import duties, surcharges and taxes with respect to items purchased and the services provided hereunder, except for taxes based solely on the net income of Row 44.

 

6.          Term and Termination

 

6.1.           Initial Term; Extensions . Unless earlier terminated, the initial term of this Agreement shall commence on the Effective Date and shall continue for a period of three (3) years (the “ Initial Term ”), and shall thereafter renew for an additional two (2) year term (each a “ Renewal Term ” and, collectively with the Initial Term, the “ Term ”), unless either Party gives the other Party *** days prior written notice of its intent not to renew this Agreement. If either Party provides the other Party a notice of such Party’s intent not to renew this Agreement, the Parties agree to meet and confer in good faith regarding terms under which the Agreement could be renewed for an additional Renewal Term, unless the Parties agree on the terms for a Renewal Term the Agreement will lapse at the end of the relevant Term.

 

6.2.           Termination; Suspension of Service.

 

6.2.1.           Termination for Breach . This Agreement may be terminated by either Party hereto if the other Party materially breaches the terms hereof, and such other Party has failed to cure such breach within *** days of notice from the non-breaching Party; provided, that, the cure period with respect to failure to make any payment due to Row 44 hereunder shall be *** days.

 

6.2.2.           Termination for Insolvency . Either Party may terminate this Agreement immediately upon delivery of notice to the other Party, without opportunity to cure, if the other Party (i) is liquidated, dissolved, ceases to do business or otherwise terminates its business operations; (ii) becomes insolvent; (iii) makes a general assignment for the benefit of creditors; or (iv) institutes or has instituted against it any proceedings under any law relating to bankruptcy or insolvency or a receiver or trustee is appointed for all or a substantial portion of its assets, and such proceeding or appointment is not dismissed or discharged within 90 days.

 

 

*** Confidential treatment requested.

 

 
 

 

6.2.3.           Effect of Breach and Termination. Return of Confidential Information. Following the termination or expiration of this Agreement, within 20 days of receipt of a request from either Party, both Parties shall return any and all Confidential Information of the other Party to such Party and an officer of each Party shall certify in writing to the other Party compliance with this provision.

 

6.2.4.           Suspension of Service. In addition to any other rights and remedies Row 44 may have under the terms of this Agreement, Row 44 may suspend Customer’s access to the Service, cease delivery of Product Kits, or suspend any other services provided by Row 44 or its vendors to Customer hereunder during any period in which Customer is in breach of the terms of this Agreement.

 

6.2.5.           Suspension due to legislative directive or authority request . Customer may suspend service if legislative directives and/or authority request require, as determined by Customer in its reasonable discretion, the service to cease.

 

6.2.6.           Termination due to an extended period of suspension. If a suspension of service extends for more than 6 months, each Party may terminate this Agreement forthwith by providing the other Party with a written notice of termination.

 

7.          General Terms

 

7.1.           Counterparts . This Agreement may be executed in counterparts and if so executed in counterparts will be enforceable and effective upon the exchange of executed counterparts or exchange of facsimile transmissions of executed counterparts.

 

7.2.           Rules of Construction and Interpretation . References to articles, sections, schedules and parties are to the Articles, Sections and Schedules of and parties to this Agreement. Headings are included for convenience only and shall not affect the construction of this Agreement. The words "hereof", "herein", "hereunder", and similar terms when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The Parties acknowledge that this Agreement has been prepared and drafted through the efforts of both Parties and agree that in the interpretation, construction and enforcement of the terms and conditions of this Agreement, there shall not be applied against either Party the normal rule of construction that vague or ambiguous terms are to be construed against the drafting party.

  

 
 

 

7.3.           Press Releases . Neither Party hereto will issue any material press releases or other publicity regarding this Agreement or its subject matter without the consent of the other Party.

 

7.4.           Disclaimers and Liability Limitations . EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN, ROW 44 SPECIFICALLY DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, RELATING TO THE PRODUCT, INCLUDING THE PRODUCT KITS AND THE SERVICE, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND OR NATURE (INCLUDING LOST PROFITS AND LOST REVENUES) ARISING OUT OF OR RELATING TO THIS AGREEMENT, EXCLUDING SUCH LIABILITIES WHICH MAY ARISE AS A RESULT OF GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF A PARTY. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY LOSSES OR DAMAGES OF ANY KIND OR NATURE ARISING OUT OF OR RELATING TO THIS AGREEMENT IN EXCESS OF THE TOTAL AMOUNT ACTUALLY PAID TO AND RECEIVED BY ROW 44 BY CUSTOMER IN THE PRIOR YEAR, WHICH AMOUNT WILL BE THE MAXIMUM AGGREGATE LIABILITY OF EITHER PARTY TO THE OTHER PARTY HEREUNDER, UNLESS A PARTY HAS ACTED WITH GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. NOTWITHSTANDING THE FOREGOING, THE MAXIMUM AGGREGATE LIABILITY AMOUNT ABOVE SHALL NOT APPLY WITH RESPECT TO AMOUNTS TO BE PAID TO ROW 44 FOR ORDERS FOR PRODUCT KITS AND SPARE PARTS PLACED BY CUSTOMER.

 

7.5.           Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the United States of America and the State of Delaware, excluding its law of conflict of laws.

 

7.6.           Notices . All notices required or permitted under this Agreement shall be in writing and deemed given with personally delivered, sent by electronic transmission (with confirmation of receipt for fax or no notice of non-delivery for e-mail, or upon confirmation of delivery by a recognized commercial overnight carrier, to the address for such Party as set forth on the signature page hereto, or such alternative address as a Party may provide the other Party via this notice provision.

 

7.7.           Compliance with Law . Each Party will comply with all applicable laws and regulations applicable to the performance by the Parties of their respective obligations hereunder, including, without limitation, in the case of Customer, all laws, policies and regulations applicable to the marketing, sale and use of the Service. The Parties agree that the United Nations Convention on Contracts for the International Sale of Goods will not apply to this Agreement.

  

 
 

 

7.8.           Export Controls . Each of the Party’s agrees that this Agreement and the equipment and services delivered hereunder are subject to all applicable export controls of the United States, and each Party hereto agrees to comply with the terms of such export controls as administered and/or imposed by the applicable governmental body. Each Party agrees to reasonably assist the other Party in such compliance, including assistance in obtaining any applicable approval or license.

 

7.9.           Waiver . No failure or delay on the part of Customer or Row 44 in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The remedies of either Party provided for herein shall be cumulative and not exclusive.

 

7.10.          Amendments . This Agreement may be amended from time to time only by a written amendment duly executed and delivered by Customer and Row 44.

 

7.11.          No Joint Venture . Nothing contained herein shall constitute the Parties as joint venturers, partners or agents of one another and neither Party shall have the right or power to bind or obligate the other.

 

7.12.          Force Majeure . Except for the exercise of due care, neither Party shall be liable for the failure or delay in performance of any obligation under this Agreement by reason of any event beyond such Party’s reasonable control, including, without limitation, acts of God, fire, flood, earthquake or other natural forces, war, civil unrest, actions or decrees of governmental bodies or freight embargos.

 

7.13.          Severability . If, for any reason, any part of this Agreement is adjudicated invalid, unenforceable or illegal by a court of competent jurisdiction, such adjudication shall not affect or impair, in whole or in part, the validity, enforceability, or legality of any remaining portions of this Agreement.

 

7.14.          Survival . The Parties agree that any provisions hereof which by their nature survive the termination or expiration of this Agreement, shall survive such termination or expiration of this Agreement.

  

 
 

 

7.15.          Assignment . Neither Party shall have the right to, and each Party covenants that it will not, assign or delegate this Agreement or any of its rights, duties or obligations hereunder without the prior written consent of the other Party. This Agreement may not be involuntarily assigned or assigned by operation of law. With the consent of the other Party, not to be unreasonably withheld or delayed, each Party shall have the right to assign (i) this Agreement to any parent or subsidiary, to any entity which results from a merger, de-merger or consolidation with the relevant Party or any person or entity that acquires all or substantially all the assets of the relevant Party related to this Agreement and/or (ii) its rights to receive payment hereunder in connection with a financing transaction. Any assignment, delegation or transfer, or attempt at the same, in violation of the foregoing shall be void and without effect.

 

7.16.          Further Assurances . Each Party to this Agreement shall, at its own expense, furnish, execute and deliver all documents and take all actions as may be reasonably be required to effect the terms and purposes of this Agreement.

 

7.17.          Attorneys Fees . In the event of any litigation or other proceeding is brought by either Party arising out of relating to this Agreement, the prevailing Party in such litigation or other proceeding shall be entitled to recover from the other Party all reasonable costs, attorneys fees, professional fees and other expenses incurred by such prevailing Party in such litigation or proceeding.

 

7.18.          Entire Agreement . This Agreement, including all schedules and exhibits hereto, and any other agreements referenced herein constitute the entire agreement between the Parties, and supersedes any prior written or oral agreement or understanding with respect to the subject matter hereof.

 

7.19.          Binding Effect . This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their permitted successors and assigns.

 

7.20.          Dispute Resolution . In the event any dispute or controversy arising out of or relating to this Agreement, whether based on law, equity or any other legal theory (a “ Dispute ”), the Parties agree to exercise their best efforts to resolve the Dispute as soon as possible through good faith negotiations. If good faith negotiations do not resolve the Dispute, either Party may submit the Dispute to arbitration in Luxembourg or such other neutral location as Row 44 and Customer may agree. The arbitration proceedings shall be governed by and otherwise carried out in accordance with the rules of the London Court of International Arbitration. The language of the arbitration proceedings shall be English.

 

7.21.         ***

 

7.22.          Designated personnel. Row 44 will fully support Customer with one (1) dedicated person for Technical installation and one (1) dedicated person for Commercial.

 

(Signature Page Follows)

 

 

*** Confidential treatment requested.

 

 
 

 

IN WITNESS WHEREOF , the Parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the Effective Date.

 

CUSTOMER   ROW 44
     
Norwegian Air Shuttle   Row 44, Inc.
         
By: /s/ Hans-Petter Aanby   By: /s/ John Guidon
         
Name:

Hans-Petter Aanby

  Name: John Guidon
         
Title: CIO   Title: CEO
         
Address: Norweigan Air Shuttle AS   Address: 4353 Park Terrace Drive, Suite 100
  Postboks 115, N 1330 Fomebu     Westlake Village, CA 91361
        Attn: CEO/COO
  Attn:       Fax: 818-706-9431
  Fax:        

 

(Signature Page to Systems and Services Agreement)

 

 
 

 

Appendix A

 

Glossary

 

AAA ” shall have the meaning set forth in Section 7.20.

 

Agreement ” shall have the meaning set forth in the preamble.

 

AOG ” shall have the meaning set forth in Section 1.9.

 

Commissioned Aircraft ” shall have the meaning set forth in Section 1.4.3.

 

Confidential Information ” shall have the meaning set forth in Section 4.1.1.

 

Customer ” shall have the meaning set forth in the preamble.

 

Dispute ” shall have the meaning set forth in Section 7.20.

 

EASA ” shall have the meaning set forth in Section 1.4.2.

 

Effective Date ” shall have the meaning set forth in the preamble.

 

Enplanement ” shall mean an enplaned customer travelling on board a Commissioned Aircraft during a single flight leg.

 

FAA ” shall have the meaning set forth in Section 1.4.2.

 

Initial Fleet Order ” shall have the meaning set forth in Section 1.1.

 

Initial Term ” shall have the meaning set forth in Section 6.1.

 

Landing Page ” shall have the meaning set forth in Section 2.4.

 

Operational Commissioned Aircraft” is defined herein as an aircraft of Customer which has passed commissioning procedures and all system components are functioning properly so as to make the aircraft available for the Service.

 

Operational Data shall mean the use of the Service by Customer directly instead of customers of Customer and for the transmission by Customer of data related to the operations of Customer, including its aircraft.

 

Party ” or “ Parties ” shall have the meaning set forth in the preamble.

 

Per Enplanement Fee ” shall have the meaning set forth on Schedule F.

 

Product ” shall have the meaning set forth in the recitals.

 

Product Kit ” shall have the meaning set forth in the recitals.

 

Renewal Term ” shall have the meaning set forth in Section 6.1.

 

Row 44 ” shall have the meaning set forth in the preamble.

 

Service ” shall have the meaning set forth in the recitals.

 

 
 

 

Spare Parts ” shall mean the Customer replaceable sub-components of the Product Kit.

 

Term ” shall have the meaning set forth in Section 6.1.

 

Third Party Partners ” shall mean Row 44’s authorized component vendors or service providers.

  

 
 

 

Schedule A

Equipment Comprising Product Kit

 

***

 

Row 44 to confirm that part numbers will be provided once the STC is obtained.

Row 44 to provide detailed assembly and sub-assembly descriptions to enable quality assurance on receipt of equipment by the customer.

 

 

*** Confidential treatment requested.

 

 
 

 

Schedule C

Equipment lead time

 

***

 

Row 44 agrees to act as the single point of contact for ordering spares unless Customer advises otherwise.

 

 

*** Confidential treatment requested.

 

 
 

 

Schedule D

Service Features and Restrictions

 

Service Features/Performance:

 

The Service shall deliver broadband Internet access, including ground-based backhaul Internet connectivity, satellite-based data connectivity to each aircraft for (i) Wi-Fi-based Internet access availability to customer’s of Customer within the cabin and (ii) electronic Operational data services provided by Customer, all with the bandwidth performance target of *** on board Customer’s operational Commissioned Aircraft.

 

Row 44 shall provide Customer access to its web-based status page service which shall report the operational and disruptive status of each Commissioned Aircraft and the performance of the system on such aircraft.

 

Service Availability:

 

Normal Operations shall mean periods in which:

 

The applicable Customer aircraft is in a proper position to receive the Service, as follows:

 

a.           For Customers customer the aircraft is operating above *** feet (AGL);

b.           For Customer Operational Data whenever the system is switched on (subject to applicable law and regulations) and there is a clear line of sight to satellite.

b.           The applicable System Unit component has not been disabled or miss-configured by Customer;

               ***

 

Normal Operations shall not include:

 

1.          Periods of general disruptions to data or Internet networks or satellite communications outside of Row 44’s network and/or control, including, without limitation, general atmospheric disruption of satellite communications or failure of a domain name server or related critical internet function.

 

2.          Periods in which the Service is specifically disrupted due to adjacent satellite interference outside of Row 44’s control.

 

3.          Periods of flight over locations where governmental restrictions on satellite communications are in effect.

 

4. Periods in which the Service is unavailable due to general satellite communication preemption by a governmental authority.

 

Definition of a ‘disrupted flight’:

 

Any flight that has a total continuous outage that is greater than *** during Normal Operations will be classed as ‘DISRUPTED’ – Fees will be payable according to this table for a disrupted flight:

 

***

 

Coverage Area:

 

See attached Schedules D-1 and D-2 for satellite coverage map and current European coverage area authorizations, respectively.

 

 

*** Confidential treatment requested.

 

 
 

 

Notwithstanding the foregoing, Row 44 and Customer acknowledge that the outer-edge of the above coverage areas and/or the outer-edge of an applicable satellite coverage region may be areas in which the throughput requirements above may not be available for the entire period the Service is available. In addition, the coverage area above is based on commonly used airline passenger flight routes and not coverage throughout the entirety of a region.

 

***

 

Restrictions

 

Use of the Service shall be subject to all rules and regulations established by applicable governmental authorities, including the FAA, EASA, the FCC, including Row 44’s FCC license, and the requirements any governmental authority or license binding on the Service as a result of its use in the coverage area.

 

The Service may not be used to provide a data link from avionics maintenance monitoring equipment or a component that collects avionics information while the applicable aircraft is on the ground.

 

 

*** Confidential treatment requested.

 

 
 

 

Schedule D-1

Satellite Coverage Map

 

***

 

 

*** Confidential treatment requested.

 

 
 

 

Schedule D-2

Country Authorizations

 

***

 

 

*** Confidential treatment requested.

 

 
 

 

Schedule D-2

Country Authorizations

Part 2

 

***

 

 

*** Confidential treatment requested.

 

 
 

 

Schedule E

Minimum Terms of Service

 

PROHIBITED CONDUCT

 

You agree not to use the Service as follows: (a) for any unlawful, improper or criminal purpose or activity; (b) to post or transmit information or communications that, whether explicitly stated, implied, or suggested through use of symbols, are libelous, defamatory, invasive of another person’s privacy, sadistic, cruel, or racist in content; or which espouses, promotes or incites bigotry, hatred or racism; or which might be legally actionable for any reason; (c) hurts minors in any way; (d) forge headers or otherwise manipulate identifiers in order to disguise the origin of any content transmitted through the Service; (e) intentionally or unintentionally violate any applicable local, provincial, state, national or international law, including, but not limited to, rules, orders and regulations having the force of law; (f) to attempt to access or access the accounts of others, to spoof or attempt to spoof the URL or DNS address, or to attempt to penetrate or penetrate our security measures or other entities' systems ("hacking") whether or not the intrusion results in corruption or loss of data; (g) to bombard individuals or newsgroups with uninvited communications, data or information, or other similar activities, including but not limited to "spamming", "flaming" or denial or distributed denial of service attacks; (h) to transmit unsolicited voluminous emails (for example, spamming) or to intercept, interfere with or redirect email intended for third parties using the Service; (i) to introduce viruses, worms, harmful code and/or Trojan horses on the Internet; (j) to post information on newsgroups which is not in the topic area of the newsgroup; (k) to interfere with another person's usage or enjoyment of the Internet or this Service; (l) to post or transmit information or communications that are defamatory, fraudulent, obscene or deceptive, including but not limited to scams such as "make-money-fast" schemes or "pyramid/chain" letters; (m) to damage the name or reputation of Service Provider or its subcontractors, or any of their respective parents, affiliates and subsidiaries, or any third parties; (n) to transmit confidential or proprietary information, except solely at your own risk; (o) to violate our or any third party's copyright, trademark, proprietary or other intellectual property rights, including trade secret rights; (p) to generate excessive amounts (as determined in our sole discretion) of Internet traffic, or to disrupt net user groups or email use by others; (q) to engage in activities designed to or having the effect of degrading or denying Service to other users or others (including activities that compromise a server, router, circuit or software; (r) to use any name or mark of Service Provider Hughes Network Systems, or their respective parents, affiliates or subsidiaries, as a hypertext link to any Web site or in any advertising publicity or other commercial manner; (t) to use the Service or the Internet in a manner intended to threaten, harass, or intimidate others; (u) to cause the screen to "scroll" faster than other subscribers or users are able to type to it, or any action that has a similar disruptive effect, on or through the Service; (v) to use the Service to disrupt the normal flow of online dialogue, (w) to use the Service to violate any operating rule, policy or guideline of any other online services provider or interactive service; (x) to attempt to subvert or to aid third parties to subvert, the security of any computer facility or system connected to the Internet; (y) to impersonate any person or using a false name while using the Service; (z) to install "auto-responders," "cancel-bots" or similar automated or manual routines which generate excessive amounts of net traffic, or disrupt net user groups or email use by others; (aa) to make false or unverified complaints against any subscriber, or otherwise abusing any of our complaint response procedures; (bb) to export software or any information in violation of US export laws; or (cc) to use the Service in contravention of the limitations of the pricing plan you have chosen.

 

ILLEGAL PURPOSES

 

You agree not to use the Service nor any of its elements or related facilities or capabilities to conduct any business or activity, or solicit the performance of any activity, which is prohibited by or would violate any applicable law, rule, regulation or legal obligation.

 

OTHER OBLIGATIONS RELATING TO CONTENT

 

You agree we do not, and we shall not without cause, pre-screen content transmitted by you over the Service, but we shall have the right (but not the obligation) in our sole discretion to refuse or move any such content that is available via the Service, including without limitation any content that violates the terms of this Agreement or is otherwise objectionable. You agree to evaluate, and bear all risks associated with, the use of any content, including any reliance on the accuracy, completeness, or usefulness of such content, and acknowledge that you may not rely on any content created by, or submitted to, ourselves.

 

 
 

 

You agree we may preserve and disclose content if required to do so by law or in the good faith belief that such preservation or disclosure is reasonably necessary to: (a) comply with legal process; (b) enforce the terms of this Agreement; (c) respond to claims that any content violates the rights of third-parties; or (d) protect the rights, property, or personal safety of Service Provider, its users and the public.

 

RESERVATION OF RIGHTS

 

We reserve all copyrights and other rights in and to any content available through the Service which is identified as, claimed by us as, or known by you to be, proprietary to us (or our licensors). The content on the Service is protected under applicable copyright law, including as a collective work. All copying, modification, distribution, publication or other use by you, or by any user of your account, of any such content or other works is prohibited, except as expressly permitted by ourselves.

 

NO ENDORSEMENT

 

We do not endorse or in any way vouch for the accuracy, completeness, truthfulness or reliability of any service, opinion, advice, communication, information or other content on or made available through the Service. None of such content should be construed or understood to constitute or reflect the views or approval of Service Provider or any of the subcontractors, subsidiaries or affiliates. We do not recommend that such content be relied on for reaching important decisions or conclusions without appropriate verification and, as appropriate, professional advice.

 

INTERNET

 

YOU ACKNOWLEDGE THAT INTERNET SITES, AND USE OF THE INTERNET, MIGHT CONSIST OF, INCLUDE AND/OR PROVIDE ACCESS TO IMAGES, SOUND, MESSAGES, TEXT, SERVICES OR OTHER CONTENT AND MATERIAL THAT MAY BE UNSUITABLE FOR MINORS AND THAT MAY BE OBJECTIONABLE TO MANY ADULTS. YOU ACKNOWLEDGE THAT WE ARE NOT RESPONSIBLE FOR ANY SUCH CONTENT OR MATERIAL AND AGREES THAT ACCESS TO SAME THROUGH USE OF THE SERVICE IS AT YOUR SOLE RISK. The reliability, availability, legality, performance and other aspects of resources accessed through the Internet are beyond our reasonable control and are not in any way warranted or supported by ourselves or our third party contractors. You acknowledge that safeguards relative to copyright, ownership, appropriateness, reliability, legality and integrity of content may be entirely lacking with respect to the Internet and content accessible through it. You confirm that you assume all risk and liability of any use of the Internet through your account, including your continuous compliance with the Subscriber Agreement.

 

DISCLAIMER OF WARRANTIES, LIABILITY AND RESPONSIBILITY

 

YOU EXPRESSLY AGREE THAT USE OF THE SERVICE IS AT YOUR SOLE RISK. NEITHER WE NOR ANY OF OUR INFORMATION OR CONTENT PROVIDERS, SERVICE PROVIDERS, LICENSORS, EMPLOYEES OR AGENTS WARRANT THAT THE SERVICE WILL BE UNINTERRUPTED OR ERROR FREE; NOR DO WE OR ANY OF OUR INFORMATION OR CONTENT PROVIDERS, SERVICE PROVIDERS, LICENSORS, EMPLOYEES OR AGENTS MAKE ANY WARRANTY AS TO THE RESULTS TO BE OBTAINED FROM USE OF THE SERVICE, INCLUDING ANY MINIMUM UPLOAD OR DOWNLOAD SPEEDS. THE SERVICE IS DISTRIBUTED ON AN "AS IS" AND "AS AVAILABLE" BASIS WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF TITLE OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, EXCEPT FOR THOSE WARRANTIES, IF ANY, WHICH ARE IMPLIED BY, AND INCAPABLE OF EXCLUSION, RESTRICTION OR MODIFICATION UNDER, THE LAWS APPLICABLE TO THIS SUBSCRIBER AGREEMENT. WE EXPRESSLY DISCLAIM ANY REPRESENTATION OR WARRANTY THAT THE SERVICE WILL BE ERROR FREE, SECURE OR UNINTERRUPTED OR OPERATE AT ANY MINIMUM SPEED. NO ORAL ADVICE OR WRITTEN INFORMATION GIVEN BY OURSELVES, OUR EMPLOYEES, DEALERS, AND LICENSORS OR THE LIKE SHALL CREATE A WARRANTY; NOR SHALL YOU RELY ON ANY SUCH INFORMATION OR ADVICE. IN ADDITION, WE FURTHER DISCLAIM ANY LIABILITY OR RESPONSIBILITY FOR THE TIMELINESS, DELETION, MIS-DELIVERY, NON-DELIVERY OR FAILURE TO STORE OR ACCURATELY STORE, ANY E-MAIL OR OTHER COMMUNICATIONS, ADDRESSES OR PERSONALIZATION SETTINGS.

 

 
 

 

IN PARTICULAR, BECAUSE WE MAY PROVIDE ITS SUBSCRIBERS WITH ELECTRONIC ACCESS TO THE CONTENT AVAILABLE ON THE SERVICE, WHICH CONTENT MAY BE ORIGINATED BY INDEPENDENT PUBLISHERS AND/OR PROVIDERS AND WHICH CONTENT IS NOT AUGMENTED BY OURSELVES, WE CANNOT AND DO NOT WARRANT THE ACCURACY OF ANY OF THE INFORMATION AS ORIGINATED BY SAID INDEPENDENT PUBLISHERS AND/OR PROVIDERS, AND WE SHALL NOT BE LIABLE IN ANY MANNER WHATSOEVER FOR ANY ERRORS, OMISSIONS, OR INACCURACIES RELATING THERETO. IF DEFECTIVE, YOU - NOT OURSELVES, OUR DEALERS, DISTRIBUTORS, AGENTS, EMPLOYEES OR ANY THIRD-PARTY CONTENT PROVIDER - ASSUME THE CONSEQUENCES RESULTING THEREFROM.

 

NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY OURSELVES, OUR DEALERS, DISTRIBUTORS, AGENTS, EMPLOYEES OR ANY THIRD-PARTY CONTENT PROVIDER, SHALL CREATE ANY WARRANTY IN OR TO THE SERVICE OR THE CONTENT, AND YOU MAY NOT RELY ON ANY SUCH INFORMATION OR ADVICE. THIS WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS. YOU MAY HAVE OTHER RIGHTS, WHICH VARY FROM STATE TO STATE.

 

LIMITATION OF LIABILITY

 

TO THE MAXIMUM EXTENT PERMITTED BY LAW, NEITHER WE NOR ANY OF OUR INFORMATION OR CONTENT PROVIDERS, SERVICE PROVIDERS, LICENSORS, EMPLOYEES OR AGENTS SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF USE OF THE SERVICE OR INABILITY TO USE THE SERVICE OR OUT OF ANY BREACH OF ANY REPRESENTATION OR WARRANTY. WITHOUT IN ANY WAY LIMITING THE FOREGOING, IF FOR ANY REASON, BY OPERATION OF LAW OR OTHERWISE, ANY PORTION OF THE FOREGOING LIMITATION OF LIABILITY SHALL BE VOIDED, THEN IN SUCH EVENT OUR MAXIMUM, SOLE, AND EXCLUSIVE LIABILITY, OUR DEALERS, DISTRIBUTORS, AGENTS, EMPLOYEES OR THIRD PARTY CONTENT PROVIDER, IF ANY, SHALL BE LIMITED TO GENERAL MONEY DAMAGES IN AN AMOUNT NOT TO EXCEED THE TOTAL AMOUNT ACTUALLY PAID TO OURSELVES BY YOU FOR SERVICES FURNISHED UNDER THIS SUBSCRIBER AGREEMENT DURING AND FOR A PERIOD OF TIME COMMENCING UPON THE OCCURRENCE OF SUCH ERROR, DEFECT OR FAILURE AND CEASING UPON THE DISCOVERY OF SUCH, IN WHOLE OR IN PART; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL SUCH PERIOD OF TIME EXCEED THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE DATE WHICH SUCH ERROR, DEFECT OR FAILURE IS FIRST DISCOVERED IN WHOLE OR IN PART.

 

INDEMNITY

 

You agree to indemnify Service Provider, Hughes Network Systems, and each of their respective subcontractors against all claims, liability, damages, costs and expenses, including but not limited to reasonable attorneys fees, arising out of or related to any and all use of your account, including any content transmitted over the Service, your use of the Service, your violation of this Agreement, and your violation of any rights of any other person. This includes, without limitation, responsibility for all such consequences of your (or that of any user of your account) violation of this Subscriber Agreement or placement on or over, or retrieval from or through, the Service of any software, file, information, communication or other content.

 

PROPRIETARY RIGHTS

 

Except for public domain material, all copyrightable content distributed over the Service is copyrighted by ourselves or the third-party content provider. We and/or such third party content providers own all right title and interest to such content and you may not copy, distribute, transmit or publish, in any form, including printed, electronic, digitized, audio or otherwise, or modify all or any portion of such content without the prior written consent of the copyright owner; provided, however, that you may store one copy of the content on your personal computer for your personal use for a period not to exceed thirty calendar days. All copyright or other proprietary rights notices contained in or associated with the content or contained therein must be preserved in, or on, any copies made of such material. The placement of copyrighted material in any public posting area, or any software library, without the consent of the copyright owner is in violation of this Subscriber Agreement.

 

 
 

 

Schedule F

Prices

 

Product Kit Price

 

***

Initial Spare Part Pricing

 

***

 

FAA/EASA Approval

 

***

 

AOG Support

 

Row 44 will provide telecommunications based 24/7 AOG support free of charge. This will be an appropriately qualified person who can support and provide corrective support for inoperable aircraft.

 

Installation Support

 

***

 

Service Fee Pricing

 

***

 

Monthly Data Usage Allowance

 

***

 

The Operational Data Service will provide Customer with an allowance of *** per operational aircraft per ***.

The applicable charge for operational data usage above *** of the Service per operational aircraft per *** shall be *** for usage during periods the Service is available to customers of Customers and *** for usage during periods the Service is not available to customers of Customers.

 

Service availability at airports is subject to regulatory clearance for each airport and that severe weather may impair service on the ground. Service to passengers below *** feet is not allowed by FAA or EASA as per the standard personal electronic device policies implemented by most airlines. The Operational Data Service will be subject to sensible provisions designed to minimize impact of this data to the network and the customer experience.

 

Sponsored Activities Revenue Share

 

***

 

 

*** Confidential treatment requested.

 

 
 

 

Schedule F-1

Price Adjustment Formula

 

 

Formula:

 

***

 

 

*** Confidential treatment requested.

 

 
 

 

Schedule G

Service Fee Calculation

 

***

 

 

*** Confidential treatment requested.

 

 

 

 

Exhibit 10.8

 

CONFIDENTIAL TREATMENT REQUESTED FOR PORTIONS OF THIS DOCUMENT. PORTIONS FOR WHICH CONFIDENTIAL TREATMENT IS REQUESTED HAVE BEEN MARKED WITH THREE ASTERISKS [***] AND A FOOTNOTE INDICATING "CONFIDENTIAL TREATMENT REQUESTED". MATERIAL OMITTED HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

OEM PURCHASE AND DEVELOPMENT AGREEMENT

BETWEEN

 

TECOM Industries, Inc.

 

And

 

Row 44, Inc.

 

THIS OEM PURCHASE AND DEVELOPMENT AGREEMENT (this " Agreement ") is entered into and effective as of October 12, 2009 (" Effective Date ") between TECOM Industries, Inc. (" TECOM " or “ Seller ”), a California corporation located at 375 Conejo Ridge Avenue, Thousand Oaks, California 91361, and Row 44, Inc. (“ Row 44 ” or “ Buyer ”), a Delaware corporation located at 31280 Oak Crest Drive, Westlake Village, California 91361, (hereinafter, each a “ Party ” and collectively, the “ Parties ”).

 

RECITALS

 

WHEREAS, Buyer operates a broadband data service for the aviation industry (the “ Row 44 Service ”);

 

WHEREAS, Seller designs and builds custom antennas and antenna systems for the defense, commercial wireless and satellite communications markets;

 

WHEREAS, Seller has developed certain proprietary airborne satellite antenna assembly subsystems technologies and products as more fully described herein;

 

WHEREAS, Seller desires to develop and sell Buyer an airborne satellite antenna subsystem that has obtained Black Label approval for use with the Row 44 Service (the “ Product Antenna System ” or “ Product ”); and

 

WHEREAS, following development of the Product Antenna System, Buyer desires to purchase a number of the Product Antenna Systems, all on the terms set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein the Parties agree as follows:

 

1. DEFINITIONS

 

Agreement ” has the meaning set forth in the preamble.

 

 
 

 

Black Label Approval ” means all the regulatory approvals set forth on Exhibit C hereto and any other similar approvals required by the FAA to supply and distribute the Product Antenna System.

 

Buyer ” has the meaning set forth in the preamble.

 

Claim” has the meaning set forth in Section 11.1.

 

“Effective Date” has the meaning set forth in the preamble.

 

FAA ” means the Federal Aviation Administration.

 

" Improvements " means any improvements, discoveries, developments, modifications or derivative works, whether or not patentable.

 

Indemnified Party ” has the meaning set forth in Section 11.2.

 

Indemnifying Party has the meaning set forth in Section 11.2.

 

Intellectual Property Rights " means all current and future trade secrets, copyrights, patents and other patent rights, trademark rights, service mark rights, mask work rights and any and all other intellectual property or proprietary rights now known or hereafter recognized in any jurisdiction.

 

“Initial Term” has the meaning set forth in Section 13.1.

 

Marks ” has the meaning set forth in Section 9.4.

 

Minimum Order Quantity ” shall mean *** Product Antenna Units.

Party ” or “ Parties ” has the meaning set forth in the preamble.

 

Product Antenna System ” or “ Product ” has the meaning set forth in the recitals.

 

Product Software ” means all software developed for auto tracking algorithms, antenna control unit firmware and systems integration.

 

Related Products ” has the meaning set forth in Section 5.5.

 

“Renewal Term” has the meaning set forth in Section 13.1.

 

Row 44 ” has the meaning set forth in the preamble.

 

Row 44 Service ” has the meaning set forth in the recitals.

 

Seller ” has the meaning set forth in the preamble.

 

Seller Know-how " means the proprietary techniques, inventions, practices, methods, knowledge, designs, skill and experience relating to the development of the Product or Seller's proprietary subsystems Seller discloses to Buyer under this Agreement.

 

*** Confidential treatment requested.  

 

 
 

 

" Seller Patents " means patents issued as of the Effective Date related to the subject matter of this Agreement and the patents to issue after the Effective Date on patent applications entitled to a filing date on or before the Effective Date related to the subject matter of this Agreement, including without limitation all foreign counterparts, all substitutions, extensions, reissues, renewals, divisions, continuations and continuations in part relating to such patents and their foreign counterparts, and which are owned or controlled by Seller (where "controlled" means licensed by Seller with a royalty-free right to grant sublicenses).

 

" Seller Technology " means (i) the inventions, designs, discoveries and processes claimed in the Seller Patents and (ii) the Seller Know-How.

 

" Specifications " means, with respect to the minimum performance of the Product, the ***, attached hereto as Exhibit A-1 , and, with respect to the final Product, the specifications for such Product to be agreed upon by the Parties and to be attached hereto as Exhibit A-2 .

 

Statement of Work ” or “ SOW ” means the Airborne Satellite RF Subsystem Statement of Work, Document Number *** , attached hereto as Exhibit B and setting forth the development scope of work.

 

TECOM ” has the meaning set forth in the preamble.

 

“Term” has the meaning set forth in Section 13.1.

 

Threshold Number ” has the meaning set forth in Section 10.6.

 

2. COMPLETION OF DEVELOPMENT

2.1. Generally . Seller either has or shortly will complete development of the Product Antenna System for general commercial release pending regulatory approvals. In the event Seller has not obtained Black Label Approval for the Product Antenna System by January 31, 2010, then Buyer shall have the right to terminate this Agreement without any liability upon written notice to Seller within thirty (30) days of such date. Subject to the foregoing right of Buyer, upon completion of development, Seller will undertake and diligently pursue obtaining regulatory approval for the Product Antenna System at all times until such approval has been obtained, Buyer exercises its right of termination set forth in this Section 2.1, or approval is denied with prejudice.

 

2.2. Further Assurances . Each Party agrees to provide the other Party such reasonably requested assistance and data to complete the development, qualification and licensing of the Product Antenna System and the other requirements of the Parties set forth in the Statement of Work. With respect to items in the Statement of Work which by their nature require further clarification, the Parties agree to negotiate the work scope and responsibilities with respect to such items in good faith and with the understanding that expenses related to non-recurring engineering costs are the sole responsibility of Seller.

 

*** Confidential treatment requested.  

 

 
 

 

2.3. Development Prototypes . In order to assist Buyer’s integration of the Product Antenna System into the Row 44 Service, to test compliance of the Product Antenna System and to assist in development of the Product Antenna System, *** , Seller shall fabricate *** prototype “red label” Product Antenna Systems, including, *** . In addition, Seller will provide Buyer a *** for purposes of Buyer’s *** . Upon Black Label Approval, Seller agrees to upgrade and/or retrofit *** provided to Buyer for use on its flight test aircraft , unless such upgrade and/or retrofit is not reasonably practical given the changes made to the antenna design since the date of delivery.

 

3. PURCHASE OF PRODUCTS

Acceptance of Orders . Seller agrees to sell the Product to Buyer and to accept purchase orders for the Product from Buyer issued pursuant the terms and conditions of this Agreement. Purchases shall be initiated by Buyer's written or electronically dispatched purchase orders referencing the quantity, the Product, applicable price, shipping instructions and expected delivery schedule. All purchase orders for Products placed by Buyer hereunder shall be governed by the terms and conditions of this Agreement which shall be incorporated by reference into each purchase order. In the event of a conflict between the provisions of this Agreement and the terms and conditions of Buyer's purchase order or Seller's acknowledgment or other written communications, the provisions of this Agreement shall prevail and any such conflicting terms or conditions are hereby rejected. Buyer represents and warrants that its standard form of contracts with Buyer’s end user customer requires that payment will be made to the Buyer within *** days after Buyer’s delivery of Products to the end use customer. Buyer will use its best efforts to enforce compliance with this provision by the end use customers. Upon reasonable request, and with the knowledge and permission of the end use customer, Buyer will provide Seller a copy of the purchase order, relevant portions of the underlying master sales or other contract, as well as other reasonable confirmation of the termination or cancellation provisions of the applicable order from Buyer’s end user customer.

Seller agrees to deliver Product directly to a carrier selected by Buyer for shipment directly to Buyer, Buyer’s end use customer or to a third party installation party(s) at a location(s) as instructed by Buyer. The Buyer represents and warrants that its standard form of contract with Buyer’s end use customer(s) provides that the final acceptance of the Product will be completed upon delivery to the designated location and no testing of the Product will be a condition to acceptance which will commence the *** day time period for payment to Buyer by the end use customer(s).

 

3.1. Lead time . Product Antenna Systems ordered by Buyer from Seller shall be subject to a *** calendar day lead time; provided, that, Seller agrees, subject to Section 5.1, (i) to accept any order issued within the lead time if Seller has the ability to meet such order, (ii) the lead time shall decrease to *** calendar days for orders placed after the initial delivery of Product Antenna Systems hereunder and (iii) Seller agrees to make a good faith, commercially reasonable effort to reduce the lead time during the term of this Agreement. Seller will notify Buyer immediately upon any change in circumstance affecting the ability of Seller to deliver orders. Notwithstanding the foregoing, Seller acknowledges that after the initial *** days of production Buyer has agreed to have available, during any period in which the Product Antenna System is in continuous production, up to *** units of the Product Antenna System in any *** month period upon *** days prior notice (a “Snap Order”). If Buyer receives a Snap Order, Seller will use best efforts to deliver the units requested within the *** day lead time.

 

*** Confidential treatment requested.  

 

 
 

 

3.2. Acknowledgment of Orders . Seller shall notify Buyer of any purchase order Seller reasonably believes is not in conformance with the terms of this Agreement by telephone or facsimile (and promptly confirm in writing) within *** business days after receipt of Buyer's purchase order. Failure of Seller to confirm or respond to Buyer's purchase order within *** business days shall constitute acceptance.

 

3.3. Minimum Orders . Except as set forth herein and with respect to the failure to meet the Development Deadline, Buyer hereby agrees that it will order the Minimum Order Quantity of Product Antenna Systems within *** months of the date by which Seller obtains Black Label Approval; provided, that, the Minimum Order Quantity shall be reduced on a *** basis for any month in which Seller in unable to deliver the ordered quantity of Product Antenna Systems in such month. For example, if in month one (1) Seller is able to deliver only *** of the *** ordered systems, the Minimum Order Quantity shall decrease by *** . For purposes of the Minimum Order Quantity orders, delivery of such units shall be made within *** months of the date of the applicable order except as the Parties otherwise mutually agree.

 

3.4. Cancellation . Buyer may cancel without any liability for such purchase order notwithstanding any obligations that otherwise remain in effect pursuant to this Agreement, any purchase order upon written notice to Seller within *** days from the date such purchase order was accepted by Seller. Subject to the terms hereof, Buyer may cancel any other purchase order issued hereunder at any time; provided, however, if Seller incurs liability (as determined by Seller in its reasonable, good faith judgment) as a result of such cancellation because of the materials and work in process costs incurred by Seller (which work in process costs shall include any purchased materials that are dedicated to the cancelled Products to the extent they cannot be returned/restocked at full cost, labor efforts expended to date at Seller’s standard hourly commercial rates, and reasonable termination costs and charges contractually imposed by Seller’s subcontractors) to meet such purchase order(s), and Seller and Buyer cannot reasonably use such materials and work in process within a reasonable time frame, the Parties agree to discuss in good faith a mutually acceptable plan to limit such liability in the future and to compensate Seller for the materials and work in process costs it has incurred as a result of such cancellation or cancellations; provided, that, orders cancelled with respect to the Minimum Order Quantity shall be subject to the payment terms set forth in Section 13.3 hereof.

 

3.5. Forecasts. Buyer shall provide Seller with a *** month non-binding, forward-looking rolling forecast and update such forecast on a monthly basis. Seller shall use such forecast for internal material planning requirements only. Such forecast does not represent any commitment by Buyer to purchase Products. Further, Seller shall view all forecasts as Confidential Information in accordance with the terms hereof.

 

3.6. Capacity Constraints . If orders for the Product exceed Seller's capacity, Seller shall allocate available capacity on a basis Seller, in its reasonable discretion, deems equitable; provided, that, Buyer shall be treated on the same basis as Seller’s most favored, similarly situated customer (whether commercial or governmental), based on pending dollar volume of orders. In addition, the Parties shall discuss in good faith a mutually acceptable course of action to rectify such capacity constraint as soon as possible.

 

*** Confidential treatment requested.  

 

 
 

 

4. DELIVERY TERMS

 

4.1. Delivery Point . All shipments shall be F.O.B. origin (Seller's U.S. shipping dock), and Buyer shall be responsible for all shipping costs (Buyer shall select the applicable carrier). Title and risk of loss shall pass to Buyer upon Seller's tender of delivery to the common carrier or Buyer's designee. In order to secure payment of all amounts owing to Seller under this Agreement, Seller will have, and Buyer hereby grants to Seller, a purchase money security interest in the Products , any other materials that Seller furnishes, and all proceeds of the foregoing. ***

 

4.2. Shipping . Seller shall not deliver any Products prior to the scheduled delivery date without Buyer's written consent, and Buyer may return early or excess shipments to Seller at Seller's sole risk and expense. Seller may ship partial orders provided Seller notifies Buyer and Buyer agrees prior to shipment. Buyer's purchase order shall specify the carrier or means of transportation or routing, and Seller will comply with Buyer's instructions. Except as otherwise set forth herein, expedited shipping shall be billed to and paid by Buyer. If Buyer fails to provide shipping instructions, Seller shall select the best available carrier, on a commercially reasonable basis. Seller shall accommodate a request to expedite the ship date, if reasonably able to do so.

 

4.3. Packing Instructions . All Products shall be packaged and prepared for shipment in a manner which (i) follows Buyer's packaging and routing guidelines, a copy of which will be provided to Seller, and includes a certificate of conformity and acceptance test results for each unit, (ii) follows good commercial practice, and (iii) is acceptable to common carriers for shipment. Seller shall mark the outside of each shrink wrapped pallet with the applicable Buyer part numbers and any necessary lifting and handling information. Each shipment shall be accompanied by a packing slip which will include Buyer's part numbers, purchase order number, Seller's part number and the quantity shipped.

 

4.4. Delivery Schedule . Delivery shall be pursuant to the schedule set forth in Buyer's purchase order or as otherwise agreed upon by the Parties, including the terms of Section 4.5 below, but not to exceed *** months from the order date unless Seller is unable to deliver the quantity of antennas ordered during such period. Seller shall immediately notify Buyer in writing of any anticipated delay in meeting the delivery schedule, stating the reasons for the delay. If Seller's delivery fails to meet the committed delivery schedule, then Seller shall expedite the routing at Seller's expense; however, if Seller's delivery fails to meet the schedule in excess of *** days, then Buyer, at its sole option and without penalty or any additional expense, may (i) require Seller to expedite the routing by the fastest available commercial carrier; (ii) reschedule the delivery; or (iii) cancel the delivery in whole or in part.

 

4.5. Rescheduling . Buyer and Seller acknowledge and agree that certain orders issued pursuant to this Agreement will be large up-front orders for installation according to a schedule to be determined by Buyer and its customers, which schedule will be subject to change between the date of the order and the date of installation. Except with respect to the *** -month limit in Section 4.4, Buyer shall be entitled to reschedule delivery of Products or quantities of Product scheduled for a particular delivery at any time for a particular purchase order; provided, however, that Buyer may not reschedule delivery of Products beyond *** days from the original delivery date in the applicable purchase order. Buyer and Seller agree to work in good faith to establish order and delivery schedules that maximize the ability to obtain bulk component discounts, match production schedules with delivery schedules, and minimize storage of completed Products due to delay. Following initial production ramp up, Buyer and Seller agree to discuss in good faith modification of this Section 4.5 to establish a “Firm Zone”, “Trade-off Zone” and “Remaining Horizon” forecast, order and delivery model based on the ongoing production needs of Buyer and Seller’s improvements to the lead time for orders.

 

*** Confidential treatment requested.  

 

 
 

 

5. PRICING; PAYMENTS; TAXES

 

Prices . Subject to the terms hereof, the prices for the Product Antenna System and related components during the Term shall be as set forth in Exhibit D on a per purchase order basis. *** Finally, Buyer agrees to place its first order of Product Antenna Systems by October 14, 2009; provided that Buyer and Seller agree, however, that such initial purchase order shall be expressly conditioned upon Seller obtaining Black Label Approval on or before January 31, 2010. Only if Seller (i) meets the deadline or (ii) misses such deadline and Buyer subsequently chooses not to terminate the Agreement in accordance with its rights set forth in Section 2.1 would the purchase order become effective and be binding on the parties. Notwithstanding anything contrary to this elsewhere in the Agreement, once the first order becomes binding and effective as described in this Section it shall not be subject to cancellation for any reason and delivery may not be extended more than *** days in good faith based upon mutual delivery and installation adjustment between Buyer and its customer(s).

 

5.1. Invoices . Subject to acceptance of Products as provided in this Agreement, invoices shall be due and payable *** days after the date of actual receipt of the Products by Buyer or Seller's invoice, whichever is later.

 

5.2. Late Payment . Any payment not made within *** days after it is due shall bear interest at a rate equal to *** percent ( *** %) per month or the highest rate permitted by applicable law, whichever is less, on the unpaid amounts from time to time outstanding from the date on which portions of such amounts became due and owing until payment thereof in full. This clause shall be a non-exclusive remedy for Seller.

 

5.3 Taxes and Duties . The prices for the Products are exclusive of all applicable sales or use taxes based on laws of the United States and/or the applicable states. Such taxes, when applicable, will appear as separate items on Seller's invoice. All import duties, customs fees or other taxes based on import of materials, components, or other goods into the United States that are used in the manufacture of the Products shall be payable by Seller and shall not impact the pricing set forth in this Agreement unless expressly set forth in this Agreement or on a purchase order.

 

5.4 ***

 

5.5 Price Adjustments . Except with respect to the Minimum Order Quantity and contemporaneously ordered Spare Parts for which prices shall be fixed according to this Agreement, ***

 

6. ACCEPTANCE; QUALITY ASSURANCE

 

6.1. Buyer Testing . Seller acknowledges that Buyer will conduct periodic testing of Product deliveries, likely by testing sample units within a lot delivery. Should such sample testing reveal a likelihood of more than a minimal number of failures of the Products delivered to comply with the limited warranty set forth in Section 10, Buyer may return the entire Product lot delivered to Buyer pursuant to the warranty return procedures set forth in this Agreement for further testing by Seller. For purposes hereof, a minimum number of failures shall mean one failure in any lot of under *** units and two failures in any lot equal to or greater than *** units, and the units in a lot shall be all units delivered in any *** day period (except where a unit lot is reasonably identifiable and extends beyond a *** day period).

 

*** Confidential treatment requested.  

 

 
 

 

6.2. Inspection Rights . Buyer and its end customers shall have the right to perform vendor qualifications and/or on-site source inspections at Seller's manufacturing facilities and Seller shall reasonably cooperate with Buyer in that regard. If an inspection or test is made on Seller's premises, Seller shall provide Buyer's inspectors with reasonable facilities and assistance at no additional charge. Buyer may conduct such inspections as required. Buyer must provide advance written notice of a desire to conduct an inspection of at least *** days prior to the beginning of such inspection. Such inspection shall be conducted only during normal business hours and in compliance with Seller's reasonable safety and security requirements.

 

6.3. ISO 9001 Compliant Supplier . Seller represents that it is currently ISO 9001 compliant. Should Seller lose the ISO 9001 registration thereafter, Seller will notify Buyer immediately. Seller will then use commercially reasonable measures to obtain re-registration within *** days. The Parties acknowledge that Seller may subcontract manufacture of Products to a subcontractor.

 

7. REGULATORY COMPLIANCE

 

7.1. Requirements . All Products delivered hereunder, shall comply with the regulatory agency requirements to be set forth in the Specifications. The responsibilities for obtaining applicable licensing and qualification shall be as set forth in the Statement of Work, and, notwithstanding the foregoing, the Parties agree to provide any assistance reasonably requested by the other Party in completing the licensing and qualification of the Product Antenna System (separately and in coordination with the other components of the Row 44 Service) with applicable governmental authorities. Notwithstanding the foregoing, Seller shall be responsible for maintaining the appropriate FAA repair certification (i.e. CFR 145 Repair Station Certification) such that Seller can repair the Product pursuant to the warranty terms set forth in this Agreement.

 

7.2. Responsibility for Export and Import Documentation . Seller shall furnish Buyer or Buyer's designee with the information necessary for Buyer to timely obtain all required export and import documentation, and shall provide reasonably requested assistance to Buyer in completing the same.

 

7.3. Country of Manufacture . Seller represents and warrants that final assembly of the Product shall be in the United States. Seller shall promptly advise Buyer at least *** days prior to a change in or addition to any manufacturing locations for the key components of the Product.

 

7.4. Commodity Classification . Seller shall provide Buyer with a copy of the Commodity Classification for the Products or, if this is not available, Seller shall provide Buyer with the ECCN that was used by Seller. In addition, Seller shall advise Buyer as to the License Exception, if applicable, pursuant to which the Product may be exported.

 

*** Confidential treatment requested.  

 

 
 

 

7.5. Export Controls Neither Party will export or re-export, directly or indirectly, the Products or technical data acquired under this Agreement or the software programs or such technical data to any country for which the United States Government or any agency thereof, at the time of export, requires an export license or other governmental approval, without first obtaining such license or approval. Both Parties will cooperate, to effect compliance with all applicable import and/or export regulations. In addition, the Parties agree to comply with all applicable local country import and/or export laws or regulations in the country(ies) of procurement, production and/or end destination of the Product. Both Parties understand that the foregoing obligations are legal requirements and agree that they shall survive any term or termination of this Agreement.

 

8. PRODUCT CHANGES

 

8.1. Updates and Product Enhancements . The Parties acknowledge that they intend that the Product will require no updates or product enhancements. Nonetheless, should such bug fixes or similar product updates become available (i.e. Seller creates an update on its own or in connection with a warranty repair), Seller shall offer them to Buyer pursuant to the procedures set forth herein. All software updates made to the Product Software, and applicable to previously purchased Products (i.e. bug fixes and reliability enhancements) shall be provided to Buyer for distribution to its customers. All software/firmware updates generally applicable to all Products shall be provided in a machine-readable format capable of being remotely applied to the Product Antenna Systems of Buyer and its customers.

 

8.2. Requested Engineering Change . In the event that Buyer finds or becomes aware of a situation which in its opinion necessitates or would benefit from an engineering change in the Product, Buyer shall suggest such proposed engineering change to Seller and Seller and Buyer agree to work with each other in good faith to determine whether such change will be made and if so will work with each other on the implementation of such change. Seller agrees to work with Buyer in good faith to upgrade or alter the Product to changing market requirements. Except as set forth in Section 8.6 below, Seller shall not be required to undertake any engineering change proposed after Black Label Approval unless Seller and Buyer agree on an appropriate allocation of the NRE related to such change.

 

8.3. Engineering Change Orders . Should Seller materially change, improve, or add any enhancements or updates to the Products at any time, Seller shall provide reasonable prior written notice to Buyer of any such material change, improvement, enhancement or update that affects the form, fit or function of any Product or related product or any changes to Seller's part number for the Product prior to its implementation. Buyer shall respond to the requested changes within *** days or the change will be deemed accepted. Buyer's response time may be reduced by mutual agreement if the change improves safety or reliability.

 

8.4. Rejection of Change Orders . Buyer shall not unreasonably withhold acceptance of a proposed change; it may however reject a proposed change for good cause, including any requirement to re-qualify or re-license the Product Antenna System with any regulatory body. If Buyer does reject a proposed change, the Parties will discuss in good faith alternatives to such rejection. Upon rejection of any proposed change, Buyer shall be entitled to (i) terminate in whole or in part, any affected Product remaining undelivered under accepted Releases or require delivery by Seller of some or all of such unchanged Product and (ii) place a last-time purchase for the unchanged Product for delivery in amounts requested by Buyer over a *** -month period following such implementation.

 

*** Confidential treatment requested.  

 



 
 

 

8.5. Unauthorized Changes . If a Seller-engineering change order is implemented without the written approval of Buyer, Seller shall be liable for repair and/or rework of all Product affected, including, but not limited to, product in transit, product in finished goods inventory, and any product located with a reseller or at an end user location.

 

8.6. Required Changes; Safety Issues . Seller shall concurrently notify Buyer if Seller issues an FAA safety bulletin or similar notice regarding the Product Antenna System. Upon such occurrence, Seller and Buyer agree to work in good faith and devote their most senior engineering and support resources to diagnose and remedy the safety risk. In the event any applicable governmental body requires, pursuant to applicable law, a change to the Product Antenna System to maintain compliance with the safety or similar rules and regulations of such body, Seller (at its expense) will promptly devote the appropriate engineering and support resources to implement the necessary engineering changes to the Product Antenna System to maintain compliance with such governmental authority.

 

9. LICENSE GRANTS; OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS

 

9.1. Intellectual Property Rights Ownership . As between Buyer and Seller, Seller shall be the exclusive owner of all inventions, technology, designs, works of authorship, mask works, technical information, computer software, and other information conceived, developed or otherwise generated in the performance of this Agreement by Seller. For the avoidance of doubt, Seller shall have no claim to the intellectual property contained in the RF Subsystem Specification of Buyer, which shall remain exclusively owned by Buyer as between Buyer and Seller. Subject to the terms and conditions of this Agreement, Seller grants to Buyer a license to offer to sell and sell the Product directly to its end-use customers.

 



9.2. Product Software License . Subject to the terms and conditions of this Agreement, Seller grants to Buyer during the term of this Agreement a nonexclusive, nontransferable, royalty-free license to distribute through Buyer's sales channels any Product Software incorporated or embedded in the Products solely as incorporated in firmware format therein, and to permit end users of the Products to use the Product Software solely as incorporated in the Products, subject in each instance to an enforceable end user license with terms and conditions no less protective of Seller's proprietary interests in such Product Software as set forth in this Agreement. To the extent permissible by applicable law, Buyer shall not reverse compile, reverse engineer or otherwise disassemble the Product Software; provided, that Seller will provide a machine readable copy of the object code and source code of such Product for use in Buyer’s integration activities and for maintenance of the Product Antenna System as part of Buyer’s Service. To the extent permissible by applicable law, no rights to copy, prepare derivative works or to publicly perform or display any Product Software are granted to Buyer or end users hereunder. Any rights to or under Seller's Intellectual Property Rights, Seller Technology or Seller Software not expressly granted in this Agreement are expressly reserved. Seller agrees to submit to a mutually agreeable escrow company a complete copy of the source code for all Product Software, which escrow shall be subject to mutually agreeable terms of release based on the requirements of customers of Buyer to have access to such software code in the event Buyer ceases operations and Seller is unwilling or unable to provide support for the Product Antenna System.

 

9.3. Intellectual Property Markings . Buyer and Seller shall work in good faith on reasonable (i) marking of the Product and accompanying packaging and documentation with a notice reflecting Seller's ownership of the Seller Technology and (ii) provision for Buyer’s own part number label information on each Product.

 

 
 

 

9.4. Trademarks . Subject to the terms and conditions set forth in the Agreement and solely for the purposes hereof, Buyer will have a non-transferable, non-exclusive license, without right of sublicense, to place the Seller trademarks and logos (" Marks ") on documentation and packaging as required. Such Marks shall be prominent and the placement and sizing shall be subject to mutual agreement of the Parties. In no event may Buyer alter or remove any Marks unless such removal is approved in advance in writing by Seller. Except for the right to use the Marks as set forth herein, nothing contained in this Agreement shall be construed to grant Buyer any right, title or interest in or to the Marks. Buyer acknowledges Seller's exclusive ownership of the Marks. Buyer agrees not to take any action inconsistent with such ownership and further agrees to take, at Seller's reasonable expense, any action which Seller reasonably requests to establish and preserve Seller's exclusive rights in and to its Marks. Buyer shall not adopt, use or attempt to register any trademarks or trade names that are confusingly similar to the Marks or in such a way as to create combination marks with the Marks. Buyer shall promptly provide Seller with samples of all materials that use the Marks for Seller's quality control purposes. If, in Seller's reasonable discretion Buyer's use of the Marks does not meet Seller's then-current trademark usage policy, Seller may, at its option, require Buyer to revise such material and re-submit it under this Section prior to shipment, display, or release of further Products or materials bearing or containing such Mark. If requested by Buyer, Seller agrees to display Buyer’s trademarks and logo on the product packaging for the Product Antenna System, and Buyer grants seller a non-transferable, non-exclusive license, without right to sublicense, to place such Buyer trademarks and logos on such packaging.

 

9.5. Documentation License . Subject to the terms and conditions of this Agreement, Seller hereby grants Buyer, a nonexclusive, nontransferable, worldwide, fully-paid and royalty-free license to use, reproduce, modify, create derivative works based on, support, demonstrate and distribute through single or multiple tiers of distribution all end user documentation, including all subsequent updates or enhancements thereto or replacements therefore, delivered as part of or together with the Products or otherwise provided under this Agreement. Any modifications or derivative works are subject to Seller's technical approval prior to demonstration or distribution.

 

10. WARRANTY

10.1. Limited Warranty . Seller warrants that all Products (including associated firmware) sold by Seller under the terms of this Agreement, for a period of *** from delivery will be (a) free from defects in workmanship and materials and (b) conform to the Specifications under normal use and service. If any Product or part thereof contains a material defect in materials or workmanship, or otherwise fails to conform to the Specifications, during the warranty period, Seller shall at its expense correct any such defect by repairing such defective Product or part or, at Seller's option, by delivering to Buyer an equivalent Product or part replacing such defective Product or part. Seller shall process warranty claims made pursuant to this Agreement according to the following schedule, commencing from receipt of the applicable component by Seller, (i) deliver a report regarding the warranty claim in a form mutually agreed upon by Buyer and Seller within *** days, (ii) repair the applicable component within *** days, and (iii) if necessary, refurbish the applicable component within *** days. Seller shall waive any expedite charges to Buyer in order to effect earliest reasonable replacement of such defective Products. Seller acknowledges and agrees that the above warranty shall be transferable to customers of Buyer. Seller, in the exercise of its reasonable discretion, shall determine whether a Product has failed to conform to the above warranty, unless such determination is disputed by Buyer. In such case, Buyer and Seller agree to meet and confer in good faith to discuss the appropriate evaluation of such Product, and, if the parties are unable to agree following such meeting, agree to appoint a third party to make the determination as to the cause of the alleged defect. Warranty return shipments shall be the same as the process for shipments of new Products, as set forth elsewhere in this Agreement.

 

*** Confidential treatment requested.  

 

 
 

 

10.2. Return of Products . Buyer will promptly notify Seller in writing of any nonconforming Product or line replaceable component thereof. Such notification shall include the applicable serial numbers for the Product and/or component thereof and reason for nonconformance. Seller acknowledges and agrees that with respect to Products sold by Buyer to its customers, Seller agrees to accept returns from such customer of Buyer, and, if requested by such customer, cooperate with Buyer or such customer in establishing reasonable protocols for repair and return of the Product in accordance with such customer’s reasonable practices. ***

 

10.3. Disclaimer . EXCEPT AS EXPRESSLY STATED HEREIN, SELLER MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND WITH RESPECT TO THE PRODUCTS. SELLER DISCLAIMS AND DOES NOT OFFER ANY REPRESENTATION OR WARRANTY THAT PERFORMANCE OR USE OF THE PRODUCTS WILL NOT BE AFFECTED BY OTHER SYSTEMS, EQUIPMENT OR DEVICES OF THAT THE PRODUCTS WILL NOT INTERFERE WITH THE USE OR PERFORMANCE OF OTHER SYSTEMS, EQUIPMENT OR DEVICES. THE FOREGOING WARRANTIES, TERMS OR CONDITIONS ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES, TERMS OR CONDITIONS, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OF OTHERWISE, INCLUDING WARRANTIES, TERMS OR CONDITIONS OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. BUYER EXPRESSLY ACKNOWLEDGES THAT SELLER HAS DESIGNED THE PRODUCTS SOLELY TO MEET THE SPECIFICATIONS AND THAT BUYER OR ITS CUSTOMERS SHALL BE RESPONSIBLE FOR TESTING THE PRODUCTS IN ORDER TO DETERMINE THAT THE PRODUCTS WILL NOT RECEIVE INTERFERENCE FROM OTHER SYSTEMS, EQUIPMENT OR DEVICES OR CAUSE INTERFERENCE WITH OTHER SYSTEMS, EQUIPMENT OR DEVICES. THE PRODUCTS ARE NOT WARRANTED AGAINST, AND BUYER SHALL NOT BE LIABLE FOR, INJURIES, DAMAGES OR LOSSES OF ANY KIND SUSTAINED AS A RESULT OF USES FOR WHICH THIS PRODUCT WAS NOT DESIGNED, INTENDED OR TESTED BY BUYER OR THE FAILURE TO USE THE PRODUCTS IN ACCORDANCE WITH ALL INSTRUCTIONS, AND ALL APPLICABLE SAFETY, REGULATORY AND INDUSTRY SAFETY STANDARDS OR THEIR EQUIVALENT.


10.4. Warranty Exclusions . SELLER SHALL NOT BE LIABLE UNDER ANY WARRANTY OR OTHER OBLIGATION IF THE ALLEGED DEFECT IN THE PRODUCT DOES NOT EXIST OR THE DEFECT OR DEFECTIVE PERFORMANCE WAS CAUSED IN WHOLE OR IN PART BY BUYER'S OR ITS CUSTOMERS (OR ANY THIRD PARTY’S) MISUSE, NEGLECT, IMPROPER INSTALLATION OR TESTING, UNAUTHORIZED ATTEMPTS TO REPAIR, OR BY ACCIDENT, FIRE, LIGHTNING OR OTHER HAZARD OUTSIDE SELLER’S CONTROL.

 

10.5. Warranty Reports . During the Term, upon Buyer’s request, Seller will provide Buyer a report of all warranty claims received by Seller from Buyer and customers of Buyer during the period since the last such report, which report will reasonably identify the applicable Product Antenna System, describe the nature of the failure (or claimed failure) and the corrective action take by Seller to resolve such claim.

 

*** Confidential treatment requested.  

 

 
 

 

10.6. Latent Defects . In the event more than the Threshold Number (as defined below) of Product Antenna Systems fail under the warranty terms hereof due a common cause or reasonably related causes (or Seller, in its reasonable discretion, determines a failure in less than the Threshold Number of Product Antenna Systems is generally applicable to other Product Antenna Systems), Seller will (i) assign a senior engineering and management team to determine the root cause of such failure (if not previously determined), (ii) work in good faith with Buyer (and, as requested by Buyer, customers of Buyer) to establish a procedure to remedy all affected Product Antenna Systems and (iii), notwithstanding the normal warranty procedures set forth herein, use commercially reasonable efforts to expedite implementation of such remedy on all affected Product Antenna Systems in service and shipped within the previous *** years. As used herein, “ Threshold Number ” shall mean *** Product Antenna Systems with respect to the Minimum Order Quantity, and thereafter *** percent of the purchased Products inclusive of the Minimum Order Quantity (i.e., the Threshold Number would be *** for the first *** Products purchased pursuant to this Agreement).

 

10.7. Part Identification . In order to allow warranty coverage for line replaceable components of the Product Antenna System, Seller agrees to establish a part identification and tracking system for such line replaceable units such that Buyer or a customer of Buyer may submit such line replaceable unit for warranty repair without the remainder of the Product Antenna System.

 

10.8. Spare Part Provisioning . Seller and Buyer agree to work in good faith to establish, as soon as possible after the Effective Date, spare part provisioning recommendations for the Product Antenna Systems (and the line replaceable unit components thereof), and, as necessary, update such recommendations during the Term of this Agreement based on the warranty reports set forth above.

 

10.9. End of Life . Buyer reserves the right to discontinue manufacturing and providing support for the Products in this Agreement at any time beginning no earlier than *** years after the termination or expiration of the Agreement.

11. INDEMNIFICATION; INSURANCE; LIMITS ON LIABILITY

 

11.1. Seller’s IP Infringement Indemnity . Seller shall indemnify, defend and hold Buyer and Buyer’s customers that purchase the Product Antenna System (together, the “ IP Indemnitee ” or “IP Indemnitees” as applicable) harmless from and against any and all liabilities, losses, damages, fees, costs and expenses, including without limitation reasonable attorneys' fees, incurred by the IP Indemnitee resulting from a third Party claim, suit, action or proceeding (a " Claim ") alleging that the Product infringes a third Party U.S. patent or copyright or misappropriates any third Party's trade secrets; provided that IP Indemnitee (i) promptly notifies Seller in writing of such Claim; (ii) provides Seller sole control of the defense or settlement of such Claim; and (iii) provides Seller assistance at Seller's request and reasonable expense. Buyer (but no other IP Indemnitee) may participate in the defense or settlement of the Claim at its own expense. If a final injunction is obtained against an IP Indemnitee for sale or use of the Product, or if Seller reasonably believes that such injunction is likely, Seller will, at its option and its expense, either (i) procure for IP Indemnitee the right to continue selling and/or using such Product as is applicable, or the infringing portions of the Seller Technology, or (ii) modify the Product so that it becomes non-infringing. If in Seller's reasonable discretion either of the above is not commercially reasonable, Buyer shall promptly cease selling Products, and Buyer agrees to include in its contracts with its customers a corresponding provision requiring such customers to stop using the Products, as applicable, and Seller shall refund to Buyer an amount equal to the amount paid by Buyer for the infringing Product units (Buyer will transfer the appropriate, corresponding amounts, through to its customer). Seller will have no liability or obligation to indemnify for any claim arising from (i) the combination of the Product with Buyer or third Party materials or intellectual property, unless, and only to the extent that, it is determined by a court of competent jurisdiction that the Product is the infringing element of such Claim; (ii) the modification or translation of the Product or any portion of the Seller Technology; or (iii) any Improvements created by a Party other than Seller.

 

*** Confidential treatment requested.  

 

 
 

 

11.2 General Indemnities.

 

(a) Buyer shall indemnify, defend and hold Seller harmless from and against any and all liabilities, losses damages, fees, costs and expenses, including without limitation reasonable attorneys’ fees, incurred by Seller resulting from Buyer’s or Buyer’s customers’ (including any third party end-users of such customers) normal use and service of the Products up to a maximum aggregate amount of twenty million dollars ($20,000,000); provided, however, that Buyer shall not be responsible for indemnifying Seller from and against Claims that the Products contained defects in workmanship and materials, Claims that the Products did not conform to the Specifications under normal use and service, or Claims covered by 11.2(b).

 

(b) Seller shall indemnify, defend and hold Buyer harmless from and against any and all liabilities, losses, damages, fees, costs and expenses, including without limitation reasonable attorneys’ fees, incurred by Buyer resulting from any personal injury or property damages Claims brought against Buyer in connection with Buyer’s or Buyer’s customers normal use and service of the Products up to a maximum aggregate amount of twenty million dollars ($20,000,000).

 

11.3 Intentionally omitted.

 

11.4 Entire Liability . This Section 11 states the entire liability and obligations of each Party and the exclusive remedy of each Party with respect to any alleged Intellectual Property Rights infringement or misappropriation by the Product, or any other breach of this Agreement.


11.5 Limitation of Liability . EXCEPT FOR EACH PARTY’S INDEMNIFICATION OBLIGATIONS HEREUNDER AND LIABILITY ARISING FROM DEATH OR PERSONAL INJURY CAUSED BY NEGLIGENCE, IN NO EVENT, WHETHER BASED IN CONTRACT OR TORT (INCLUDING WITHOUT LIMITATION NEGLIGENCE), SHALL EITHER PARTY BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL, INDIRECT OR SPECIAL DAMAGES OF ANY KIND OR FOR LOSS OF PROFITS OR REVENUE OR LOSS OF BUSINESS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH THEREOF, WHETHER OR NOT THE PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

 

IN ADDITION, IN NO EVENT SHALL EITHER PARTY’S LIABILITY TO THE OTHER HEREUNDER EXCEED THE AMOUNTS PAID (WITH RESPECT TO SELLER’S LIABILITY) AND OWED (WITH RESPECT TO BUYER’S LIABILITY) FOR THE PRODUCTS IN QUESTION.

 

 
 

 

A CAUSE OF ACTION FOR RECOVERY FOR AN ALLEGED BREACH UNDER THIS AGREEMENT MUST BE MADE WITHIN TWELVE (12) MONTHS AFTER DISCOVERY OF THE BASIS OF THE ALLEGED BREACH. Each Party acknowledges and agrees that the foregoing limitations on liability are essential elements of the basis of the bargain between the Parties and that in the absence of such limitations the material and economic terms of this Agreement would be substantially different.

 

12. CONFIDENTIALITY

 

12.1. Confidential Information . Information that is transmitted by one Party to the other in connection with the performance or implementation of this Agreement and, if in written form, is marked "confidential" or with a similar legend by the disclosing Party before being furnished to the other, or if disclosed orally or visually is identified as such prior to disclosure and summarized, in writing, by the disclosing Party to the receiving Party within *** days thereof shall be deemed to be confidential information of the disclosing Party. Each Party agrees that it shall use the same degree of care and means that it utilizes to protect its own information of a similar nature, but in any event not less than reasonable care and means, to prevent the unauthorized use or the disclosure of such confidential information to third parties. The confidential information may be disclosed only to employees, contractors or representatives of a recipient with a "need to know" who are instructed and agree not to disclose the confidential information and not to use the confidential information for any purpose, except as set forth herein. Recipient shall have appropriate written agreements (or obligations under law) with any such employees, contractors or representatives sufficient to allow the recipient to comply with the provisions of this Agreement. Each of the Parties further agrees to make no use of such confidential information except as expressly permitted by this Agreement. Notwithstanding the foregoing, the Parties acknowledge and agree that certain confidential information of each Party will be required to be disclosed to applicable governmental agencies in order to obtain the right and license to use the Product for its intended use. Each Party acknowledges and agrees that such submissions of a Party’s confidential information are permitted hereunder; provided, that, (i) the disclosing Party must reasonably believe the applicable information is required to be disclosed pursuant to the requirements of such governmental organization, and, (ii) if available, the disclosing Party will request from such governmental organization that such information remain confidential for the maximum period of time available under the rules and regulations of such governmental organization.

 

12.2. Exceptions . The confidential information of a Party shall not include and the foregoing obligation shall not apply to data or information which: (i) was in the public domain at the time it was disclosed or falls within the public domain, except through the fault of the receiving Party; (ii) was known to the receiving Party at the time of disclosure without an obligation of confidentiality; (iii) was disclosed after written approval of the disclosing Party; (iv) becomes known to the receiving Party from a third party source unrelated to the disclosing Party without any obligation of confidentiality; (v) is furnished to a third Party by the disclosing Party without an obligation of confidentiality; or (vi) was independently developed by the receiving Party without the benefit of confidential information received from the disclosing Party. Nothing in this Agreement shall prevent the receiving Party from disclosing confidential information to the extent the receiving Party is legally compelled to do so by any governmental investigative or judicial agency pursuant to proceedings over which such agency has jurisdiction; provided, however, that prior to any such disclosure, the receiving Party shall (a) assert the confidential nature of the confidential information to the agency; (b) immediately notify the disclosing Party in writing of the agency's order or request to disclose; and (c) cooperate fully with the disclosing Party in protecting against any such disclosure and/or obtaining a protective order narrowing the scope of the compelled disclosure and protecting its confidentiality.

 

*** Confidential treatment requested.  

 

 
 

 

12.3. Return of Documentation and Confidential Information . Upon any termination of this Agreement, each Party shall immediately return to the other Party all documentation, confidential information and any other tangible items in its possession or under its control evidencing the know-how of the other Party.

 

13. TERM AND TERMINATION

 

13.1. Term . This Agreement shall commence on the Effective Date and shall continue for ten (10) years thereafter (the “ Initial Term ”), unless (i) otherwise specified herein, (ii) unless there have been no orders for Products pursuant to this Agreement for a period of twelve (12) months after the end of the Exclusivity Period, or (iii) unless terminated sooner under the provisions set forth herein. Thereafter, this Agreement shall automatically be renewed for successive one (1) year terms (each a “ Renewal Term ” and collectively with the Initial Term, the “ Term ”), unless one Party requests in writing at least *** days prior to the expiration of the then current term that this Agreement not be so renewed.

 

13.2. Termination For Cause . Either Party shall have the right to terminate this Agreement for cause as a result of:

 

13.2.1. The failure of the other Party to perform any material term or condition of this Agreement and to remedy such failure within *** days after written notice of such failure given by the non-defaulting Party; or

 

13.2.2. The filing by or against the other Party of a petition for liquidation under the U.S. Bankruptcy Code or corresponding laws or procedures of any applicable jurisdiction; or

 

13.2.3. The filing by or against the other Party of any other proceeding concerning bankruptcy, insolvency, dissolution, cessation of operations, or the like by the other Party. If such proceeding is involuntary and is contested in good faith, this Agreement shall terminate only after the passage of one hundred twenty (120) days without the dismissal of such proceedings; or

 

13.2.4. The voluntary or involuntary execution upon; the assignment or conveyance to a liquidating agent, trustee, mortgages or assignee of whatever description; or the making of any judicial levy against a substantial percentage of the other Party's assets, for the benefit of its creditors; or

 

13.2.5. The appointment of a receiver, keeper, liquidator or custodian of whatever sort of description, for all or a substantial portion of the other Party's assets; or

 

13.2.6. The termination, dissolution, insolvency or failure in business of the other Party, the distribution of a substantial portion of its assets, or its cessation to continue all or substantially all of its business affairs related to the activities under this Agreement.

 

*** Confidential treatment requested.  

 

 
 

 

13.3. Payment . The termination or expiration of this Agreement shall in no way relieve either Party from its obligations to pay the other any sums accrued hereunder prior to such termination or expiration. In addition, in the event Buyer terminates this Agreement without cause or Seller terminates this Agreement for cause, Buyer shall pay Seller (i) all outstanding and undisputed invoices for Products already delivered and accepted by Buyer, (ii) an amount equal to the purchase price per Product Antenna System for the number of Product Antenna Systems constituting the Minimum Order Quantity minus the number of Product Antenna Systems ordered and paid for by Buyer prior to the date of termination and (iii), to the extent not included in (i) or (ii) above, the costs for items in the process of manufacture, inspection, or test based on the state of completion of such items by Seller and according to the cancellation procedures set forth in Section 3.5.

 

13.4. Survival . Sections 5, 7, 8, 9, 10, 11, 12, and 14 shall survive any termination or expiration of the Agreement.

 

14. GENERAL

14.1. Federal Acquisition Regulations . In furnishing the Products hereunder, Seller agrees to comply with all applicable Federal Acquisition Regulations and related laws, rules, regulations and executive orders in connection with its activities under this Agreement, including, without limitation, the following FAR clauses: 52.222-26 - Equal Opportunity, 52.222-35 - Affirmative Action for Special Disabled and Vietnam Era Veterans and 52.222-36 - Affirmative Action for Handicapped Workers. The Product is a "commercial item," as that term is defined at 48 C.F.R. 2.101 (Oct 1995), as such terms are used in 48 C.F.R. 12.212 (Sep 1995) and will be provided to the U.S. Government only as a commercial end item. Consistent with 48 C.F.R. 12.212 and 48 C.F.R. 227.7202-1 through 227.7202-4 (Jun 1995), all U.S. Government end users acquire the Product Software incorporated in the Product with only those rights set forth herein.

14.2. Insurance . Seller represents and warrants that during the Term and for a period of *** months after the last purchase by a customer of Products from Seller, it (or its parent company Smiths Group plc) will obtain and maintain, at its expense, product liability and aircraft grounding insurance covering Products to the extent any damages that are caused by normal operation and use of such Products. The insurance will be in an amount not less than *** per occurrence and not less than *** in the annual aggregate, will have no deductibles, will have a waiver of subrogation provision, and will contain such exclusions and be issued by such insurers as Buyer shall approve in writing, such approval not to be unreasonably withheld. The insurance will be occurrence-based (as opposed to claims made), will include Buyer as a named insured without liability for premiums, and will provide for at least *** days' prior written notice to Buyer of cancellation or non-renewal and of any material change in the coverage. On execution of this Agreement and on each anniversary of the date of this Agreement (including the *** -month period following termination of the license), and at any time on request by Buyer, Seller will furnish Buyer with certificates issued by the insurer or by a licensed insurance broker confirming that insurance coverage required by this Agreement is maintained and in full force and effect.

 

14.3. Publicity . Neither party shall disclose to the general public, advertise, or publish the existence or the terms or conditions of this Agreement, financial or otherwise, without the prior written consent of the other.

 

*** Confidential treatment requested.  

 

 
 

 

14.4. Relationship of The Parties . Each of the Parties shall at all times during the term of this Agreement act as, and shall represent itself to be, an independent contractor, and not an agent or employee of the other.

 

14.5. Entire Agreement . This Agreement and Exhibits hereto are intended as the complete, final and exclusive statement of the terms of the agreement between the Parties regarding the subject matter hereof and supersedes any and all other prior or contemporaneous agreements or understandings, whether written or oral, between them relating to the subject matter hereof. This Agreement may not be modified except in writing executed by both Parties. The terms and conditions of this Agreement shall prevail notwithstanding any conflict with the terms and conditions of any purchase order, acknowledgment or other instrument submitted by Buyer or Seller.

 

14.6. Force Majeure . Neither Party shall be liable to the other for any alleged loss or damages resulting from failure to perform due to acts of God, natural disasters, acts of civil or military authority, government priorities, fire, floods, epidemics, quarantine, energy crises, war or riots. Each Party shall promptly notify the other Party of such event. If Seller is unable to deliver in accordance with agreed delivery schedule, Buyer may either (i) extend the time of performance and, with Seller’s consent, make an equitable adjustment to the price to reflect the diminished value of the Products to Buyer (including taking into account penalties from customers of Buyer for failure to deliver units on schedule), or (ii) if (i) is not reasonably available, cancel the uncompleted portion of the purchase order at no cost to Buyer.

 

14.7. Notices . Except for purchase orders and acknowledgments which may be sent by normal carrier, all notices and communications hereunder are required to be sent to the address or facsimile number stated below (or such other address or facsimile number as subsequently notified in writing to the other Party): (i) by facsimile with confirmation of transmission, (ii) personal same or next day delivery or (iii) sent by commercial overnight courier with written verification of delivery. All notices so given shall be deemed given upon the earlier of receipt or three (3) days after dispatch. Any notices sent to Buyer and/or Seller hereunder should be sent to:

 

Row 44 Inc. TECOM Industries, Inc.
31280 Oak Crest Drive 375 Conejo Ridge Ave.
Westlake Village, CA 91361 Thousand Oaks, CA 91361
   
Attn: *** Attn: ***
Telephone No. *** Telephone No. ***
Facsimile No. *** Facsimile No. ***

 

14.8. Waiver . A waiver of any default hereunder or of any of the terms and conditions of this Agreement shall not be deemed to be a continuing waiver or a waiver of any other default or of any other term or condition, but shall apply solely to the instance to which such waiver is directed. The exercise of any right or remedy provided in this Agreement shall be without prejudice to the right to exercise any other right or remedy provided by law or equity, except as expressly limited by this Agreement.

 

*** Confidential treatment requested.  

 

 
 

 

14.9. Severability . In the event any provision of this Agreement is found to be invalid, illegal or unenforceable, the validity, legality and enforceability of any of the remaining provisions shall not in any way be affected or impaired.

 

14.10. Press Release . Neither Party shall issue any press release announcing this transaction without the consent of the other Party.

 

14.11. Assignment . Neither Party may assign or transfer this Agreement, whether in whole or part, or any of its rights or obligations under this Agreement without the prior written consent of the other, except that either Party may transfer all its rights and obligations to a successor in interest upon a merger, reorganization, change of control, acquisition or sale of all or substantially all its assets. Any attempted assignment without such written consent shall be null and void.

 

14.12. Photocopy Of Original . Neither Party shall object to the use of a photocopy of the original of this Agreement for the purpose of making any required or allowed public filings.

14.13. Disclaimer of Third Party Beneficiaries . Other than with respect to (a) the transferable Product warranties for commercial airline customers of Buyer and (b) indemnification that runs expressly to customers of the Buyer, this Agreement is for the benefit of the parties to the Agreement and is not for the benefit of any third party.

 

14.14. Governing Law . THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND ALL DISPUTES HEREUNDER SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT ITS CONFLICT OF LAW RULES. THE PARTIES HEREBY AGREE THAT THE SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR LOS ANGELES COUNTY AND/OR THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA SHALL HAVE JURISDICTION AND VENUE OVER ANY CONTROVERSIES, PROCEEDINGS, OR DISPUTES IN CONNECTION WITH THIS AGREEMENT. THE PARTIES EXCLUDE IN ITS ENTIRETY THE APPLICATION TO THIS AGREEMENT OF THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS.

14.15. Attorney’s Fees . In any action to enforce this Agreement, the prevailing Party shall be awarded all arbitration costs or courts costs and reasonable attorneys' fees incurred, including such costs and attorneys' fees incurred in enforcing and collecting any judgment.

 

14.16. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

 

14.17. Choice of Language . The original of this Agreement has been written in English and the governing language of this Agreement shall be English.

 

14.18. ***


*** Confidential treatment requested.  

 

 
 

 

14.19. Hiring . Except as may be limited by applicable law, during the term of this Agreement and for a period of *** year thereafter, each Party agrees not to solicit for employment or hire any technical or professional employees of the other Party assigned to work on this Agreement or any resultant contract without the prior written consent of the other Party. This paragraph does not restrict in any way the right of either Party to solicit generally in the media for required personnel, and hiring personnel (not assigned to work on this Agreement or related contracts) pursuant to public solicitation shall not constitute a breach of this paragraph. Furthermore, this paragraph does not restrict employees of either Party from pursuing on their own initiative, employment opportunities with the other Party.

 

14.20. Representations and Warranties of the Parties . Each party to this Agreement represents and warrants to the other that by signing this Agreement and performing the obligations contemplated hereunder, it is not breaching any existing contract or agreement with, or obligation to, any third party. Buyer further represents and acknowledges that Buyer’s entry into this Agreement is not attributable to, and Seller did not, induce or influence Buyer to breach any existing contract or agreement with, or obligation to, any third party.

 

(Remainder of Page Left Blank; Signature Page Follows)

 

 

*** Confidential treatment requested.  

 

 
 

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives effective as of the Effective Date.

 

TECOM Industries Inc. Row 44, Inc.
   
   
By: /s/ Robert J. McFall   By: /s/ John Guidon
Name: Robert J. McFall Name: John Guidon
Title: Director of Contracts Title: C.E.O.

 

By: /s/ Arsen Melconian    
Name: Arsen Melconian  
Title: President  

 

(Signature Page to OEM Purchase and Development Agreement)

 

 

 

 
 

 

Exhibit A-1

 

***

 

*** Confidential treatment requested.  

 

 
 

 

Exhibit A-2

Product Antenna System Specifications

 

 
 

 

Exhibit B

Statement of Work

 

***

 

*** Confidential treatment requested.

 

 
 

 

Exhibit C

Black Label Approval

 

This is the path for Black Label certification:

 

***

 

 

*** Confidential treatment requested.

 

 
 

 

Exhibit D

 

***

 

 

*** Confidential treatment requested.

 

 
 

 

FIRST AMENDMENT TO
OEM PURCHASE AND DEVELOPMENT AGREEMENT BETWEEN

 

TECOM Industries, Inc.

 

And

 

Row 44, Inc.

 

          THIS FIRST AMENDMENT TO OEM PURCHASE AND DEVELOPMENT AGREEMENT (this “First Amendment” ) is entered into as of December 19, 2011 between TECOM Industries, Inc. ( “Seller” or “TECOM” ), a California corporation located at 375 Conejo Ridge Avenue, Thousand Oaks, California 91361, and Row 44, Inc. ( “Buyer” or “Row 44” ), a Delaware corporation located at 4353 Park Terrace Drive, Westlake Village, California 91361 (hereinafter, each a “Party” and collectively, the “Parties” ) and amends that certain OEM Purchase and Development Agreement (the “Original Agreement” and together with the First Amendment, the “Agreement” ). This First Amendment modifies the Original Agreement only as expressly stated below. Except as modified by this First Amendment, all of the terms and conditions contained in the Original Agreement are and will remain in full force and effect. Capitalized terms used but not defined in this First Amendment will have the same meanings as defined for such terms in the Original Agreement. In the event of any conflict of terms, this First Amendment will solely and exclusively control.

 

RECITALS

 

A.          On or about October 12, 2009, TECOM and Row 44 entered into the Original Agreement relating to the development and purchase of Product Antenna Systems.

 

B.          Pursuant to Section 4.1 of the Original Agreement, Row 44 granted to TECOM a purchase money security interest in the Products, any other materials that TECOM furnishes, and all proceeds of the foregoing.

 

C.          Certain disputes have since arisen between TECOM and Row 44 regarding the performance of the Original Agreement, including disputes regarding (i) non-payment by Row 44 for Product delivered by TECOM to Row 44, and (ii) ***. As of November 26, 2011, all outstanding amounts due and owing from Row 44 to TECOM is *** (not including interest for late payments) (the “ Outstanding Amount ”).

 

 

*** Confidential treatment requested.

 

 
 

 

D.          Without any admission of fault or liability whatsoever, the Parties enter into this First Amendment to settle certain disputes that have arisen between the Parties and to amend the terms of the Original Agreement by this First Amendment.

 

AGREEMENT

 

1.           Row 44 Outstanding Amount Payments to TECOM . Row 44 shall make payments to TECOM for *** according to the following terms and schedule:

 

1.1          Row 44 shall make a payment to TECOM in the amount of ***, by no later than 2:00 p.m. Pacific Standard Time, on the Effective Date. This payment shall be made by wire transfer to the following account:

 

Account name: TECOM Industries, Inc.

 

Bank Name: JP Morgan Chase Bank          

 

City/State: New York, NY

 

Account Number: ***

 

Routing Number: ***

 

1.2          ***

 

1.3          ***

 

1.4          ***

 

i.          ***

 

ii.         ***

 

iii.        ***

 

iv.        ***

 

v.         ***

 

vi.        ***

 

vii.       ***

 

viii.      ***

 

ix.        ***

 

 

*** Confidential treatment requested.

 

 
 

 

1.5          Any payment of any amount due on the Outstanding Amount pursuant to the terms hereof not made within *** business days after it is due shall be considered a material breach of this Agreement and shall bear interest at a rate equal to *** percent (***) per month or the highest rate permitted by applicable law, whichever is less, on the unpaid amounts from time to time outstanding from the date on which portions of such amounts became due and owing until payment thereof in full. In addition, if any payment of any amount due on the Outstanding Amount pursuant to the terms hereof is not made when due, then any and all amounts due and owing under this First Amendment or the Original Agreement shall become immediately due and payable if not cured within the ***-business-day period, and TECOM shall have the right to cease shipment of any Products ordered by Row 44 as of such due date, to reject any additional orders of Products made by Row 44 after such due date (without breach by TECOM of any of its obligations, including without limitation to ship and deliver Products on a timely basis), and to pursue all other rights and remedies TECOM may have under the Agreement or otherwise. This clause shall be a non-exclusive remedy for TECOM.

 

1.6          Row 44’s payment obligations, and TECOM’s rights with respect to those obligations, shall survive notwithstanding the expiration or termination of the Agreement and irrespective of the Parties’ performance or non-performance of the Agreement.

 

2.           Credit Limits . ***

 

3.           Interest . If Row 44 timely makes all payments described in Sections 1.1, 1.2, 1.3, 1.4 above and Section 4 below when due or within *** business days after it is due, then TECOM agrees to waive its entitlement to all interest accrued on the Outstanding Amount. For the avoidance of doubt, the waiver contemplated by this Section shall be of no force and effect unless and until Row 44 timely makes all such payments. Should Row 44 fail to timely make any of such payments, all interest accrued on the Outstanding Amount (as calculated from the date on which the Outstanding Amount (or portion thereof) originally became due and owing) will immediately become due and payable to TECOM and interest on the Outstanding Amount will continue to accrue at the rate set forth in Section 5.2 of the Original Agreement until payment thereof in full. In addition, if TECOM, by judgment, agreement or otherwise, is required to disgorge any payments described in Sections 1.1, 1.2, 1.3, 1.4 above and Section 4 below, pursuant to actions under chapter 5 of title 11 of the United States Code or other applicable law, then the payments shall be deemed to have not been made pursuant to this First Agreement, the waiver shall be of no force and effect, and TECOM shall have retained its rights to pursue interest accrued on the Outstanding Amount as set forth herein.

 

4.           Invoices Going Forward . For all shipments and deliveries on or after November 26, 2011, invoices shall be due and payable in accordance with Section 5.1 of the Agreement provided, however, that, if *** and within the applicable payment period, the entire amount due for such Product Antenna System shall be payable on the later of (i) *** days after *** during such *** day period) and (ii) the payment period set forth in the Agreement.

 

5.           Security Interest .

 

5.1          Section 4.1 of the Original Agreement is hereby amended and restated as follows, provided, however, that, if and when the Outstanding Amount is paid in full, the amended and restated provision set forth immediately below shall immediately revert to the language of Section 4.1 set forth in the Original Agreement:

 

*** Confidential treatment requested.  

 

 
 

 

“4.1 Delivery Point . All shipments shall be F.O.B. origin (Seller’s U.S. shipping dock), and Buyer shall be responsible for all shipping costs (Buyer shall select the applicable carrier). Title and risk of loss shall pass to Buyer upon Seller’s tender of delivery to the common carrier or Buyer’s designee. In order to secure payment of *** of each invoiced amount owing by Buyer to Seller, from time to time, whether under this Agreement or under separate purchase orders or otherwise in each case arising after the Effective Date of the First Amendment hereto (the “ Secured Obligations ”) and subject to the terms of the Intercreditor Agreement (as defined below), Seller will have, and Buyer hereby grants to Seller, a purchase money security interest in (i) all of Buyer’s right, title and interest in the Products relating to such invoices (in each case, wherever located, and whether or not existing or hereafter arising), and all proceeds of the foregoing (everything in this subsection (i), the Products Collateral ), (ii) all of Buyer’s right, title and interest in all accounts and other rights to payment generated by the sale, transfer, or other disposition of the Products Collateral, and all proceeds and products thereof and accessions thereto (wherever located, and whether now existing or hereafter arising ) (everything in this subsection (ii), the Accounts Receivable ), and (iii) all of Buyer’s right, title, and interest in the deposit account described in the lockbox agreement to be established pursuant to Section 5.2 of the First Amendment (the Lockbox Account ), and all proceeds and products thereof and accessions thereto (wherever located, and whether now existing or hereafter arising), to the extent that Seller is entitled thereto pursuant to the Intercreditor Agreement (everything in this subsection (iii), the Lockbox Funds ). Everything upon which Seller has a lien pursuant to this Section is referred to herein as the Collateral . Buyer will execute and deliver to Seller any documentation required to perfect and/or maintain Seller’s security interest, including reasonably acceptable account control agreements and/or lockbox agreements. Buyer hereby authorizes Seller to sign and file any such documentation on its behalf or to file such documentation without its signature and to provide such notice to the holders of conflicting security interests as may be necessary to establish the priority of such lien. The security interest granted pursuant to this Section 4.1 is subject to the Intercreditor Agreement, dated as of [__________], (the “Intercreditor Agreement”) among Buyer, Seller and PAR Investment Partners, L.P., as collateral agent (the “Collateral Agent”). Seller hereby agrees that it shall have no Lien securing amounts due to Seller and accruing prior to the date of this First Amendment, and hereby releases any lien or security interest under the Original Agreement to the extent securing any such amounts.”.

 

5.2          Until such time as the Outstanding Amount is paid in full by Row 44, TECOM hereby agrees that, pursuant to the Intercreditor Agreement and a Lockbox Agreement implementing the Lockbox Account described above, the Collateral Agent and TECOM will agree to waterfall, intercreditor and lockbox arrangements satisfactory to the Collateral Agent and TECOM in their sole discretion.

 

 

*** Confidential treatment requested.

 

 
 

 

5.3          ***

 

5.4          Row 44 shall not settle or compromise any dispute with any end user regarding an Account Receivable without the prior written consent of TECOM and, should the Parties not agree on a settlement amount or other course of action with respect to any such dispute, Row 44 shall permit TECOM, in its reasonable discretion, to direct any litigation or negotiation with respect to such dispute and to resolve any dispute by settlement or otherwise, with all such monies realized upon any such litigation, settlement or other resolution to be deposited into the Lockbox Account.

 

6.           Shipments . As of the Effective Date, TECOM will immediately recommence the shipment and delivery of all ordered Products in the usual course of business and consistent with the Agreement. Row 44 shall ship all Products to end users within *** days of receipt of such Products by Row 44 from TECOM unless otherwise notified in writing by Row 44 to TECOM and agreed to in advance by TECOM (such agreement not to be unreasonably withheld or delayed).

 

7.           Financial and Customer Information . ***

 

8.           Release .

 

8.1           Release by Row 44 . Row 44, on behalf of itself and its past, present and future affiliates, and their respective employees, officers, directors, managers, equityholders, advisors, consultants, representatives, agents, heirs, predecessors, successors and assigns (collectively, the “ Row 44 Releasing Parties ”), hereby, knowingly and voluntarily, forever settles, waives, releases and discharges with prejudice TECOM and its past, present and future affiliates including, without limitation all direct and indirect parents that hold a *** or more interest in TECOM and subsidiaries in which TECOM holds a *** or more interest, and their respective past, present and future employees, officers, directors, managers, equityholders, advisors, consultants, representatives, agents, heirs, predecessors, successors and assigns (collectively, the “ TECOM Released Parties ”) from any and all claims, rights, causes of action, protests, suits, disputes, orders, obligations, debts, demands, proceedings, contracts, agreements, promises, liabilities, controversies, costs, expenses, fees (including attorneys’ fees), or damages of any kind, whether known or unknown, suspected or unsuspected, accrued or not accrued, foreseen or unforeseen, or mature or unmature, arising by any means, including, without limitation, subrogation, assignment, reimbursement, operation of law or otherwise, *** under the Agreement at any time prior to the Effective Date (collectively, “ Row 44 Claims ”); provided however , that a Row 44 Claim shall not include, and the Release set forth in this Section 8.1 and Section 9 below shall not apply in any way to any claim for warranty under Section 10.1 of the Agreement with respect to any Product shipped or delivered under the Agreement at any time prior to the Effective Date.

 

 

*** Confidential treatment requested.

 

 
 

 

8.2           Release by TECOM . TECOM, on behalf of itself and its past, present and future affiliates, and their respective employees, officers, directors, managers, equityholders, advisors, consultants, representatives, agents, heirs, predecessors, successors and assigns (collectively, the “ TECOM Releasing Parties ”), hereby, knowingly and voluntarily, forever settles, waives, releases and discharges with prejudice Row 44 and its past, present and future affiliates and subsidiaries and their respective past, present and future employees, officers, directors, managers, equityholders, advisors, consultants, representatives, agents, heirs, predecessors, successors and assigns (collectively, the “ Row 44 Released Parties ”) from any and all claims, rights, causes of action, protests, suits, disputes, orders, obligations, debts, demands, proceedings, contracts, agreements, promises, liabilities, controversies, costs, expenses, fees (including attorneys’ fees), or damages of any kind, whether known or unknown, suspected or unsuspected, accrued or not accrued, foreseen or unforeseen, or mature or unmature, arising by any means, including, without limitation, subrogation, assignment, reimbursement, operation of law or otherwise, arising with respect to Row 44’s failure to make timely payments under the Agreement at any time prior to the Effective Date (collectively, “ TECOM Claims ”); provided however , that a TECOM Claim shall not include (i) any claim for payment by Row 44 of any amount due under the Agreement (as amended hereby), (ii) any claim for misappropriation, theft or similar such causes of action that relate to any intellectual owned by TECOM, licensed by TECOM or in which TECOM has any other such rights and (iii) any willful, reckless or grossly negligent conduct.

 

8.3          The Row 44 Claims and TECOM Claims (collectively and respectively, “ Claims ” for purposes of the remainder of this Section 8) released pursuant to Section 8.1 and Section 8.2, respectively, include, without limitation, Claims for breach of contract, tort or personal injury of any sort, whether intentional or negligent, including, without limitation, Claims for the negligence of any or all of the TECOM Released Parties and Row 44 Released Parties (collectively and respectively, “ Released Parties ” for purposes of the remainder of this Section 8); Claims under any federal, state or local statute, regulation, or rule, in equity or at common law. The Parties intend the release in Section 8.1 and Section 8.2 to be general and comprehensive in nature and to release all Claims and potential Claims covered by the release to the maximum extent permitted by law. Each Party acknowledges that such Party may discover facts different from, or in addition to, those such Party now knows or believes to be true with respect to the release and such Party agrees that the release shall be and remain in effect in all respects as a complete and general release as to all matters released, notwithstanding any different or additional facts.

 

8.4          Row 44 acknowledges that (i) the revised payment schedule, the waiver of interest by TECOM set forth in Section 2 and the other direct and indirect benefits afforded Row 44 by continuing the Agreement as amended by this First Amendment provide more than adequate consideration for the release and (ii) the release is valid, fair, adequate and reasonable. TECOM acknowledges that (a) the revised TAT and Spare Pool terms set forth in this First Amendment and the other direct and indirect benefits afforded TECOM by continuing the Agreement as amended by this First Amendment provide more than adequate consideration for the release and (b) the release is valid, fair, adequate and reasonable.

 

 
 

 

8.5          Each Party, on behalf of itself and its respective TECOM Releasing Parties and Row 44 Releasing Parties (collectively and respectively, “ Releasing Parties ” for purposes of the remainder of this Section 8), hereby expressly agrees not to, at any time, sue, protest, initiate, institute or assist in instituting any proceeding, grievance, suit or investigation before any court or other governmental authority related to any Claim released pursuant to the release in Section 8.1, the release in Section 8.2 or otherwise assert any Claim released pursuant to such release against any of the Released Parties. Each Party hereby represents and warrants that it has not sold, assigned, pledged, transferred or otherwise disposed of, in whole or in part, any right, title, interest, security interest, or claim in, to, or with respect to, any Claim such Party or any of its respective Releasing Parties currently has, or has had in the past, against any such respective Released Party.

 

8.6          Each Party agrees, on behalf of itself and its respective Releasing Parties, to indemnify and hold harmless each of the Released Parties from and against all Claims arising out of any Claim released pursuant to the release.

 

9.           Waiver of Rights (If Any) Under Section 1542 of the California Civil Code . In connection with the releases, settlements, waivers, discharges and covenants set forth in this First Amendment, each Party acknowledges that it has been advised by legal counsel (or has had the opportunity to consult with legal counsel and has chosen not to do so), and that it is familiar with the provisions of Section 1542 of the California Civil Code, which provides as follows:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

 

Each Party, on behalf of itself and each other of its respective Releasing Parties, hereby expressly waives and relinquishes (and hereby agrees to cause each other Releasing Party to expressly waive and relinquish) any and all rights that it may have under Section 1542 of the California Civil Code as well as any and all similar rights, rules, regulations, and provisions of the laws of other states and other jurisdictions of the United States and other countries. Each Party understands, acknowledges and agrees that this First Amendment will act as a waiver and release of all future claims that may arise from the released Claims, whether such claims are currently known, unknown, foreseen, unforeseen, suspected or unsuspected, and agrees that the release is intended to and shall constitute a full, complete, absolute and general release of all such claims. Each Party represents and warrants that the effect and import of the provisions of Section 1542 has been fully explained to it by its counsel and it expressly acknowledges its understanding of the same. Nothing in this Section 9 or the inclusion of this Section 9 in this First Amendment shall be deemed or construed to limit the provisions of Section 12.6 or to constitute an admission of the applicability of Section 1542 of the California Civil Code, or any other provision of the laws of the State of California, to this First Amendment or to its formation, existence, validity, enforceability, performance, interpretation, breach, or termination.

 

10.           Additional Definitions; Turn Around Time; Spare Pool .

 

10.1          Additional Definitions: Section 1 of the Original Agreement is hereby amended to add the following definitions:

 

 

 
 

 

Product Antenna System Component ” means any of the SAA, ACU, HPT and RF Cable Set.

 

SAA ” or “ Antenna Assembly ” means the satellite antenna assembly portion of the Product Antenna System.

 

HPT ” means the high powered transceiver portion of the Product Antenna System.

 

ACU ” means the antenna control unit portion of the Product Antenna System.

 

RF Cable Set ” means the RF cables set portion of the Product Antenna System.

 

10.2          Section 10.1 of the Original Agreement is hereby amended and restated as follows:

 

“Limited Warranty . Seller warrants that all Products (including associated firmware) sold by Seller under the terms of this Agreement, for a period of *** from delivery will be (a) free from defects in workmanship and materials and (b) conform to the Specifications under normal use and service. If any Product or part thereof contains a material defect in materials or workmanship, or otherwise fails to conform to the Specifications, during the warranty period, Seller shall at its expense correct any such defect by repairing such defective Product or part or, at Seller's option, by delivering to Buyer an equivalent Product or part replacing such defective Product or part. Seller shall process warranty claims made pursuant to this Agreement according to the following schedule, commencing from receipt of the applicable component by Seller, (i) deliver a report regarding the warranty claim in a form mutually agreed upon by Buyer and Seller within *** days, (ii) repair the applicable component within *** days, and (iii) if necessary, refurbish the applicable component within *** days (collectively, the foregoing periods shall be referred to as the “TAT Metric”). Notwithstanding the foregoing, in the event Seller encounters a novel failure mode of a Product Antenna System Component not previously seen by Seller with respect to such Product Antenna System Component, Seller may include in the report to be delivered to Buyer pursuant to the previous sentence, a notice regarding such failure mode, a description of why such failure model is novel, the steps taken to date to evaluate such product and the expected continuing failure analysis tests. In such event, Buyer shall in good faith reasonably extend the applicable TAT Metric with respect to repair and refurbishment set forth above by up to an additional *** days without implicating the TAT Metric Failure terms set forth in the Agreement, provided, that, Seller exercises all deliberate speed and diligence to continue the failure analysis testing, provides detailed reports to Buyer at least every *** business days regarding progress taken since the previous report and completes the repair of such product within such agreed upon extended TAT Metric time period. In addition to the provisions set forth in Section 10.1A, Seller shall waive any expedite charges to Buyer in order to effect earliest reasonable replacement of such defective Products. Seller acknowledges and agrees that the above warranty shall be transferable to customers of Buyer. Seller, in the exercise of its reasonable discretion, shall determine whether a Product has failed to conform to the above warranty, unless such determination is disputed by Buyer. In such case, Buyer and Seller agree to meet and confer in good faith to discuss the appropriate evaluation of such Product, and, if the parties are unable to agree following such meeting, agree to appoint a third party to make the determination as to the cause of the alleged defect. Warranty return shipments shall be the same as the process for shipments of new Products, as set forth elsewhere in this Agreement.”

 

 

*** Confidential treatment requested.

 

 
 

 

10.3          The Original Agreement is hereby amended to add a new Section 10.1A, entitled “TAT Metric Failure” following Section 10.1 therein and stating as follows:

 

Section 10.1A TAT Metric Failure .

 

In the event Seller is unable to meet the TAT Metric with respect to any Product Antenna System Components returned to Seller during the applicable warranty period, the warranty period set forth in Section 10.1 above shall be extended for such component based on the table below, including, without limitation, the issuance of a replacement unit for such returned Product Antenna System Component:

 

Days in excess of
TAT Metric
  Additional Warranty Period
***   *** months
     
***   *** months
     
***   *** months
     
***   *** months

 

In the event a Product Antenna System Component is returned to Seller for repair for the same or similar cause three times, Seller shall provide Buyer a replacement of the applicable major subassembly part of such Product Antenna System Component as determined by Seller in its reasonable discretion.

 

For the avoidance of doubt, Section 10.1A shall not apply to RMA of HPTAs returned units until the current backlog of RMA is reduced to ***.

 

 

*** Confidential treatment requested.

 

 
 

 

10.4           Spare Pool . The Original Agreement is hereby amended to add a new Section 10.8A, entitled “Spare Pool” following Section 10.8 therein and stating as follows:

Section 10.8A Spare Pool . The build plan provides the capability to create a safety stock for each unit type by the end of January 2012. This plan also allows for RMA repairs at anticipated return rates of *** units per month for SAAs and ACUs. Any returned RF cables will be immediately replaced with new cables as necessary. The build plan will allow for a total of at least the following numbers of units in advance of production:

 

  ACUs ***
  SSAs ***
  Cable Sets ***
  HPTAs ***

 

11.           Deviations/*** Affirmative Obligation .

 

11.1          As of the Effective Date, the Parties acknowledge and agree that (i) the Product Antenna System is subject to the provisions of Section ***, of the Original Agreement with respect to *** and (ii) numerous deviations from specification, and associated commitments regarding correcting such deviations, have been agreed to by the Parties. Seller affirmatively commits to (a) continue to perform on its obligations pursuant to Section *** of the Original Agreement with respect to the *** currently in process, and (b) continue to perform on all deviations from specification previously agreed to by Parties.

 

11.2          Buyer’s exclusive remedy for any claims by Buyer against Seller under the Agreement with respect to *** shall be the procedure set forth in Section ***.

 

11.3          Buyer expressly recognizes and agrees that, as of the Effective Date, Seller has satisfied all of its obligations under Section *** of the Original Agreement and Buyer has no claim with respect to Seller’s performance or compliance thereunder.

 

12.           Miscellaneous .

 

12.1           Confirmation . Except as amended hereby, the Agreement remains in full force and effect in accordance with its existing terms. All references to the Agreement shall mean the Agreement as modified by this First Amendment.

 

12.2           Counterparts; Faxes . This First Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This First Amendment may also be executed via facsimile, which shall be deemed an original.

 

12.3           Titles and Subtitles . The titles and subtitles used in this First Amendment are used for convenience only and are not to be considered in construing or interpreting this First Amendment.

 

 

*** Confidential treatment requested.

 

 
 

 

12.4           Severability . Any provision of this First Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

 

12.5           Entire Agreement . This First Amendment, together with the Agreement, including the Exhibits thereto, constitute the entire agreement between the Parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

 

12.6           Governing Law . This First Amendment shall be construed in accordance with, and all disputes hereunder shall be governed by, the laws of the State of California, except its conflict of law rules.

 

13.           Effective Date . This First Amendment shall be effective on the date on which the last of the items (11.1) through (11.4) set forth below is satisfied, as determined by TECOM (or waived in writing by TECOM) (the “Effective Date” ), provided, however, that if the Effective Date does not occur on or before December 23, 2011, then this First Amendment shall automatically be null and void and of no force and effect. No obligation of TECOM under this First Amendment shall be operative or binding unless and until the occurrence of the Effective Date.

 

13.1           Lockbox Agreement . A Lockbox Agreement by and among Buyer, TECOM, the Collateral Agent and the depository financial institution effectuating the Lockbox Account contemplated by Section 5.1 and the necessary cash flow mechanisms contemplated by Section 5.2 has been executed by all necessary parties and is in effect.

 

13.2           Intercreditor Agreement . An intercreditor agreement by and among TECOM and the Collateral Agent and acknowledged by Buyer setting forth TECOM’s first priority lien rights in the Collateral and effectuating the necessary cash flow mechanisms contemplated by Section 5.2 has been executed by all necessary parties and is in effect.

 

13.3           Acknowledgments by End Users . *** and *** have each received the notice contemplated by Section 5.3.

 

13.4           Payment . Buyer has paid all sums due on the Effective Date pursuant to Sections 1.1, 1.2 and 1.3 of this First Amendment.

 

 

*** Confidential treatment requested.

 

 
 

 

          IN WITNESS WHEREOF, the Parties have executed this First Amendment or caused their duly authorized officers to execute this Amendment as of the date first above written.

 

TECOM Industries, Inc.   Row 44, Inc.
         
By: /s/ Arsen Melconian   By: /s/ John W. LaValle
Name: Arsen Melconian   Name: John W. LaValle
Title: President   Title: COO, CFO

 

 
 

 

AMENDMENT TO THE FIRST AMENDMENT TO
OEM PURCHASE AND DEVELOPMENT AGREEMENT BETWEEN

 

TECOM Industries, Inc.

 

And

 

Row 44, Inc.

 

          THIS AMENDMENT NO. 1 TO THE FIRST AMENDMENT TO OEM PURCHASE AND DEVELOPMENT AGREEMENT (this “Amendment No. 1” ) is entered into as of December 23, 2011 between TECOM Industries, Inc. ( “Seller” or “TECOM” ), a California corporation located at 375 Conejo Ridge Avenue, Thousand Oaks, California 91361, and Row 44, Inc. ( “Buyer” or “Row 44” ), a Delaware corporation located at 4353 Park Terrace Drive, Westlake Village, California 91361 (hereinafter, each a “Party” and collectively, the “Parties” ) and amends that certain First Amendment to OEM Purchase and Development Agreement (the “First Amendment ), which amended that certain OEM Purchase and Development Agreement (the “Original Agreement” and together with the First Amendment and Amendment No. 1, the “Agreement” ). This Amendment No. 1 modifies the First Amendment only as expressly stated below. Except as modified by this Amendment No. 1, all of the terms and conditions contained in the First Amendment are and will remain in full force and effect. Capitalized terms used but not defined in this Amendment No. 1 will have the same meanings as defined for such terms in the First Amendment. In the event of any conflict of terms, this Amendment No. 1 will solely and exclusively control.

 

AGREEMENT

 

1.           Deadline for Lockbox Agreement . If the Lockbox Agreement by and among Buyer, TECOM, the Collateral Agent and the depository financial institution effectuating the Lockbox Account contemplated by Section 5.1 of the First Amendment and the necessary cash flow mechanisms contemplated by Section 5.2 of the First Amendment has not been executed by all necessary parties and in effect within *** Business Days of the date of this Amendment No. 1, then Buyer shall be deemed to have committed a material breach of the Agreement and TECOM shall have the right to cease shipment of any Products ordered by Row 44 as of such due date, to reject any additional orders of Products made by Row 44 after such due date (without breach by TECOM of any of its obligations, including without limitation to ship and deliver Products on a timely basis), and to pursue all other rights and remedies TECOM may have under the Agreement or otherwise. This clause shall be a non-exclusive remedy for TECOM.

 

 

*** Confidential treatment requested.

 

 
 

 

2.          Section 5.1 of the First Amendment is hereby amended by adding “(or any successor account)” to the quote of Section 4.1 after “deposit account” in (iii), and by adding “or other blocked account” after the defined term “Lockbox Account”.

 

3.          Section 5.3 of the First Amendment is hereby amended by adding the following language at the end of the paragraph: “provided, however, that until the Lockbox Account is in place, Row 44 shall refer in such notice to the Blocked Account referenced in the Intercreditor Agreement, and provided further, however, that if and when the Lockbox Account is in place, Row 44 shall send another notice that supersedes the previous notice and refers to the Lockbox Account.”

 

4.           Amendment of Lockbox Condition to Effectiveness of First Amendment . Section 13.1 of the First Amendment is hereby amended and restated as follows: “A Blocked Account Agreement by and among Buyer, the Collateral Agent and the depository financial institution effectuating the blocked account arrangement contemplated by the Intercreditor Agreement has been executed by all necessary parties and is in effect.”

 

5.           Miscellaneous .

 

5.1           Confirmation . Except as amended hereby, the First Amendment remains in full force and effect in accordance with its existing terms.

 

5.2           Counterparts; Faxes . This Amendment No. 1 may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Amendment No. 1 may also be executed via facsimile, which shall be deemed an original.

 

5.3           Titles and Subtitles . The titles and subtitles used in this Amendment No. 1 are used for convenience only and are not to be considered in construing or interpreting this Amendment No.1.

 

5.4           Entire Agreement . This Amendment No. 1, together with the Agreement, including the Exhibits thereto, constitute the entire agreement between the Parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

 

5.5           Governing Law . This Amendment shall be construed in accordance with, and all disputes hereunder shall be governed by, the laws of the State of California, except its conflict of law rules.

 

6.           Effective Date . This Amendment No. 1 shall be effective upon execution.

 

// Remainder of page intentionally left blank

 

 

 

 
 

 

          IN WITNESS WHEREOF, the Parties have executed this First Amendment or caused their duly authorized officers to execute this Amendment as of the date first above written.

 

TECOM Industries, Inc.   Row 44, Inc.
         
By: /s/ Arsen Melconian   By: /s/ John LaValle
Name: Arsen Melconian   Name: John LaValle
Title: President   Title: CEO

 

 
 

 

AMENDMENT NO. 2 TO THE FIRST AMENDMENT TO
OEM PURCHASE AND DEVELOPMENT AGREEMENT BETWEEN

 

TECOM Industries, Inc.

 

And

 

Row 44, Inc.

 

          THIS AMENDMENT NO. 2 TO THE FIRST AMENDMENT TO OEM PURCHASE AND DEVELOPMENT AGREEMENT (this “Amendment No. 2” ) is entered into as of January 6, 2012 between TECOM Industries, Inc. ( “TECOM” ), a California corporation located at 375 Conejo Ridge Avenue, Thousand Oaks, California 91361, and Row 44, Inc. ( “Row 44” ), a Delaware corporation located at 4353 Park Terrace Drive, Westlake Village, California 91361 (hereinafter, each a “Party” and collectively, the “Parties” ) and amends that certain First Amendment to OEM Purchase and Development Agreement (as amended by Amendment No. 1 to the First Amendment to OEM Purchase and Development Agreement ( “Amendment No. 1” ), the “First Amendment” ), which amended that certain OEM Purchase and Development Agreement (together with the First Amendment, Amendment No. 1, and Amendment No. 2, the “Agreement” ). This Amendment No. 2 modifies the First Amendment only as expressly stated below. Except as modified by Amendment No. 1 and this Amendment No. 2, all of the terms and conditions contained in the First Amendment are and will remain in full force and effect. Capitalized terms used but not defined in this Amendment No. 2 will have the same meanings as defined for such terms in the First Amendment. In the event of any conflict of terms, this Amendment No. 2 will solely and exclusively control.

 

AGREEMENT

 

1.          Section 2 of the First Amendment is hereby amended and restated as follows:

 

***

 

2.           Miscellaneous .

 

2.1           Confirmation . Except as amended hereby, the First Amendment remains in full force and effect in accordance with its existing terms.

 

 

2.2           Counterparts; Faxes . This Amendment No. 2 may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Amendment No. 2 may also be executed via facsimile, which shall be deemed an original.

 

 

*** Confidential treatment requested.

 

 
 

 

 

2.3           Titles and Subtitles . The titles and subtitles used in this Amendment No. 2 are used for convenience only and are not to be considered in construing or interpreting this Amendment No. 2.

 

2.4           Entire Agreement . This Amendment No. 2, together with the Agreement, including the Exhibits thereto, constitute the entire agreement between the Parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

 

2.5           Governing Law . This Amendment shall be construed in accordance with, and all disputes hereunder shall be governed by, the laws of the State of California, except its conflict of law rules.

 

3. Effective Date . This Amendment No. 2 shall be effective upon execution.

 

          IN WITNESS WHEREOF, the Parties have executed this First Amendment or caused their duly authorized officers to execute this Amendment as of the date first above written.

 

TECOM Industries, Inc.   Row 44, Inc.
         
By: /s/ Arsen Melconian   By: /s/ John LaValle
Name: Arsen Melconian   Name: John LaValle
Title: President   Title: CEO

 

 
 

 

AMENDMENT NO. 3 TO THE FIRST AMENDMENT TO
OEM PURCHASE AND DEVELOPMENT AGREEMENT BETWEEN

 

TECOM Industries, Inc.

 

And

 

Row 44, Inc.

 

          THIS AMENDMENT NO. 3 TO THE FIRST AMENDMENT TO OEM PURCHASE AND DEVELOPMENT AGREEMENT (this “Amendment No. 3” ) is entered into as of January 18, 2012 between TECOM Industries, Inc. ( “TECOM” ), a California corporation located at 375 Conejo Ridge Avenue, Thousand Oaks, California 91361, and Row 44, Inc. ( “Row 44” ), a Delaware corporation located at 4353 Park Terrace Drive, Westlake Village, California 91361 (hereinafter, each a “Party” and collectively, the “Parties” ) and amends that certain First Amendment to OEM Purchase and Development Agreement (as amended by Amendment No. 1 and Amendment No. 2 to the First Amendment to OEM Purchase and Development Agreement ( “Amendment No. 1” and “Amendment No. 2 , ” respectively ), the “First Amendment” ), which amended that certain OEM Purchase and Development Agreement (together with the First Amendment, Amendment No. 1, Amendment No. 2 and Amendment No. 3, the “Agreement” ). This Amendment No. 3 modifies the First Amendment and Amendment No. 1 only as expressly stated below. Except as modified by Amendment No. 1, Amendment No. 2 and this Amendment No. 3, all of the terms and conditions contained in the First Amendment are and will remain in full force and effect. Capitalized terms used but not defined in this Amendment No. 3 will have the same meanings as defined for such terms in the First Amendment. In the event of any conflict of terms, this Amendment No. 3 will solely and exclusively control.

 

AGREEMENT

 

1.          Section 5.1 of the First Amendment is hereby amended by adding “and/or escrow account” to the quote of Section 4.1 after “deposit account”.

 

2.          Section 13 of the First Amendment is hereby amended by replacing “items (11.1) through (11.4)” with “items (13.1) through (13.4)”.

 

3.           Miscellaneous .

 

3.1           Confirmation . Except as amended hereby, the First Amendment remains in full force and effect in accordance with its existing terms.

 

3.2           Counterparts; Faxes . This Amendment No. 3 may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Amendment No. 3 may also be executed via facsimile, which shall be deemed an original.

 

 
 

 

3.3           Titles and Subtitles . The titles and subtitles used in this Amendment No. 3 are used for convenience only and are not to be considered in construing or interpreting this Amendment No. 3.

 

3.4           Entire Agreement . This Amendment No. 3, together with the Agreement, including the Exhibits thereto, constitutes the entire agreement between the Parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

 

3.5           Governing Law . This Amendment shall be construed in accordance with, and all disputes hereunder shall be governed by, the laws of the State of California, except its conflict of law rules.

 

4.           Effective Date . This Amendment No. 3 shall be effective upon execution.

 

[Signature Page to Follow]

 

 

 
 

 

          IN WITNESS WHEREOF, the Parties have executed this First Amendment or caused their duly authorized officers to execute this Amendment as of the date first above written.

 

TECOM Industries, Inc.   Row 44, Inc.
         
By: /s/ Arsen Melconian   By: /s/ John LaValle
Name: Arsen Melconian   Name: John LaValle
Title: President   Title: CEO
         

 

 

 

 

Exhibit 10.9

 

CONFIDENTIAL TREATMENT REQUESTED FOR PORTIONS OF THIS DOCUMENT. PORTIONS FOR WHICH CONFIDENTIAL TREATMENT IS REQUESTED HAVE BEEN MARKED WITH THREE ASTERISKS [***] AND A FOOTNOTE INDICATING “CONFIDENTIAL TREATMENT REQUESTED”. MATERIAL OMITTED HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

MASTER EQUIPMENT PURCHASE AGREEMENT

 

BETWEEN

 

HUGHES NETWORK SYSTEMS, LLC

 

AND

 

ROW 44, INC.

 

DRAFT

 

 
 

 

MASTER EQUIPMENT PURCHASE AGREEMENT

 

This Agreement is entered into and made effective as of this _____ day of ___________ 2007, (the “Effective Date”) by and between Row 44, Inc., with offices at 31280 Oak Crest Drive, Suite #5, Westlake Village, CA 91361 (“Customer”), and Hughes Network Systems, L.L.C., having its principal offices at 11717 Exploration Lane, Germantown, MD 20876 (“HNS ” or “Hughes ”).

 

WHEREAS, the parties hereto entered into that certain Satellite Delivery and Services Agreement on or about September 9, 2004, as amended by that certain Amendment No. 1 effective as of September 30, 2005 (collectively, the “Original Agreement”);

 

WHEREAS, the Original Agreement contemplated that the parties would enter into a further agreement for the provision by HNS of certain equipment to be used in connection with Customer’s deployment of a communication system for Internet connectivity on aircraft (the “System”);

 

WHEREAS, the parties have agreed, in a certain Development Services Agreement heretofore entered into by each them on or about July 10, 2007, that the platform to be utilized for the System would be the HNS’ HX Network, instead of the architecture initially contemplated in the Original Agreement;

 

WHEREAS, the Parties further intend that the Original Agreement be revised to provide, among other things, that the prices for the equipment and services to be utilized in connection with the System be changed to the prices and payment structure herein specified; and

 

NOW THEREFORE, for and in consideration of the foregoing and of the mutual premises hereinafter expressed, and intending to be legally bound hereby, it is mutually agreed as follows:

 

1.        EQUIPMENT TO BE PURCHASED BY CUSTOMER

 

During the Term (as defined), HNS will provide, and Customer will accept and pay for , the satellite communication equipment (“Equipment”) in accordance with and subject to the terms and conditions set forth herein and Exhibits A and B attached hereto and incorporated herein:

 

Exhibit A – Equipment Order and Pricing

Exhibit B – HX 150 Warranty Repair and Out of Warranty Repair Services and Pricing

 

During the Term, Customer may order additional Equipment, (subject to the provisions described herein relating to the potential discontinuation of the supply of such Equipment) for the same at the prices set forth in this Agreement, including the Exhibits hereto. Prior to discontinuing the availability of any item Equipment for purchase by Customer, HNS will provide Customer with at *** months notice and will provide Customer the opportunity to make a “last buy” of any such Equipment. Further, in such event the conditions described in Exhibit A relative to HNS providing a license to the intellectual property associated with the remote Equipment to Customer will also apply.

 

 

*** Confidential treatment requested.

 

 
 

 

2.        TERM OF AGREEMENT

 

The term of this Agreement (“Term”) and the term of Services provided hereunder will remain in effect for sixty (60) months (the “Initial Term”), unless terminated earlier as provided herein. At the end of the Initial Term, the Term will automatically renew for one additional five year period, unless otherwise terminated by Customer giving written notice to HNS at least ninety (90) days prior to the end of the Initial Term. At the end of the first additional five (5) year period, the Term will then automatically renew an additional five (5) year period, unless otherwise terminated by either party giving written notice of the other at least ninety (90) days prior to the end of the then current Term (each extended five (5) year period a “Renewal Term”). The Initial Term and the subsequent Renewal Terms are referred to in this Agreement as the “Term” of this Agreement.

 

3.        DELIVERY, OWNERSHIP AND RISK OF LOSS

 

Title and risk of loss to all Equipment, as identified in the Exhibit A, shall pass to Customer upon delivery. For purposes of this Agreement, in respect of the HX NOC Equipment to be provided by HNS, “delivery” shall take place upon shipment of the relevant Equipment to HNS’ facility. This Agreement will constitute a security agreement with respect to all Equipment up to the date of payment, and Customer hereby authorizes HNS to sign and file on behalf of Customer any financing statements or other documents that may be necessary to perfect such security interest.

 

Customer hereby authorizes HNS to deliver the HX NOC equipment specified in Section A.1.A of Exhibit A to a *** by December 31, 2007. Customer further authorizes HNS to deliver the quantity of Remote Equipment, as specified in Section 2.4.1 of said Exhibit A, to a Customer designated location by December 31, 2007. HNS will maintain special security procedures for such equipment, including but not limited to keeping it separate from any other equipment maintained by HNS at such location. HNS will maintain all-risk insurance with coverage limits covering the replacement value of all Equipment and, in the event of any loss or damage to the Equipment, HNS will replace the Equipment.

 

4.        EQUIPMENT ORDERS, LEAD TIMES AND FORECASTING

 

Each time Customer elects to purchase Equipment, it shall issue a Purchase Order to HNS. Each individual Purchase Order for Equipment shall set forth the following required terms: (i) the identity and quantities of Equipment ordered, (ii) the price, pursuant to this Agreement, and (iii) the desired delivery schedule. Customer shall provide to HNS, on the first working day of each month, a rolling fifty-two (52) week forecast of its anticipated purchase of Equipment from HNS. A Purchase Order shall be issued at least sixteen (16) weeks prior to the production week, with week zero (0) being the scheduled production week. Accordingly, Customer’s forecast volumes for weeks zero through sixteen (0-16) must be covered by binding Purchase Orders and forecast volumes for weeks beyond week sixteen shall be for planning purposes only.

 

 

*** Confidential treatment requested.

 

 
 

 

4.A     EQUIPMENT CHANGES AND CHANGE NOTICES

 

HNS may, from time to time, make changes to the Equipment to be provided hereunder in order to add functionality or enhanced performance, reduce cost, or other reasons. In the event any such change affects the form, fit or function of such remote Equipment, HNS will provide notice of such change to Customer as promptly as practicable, but, in any event, no later than delivery of Equipment subject to such change. In the event that, after such notification and any subsequent discussions between the parties, Customer determines that any such changed remote Equipment will not be acceptable to Customer, Customer may order any quantity of the prior version of such Equipment as it deems necessary, and HNS will exercise its best reasonable efforts to supply such Equipment. Further, in the event that HNS is not able to provide such additional remote Equipment in the quantities required by Customer, HNS will grant Customer a license to the intellectual property required for the manufacture and supply of such Equipment pursuant to commercially reasonable terms.

 

5.        ASSIGNMENTS

 

Except for (i) assignment to a successor who acquires substantially all of the assets and business of HNS or Customer, (ii) assignment to a subsidiary company, parent company, or subsidiary of parent company, or (iii) assignment, pledge, or transfer by HNS of any interest in any payments to be received by HNS hereunder, neither party hereto may assign this Agreement or any portion hereof without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed. Any assignment permitted hereunder, or otherwise agreed to by the other party hereto will not relieve the assigning party of any obligations with respect to any covenant, condition, or obligation required to be performed by the assigning party under this Agreement.

 

6.        PRICE AND PAYMENT TERMS

 

A. The prices for the Equipment to be provided hereunder (“Charges”) are set forth in Exhibit A.

 

B. The prices for the Equipment set forth in Exhibit A shall be fixed for the Initial Term.

 

C. The Charges provided for in this Agreement are exclusive of the following taxes and charges with respect to the Services or Equipment provided hereunder: (i) any present or future Federal, State, or local excise, sales, or use taxes; (ii) any other present or future excise, sales or use tax, or other charge or assessment upon or measured by the gross receipts from the transactions provided in this Agreement or any allocated portion thereof or by the gross value of the Equipment, and other materials provided hereunder, including but not limited to a Universal Service Fund charge; and (iii) any present or future property, inventory, or value-added tax or similar charge. Customer will pay and discharge, either directly to the governmental agency or as billed by HNS, the foregoing taxes and charges and all assessments, and other taxes with respect to the transactions provided in this Agreement and all Equipment provided hereunder (excluding any Federal, state, local or foreign income taxes, or any tax on gross receipts or gross revenue which is in the nature of an income tax, or any franchise, net worth or capital taxes, imposed upon HNS).

 

D. Customer will pay all invoices submitted hereunder in accordance with the payment terms set forth in Exhibit A. In the even t no such payment terms are described in said Exhibit A in respect of other item or items being purchased by Customer, Customer will pay such invoices net thirty (30) days from the date of invoice. Customer agrees to pay on demand a late payment charge on any amount that is not received by the due date for such payment, at an annual rate of the lesser of (i) the current prime rate (or equivalent), as last quoted by The Wall Street Journal prior to the due date of the payment, plus two percent (2%), or (ii) the maximum rate allowed by applicable law. Any invoice not disputed by Customer in writing within 120 days after issuance shall be deemed valid and shall not be subject to dispute.

 

 
 

 

7.         LICENSE OF SOFTWARE

 

A. Customer acknowledges that any software supplied by HNS to Customer hereunder as listed in Exhibit A is subject to the proprietary rights of HNS and/or HNS' vendor(s) (the “Licensor(s)”) Customer acknowledges that any software licensed hereunder was developed using HNS’ and its Licensor’s typical commercial practices, and not in anticipation of Customer’s particular aircraft-based application. Except for the licenses granted herein, HNS or its Licensor(s), as the case may be, will retain all right, title and interest in the Software. Customer acknowledges that it may use the Software only pursuant to the terms of this Agreement.

 

B. Subject to Customer payment of the Charges specified herein, HNS hereby grants to Customer and Customer hereby accepts from HNS a perpetual, irrevocable, worldwide , nonexclusive license (or sublicense, as applicable) to use the Software and associated documentation solely in connection with the Equipment provided hereunder, such license to commence upon delivery of the Software and associated Equipment to Customer. Customer’s right to use Software shall include the right to use multiple versions or releases of the Software, if applicable (including any updates, “bug” fixes or enhancements).

 

C. Except as permitted by this Article, Customer will not (i) alter, modify, create derivative works of, or attempt to alter, modify, or create derivative works of the Software or any part thereof, (ii) copy, duplicate, or permit anyone else under the control of Customer to copy or duplicate, any part of the Software, or (iii) create or attempt to create, or permit others under the control of Customer to create or attempt to create, by decompiling, disassembling, reverse engineering or otherwise, the source programs or any part thereof from the object programs or from other information made available under this Agreement. Customer may at its own expense make one copy of the object program for archive purposes.

 

D. HNS acknowledges that Customer may resell or lease some portion of the Equipment provided hereunder to third parties, including its airline customers and suppliers . In such event, with respect to each item of Equipment, HNS further agrees that the license granted to Customer for Software installed or used in connection with such Equipment hereunder shall automatically transfer to such third party upon such resale or lease by Customer . Except as described herein, Customer will not, directly or indirectly, distribute, sell, assign, transfer, offer, disclose, lease (as lessor), or license the Software to any third party. Customer agrees to use commercially reasonable efforts to notify HNS within 30 days after it learns of the unauthorized possession, use or knowledge of the Software made available to Customer pursuant to this Agreement by any person under the control of Customer not authorized to have such possession, use or knowledge.

 

 
 

 

8.         FORCE MAJEURE

 

Either party hereto shall be excused for delays or interruptions in the performance of its obligations under this Agreement when such delays or interruptions (i) are caused by the other party, or, (ii) except for the exercise of due care, are otherwise beyond the reasonable control of such party, including but not limited to war (whether or not actually declared), sabotage, insurrection, rebellion, riot or other act of civil disobedience, act of a public enemy, failure of or delay in transportation, any governmental act, judicial action, priorities given U.S. Government procurements, labor dispute, shortage of labor, fuel, raw material or machinery, fire, accident, explosion, epidemic, quarantine, storm, flood, earthquake, or other Acts of God (“Force Majeure”). The parties specifically agree that rain, snow or other ordinary weather conditions (excluding tornadoes, hurricanes, and other major storms) do not constitute Force Majeure conditions. If any such Force Majeure occurs, the party affected by such Force Majeure shall use its best efforts to abate the effect of such Force Majeure and restore compliance with the terms of this Agreement as soon as possible. In that regard, during a Force Majeure, HNS shall allocate production and deliveries of equipment to Customer on a basis no less detrimental than any other customer of HNS similarly subject to such Force Majeure; provided, that, HNS may give preferential treatment to allocating equipment to the U.S. Government. Customer may cancel any scheduled delivery that has been excusably delayed for reason (ii) above for more than two (2) months.

 

9.     LIMITED WARRANTIES ON EQUIPMENT, DISCLAIMERS, PROCEDURES

 

A. HNS will deliver good title to all of the Equipment purchased by Customer pursuant to this Agreement, free from any and all liens, claims, or encumbrances.

 

B. Subject to the terms and conditions hereof, f or any Equipment which is in the nature of NOC Equipment or applicable spare parts, , HNS warrants that such Equipment shall perform in accordance with the specifications for such Equipment for a period of 12 months from the date of delivery from HNS to Customer, provided, that, for the initial NOC order made herein, such warranty shall commence on the installation of such Equipment at the designated NOC. For Equipment which is in the nature of Remote Equipment, such as the HX 150 boards, HNS warrants that such Equipment will be manufactured in substantial conformity with HNS’ standard manufacturing processes and will meet HNS’ standard HX150 specifications (as such specifications are in effect as of the date of delivery of such Equipment to Customer) for a period of the lesser of 42 months from the date of delivery to Customer, or 36 months from the date of installation . HNS shall, at its option and expense in accordance with Paragraph C below, promptly repair or replace, or cause to be repaired or replaced, any Equipment that proves to have a defect during such warranty periods . Fees for repair or replacement of equipment beyond the warranty period are set forth in Exhibit B. In addition, in respect of any item which is separate “deliverable” pursuant to Exhibit A to this Agreement (as opposed to a component in a deliverable), in the event that HNS’ agreements with its suppliers and subcontractors provide better warranties than those specified herein, HNS will pass through the benefit of any such better warranties to Customer.

 

C. The limited warranties set forth in this Article, except for the warranty of title, are contingent upon Customer’s notifying HNS of an alleged defect during the warranty periods defined herein. Repair, replacement, amendment, or alteration will be performed in accordance with HNS’ standard practices with respect to such Equipment. Customer shall be responsible for the return of Equipment to HNS’ designated repair location (to be located within the contiguous United States), freight prepaid and packed to assure safe arrival. HNS shall return repaired, replaced, amended or altered Equipment, freight prepaid and packed to assure safe arrival, to Customer’s designated location in the contiguous United States.

 

 
 

 

D. Except as set forth herein, Customer hereby acknowledges and agrees HNS make no representation, and disclaims any warranty, express or implied, regarding the Equipment, including, without limitation, the operation of the Equipment in Customer’s aeronautical application . Without limiting the generality of the foregoing, HNS makes no representation regarding the fitness for use of the Equipment in Customer’s aeronautical application and, except as described in Subsections A and B of this Section 9, Customer accepts remote equipment “as is” and without any other warranty. In addition, Customer has sole responsibility for any and all changes that may be required to ensure fitness for use in Customer’s aeronautical application and for obtaining all necessary FAA, FCC and any other certifications that may be required for flight qualification. Further, limited warranties set forth in this Article will not apply with respect to (i) Equipment that has been subject to unauthorized alteration, modification, or repair, (ii) defects or failures resulting from handling, storage, operation, interconnection, or installation; (iii) failure to continually provide a suitable installation and operational environment; or (iv) any other cause beyond the range of normal usage for the equipment ; provided, that, the exceptions above shall not apply where such exception results from HNS’s actions pursuant to an agreement with Customer . In the event Customer desires to make a modification to the Equipment which is not “authorized” by HNS, Customer may, at its option, acquire a license from HNS to the intellectual property necessary for Customer or its contractor to manufacture of the relevant Equipment itself. The terms of any such license will be mutually agreed by the parties.

 

E. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, HNS NEITHER MAKES NOR ASSUMES ANY LIABILITY UNDER ANY WARRANTIES (WHETHER EXPRESS, IMPLIED, OR STATUTORY) ON OR WITH RESPECT TO THE SUPPLIED EQUIPMENT OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED CONDITIONS OR WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

10.         PATENT AND COPYRIGHT INDEMNITY

 

A. Hughes warrants that, to the best of its knowledge, the Software and the Equipment will not infringe any patent, copyright, trademark, trade secret, mask work right or other intellectual property right of any third party. If Customer promptly notifies Hughes in writing of a third party claim against Customer that any of the Equipment or Software provided by Hughes infringes a patent, copyright trade secret or other intellectual property right of a third party, Hughes will indemnify, defend and hold Customer harmless with respect to such claim at Hughes’ expense and will pay any costs or damages that may be finally determined against Customer. In the event of any such claim, HNS shall have the right to control the defense thereof and Customer shall provide such reasonable assistance and information, at HNS’ expense, as HNS requests in writing and as it is available to Customer.

 

 
 

 

B. Further, if any such item is, or in Hughes’ opinion is likely to be, held to constitute an infringing product, Hughes shall at its expense and option either (a) procure the right for Customer to continue using it, (b) replace it with a non-infringing equivalent reasonably acceptable to Customer, (c) modify it to make it non-infringing or (d), only if the remedies above are impracticable, accept return of such item and, in addition to the indemnification obligations above and such other rights and remedies of Customer available herein, refund to Customer the fees paid for such item less a reasonable amount for Customer’s use of the relevant item up to the time of return.

 

C. Notwithstanding the above, HNS will not be liable for any such damages or costs attributable to claims resulting from (i) HNS' compliance with Customer’s designs, specifications, or instructions, (ii) use of any item provided by HNS in combination with products not supplied by HNS, to the extent the claim would not have otherwise arisen but for such combined use, or (iii) a manufacturing or other process carried out by or through Customer and utilizing any item provided by HNS that constitutes either direct or contributory infringement of any patent or other intellectual property right , . In addition, the exclusion from HNS’ intellectual property indemnity, as described in Section 9(e) of the Development Services Agreement heretofore entered into by the parties, as said exclusion applies to claims of infringement which would not have arisen but for such development work, shall continue to apply. All such claims for which HNS has no indemnity obligation are hereafter referred to as "Other Claims". Customer will indemnify HNS from any and all losses, liabilities, damages and costs finally awarded or agreed upon in any settlement of a claim for infringement of any patent or intellectual property right in any suit resulting from Other Claims, and from reasonable expenses incurred by HNS in defense of such suit if Customer does not undertake the defense thereof.

 

D. The foregoing indemnity shall be Customer’s sole and exclusive remedy for any patent and copyright infringement claims arising out of the use of the Equipment, Software and documentation provided to Customer hereunder, and is in lieu of any other indemnity or warranty, express or implied, with respect to intellectual property.

 

11.      INDEMNIFICATION

 

Customer and HNS shall indemnify, defend and hold the other harmless from and against any claims, demands, and causes of action asserted against the indemnitee by any person (including, without limitation, HNS' and Customer's employees, HNS' subcontractors and employees of such subcontractors or any third party) for personal injury or death or for loss of or damage to property resulting from the indemnitor's negligence or willful misconduct hereunder. Where personal injury, death or loss of or damage to property is the result of the joint negligence or willful misconduct of Customer and HNS, the indemnitor's duty of indemnification shall be in proportion to its allocable share of joint negligence or willful misconduct.

 

Customer shall indemnify, defend and hold HNS harmless from and against any claims, demands, and causes of action asserted against the indemnitee by any person (including, without limitation, any of Customer’s customers or any person or entity that Customer permits to use any service provided by Customer) based on any claim in connection with: (i) the Equipment provided to any customer of Customer (including end users or airlines) or the failure of Customer to provide such Equipment and any service; (ii) any material misrepresentation or material omission made to by Customer regarding the Equipment or any service to be provided by Customer; (iii) any claim by any customer of Customer arising from loss of service due to the termination of this Agreement or any other reason; and (iv) any violation by Customer of local, state or federal laws, rules and regulations.

 

 
 

 

Each party’s indemnification obligation shall be contingent upon the indemnitee giving prompt written notice to the indemnitor of any such claim, demand, or cause of action and permitting the indemnitor to have sole control of the defense thereof.

 

12.        INSURANCE .

 

A. Commencing not later than the first installation by Customer on a commercial aircraft and thereafter during the Term , Customer shall obtain and maintain at its own expense insurance of the type and in the amounts set forth below:
     
i Commercial General Liability ( “CGL” ) coverage on an occurrence basis (not claims made), with limits at least $ 20,000,000 per occurrence for bodily injury and property damage, including coverage for liability arising from (i) premises; (ii) operations; (iii) broad form property damage; (iv) personal injury; (v) independent contractor's liability; and (vi) work performed by Customer.

  

ii Excess Liability coverage with respect to the CGL policy described above, in an umbrella form and on an occurrence basis with limits of at least $ 20,000,000 per occurrence.

 

iii Professional Liability coverage with limits of at least $ 5,000,000 providing coverage for claims arising out of the performance of Customer and its subcontractors in providing or failing to provide the equipment and services to its customers, airlines and end users, including, but not limited to, coverage for errors and omissions caused by Customer’s or its subcontractor’s negligence in the performance thereof.

 

B. Upon obtaining such insurance , Customer shall deliver certificates of insurance in a form acceptable to HNS which evidence that Customer has the insurance required by this Section. HNS shall be named as an “Additional Insured” with respect to all coverages required by this Section. Customer shall obtain the insurance policies required by this Section from a provider that has a rating of A- X or better from A.M. Best’s or a comparable rating from another rating agency. These policies shall not be canceled or materially changed without ten (10) days prior written notice from the insurer to HNS and Customer.

 

C. Notwithstanding anything to the contrary in this Agreement if Customer fails to maintain the insurance required by this Section, or if any of the required insurance is cancelled and not replaced within a commercially reasonable timeframe, HNS may terminate this Agreement for the default of Customer without further obligation.

 

D. The insurance required by this Section shall be primary insurance and not excess over nor contributing with any insurance maintained by HNS. In addition, the insurance requirements set forth above are minimal coverage requirements and are not to be construed in any way as a limitation on Customer’s liability under this Agreement.

  

E. As an alternative to Customer’s requirement to secure the Comprehensive General Liability coverage and the Excess Liability coverage referenced in Sections A.i and A.ii above, Customer may provide HNS with proof that (a) its airline customers are not requiring these coverages from Customer, (b) that such airline customers are intending to address any insurance requirements relating to these coverages themselves through their own aviation insurance coverage, or (c) that such airline customers are indemnifying and holding Customer harmless from and against any liability for personal injury and property damage arising from or relating to Customer’s provision of equipment and services to such airline customers or end users.

  

 
 

 

13.      DEFAULT BY CUSTOMER

 

13.1    Definition

 

The occurrence of any one or more the following events (herein called "Events of Customer Default") shall constitute a default by Customer under this Agreement:

 

A. Default by Customer in the payment of any charge payable hereunder as and when the same becomes due and payable and such default continues for a period of thirty (30) days after notice of such default from HNS , ; or

 

B. Default by Customer in the performance of any other term, covenant or condition of this Agreement, which default shall continue for a period of thirty (30) days after written notice; or

 

C. The making of an assignment by Customer for the benefit of its creditors or the admission by Customer in writing of its inability to pay its debts as they become due, or the insolvency of Customer, or the filing by Customer of a voluntary petition in bankruptcy, or the adjudication of Customer as bankrupt, or the filing by Customer of any petition or answer seeking for itself any reorganization, arrangement, composition or readjustment precipitated by the insolvency or bankruptcy of Customer, any liquidation, dissolution or similar relief under any present or future statute, law or regulation, or the filing of any answer by Customer admitting, or the failure by Customer to deny, the material allegations of a petition filed against it for any such relief, or the seeking or consenting by Customer to, or acquiescence by Customer in, the appointment of any trustee, receiver or liquidator of Customer or of all or any substantial part of the properties of Customer, or the inability of Customer to pay its debts when due, or the commission by Customer of any act of bankruptcy; or

 

D. The failure by Customer, within sixty (60) days after the commencement of any proceeding against Customer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, to obtain the dismissal of such proceeding or, within sixty (60) days after the appointment, without the consent or acquiescence of Customer, or any trustee, receiver or liquidator of Customer or of all or any substantial part of the properties of Customer, to vacate such appointment.

 

13.2    Remedies

 

Upon the occurrence of any Event of Customer Default, HNS may, in addition to any other rights or remedies available to it at law or in equity, terminate this Agreement immediately upon written notice. In addition, upon termination of this Agreement for the default of Customer, HNS may, at its option, require Customer to disable any Equipment previously installed in any aircraft. Customer shall in any event remain fully liable for reasonable damages as provided by law and for all costs and expenses incurred by HNS on account of such default including all court costs and reasonable attorneys fees.

 

 
 

 

14.      DEFAULT BY HNS

 

14.1    Definition

 

The occurrence of any one or more the following events (herein called "Events of HNS Default") shall constitute a default by HNS under this Agreement:

 

A. Default by HNS in the performance of any other term, covenant or condition of this Agreement, which default shall continue for a period of thirty (30) days after notice; or

 

B. The making of an assignment by HNS for the benefit of its creditors or the admission by HNS in writing of its inability to pay its debts as they become due, or the insolvency of HNS, or the filing by HNS of a voluntary petition in bankruptcy, or the adjudication of HNS as bankrupt, or the filing by HNS of any petition or answer seeking for itself any reorganization, arrangement, composition or readjustment precipitated by the insolvency or bankruptcy of HNS, any liquidation, dissolution or similar relief under any present or future statute, law or regulation, or the filing of any answer by HNS admitting, or the failure by HNS to deny, the material allegations of a petition filed against it for any such relief, or the seeking or consenting by HNS to, or acquiescence by HNS in, the appointment of any trustee, receiver or liquidator of HNS or of all or any substantial part of the properties of HNS, or the inability of HNS to pay its debts when due, or the commission by HNS of any act of bankruptcy, as amended; or

 

C. The failure by HNS, within sixty (60) days after the commencement of any proceeding against HNS seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, to obtain the dismissal of such proceeding or, within sixty (60) days after the appointment, without the consent or acquiescence of HNS, or any trustee, receiver or liquidator of HNS or of all or any substantial part of the properties of HNS, to vacate such appointment.

 

14.2    Remedies

 

Upon the occurrence of any one or more Events of HNS Default, Customer may, in addition to any other rights or remedies available to it at law or in equity, and subject to the limitations described in Section 15, terminate this Agreement immediately upon written notice. HNS shall in any event remain fully liable for reasonable damages as provided by law and for all costs and expenses incurred by Customer on account of such default including all court costs and reasonable attorneys fees.

 

 
 

 

15.     LIMITATION OF LIABILITY

 

A. IN NO EVENT WILL CUSTOMER, HNS, OR ASSIGNEES BE LIABLE TO EACH OTHER FOR SPECIAL, COLLATERAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY NATURE (INCLUDING WITHOUT LIMITATION, LOSS OF GOODWILL, LOSS OF PROFITS OR REVENUES, LOSS OF DATA, LOSS OF SAVINGS, LOSS OF USE, INTERRUPTIONS OF BUSINESS, AND CLAIMS OF CUSTOMERS) ARISING OUT OF OR RELATED TO THIS AGREEMENT, OR THE EQUIPMENT, SOFTWARE, AND SERVICES PROVIDED HEREUNDER, EVEN IF SUCH DAMAGES WERE FORESEEABLE.

 

B. HNS' MAXIMUM AGGREGATE LIABILITY UNDER THIS AGREEMENT SHALL NOT EXCEED THE PURCHASE PRICE OF THE EQUIPMENT ON WHICH SUCH LIABILITY IS BASED.

 

C. The remedies of Customer and HNS set forth herein are exclusive and in lieu of all other remedies, express or implied. Except for the remedies provided for herein, neither HNS nor its subcontractors shall be liable for any delay or failure of performance of the Equipment, Software or Services provided herein.

 

16.     INDEPENDENT CONTRACTOR AND SUBCONTRACTING

 

A. HNS and Customer will be and shall act as independent contractors, and neither party is authorized to act as an agent or partner of, or joint venturer with, the other party for any purpose. Neither party by virtue of this Agreement shall have any right, power, or authority to act or create any obligation, express or implied, on behalf of the other party. Customer acknowledges and agrees that HNS will be solely responsible to determine the method and manner of performing its obligations hereunder.

 

B. Customer agrees that HNS may, at its sole discretion, subcontract the whole or any part of its obligations under this Agreement; provided that HNS agrees that it will retain full responsibility for such obligations despite such subcontract.

 

17. CONFIDENTIALITY

 

A. HNS and Customer, to the extent of their contractual and lawful right to do so, will exchange proprietary or confidential information as reasonably necessary for each to perform its obligations under this Agreement. All information relating to this Agreement provided by either party to the other, whether oral or written, and when identified as confidential or proprietary in writing, is hereby deemed to be confidential and proprietary information ("Proprietary Information").

 

B. Except as set forth in Paragraph C below, a party receiving Proprietary Information pursuant hereto (the "Receiving Party") will keep such Proprietary Information confidential, and will not, without the prior written consent of the party disclosing such information (the "Disclosing Party"), (i) use any portion of the Proprietary Information for any purpose other than the purpose of this Agreement, or (ii) disclose any portion of the Proprietary Information to any persons or entities other than the employees and consultants of the Receiving Party (and HNS' subcontractors) who reasonably need to have access to the Proprietary Information in connection with the purposes of this Agreement and who have agreed to protect Proprietary Information as though they were a party to this Agreement.

 

 
 

 

C. A Receiving Party will not be liable for disclosure of Proprietary Information, or any part thereof, if the Receiving Party can demonstrate that such Proprietary Information (i) was in the public domain at the time it was received or subsequently entered the public domain through no fault of the Receiving Party; (ii) was known to or is in the possession of the Receiving Party at the time of receipt; (iii) became known to the Receiving Party from a source other than the Disclosing Party without breach of an obligation of confidentiality; or (iv) is disclosed more than five (5) years after the date of receipt of the proprietary Information by the Receiving Party. In the event of any legal action or proceeding or asserted legal requirement for disclosure of Proprietary Information furnished hereunder, the Receiving Party will promptly notify the Disclosing Party and, upon the request and at the expense of the Disclosing Party, will cooperate with the Disclosing Party in lawfully contesting such disclosure. Except in connection with any failure to discharge its responsibilities under the preceding sentence, the Receiving Party will not be liable for any disclosure pursuant to court order.

 

D. Proprietary Information will remain the property of the Disclosing Party and will, at the Disclosing Party's request and after it is no longer needed for the purposes of this Agreement or upon expiration or termination of this Agreement for any reason, whichever occurs first, promptly be returned to the Disclosing Party or be destroyed, together with all copies made by the Receiving Party and by anyone to whom such Proprietary Information has been made available by the Receiving Party in accordance with the provisions of this Section 17.D.

 

18.     RESOLUTION OF DISPUTES

 

Any and all disputes arising under or in connection with this Agreement shall be resolved in accordance with this Section 18.

 

A.. Negotiation.

 

The parties shall attempt to resolve any dispute, controversy or difference that may arise between them through good faith negotiations. In the event the parties fail to reach resolution of any such dispute within sixty (60) days after entering into negotiations, either party may refer such dispute to arbitration pursuant to the provisions of Section 18.B. Notwithstanding the above, the parties may elect to waive applicability of this section (i) if both parties agree in writing that the nature of their dispute is such that it cannot be resolved through negotiations; or (ii) if a party shall suffer irrevocable harm by such delay.

 

B. Arbitration.

 

Arbitration shall be conducted in accordance with the International Arbitration Rules of the American Arbitration Association (“AAA”) in effect at the time of arbitration. The arbitration shall be in accordance with the following guidelines except to the extent the parties to arbitration shall agree otherwise:

 

1. The place of arbitration shall be Washington, D.C.

 

2. The arbitration panel shall be composed of one arbitrator. If the parties fail to mutually agree on an arbitrator within thirty (30) days from the date the dispute is referred to arbitration, any party may refer such selection to the AAA.

 

3. The proceeding shall be conducted and transcribed in English. Any document submitted in a language other than English shall be accompanied by an English translation. Neither party will be entitled to discovery in connection with such arbitration unless otherwise mutually agreed in writing.

 

 
 

 

4. The results of any such arbitration, and all testimony and evidence related to the confidential information or trade secrets of either party shall be deemed to be Proprietary Information subject to Section 16 and shall be safeguarded and maintained as confidential, with access to such evidence to be only on a need-to-know basis and subject to all reasonable precautions so as not to jeopardize the confidential information or trade secrets of any party.

 

5. The parties hereby accept jurisdiction of the arbitral tribunal over the parties and over the subject matter of the dispute.

 

6. Notwithstanding the foregoing, either party shall have the right to seek injunctive relief regarding any disputes arising under Section 17.

 

19.     ADDITIONAL CLAUSES

 

A. EXPORT CONTROL: It is expressly agreed that the execution of this Agreement and the subsequent delivery of any Equipment or Software under this Agreement are subject to all applicable export controls imposed or administered by the U.S. Department of Commerce as well as by any other U.S. Government Agency that may impose any such controls, including but not limited to the export of technical data, equipment, software and know-how. Each party shall perform their obligations under this Agreement in compliance with such laws and regulations and shall not take any action contrary thereto. Customer will not export or re-export, directly or indirectly, any Software, Equipment, documentation or other technical data provided to it hereunder, without complying with all export control laws and regulations, and without first obtaining any required export licenses and approvals. HNS shall provide reasonable cooperation and assistance to enable Customer to obtain any such export licenses and approvals.

 

B. ENTIRE AGREEMENT: This Agreement, the Exhibits hereto, and any other documents referred to herein constitute the entire agreement between the parties, and supersedes any prior written or oral agreement or understanding with respect to the subject matter hereof. No interpretation, amendment, or change to this Agreement will be effective unless made in writing and signed by both parties, except that each party may change the address or the name of the person to whom notices to that party will be sent by giving written notice of such change to the other party as provided in Section 19.E hereof.

 

C. NO WAIVER: Failure by either party to exercise any rights under this Agreement in any one or more instances will not constitute a waiver of such rights in any other instance. Waiver by such party of any default under this Agreement will not be deemed a waiver of any other default. No alteration or modification of any provision of this Agreement will be binding unless in writing and signed by duly authorized representatives of both parties.

 

D. GOVERNING LAW: This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, will be governed by and construed in accordance with the laws of the State of Maryland notwithstanding the place of execution or performance of this Agreement (without reference to its conflict of laws principles) and applicable Federal laws.
 
 

  

E. CROSS DEFAULT: In the event that either party is in breach of any other agreement between the parties hereto, such breach may, at the option of the non- breaching party, be deemed to be a breach of this Agreement. Consequently, in the event the breach of such other agreement between the parties is not cured pursuant to the terms of such agreement, thus leading to the termination of such agreement for default, this Agreement may likewise be terminated for default.

 

F. NOTICES: All notices, demands, requests, or other communications provided for herein (other than routine communications concerning the Services) will be given in writing and will be effective when delivered personally or when sent by registered or certified mail, return receipt requested, postage prepaid, or transmitted by facsimile, hand delivery, telegram, or telex/TWX. All notices sent by either party will be addressed as follows:

 

If to HNS:

 

Hughes Network Systems, LLC

11717 Exploration Lane

Germantown, Maryland 20876

ATTN: General Counsel

 

If to Customer:

 

Row 44, Inc.

31280 Oak Crest Drive, Suite #5

Westlake Village, CA 91361

Attn: Chief Executive Officer

 

With a copy to:

 

Strategic Law Partners, LLP

500 S. Grand Avenue, Suite 2050

Los Angeles, CA 90071

Attn: Timothy F. Silvestre

 

Either party may designate by notice in writing a new address to which any notice, demand, request, or communication will be delivered, as provided above.

 

G. SEVERABILITY: If any of the provisions or any portion of the provisions of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability will not invalidate or render unenforceable the entire Agreement, but rather the entire Agreement will be construed as if not containing the particular invalid or unenforceable provisions or portion thereof, and the rights and obligations of the parties hereto will be construed and enforced accordingly.

 

 
 

 

H. COUNTERPARTS. One execution original of this Agreement, together with its Exhibits and Addendums, marked “Original”, shall be the original of this Agreement evidencing use agreements covering the Equipment. All other executed counterparts of this Agreement shall be marked “Duplicate”. To the extent that this Agreement constitutes chattel paper, as such term is defined in the Uniform Commercial Code of the applicable jurisdiction, no security interest in this Agreement may be created through the transfer of possession of any counterpart other than the Original of this Agreement.

 

I. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and permitted assigns.

 

J. COMPLIANCE WITH LAWS. Each party agrees to comply with all applicable laws, rules, and regulations in connection with its activities under this Agreement.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by and through their duly authorized representatives.

 

    Hughes Network Systems, LLC
     
  By: /s/ Philip K. O’Brien
  Name: Philip K. O’Brien
  Title V.P. Legal
  Date: 12/21.2007
     
    Row 44, Inc.
     
  By: /s/ John Guidon
  Name: John Guidon
  Title: CEO

 

 
 

 

 

EXHIBIT A

 

TO MASTER PURCHASE AGREEMENT

 

EQUIPMENT ORDER AND PRICING

 

 
 

 

EXHIBIT A

EQUIPMENT ORDER AND PRICING

 

1.0 SCOPE

 

This Exhibit sets forth a description of the Equipment and related items that are to be provided pursuant to this Agreement. This Exhibit also includes the prices for such Equipment and related items, the pricing for additional Equipment that may be purchased by Customer from time to time, as well as the payment terms associated with such Equipment. HNS will provide full duplex point-to-multipoint satellite communication equipment and services, in accordance with the terms of this Agreement, and shall install (as provided herein) and commission the quantity of dedicated HX Networks specified in Section 2.1 below, consisting of certain network operations center (“NOC”) equipment and Customer supplied and Customer operated integrated aeronautical terminal units. HNS will supply standard HX 150 baseband and RF boards (Remote Equipment) to Customer for incorporation by Customer into Customer’s aeronautical terminal units.. *** .

 

1.1 NOC DELIVERABLES

 

HNS will deliver the hub equipment summarized below. The associated pricing information is listed in Section 2 below. *** If that assumption proves in-correct, then additional equipment and services will be required.

 

***

 

HX System Software and all associated 3 rd party licenses

 

Full complement of Customer hub spares to be resident at *** as specified and priced in Section 2.2 below

 

Shipping, installation and testing, including all travel and expenses.

 

 

*** Confidential treatment requested.

 

 
 

 

1.2 HX NOC INSTALLATION AND TESTS

 

HNS will install and test the deliverable NOC Equipment in accordance with the terms hereof. There are a number of tests associated with the manufacture, installation, and commissioning of the HX NOC equipment. A description of each of these tests follows, as well as a description of the NOC installation services to be provided by HNS, follows.

 

1.2.1 HX NOC SITE PREPARATION AND INSTALLATION

 

HNS will be responsible to provide the hub earth station (use of existing RFTs) and to provide and install the HX NOC Equipment described above at ***. HNS will provide electrical power, air conditioning, fire protection provisions, floor space, and any required backhaul equipment and facilities, and other necessary preparations.

 

1.2.2 HX NOC ACCEPTANCE TESTS

 

HNS will conduct the onsite HX NOC acceptance tests in accordance with a test plan agreed and documented by the parties. The test plan will be based on HNS’ standard HX NOC ATP with additional tests for Customer-specific changes.

 

1.2.3 HNS RESPONSIBILITIES FOR HX NOC ACCEPTANCE TESTING

 

HNS responsibilities will include the following:

 

•      Provide test personnel to conduct the onsite tests

 

•      Provide satellite test time (at the cost of Customer)

 

•      Conduct the onsite tests in conjunction with the Customer and document the result

 

1.2.4 CUSTOMER RESPONSIBILITIES FOR HX NOC ACCEPTANCE TESTING

 

Customer responsibilities will include the following:

 

•     Provide test personnel to assist in conducting the onsite tests.

 

•     Provide aeronautical terminal equipment to be used in connection with the test

 

*** Confidential treatment requested.  

 

 
 

 

1.3 REMOTE EQUIPMENT

 

HNS will deliver the HX 150 baseband and RF board sets detailed below. The associated pricing information is listed in Section 2. A single HX 150 baseband board and RF board set constitutes a “remote”. Each delivery of remotes shall include board level factory functional test results for such equipment as well as a statement certifying that such equipment has been built and tested in compliance with HNS’ standard manufacturing processes and in conformance to the HX 150 standard product board specifications.

 

HX 150 Board Set
Baseband Board

 

RF Board
 
 

 

2. INITIAL ORDER

 

Customer hereby orders *** including installation and acceptance testing and ***. The following sets forth the Equipment configuration that comprises the Initial Order under this Agreement.

 

2.1      HX NOC Equipment:

 

***

 

2.2.     HX NOC Equipment Spare Parts

 

***

 

2.3.     Backhaul Equipment

 

***

 

2.4.     Remote Equipment

 

Remote equipment consists of HX 150 standalone baseband and RF boards produced using Hughes’ existing commercial procurement, board level manufacturing and test process and does not include any changes or additional testing to the existing individual board level tests. The warranties and associated limitations applicable to this Equipment are described in Section 9 of this Agreement.

 

2.4.1 Initial Order Remote Equipment

 

***

 

.2.4.2 Additional Remote Equipment

 

Customer may order additional Remote Equipment in accordance with the prices described below:

 

***

 

 

*** Confidential treatment requested.

 

 
 

 

After the initial order of remote equipment described in Section 2.4.1 above, additional orders of such remote equipment ***.

 

In order to qualify for the discount described above, Customer must direct that all ordered Equipment be delivered within 16 weeks. In the event that HNS is unable to fulfill an order from Customer for additional sets of Remote Equipment, due to parts unavailability or obsolescence or other reasons, HNS will (i) use commercial reasonable efforts to fast track production to meet the order quantity ordered, including, without limitation, requesting “hot lots” at HNS’s expense and, if still unable to fulfill the order, enter into good faith negotiations with Customer on the licensing of the design of the Equipment and Software at commercially reasonable rates, in order to give Customer the opportunity to maintain a continuity of supply of such Equipment. In addition, HNS will provide notice to Customer of its intention to discontinue the supply of such Equipment, and will afford Customer the opportunity to make a last buy of such Equipment in accordance with the terms set forth in Section 1 of this Agreement.

 

HNS at its sole discretion may define and implement HX 150 baseband or RF board Engineering Change Notices (ECNs). HNS will inform the Customer of ECNs which affect the form, fit or function of the HX 150 baseband or RF boards as promptly as possible prior to implementing any such change. HNS will not inform the Customer of changes to the HX 150 baseband or RF boards that do not impact form, fit or function (e.g., the use of alternative parts that comply with the bill of material specifications). The other terms set forth in Section 4.A of the Agreement shall also apply to Engineering Change Notices.

 

3.        HX NOC OPTIONS

 

HX NOC inroute spreading option:

 

***

 

The following Expansion capabilities are all optional:

 

***

 

4.      DOCUMENTATION

 

***

 

 

*** Confidential treatment requested.

 

 
 

 

5.       PAYMENT TERMS

 

A. Equipment

 

***

 

HNS will invoice Customer for the initial lot of Remote Equipment as specified in Section 2.4.1

 

***

 

B. Except as otherwise provided in this Section, payment will be due net thirty (30) days from date of invoice.

 

 

*** Confidential treatment requested.

 

 
 

 

EXHIBIT B

 

HX 150 WARRANTY AND OUT OF WARRANTY REPAIRS

 

 
 

 

EXHIBIT B

HX 150 WARRANTY AND OUT OF WARRANTY REPAIRS

 

1.       DEFINITIONS

 

Cannot Duplicate (CND) – This indicates that HNS has tested the Equipment and cannot duplicate a problem using the test fixtures. The unit will be returned to Customer so that it can be reentered into service.

 

ECN, No Problem Found – This indicates that HNS has tested the Equipment and cannot duplicate a problem using the test fixtures. However, since the unit was manufactured, there has been a suggested engineering change notice (ECN) and HNS has updated the unit in accordance with the ECN. The unit will be returned to Customer so that it can be reentered into service.

 

Return – Un-repaired – This indicates that the unit has evidence of damage caused by Customer or end-user actions. The unit is returned in the condition in which it was sent.

 

Scrap – This indicates the Equipment cannot be repaired and is out of warranty. The unit is returned to Customer for disposal.

 

Return Merchandise Authorization (RMA) – Authorization number that is assigned to a batch of equipment that is returned for repair. The RMA number is used to track the equipment from initial shipment by Customer to return shipment by HNS.

 

2.       HX 150 WITHIN WARRANTY PRICING

 

The Section sets forth the applicable pricing associated with the additional services herein provided during the Warranty Period. This pricing applies to the HX 150 baseband and RF board set.

 

HNS will perform diagnostic testing on the equipment and will return it to Customer if the equipment appears to be functioning correctly. In that case, the CND fee would apply. Depending on the revision of the equipment, HNS will occasionally update the unit in accordance with an engineering change notice. In this scenario, there was no problem found, but work was done on the unit to implement the ECN. If there is a defect, then HNS will repair the unit or replace the unit at no charge.

 

***

 

*** Confidential treatment requested.

 

 
 

 

3.       HX 150 OUT OF WARRANTY PRICING

 

The Section sets forth the applicable pricing associated with the additional services herein provided after the Warranty Period has ended. This pricing applies to HX 150 baseband and RF board set.

 

HNS will perform diagnostic testing on the equipment and will return it to Customer if the equipment appears to be functioning correctly. In that case, the CND fee would apply. Depending on the revision of the equipment, HNS will occasionally update the unit in accordance with an engineering change notice. In this scenario, there was no problem found, but work was done on the unit to implement the ECN.

 

If a Defect is confirmed after the Warranty Period, then HNS will inform Customer of the status and Customer can elect to have the failed unit returned for the Return – Un-repaired fee or HNS will repair the unit if the unit is repairable. If Customer elects to have the unit repaired, then only the appropriate equipment price below is charged.

 

***

 

4.       REPAIR TIME

 

After Customer has submitted an RMA request and received an authorization number, Customer will ship the equipment, freight prepaid and packed to assure safe arrival, to HNS. Upon receipt of the equipment at HNS, HNS will compare the RMA request to the material received. Once there is a complete match between the RMA and material, HNS will endeavor to complete any repairs and return the equipment within forty-five (45) days. HNS shall return repaired equipment, freight prepaid and packed to assure safe arrival, to Customer's designated location.

 

 

*** Confidential treatment requested.

 

 

 

 

CONFIDENTIAL TREATMENT REQUESTED FOR PORTIONS OF THIS DOCUMENT. PORTIONS FOR WHICH CONFIDENTIAL TREATMENT IS REQUESTED HAVE BEEN MARKED WITH THREE ASTERISKS [***] AND A FOOTNOTE INDICATING “CONFIDENTIAL TREATMENT REQUESTED”. MATERIAL OMITTED HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

MASTER SERVICES AGREEMENT

 

BETWEEN

 

HUGHES NETWORK SYSTEMS, LLC

 

AND

 

ROW 44, INC.

 

DRAFT

 

 
 

 

MASTER SERVICES AGREEMENT

 

This Agreement is entered into and made effective as of this _____ day of ___________ 2007, (the “Effective Date”) by and between Row 44, Inc., with offices at 31280 Oak Crest Drive, Suite #5, Westlake Village, CA 91361 (“Customer” or “Row 44”), and Hughes Network Systems, L.L.C., having its principal offices at 11717 Exploration Lane, Germantown, MD 20876 (“HNS”).

 

WHEREAS, the parties hereto entered into that certain Satellite Delivery and Services Agreement on or about September 9, 2004, as amended by that certain Amendment No. 1 effective as of September 30, 2005 (collectively, the “Original Agreement”);

 

WHEREAS, the Original Agreement contemplated that the parties would enter into a further agreement for the provision by HNS of certain equipment to be used in connection with Customer’s deployment of a communication system for Internet connectivity on aircraft (the “System”);

 

WHEREAS, the Original Agreement contemplated that HNS would be paid for said equipment and services in accordance with a formula therein specified;

 

WHEREAS, the parties have agreed, in a certain Development Services Agreement heretofore entered into by each them on or about July 10, 2007, that the platform to be utilized for the System would be the HNS’ HX Network, instead of the architecture initially contemplated in the Original Agreement;

 

WHEREAS, the Parties further intend that the Original Agreement be revised to provide, among other things, that the prices for the equipment and services to be utilized in connection with the System be changed to the prices and payment structure herein specified; and

 

WHEREAS, on even date herewith, the parties have executed a Master Purchase Agreement covering Customer’s purchase of certain equipment to be used in connection with Customer’s provision of the System; and

 

WHEREAS, the parties now desire to set forth the terms and conditions under which HNS will provide certain services related to the System.

 

NOW THEREFORE, for and in consideration of the foregoing and of the mutual premises hereinafter expressed, and intending to be legally bound hereby, it is mutually agreed as follows:

 

1.        SCOPE OF SERVICES

 

During the Term (as defined), HNS will provide, and Customer will accept and pay for, the services in accordance with and subject to the terms and conditions set forth herein and Exhibits A, B and C attached hereto and incorporated herein (which services are hereafter referred to as the “Services”).:

 

Exhibit A – Statement of Work

Exhibit B – Hub Operations, Maintenance and Technical Support Services

Exhibit C – Service Pricing and Payment Terms

 

 
 

 

During the Term, Customer may order additional Services subject to the terms hereof, for the same at the prices set forth in this Agreement, including the Exhibits hereto. Notwithstanding the foregoing, Customer acknowledges that additional Space Segment Services will be subject to the availability of such Space Segment capacity. In order to increase the likelihood that HNS will be able to provide any such additional Space Segment capacity when such capacity is required by Customer, the parties will establish a mutually acceptable methodology for forecasting and ordering any additional space segment that may be required by Customer. In addition, on a regular basis HNS will provide Customer with its best estimate of the amount of Space Segment capacity currently available and to anticipated to become available on any of the satellites used by Customer.

 

In addition, from time to time, Customer may request HNS to provide certain supplementary services for Customer, including supplementary maintenance and repair services, which are outside the scope of the Services (“Demand Services”). The parties will, prior to providing any Demand Services, develop and mutually agree in writing upon the details regarding such services and the associated pricing and commercial terms.

 

2.        TERM OF AGREEMENT

 

The term of this Agreement (“Term”) and the term of Services provided hereunder will remain in effect for sixty (60) months (the “Initial Term”), unless terminated earlier as provided herein. At the end of the Initial Term, the Term will automatically renew for one additional, five (5) year period, unless otherwise terminated by Row 44 giving written notice to HNS at least ninety (90) days prior to the end of the Initial Term. At the end of the first additional five (5) year period, the Term will then automatically renew an additional five (5) year period, unless otherwise terminated by either party giving written notice of the other at least ninety (90) days prior to the end of the then current Term (each extended five (5) year period a “Renewal Term”). The Initial Term and Renewal Terms are referred to in this Agreement as the “Term” of this Agreement.

 

2A.     EXCLUSIVITY

 

a. ***

 

b. ***

 

c. ***

 

i. ***
ii. ***

 

D. ***

 

E. Notification; Cure. In the event HNS believes Row 44 has failed to meet the applicable exclusivity metric for any given period set forth in this section, HNS will provide written notice of the same to Row 44 and Row 44 shall thereafter have 60 days to make a cash payment to HNS in the amount of such shortfall.

 


*** Confidential treatment requested.

 

 
 

 

  F      No Assignment of Exclusivity Right . HNS’ exclusivity obligation, as herein specified, shall be personal to Customer itself, and shall not extend to any successors or assigns of Customer, without the prior consent of HNS, except that in the event of any assignment which take place by virtue of the sale of all or substantially all of the assets of Row 44, HNS will not unreasonably withhold its consent to such assignment.

 

G. ***

 

3.        ASSIGNMENTS

 

Except for (i) assignment to a successor who acquires substantially all of the assets and business of HNS or Customer, (ii) assignment to a subsidiary company, parent company, or subsidiary of parent company, or (iii) assignment, pledge, or transfer by HNS of any interest in any payments to be received by HNS hereunder, neither party hereto may assign this Agreement or any portion hereof without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed. Any assignment permitted hereunder, or otherwise agreed to by the other party hereto will not relieve the assigning party of any obligations with respect to any covenant, condition, or obligation required to be performed by the assigning party under this Agreement.

 

4.        PRICE AND PAYMENT TERMS

 

A. The prices for the Services to be provided hereunder (“Charges”) are set forth in Exhibit C.

 

B. The prices for the Services to be provided hereunder as set forth in Exhibit C, except for the price of Space Segment shall be fixed for the Initial Term. In respect of Space Segment, the price in Exhibit C for Customer’s initial order of Space Segment shall be fixed for the Initial Term. In the event that Customer requires additional Space Segment, or Space Segment on a different satellite, Customer shall advise HNS of the scope of its requirement as soon as possible. Subject to the terms described in Section 1 above, HNS will procure additional Space Segment on behalf of Customer per Customer’s order at mutually agreed Space Segment pricing.

 

C. The Services Charges provided for in this Agreement are exclusive of the following taxes and charges with respect to the Services or Equipment provided hereunder: (i) any present or future Federal, State, or local excise, sales, or use taxes; (ii) any other present or future excise, sales or use tax, or other charge or assessment upon or measured by the gross receipts from the transactions provided in this Agreement or any allocated portion thereof or by the gross value of the Services and other materials provided hereunder, including but not limited to a Universal Service Fund charge; and (iii) any present or future property, inventory, or value-added tax or similar charge. Customer will pay and discharge, either directly to the governmental agency or as billed by HNS, the foregoing taxes and charges and all assessments, and other taxes with respect to the transactions provided in this Agreement and all Services provided hereunder (excluding any Federal, state, local or foreign income taxes, or any tax on gross receipts or gross revenue which is in the nature of an income tax, or any franchise, net worth or capital taxes, imposed upon HNS).

 


*** Confidential treatment requested.

 

 
 

 

D. HNS will invoice all recurring monthly Service Charges on a monthly basis.

 

E. Customer will pay all invoices submitted hereunder in accordance with the payment terms set forth in Exhibit C. In the even t no such payment terms are described in said Exhibit C, in respect of other Services being provided to Customer, Customer will pay such invoices net thirty (30) days days from the date of invoice. Customer agrees to pay on demand a late payment charge on any amount that is not received by the due date for such payment, at an annual rate of the lesser of (i) the current prime rate (or equivalent), as last quoted by The Wall Street Journal prior to the due date of the payment, plus two percent (2%), or (ii) the maximum rate allowed by applicable law. Any invoice not disputed by Customer in writing within 120 days after issuance shall be deemed valid and shall not be subject to dispute.

 

5.          LICENSE OF SOFTWARE

 

A. Customer acknowledges that any software supplied by HNS to Customer is subject to the proprietary rights of HNS and/or HNS' vendor(s) (the “Licensor(s)”) Customer acknowledges that that any software licensed hereunder was developed using HNS’ and its Licensor’s typical commercial practices, and not in anticipation of Customer’s particular aircraft-based application. Except for the licenses granted herein, HNS or its Licensor(s), as the case may be, will retain all right, title and interest in the Software. Customer acknowledges that it may use the Software only pursuant to the terms of this Agreement.

 

B. Subject to Customer payment of the Charges specified herein, HNS hereby grants to Customer and Customer hereby accepts from HNS a perpetual, irrevocable, worldwide, nonexclusive license (or sublicense, as applicable) to use the Software and associated documentation solely in the connection with the Equipment provided hereunder, such license to commence upon delivery of the Software and associated Equipment to Customer. Customer’s right to use Software shall include the right to use multiple versions or releases of the Software, if applicable (including any updates, “bug” fixes or enhancements).

 

C. Except as permitted by this Article, Customer will not (i) alter, modify, create derivative works of, or attempt to alter, modify, or create derivative works of the Software or any part thereof, (ii) copy, duplicate, or permit anyone else to copy or duplicate, any part of the Software, or (iii) create or attempt to create, or permit others to create or attempt to create, by decompiling, disassembling, reverse engineering or otherwise, the source programs or any part thereof from the object programs or from other information made available under this Agreement. Customer may at its own expense make one copy of the object program for archive purposes.

 

 
 

 

6.       FORCE MAJEURE

 

Either party hereto shall be excused for delays or interruptions in the performance of its obligations under this Agreement when such delays or interruptions (i) are caused by the other party, or, (ii) except for the exercise of due care, are otherwise beyond the reasonable control of such party, including but not limited to war (whether or not actually declared), sabotage, insurrection, rebellion, riot or other act of civil disobedience, act of a public enemy, failure of or delay in transportation, any governmental act, judicial action, priorities given U.S. Government procurements, labor dispute, shortage of labor, fuel, raw material or machinery, fire, accident, explosion, epidemic, quarantine, storm, flood, earthquake, or other Acts of God (“Force Majeure”). The parties specifically agree that rain, snow or other ordinary weather conditions (excluding tornadoes, hurricanes, and other major storms) do not constitute Force Majeure conditions. If any such Force Majeure occurs, the party affected by such Force Majeure shall use its best efforts to abate the effect of such Force Majeure and restore compliance with the terms of this Agreement as soon as possible. In that regard, during a Force Majeure, HNS shall allocate production and deliveries of equipment to Customer on a basis no less detrimental than any other customer of HNS similarly subject to such Force Majeure; provided, that, HNS may give preferential treatment to allocating equipment to the U.S. Government.. Customer may cancel any scheduled delivery that has been excusably delayed for reason (ii) above for more than two (2) months.

 

7.    LIMITED WARRANTIES ON SERVICES, DISCLAIMERS, PROCEDURES

 

A. Subject to the terms and conditions hereof, HNS warrants that all Services will be performed in a professional and workmanlike manner and in accordance with applicable specification, if any. In the event of any breach of the foregoing warranty, HNS shall, at its option and expense in accordance with, promptly reperform, repair or replace, or cause to be reperformed, repaired or replaced, any Service that proves to have a defect.

 

B. Any reperformance, repair, replacement, amendment, or alteration will be performed in accordance with HNS’ standard practices with respect to such Services. .

 

C. Customer acknowledges and agrees that, except for the services performed in connection with the Development Agreement (which services are warranted in accordance with the terms of such Development Agreement), HNS has not evaluated or certified the functionality of Customer’s antenna or associated equipment as substitutes for the equipment typically provided by HNS for use with the Service or evaluated the performance or capability of the same (or combination of such antenna with any equipment or services provided by HNS) in connection with Customer’s aeronautical application. HNS makes no representations regarding such substituted equipment or such combination and the effect of the same on the performance of the Service impacts the System or otherwise. Without limiting the generality of the foregoing, HNS makes no representation regarding the fitness for use of the Service in the System or Customer’s aeronautical application. In addition, Customer has sole responsibility for any and all changes that may be required to ensure fitness or use in Customer’s application and for obtaining all necessary FAA, FCC and any other certifications that may be required for flight qualification.

 

D. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, HNS NEITHER MAKES NOR ASSUMES ANY LIABILITY UNDER ANY WARRANTIES (WHETHER EXPRESS, IMPLIED, OR STATUTORY) ON OR WITH RESPECT TO THE SERVICE, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED CONDITIONS OR WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

 
 

 

8.     PATENT AND COPYRIGHT INDEMNITY

 

A. Hughes warrants that, to the best of its knowledge, the Services, Software and the Equipment will not infringe any patent, copyright, trademark, trade secret, mask work right or other intellectual property right of any third party. If Customer promptly notifies Hughes in writing of a third party claim against Customer that any of the Equipment, Software or Service provided by Hughes infringes a patent, copyright trade secret or other intellectual property right of a third party, Hughes will indemnify, defend and hold Customer harmless with respect to such claim at Hughes’ expense and will pay any costs or damages that may be finally determined against Customer. In the event of any such claim, HNS shall have the right to control the defense thereof and Customer shall provide such reasonable assistance and information, at HNS’ expense, as HNS requests in writing and as it is available to Customer.

 

B. Further, if any such item is, or in Hughes’ opinion is likely to be, held to constitute an infringing product, Hughes shall at its expense and option either (a) procure the right for Customer to continue using it, (b) replace it with a non-infringing equivalent reasonably acceptable to Customer, (c) modify it to make it non-infringing or (d), only if the remedies above are impracticable, accept return of such item and, in addition to the indemnification obligations above and such other rights and remedies of Customer available herein, refund to Customer the fees paid for such item less a reasonable amount for Customer’s use of the relevant item up to the time of return.

 

C. Notwithstanding the above, HNS will not be liable for any such damages or costs attributable to claims resulting from (i) HNS' compliance with Customer’s designs, specifications, or instructions, (ii) use of any item provided by HNS in combination with products not supplied by HNS, to the extent the claim would not have otherwise arisen but for such combined use, or (iii) a manufacturing or other process carried out by or through Customer and utilizing any item provided by HNS that constitutes either direct or contributory infringement of any patent or other intellectual property right , . In addition, the exclusion from HNS’ intellectual property indemnity, as described in Section 9(e) of the Development Services Agreement heretofore entered into by the parties, as said exclusion applies to claims of infringement which would not have arisen but for such development work, shall continue to apply. All such claims for which HNS has no indemnity obligation are hereafter referred to as "Other Claims". Customer will indemnify HNS from any and all losses, liabilities, damages and costs finally awarded or agreed upon in any settlement of a claim for infringement of any patent or intellectual property right in any suit resulting from Other Claims, and from reasonable expenses incurred by HNS in defense of such suit if Customer does not undertake the defense thereof.

 

D. The foregoing indemnity shall be Customer’s sole and exclusive remedy for any patent and copyright infringement claims arising out of the use of the Equipment, Software and documentation provided to Customer hereunder, and is in lieu of any other indemnity or warranty, express or implied, with respect to intellectual property.

 

9.       TERMS OF USE

 

Customer agrees to require its end users, or, if applicable, Customer agrees to require its airline customer reseller of its service, to require their respective end users to agree to terms and conditions relating to service to be provided by Customer which terms are substantially similar to those set forth in Attachment 1 to this Agreement.

 

 
 

 

10.     INDEMNIFICATION

 

Customer and HNS shall indemnify, defend and hold the other harmless from and against any claims, demands, and causes of action asserted against the indemnitee by any person (including, without limitation, HNS' and Customer's employees, HNS' subcontractors and employees of such subcontractors or any third party) for personal injury or death or for loss of or damage to property resulting from the indemnitor's negligence or willful misconduct hereunder. Where personal injury, death or loss of or damage to property is the result of the joint negligence or willful misconduct of Customer and HNS, the indemnitor's duty of indemnification shall be in proportion to its allocable share of joint negligence or willful misconduct.

 

Customer shall indemnify, defend and hold HNS harmless from and against any claims, demands, and causes of action asserted against the indemnitee by any person (including, without limitation, any of Customer’s customers or any person or entity that Customer permits to use the any service provided by Customer) based on any claim in connection with: (i) the Service provided to any customer of Customer (including end users or airlines) or the failure of Customer to provide such Service; (ii) any material misrepresentation or material omission made to by Customer regarding the Services or any service to be provided by Customer; (iii) any claim by any customer of Customer arising from loss of service due to the termination of this Agreement or any other reason; and (iv) any violation by Customer of local, state or federal laws, rules and regulations.

 

Each party’s indemnification obligation shall be contingent upon the indemnitee giving prompt written notice to the indemnitor of any such claim, demand, or cause of action and permitting the indemnitor to have sole control of the defense thereof.

 

11.          INSURANCE .

 

A. Commencing not later than on the first installation by Customer on commercial aircraft and thereafter during the Term, Customer shall obtain and maintain at its own expense, and require its agents, subcontractors and representatives to obtain and maintain at their own expense or at Customer’s expense, insurance of the type and in the amounts set forth below:

 

i Commercial General Liability ( “CGL” ) coverage on an occurrence basis (not claims made), with limits at least $20,000.000 per occurrence for bodily injury and property damage, including coverage for liability arising from (i) premises; (ii) operations; (iii) broad form property damage; (iv) personal injury; (v) independent contractor's liability; and (vi) work performed by Customer.

 

ii Excess Liability coverage with respect to the CGL policy described above, in an umbrella form and on an occurrence basis with limits of at least $20,000,000 per occurrence.

 

iii Professional Liability coverage with limits of at least $5,000,000 providing coverage for claims arising out of the performance of Customer and its subcontractors in providing or failing to provide the equipment and services to its customers, airlines and end users, including, but not limited to, coverage for errors and omissions caused by Customer’s or its subcontractor’s negligence in the performance thereof.

 

 
 

 

B. Upon obtaining such insurance, Customer shall deliver certificates of insurance in a form acceptable to HNS which evidence that Customer has the insurance required by this Section. HNS shall be named as an “Additional Insured” with respect to all coverages required by this Section. Customer shall obtain the insurance policies required by this Section from a provider that has a rating of A- X or better from A.M. Best’s or a comparable rating from another rating agency. These policies shall not be canceled or materially changed without ten (10) days prior written notice from the insurer to HNS and Customer.

 

C. Notwithstanding anything to the contrary in this Agreement if Customer fails to maintain the insurance required by this Section, or if any of the required insurance is cancelled and not replaced within a commercially reasonable timeframe, HNS may terminate this Agreement for the default of Customer without further obligation.

 

D. The insurance required by this Section shall be primary insurance and not excess over nor contributing with any insurance maintained by HNS. In addition, the insurance requirements set forth above are minimal coverage requirements and are not to be construed in any way as a limitation on Customer’s liability under this Agreement.

 

E. As an alternative to Customer’s requirement to secure the Comprehensive General Liability coverage and the Excess Liability coverage referenced in Sections A.i and A.ii above, Customer may provide HNS with proof that (a) its airline customers are not requiring these coverages from Customer, (b) that such airline customers are intending to address any insurance requirements relating to these coverages themselves through their own aviation insurance coverage, or (c) that such airline customers are indemnifying and holding Customer harmless from and against any liability for personal injury and property damage arising from or relating to Customer’s provision of equipment and services to such airline customers or end users.

 

12.       DEFAULT BY CUSTOMER

 

12.1       Definition

 

The occurrence of any one or more the following events (herein called "Events of Customer Default") shall constitute a default by Customer under this Agreement:

 

A. Default by Customer in the payment of any charge payable hereunder as and when the same becomes due and payable and such default continues for a period of thirty (30) days after notice of such default from HNS, or

 

B. Default by Customer in the performance of any other term, covenant or condition of this Agreement, which default shall continue for a period of thirty (30) days after written notice; or

 

C. The making of an assignment by Customer for the benefit of its creditors or the admission by Customer in writing of its inability to pay its debts as they become due, or the insolvency of Customer, or the filing by Customer of a voluntary petition in bankruptcy, or the adjudication of Customer as bankrupt, or the filing by Customer of any petition or answer seeking for itself any reorganization, arrangement, composition or readjustment precipitated by the insolvency or bankruptcy of Customer, any liquidation, dissolution or similar relief under any present or future statute, law or regulation, or the filing of any answer by Customer admitting, or the failure by Customer to deny, the material allegations of a petition filed against it for any such relief, or the seeking or consenting by Customer to, or acquiescence by Customer in, the appointment of any trustee, receiver or liquidator of Customer or of all or any substantial part of the properties of Customer, or the inability of Customer to pay its debts when due, or the commission by Customer of any act of bankruptcy; or

 

 
 

 

D. The failure by Customer, within sixty (60) days after the commencement of any proceeding against Customer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, to obtain the dismissal of such proceeding or, within sixty (60) days after the appointment, without the consent or acquiescence of Customer, or any trustee, receiver or liquidator of Customer or of all or any substantial part of the properties of Customer, to vacate such appointment.

 

12.2    Remedies

 

Upon the occurrence of any Event of Customer Default, HNS may, in addition to any other rights or remedies available to it at law or in equity, terminate this Agreement immediately upon written notice. In addition, upon termination of this Agreement for the default of Customer, HNS may, at its option, require Customer to disable any equipment provided by HNS which has been previously installed in any aircraft. Customer shall in any event remain fully liable for reasonable damages as provided by law and for all costs and expenses incurred by HNS on account of such default including all court costs and reasonable attorneys fees.

 

13.    DEFAULT BY HNS

 

13.1   Definition

 

The occurrence of any one or more the following events (herein called "Events of HNS Default") shall constitute a default by HNS under this Agreement:

 

A. Default by HNS in the performance of any other term, covenant or condition of this Agreement, which default shall continue for a period of thirty (30) days after notice; or

 

B. The making of an assignment by HNS for the benefit of its creditors or the admission by HNS in writing of its inability to pay its debts as they become due, or the insolvency of HNS, or the filing by HNS of a voluntary petition in bankruptcy, or the adjudication of HNS as bankrupt, or the filing by HNS of any petition or answer seeking for itself any reorganization, arrangement, composition or readjustment precipitated by the insolvency or bankruptcy of HNS, any liquidation, dissolution or similar relief under any present or future statute, law or regulation, or the filing of any answer by HNS admitting, or the failure by HNS to deny, the material allegations of a petition filed against it for any such relief, or the seeking or consenting by HNS to, or acquiescence by HNS in, the appointment of any trustee, receiver or liquidator of HNS or of all or any substantial part of the properties of HNS, or the inability of HNS to pay its debts when due, or the commission by HNS of any act of bankruptcy, as amended; or

 

 
 

 

C. The failure by HNS, within sixty (60) days after the commencement of any proceeding against HNS seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, to obtain the dismissal of such proceeding or, within sixty (60) days after the appointment, without the consent or acquiescence of HNS, or any trustee, receiver or liquidator of HNS or of all or any substantial part of the properties of HNS, to vacate such appointment.

 

13.2    Remedies

 

Upon the occurrence of any one or more Events of HNS Default, Customer may, in addition to any other rights or remedies available to it at law or in equity, and subject to the limitations described in Section 15, terminate this Agreement immediately upon written notice. HNS shall in any event remain fully liable for reasonable damages as provided by law and for all costs and expenses incurred by Customer on account of such default including all court costs and reasonable attorneys fees.

 

14.     LIMITATION OF LIABILITY

 

A. IN NO EVENT WILL CUSTOMER, HNS, OR ASSIGNEES BE LIABLE TO EACH OTHER FOR SPECIAL, COLLATERAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY NATURE (INCLUDING WITHOUT LIMITATION, LOSS OF GOODWILL, LOSS OF PROFITS OR REVENUES, LOSS OF DATA, LOSS OF SAVINGS, LOSS OF USE, INTERRUPTIONS OF BUSINESS, AND CLAIMS OF CUSTOMERS) ARISING OUT OF OR RELATED TO THIS AGREEMENT, OR THE EQUIPMENT, SOFTWARE, AND SERVICES PROVIDED HEREUNDER, EVEN IF SUCH DAMAGES WERE FORESEEABLE.

 

B. HNS' MAXIMUM AGGREGATE LIABILITY UNDER THIS AGREEMENT SHALL BE LIMITED TO THE SERVICE CHARGES PAID BY CUSTOMER DURING THE TWELVE MONTH PERIOD IMMEDIATELY PRECEDING HNS’ RECEIPT OF NOTICE OF THE EVENT THAT GAVE RISE TO SUCH LIABILITY.
C. The remedies of Customer and HNS set forth herein are exclusive and in lieu of all other remedies, express or implied. Except for the remedies provided for herein, neither HNS nor its subcontractors shall be liable for any delay or failure of performance of the Equipment, Software or Services provided herein.

 

15.     INDEPENDENT CONTRACTOR AND SUBCONTRACTING

 

A. HNS and Customer will be and shall act as independent contractors, and neither party is authorized to act as an agent or partner of, or joint venturer with, the other party for any purpose. Neither party by virtue of this Agreement shall have any right, power, or authority to act or create any obligation, express or implied, on behalf of the other party. Customer acknowledges and agrees that HNS will be solely responsible to determine the method and manner of performing its obligations hereunder.

 

B. Customer agrees that HNS may, at its sole discretion, subcontract the whole or any part of its obligations under this Agreement; provided that HNS agrees that it will retain full responsibility for such obligations despite such subcontract.

 

 
 

 

16.     CONFIDENTIALITY

 

A. HNS and Customer, to the extent of their contractual and lawful right to do so, will exchange proprietary or confidential information as reasonably necessary for each to perform its obligations under this Agreement. All information relating to this Agreement provided by either party to the other, whether oral or written, and when identified as confidential or proprietary in writing, is hereby deemed to be confidential and proprietary information ("Proprietary Information").

 

B. Except as set forth in Paragraph C below, a party receiving Proprietary Information pursuant hereto (the "Receiving Party") will keep such Proprietary Information confidential, and will not, without the prior written consent of the party disclosing such information (the "Disclosing Party"), (i) use any portion of the Proprietary Information for any purpose other than the purpose of this Agreement, or (ii) disclose any portion of the Proprietary Information to any persons or entities other than the employees and consultants of the Receiving Party (and HNS' subcontractors) who reasonably need to have access to the Proprietary Information in connection with the purposes of this Agreement and who have agreed to protect Proprietary Information as though they were a party to this Agreement.

 

C. A Receiving Party will not be liable for disclosure of Proprietary Information, or any part thereof, if the Receiving Party can demonstrate that such Proprietary Information (i) was in the public domain at the time it was received or subsequently entered the public domain through no fault of the Receiving Party; (ii) was known to or is in the possession of the Receiving Party at the time of receipt; (iii) became known to the Receiving Party from a source other than the Disclosing Party without breach of an obligation of confidentiality; or (iv) is disclosed more than five (5) years after the date of receipt of the proprietary Information by the Receiving Party. In the event of any legal action or proceeding or asserted legal requirement for disclosure of Proprietary Information furnished hereunder, the Receiving Party will promptly notify the Disclosing Party and, upon the request and at the expense of the Disclosing Party, will cooperate with the Disclosing Party in lawfully contesting such disclosure. Except in connection with any failure to discharge its responsibilities under the preceding sentence, the Receiving Party will not be liable for any disclosure pursuant to court order.

 

D. Proprietary Information will remain the property of the Disclosing Party and will, at the Disclosing Party's request and after it is no longer needed for the purposes of this Agreement or upon expiration or termination of this Agreement for any reason, whichever occurs first, promptly be returned to the Disclosing Party or be destroyed, together with all copies made by the Receiving Party and by anyone to whom such Proprietary Information has been made available by the Receiving Party in accordance with the provisions of this Section 16.D.

 

17.     RESOLUTION OF DISPUTES

 

Any and all disputes arising under or in connection with this Agreement shall be resolved in accordance with this Section 17.

 

A.. Negotiation.

 

 
 

 

The parties shall attempt to resolve any dispute, controversy or difference that may arise between them through good faith negotiations. In the event the parties fail to reach resolution of any such dispute within sixty (60) days after entering into negotiations, either party may refer such dispute to arbitration pursuant to the provisions of Section 17.B. Notwithstanding the above, the parties may elect to waive applicability of this section (i) if both parties agree in writing that the nature of their dispute is such that it cannot be resolved through negotiations; or (ii) if a party shall suffer irrevocable harm by such delay.

 

B. Arbitration.

 

Arbitration shall be conducted in accordance with the International Arbitration Rules of the American Arbitration Association (“AAA”) in effect at the time of arbitration. The arbitration shall be in accordance with the following guidelines except to the extent the parties to arbitration shall agree otherwise:

 

1. The place of arbitration shall be Washington, D.C.

 

2. The arbitration panel shall be composed of one arbitrator. If the parties fail to mutually agree on an arbitrator within thirty (30) days from the date the dispute is referred to arbitration, any party may refer such selection to the AAA.

 

3. The proceeding shall be conducted and transcribed in English. Any document submitted in a language other than English shall be accompanied by an English translation. Neither party will be entitled to discovery in connection with such arbitration unless otherwise mutually agreed in writing.

 

4. The results of any such arbitration, and all testimony and evidence related to the confidential information or trade secrets of either party shall be deemed to be Proprietary Information subject to Section 16 and shall be safeguarded and maintained as confidential, with access to such evidence to be only on a need-to-know basis and subject to all reasonable precautions so as not to jeopardize the confidential information or trade secrets of any party.

 

5. The parties hereby accept jurisdiction of the arbitral tribunal over the parties and over the subject matter of the dispute.

 

6. Notwithstanding the foregoing, either party shall have the right to seek injunctive relief regarding any disputes arising under Section 17.

 

18.      ***

 

19.     ADDITIONAL CLAUSES

 

A. EXPORT CONTROL: It is expressly agreed that the execution of this Agreement and the subsequent delivery of any Equipment or Software under this Agreement are subject to all applicable export controls imposed or administered by the U.S. Department of Commerce as well as by any other U.S. Government Agency that may impose any such controls, including but not limited to the export of technical data, equipment, software and know-how. Each party shall perform their obligations under this Agreement in compliance with such laws and regulations and shall not take any action contrary thereto. Customer will not export or re-export, directly or indirectly, any Software, Equipment, documentation or other technical data provided to it hereunder, without complying with all export control laws and regulations, and without first obtaining any required export licenses and approvals. HNS shall provide reasonable cooperation and assistance to enable Customer to obtain any such export licenses and approvals.

 


*** Confidential treatment requested.

 

 
 

 

B. ENTIRE AGREEMENT: This Agreement, the Exhibits hereto, and any other documents referred to herein constitute the entire agreement between the parties, and supersedes any prior written or oral agreement or understanding with respect to the subject matter hereof. No interpretation, amendment, or change to this Agreement will be effective unless made in writing and signed by both parties, except that each party may change the address or the name of the person to whom notices to that party will be sent by giving written notice of such change to the other party as provided in Section 19.E hereof.

 

C. NO WAIVER: Failure by either party to exercise any rights under this Agreement in any one or more instances will not constitute a waiver of such rights in any other instance. Waiver by such party of any default under this Agreement will not be deemed a waiver of any other default. No alteration or modification of any provision of this Agreement will be binding unless in writing and signed by duly authorized representatives of both parties.

 

D. GOVERNING LAW: This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, will be governed by and construed in accordance with the laws of the State of Maryland notwithstanding the place of execution or performance of this Agreement (without reference to its conflict of laws principles) and applicable Federal laws.

 

E. CROSS DEFAULT: In the event that either party is in breach of any other agreement between the parties hereto, such breach may, at the option of the non- breaching party, be deemed to be a breach of this Agreement. Consequently, in the event the breach of such other agreement between the parties is not cured pursuant to the terms of such agreement, thus leading to the termination of such agreement for default, this Agreement may likewise be terminated for default.

 

F. NOTICES: All notices, demands, requests, or other communications provided for herein (other than routine communications concerning the Services) will be given in writing and will be effective when delivered personally or when sent by registered or certified mail, return receipt requested, postage prepaid, or transmitted by facsimile, hand delivery, telegram, or telex/TWX. All notices sent by either party will be addressed as follows:

 

If to HNS:

 

Hughes Network Systems, LLC

11717 Exploration Lane

Germantown, Maryland 20876

ATTN: General Counsel

 

 
 

 

If to Customer:

 

Row 44, Inc.

31280 Oak Crest Drive, Suite #5

Westlake Village, CA 91361

Attn: Chief Executive Officer

 

With a copy to:

 

Strategic Law Partners, LLP

500 S. Grand Avenue, Suite 2050

Los Angeles, CA 90071

Attn: Timothy F. Silvestre

 

Either party may designate by notice in writing a new address to which any notice, demand, request, or communication will be delivered, as provided above.

 

G. SEVERABILITY: If any of the provisions or any portion of the provisions of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability will not invalidate or render unenforceable the entire Agreement, but rather the entire Agreement will be construed as if not containing the particular invalid or unenforceable provisions or portion thereof, and the rights and obligations of the parties hereto will be construed and enforced accordingly.

 

H. COUNTERPARTS. One execution original of this Agreement, together with its Exhibits and Addendums, marked “Original”, shall be the original of this Agreement evidencing use agreements covering the Equipment. All other executed counterparts of this Agreement shall be marked “Duplicate”. To the extent that this Agreement constitutes chattel paper, as such term is defined in the Uniform Commercial Code of the applicable jurisdiction, no security interest in this Agreement may be created through the transfer of possession of any counterpart other than the Original of this Agreement.

 

I. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and permitted assigns.

 

J. COMPLIANCE WITH LAWS. Each party agrees to comply with all applicable laws, rules, and regulations in connection with its activities under this Agreement.

 

 
 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by and through their duly authorized representatives.

 

    Hughes Network Systems, LLC
     
  By: /s/ Philip K. O’Brien
  Name: Philip K. O’Brien
  Title V.P. Legal
  Date: 12/21/2007
     
    Row 44, Inc.
     
  By: /s/ John Guidon
  Name: John Guidon
  Title: CEO
  Date:  

 

 
 

 

ATTACHMENT 1

REQUIRED END-USER AGREEMENT TERMS AND CONDITIONS

 

As specified in Section 9 of this Agreement, this Attachment contains the terms and conditions which Customer, or its airline customer, must incorporate, in pertinent part, into its End-User Agreements with its customers.

 

PROHIBITED CONDUCT

 

You agree not to use the Service as follows: (a) for any unlawful, improper or criminal purpose or activity; (b) to post or transmit information or communications that, whether explicitly stated, implied, or suggested through use of symbols, are libelous, defamatory, invasive of another person’s privacy, sadistic, cruel, or racist in content; or which espouses, promotes or incites bigotry, hatred or racism; or which might be legally actionable for any reason; (c) hurts minors in any way; (d) forge headers or otherwise manipulate identifiers in order to disguise the origin of any content transmitted through the Service; (e) intentionally or unintentionally violate any applicable local, provincial, state, national or international law, including, but not limited to, rules, orders and regulations having the force of law; (f) to attempt to access or access the accounts of others, to spoof or attempt to spoof the URL or DNS address, or to attempt to penetrate or penetrate our security measures or other entities' systems ("hacking") whether or not the intrusion results in corruption or loss of data; (g) to bombard individuals or newsgroups with uninvited communications, data or information, or other similar activities, including but not limited to "spamming", "flaming" or denial or distributed denial of service attacks; (h) to transmit unsolicited voluminous emails (for example, spamming) or to intercept, interfere with or redirect email intended for third parties using the Service; (i) to introduce viruses, worms, harmful code and/or Trojan horses on the Internet; (j) to post information on newsgroups which is not in the topic area of the newsgroup; (k) to interfere with another person's usage or enjoyment of the Internet or this Service; (l) to post or transmit information or communications that are defamatory, fraudulent, obscene or deceptive, including but not limited to scams such as "make-money-fast" schemes or "pyramid/chain" letters; (m) to damage the name or reputation of Service Provider or its subcontractors, or any of their respective parents, affiliates and subsidiaries, or any third parties; (n) to transmit confidential or proprietary information, except solely at your own risk; (o) to violate our or any third party's copyright, trademark, proprietary or other intellectual property rights, including trade secret rights; (p) to generate excessive amounts (as determined in our sole discretion) of Internet traffic, or to disrupt net user groups or email use by others; (q) to engage in activities designed to or having the effect of degrading or denying Service to other users or others (including activities that compromise a server, router, circuit or software; (r) to use any name or mark of Service Provider Hughes Network Systems, or their respective parents, affiliates or subsidiaries, as a hypertext link to any Web site or in any advertising publicity or other commercial manner; (t) to use the Service or the Internet in a manner intended to threaten, harass, or intimidate others; (u) to cause the screen to "scroll" faster than other subscribers or users are able to type to it, or any action that has a similar disruptive effect, on or through the Service; (v) to use the Service to disrupt the normal flow of online dialogue, (w) to use the Service to violate any operating rule, policy or guideline of any other online services provider or interactive service; (x) to attempt to subvert or to aid third parties to subvert, the security of any computer facility or system connected to the Internet; (y) to impersonate any person or using a false name while using the Service; (z) to install "auto-responders," "cancel-bots" or similar automated or manual routines which generate excessive amounts of net traffic, or disrupt net user groups or email use by others; (aa) to make false or unverified complaints against any subscriber, or otherwise abusing any of our complaint response procedures; (bb) to export software or any information in violation of US export laws; or (cc) to use the Service in contravention of the limitations of the pricing plan you have chosen.

 

 
 

 

ILLEGAL PURPOSES

 

You agree not to use the Service nor any of its elements or related facilities or capabilities to conduct any business or activity, or solicit the performance of any activity, which is prohibited by or would violate any applicable law, rule, regulation or legal obligation.

 

OTHER OBLIGATIONS RELATING TO CONTENT

 

You agree we do not, and we shall not without cause, pre-screen content transmitted by you over the Service, but we shall have the right (but not the obligation) in our sole discretion to refuse or move any such content that is available via the Service, including without limitation any content that violates the terms of this Agreement or is otherwise objectionable. You agree to evaluate, and bear all risks associated with, the use of any content, including any reliance on the accuracy, completeness, or usefulness of such content, and acknowledge that you may not rely on any content created by, or submitted to, ourselves.

 

You agree we may preserve and disclose content if required to do so by law or in the good faith belief that such preservation or disclosure is reasonably necessary to: (a) comply with legal process; (b) enforce the terms of this Agreement; (c) respond to claims that any content violates the rights of third-parties; or (d) protect the rights, property, or personal safety of Service Provider, its users and the public.

 

RESERVATION OF RIGHTS

 

We reserve all copyrights and other rights in and to any content available through the Service which is identified as, claimed by us as, or known by you to be, proprietary to us (or our licensors). The content on the Service is protected under applicable copyright law, including as a collective work. All copying, modification, distribution, publication or other use by you, or by any user of your account, of any such content or other works is prohibited, except as expressly permitted by ourselves.

 

NO ENDORSEMENT

 

We do not endorse or in any way vouch for the accuracy, completeness, truthfulness or reliability of any service, opinion, advice, communication, information or other content on or made available through the Service. None of such content should be construed or understood to constitute or reflect the views or approval of Service Provider or any of the subcontractors, subsidiaries or affiliates. We do not recommend that such content be relied on for reaching important decisions or conclusions without appropriate verification and, as appropriate, professional advice.

 

INTERNET

 

YOU ACKNOWLEDGE THAT INTERNET SITES, AND USE OF THE INTERNET, MIGHT CONSIST OF, INCLUDE AND/OR PROVIDE ACCESS TO IMAGES, SOUND, MESSAGES, TEXT, SERVICES OR OTHER CONTENT AND MATERIAL THAT MAY BE UNSUITABLE FOR MINORS AND THAT MAY BE OBJECTIONABLE TO MANY ADULTS. YOU ACKNOWLEDGE THAT WE ARE NOT RESPONSIBLE FOR ANY SUCH CONTENT OR MATERIAL AND AGREES THAT ACCESS TO SAME THROUGH USE OF THE SERVICE IS AT YOUR SOLE RISK. The reliability, availability, legality, performance and other aspects of resources accessed through the Internet are beyond our reasonable control and are not in any way warranted or supported by ourselves or our third party contractors. You acknowledge that safeguards relative to copyright, ownership, appropriateness, reliability, legality and integrity of content may be entirely lacking with respect to the Internet and content accessible through it. You confirm that you assume all risk and liability of any use of the Internet through your account, including your continuous compliance with the Subscriber Agreement.

 

 
 

 

DISCLAIMER OF WARRANTIES, LIABILITY AND RESPONSIBILITY

 

YOU EXPRESSLY AGREE THAT USE OF THE SERVICE IS AT YOUR SOLE RISK. NEITHER WE NOR ANY OF OUR INFORMATION OR CONTENT PROVIDERS, SERVICE PROVIDERS, LICENSORS, EMPLOYEES OR AGENTS WARRANT THAT THE SERVICE WILL BE UNINTERRUPTED OR ERROR FREE; NOR DO WE OR ANY OF OUR INFORMATION OR CONTENT PROVIDERS, SERVICE PROVIDERS, LICENSORS, EMPLOYEES OR AGENTS MAKE ANY WARRANTY AS TO THE RESULTS TO BE OBTAINED FROM USE OF THE SERVICE, INCLUDING ANY MINIMUM UPLOAD OR DOWNLOAD SPEEDS. THE SERVICE IS DISTRIBUTED ON AN "AS IS" AND "AS AVAILABLE" BASIS WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF TITLE OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, EXCEPT FOR THOSE WARRANTIES, IF ANY, WHICH ARE IMPLIED BY, AND INCAPABLE OF EXCLUSION, RESTRICTION OR MODIFICATION UNDER, THE LAWS APPLICABLE TO THIS SUBSCRIBER AGREEMENT. WE EXPRESSLY DISCLAIM ANY REPRESENTATION OR WARRANTY THAT THE SERVICE WILL BE ERROR FREE, SECURE OR UNINTERRUPTED OR OPERATE AT ANY MINIMUM SPEED. NO ORAL ADVICE OR WRITTEN INFORMATION GIVEN BY OURESELVES, OUR EMPLOYEES, DEALERS, AND LICENSORS OR THE LIKE SHALL CREATE A WARRANTY; NOR SHALL YOU RELY ON ANY SUCH INFORMATION OR ADVICE. IN ADDITION, WE FURTHER DISCLAIM ANY LIABILITY OR RESPONSIBILITY FOR THE TIMELINESS, DELETION, MIS-DELIVERY, NON-DELIVERY OR FAILURE TO STORE OR ACCURATELY STORE, ANY E-MAIL OR OTHER COMMUNICATIONS, ADDRESSES OR PERSONALIZATION SETTINGS.

 

IN PARTICULAR, BECAUSE WE MAY PROVIDE ITS SUBSCRIBERS WITH ELECTRONIC ACCESS TO THE CONTENT AVAILABLE ON THE SERVICE, WHICH CONTENT MAY BE ORIGINATED BY INDEPENDENT PUBLISHERS AND/OR PROVIDERS AND WHICH CONTENT IS NOT AUGMENTED BY OURSELVES, WE CANNOT AND DO NOT WARRANT THE ACCURACY OF ANY OF THE INFORMATION AS ORIGINATED BY SAID INDEPENDENT PUBLISHERS AND/OR PROVIDERS, AND WE SHALL NOT BE LIABLE IN ANY MANNER WHATSOEVER FOR ANY ERRORS, OMISSIONS, OR INACCURACIES RELATING THERETO. IF DEFECTIVE, YOU - NOT OURSELVES, OUR DEALERS, DISTRIBUTORS, AGENTS, EMPLOYEES OR ANY THIRD-PARTY CONTENT PROVIDER - ASSUME THE CONSEQUENCES RESULTING THEREFROM.

 

NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY OURSELVES, OUR DEALERS, DISTRIBUTORS, AGENTS, EMPLOYEES OR ANY THIRD-PARTY CONTENT PROVIDER, SHALL CREATE ANY WARRANTY IN OR TO THE SERVICE OR THE CONTENT, AND YOU MAY NOT RELY ON ANY SUCH INFORMATION OR ADVICE. THIS WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS. YOU MAY HAVE OTHER RIGHTS, WHICH VARY FROM STATE TO STATE.

 

 
 

 

LIMITATION OF LIABILITY

 

TO THE MAXIMUM EXTENT PERMITTED BY LAW, NEITHER WE NOR ANY OF OUR INFORMATION OR CONTENT PROVIDERS, SERVICE PROVIDERS, LICENSORS, EMPLOYEES OR AGENTS SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF USE OF THE SERVICE OR INABILITY TO USE THE SERVICE OR OUT OF ANY BREACH OF ANY REPRESENTATION OR WARRANTY. WITHOUT IN ANY WAY LIMITING THE FOREGOING, IF FOR ANY REASON, BY OPERATION OF LAW OR OTHERWISE, ANY PORTION OF THE FOREGOING LIMITATION OF LIABILITY SHALL BE VOIDED, THEN IN SUCH EVENT OUR MAXIMUM, SOLE, AND EXCLUSIVE LIABILITY, OUR DEALERS, DISTRIBUTORS, AGENTS, EMPLOYEES OR THIRD PARTY CONTENT PROVIDER, IF ANY, SHALL BE LIMITED TO GENERAL MONEY DAMAGES IN AN AMOUNT NOT TO EXCEED THE TOTAL AMOUNT ACTUALLY PAID TO OURSELVES BY YOU FOR SERVICES FURNISHED UNDER THIS SUBSCRIBER AGREEMENT DURING AND FOR A PERIOD OF TIME COMMENCING UPON THE OCCURRENCE OF SUCH ERROR, DEFECT OR FAILURE AND CEASING UPON THE DISCOVERY OF SUCH, IN WHOLE OR IN PART; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL SUCH PERIOD OF TIME EXCEED THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE DATE WHICH SUCH ERROR, DEFECT OR FAILURE IS FIRST DISCOVERED IN WHOLE OR IN PART.

 

INDEMNITY

 

You agree to indemnify Service Provider, Hughes Network Systems, and each of their respective subcontractors against all claims, liability, damages, costs and expenses, including but not limited to reasonable attorneys fees, arising out of or related to any and all use of your account, including any content transmitted over the Service, your use of the Service, your violation of this Agreement, and your violation of any rights of any other person. This includes, without limitation, responsibility for all such consequences of your (or that of any user of your account) violation of this Subscriber Agreement or placement on or over, or retrieval from or through, the Service of any software, file, information, communication or other content.

 

PROPRIETARY RIGHTS

 

Except for public domain material, all copyrightable content distributed over the Service is copyrighted by ourselves or the third-party content provider. We and/or such third party content providers own all right title and interest to such content and you may not copy, distribute, transmit or publish, in any form, including printed, electronic, digitized, audio or otherwise, or modify all or any portion of such content without the prior written consent of the copyright owner; provided, however, that you may store one copy of the content on your personal computer for your personal use for a period not to exceed thirty calendar days. All copyright or other proprietary rights notices contained in or associated with the content or contained therein must be preserved in, or on, any copies made of such material. The placement of copyrighted material in any public posting area, or any software library, without the consent of the copyright owner is in violation of this Subscriber Agreement.

 

 
 

 

 

EXHIBIT A

 

TO MASTER SERVICES AGREEMENT

 

STATEMENT OF WORK

 

 
 

 

EXHIBIT A

STATEMENT OF WORK

 

1.0   SCOPE OF WORK

 

In accordance with the terms hereof, HNS will provide the services required to provide full duplex point-to-multipoint satellite communication system using dedicated HX Networks (“Network”) consisting of certain network operations center (“NOC”) equipment, and Customer supplied and Customer operated integrated aeronautical terminal units. The Equipment associated with the Network is being provided in accordance with the Master Purchase Agreement entered into by the parties on even date herewith.

 

The program effort associated with the maintenance and operation of the Network will be carried out as follows:

 

HNS will provide services including;

 

Program management services, including network engineering and implementation of Equipment and Services.

 

2) Provision and operation of dedicated Ku-band space segment (the “Space Segment”) per Customer’s instructions subject to space segment availability.

 

3) Operation of Customer’s HX NOCs on a 24-hour per day, 365-days per year basis including network monitoring, control, configuration, maintenance, trouble isolation, trouble diagnosis, and trouble reporting. Hub operation, maintenance, and technical support services are described in Exhibit B.

 

Read-only access to monthly Service reports to provide information regarding the Services including service NOC outages during the prior calendar month, and planned activities for the upcoming calendar month.

 

Provision and maintenance of certain terrestrial backhaul facilities between the HNS NOC facility and Customer’s data center.

 

2.0   DELIVERABLE SERVICES

 

This section sets forth the services to be provided under this Agreement.

 

 
 

 

   NOC OPERATIONS AND MAINTENANCE

 

HNS will provide the NOC Operations and Maintenance Services as described in Exhibit B and Exhibit C (Pricing).

 

   SPACE SEGMENT

 

Dedicated transponder capacity to support the Customer's communication network will be procured by HNS on Ku-band satellites per Customer’s instructions subject to space segment availability. Each satellite is configured with redundant traveling wave tube amplifiers (“TWTAs”), which provide inherent backup capability in the event of a primary TWTA failure.

 

On a regular basis, HNS will provide the Customer with information available to HNS on the expected life of each satellite used by HNS to provide service to Customer.

 

2.3 TRAINING

 

Training courses are offered periodically and are available to Customer on a reservation basis. HNS reserves the right to cancel a course if the minimum number of students are not preregistered two (2) weeks before the scheduled start of the course. If the Customer cancels a course reservation less than two (2) weeks before the start of the course, the Customer will be charged 50% of the applicable fees as defined in Exhibit C (or if applicable, the training slot designated for Customer herein will be forfeited). If the Customer does not attend the course and does not cancel the reservation, the Customer will pay the full price for the course (or forfeit its allotted slot, if applicable). Customer must register for training courses by submitting purchase orders. Training courses and associated pricing may be found in Exhibit C.

 

2.4   REPORTS AND OTHER INFORMATION; REMOTE ACCESS

 

HNS will provide Customer with read-only access to the following reports via a web-based application in HNS standard formats:

 

1. Chronological list of trouble reports summarizing NOC related or customer reported problem(s) and resolution(s) of problems with timed duration of outage. This report will also provide information on HNS’ performance in resolving the problem in accordance with the applicable severity level.

 

2. A summary report on network service availability for the preceding month.

 

 
 

 

3. Other reports as may be made available in accordance with Exhibit B.

 

Customer may request other reports and information, which, upon mutual agreement, HNS will provide for an additional fee.

 

  (See Section 2.5.1.2 and Section 1 of Attachment B)

 

2.5    HNS PROGRAM TASKS

 

HNS has the overall responsibility for implementation of Customer’s dedicated Network as described in this Agreement. This section details some of the specific tasks that will be the responsibility of HNS during the accomplishment of this work. Section 4.0 notes Customer's responsibilities related to the network implementation.

 

2.5.1   PROGRAM MANAGEMENT

 

2.5.1.1  Program Management Team

 

In order to ensure that work under the Agreement proceeds at the planned rate, HNS will put into place a program management team consisting of experienced professionals in the various areas of expertise required. This team will be headed by a Program Manager to coordinate all HNS resources required for the successful conduct of the work, and to ensure that required coordination takes place between HNS and Customer personnel.

 

Tasks to be performed by the program management team include:

 

· Schedules
· Status reporting
· Staffing
· Subcontractor interface (if applicable)
· Space segment technical support
· System configuration
· Documentation preparation

 

2.5.1.2 Progress Reports and Status Reviews

 

HNS will prepare a written progress report each month during the network implementation phase detailing the status of the program. In addition, a program status review meeting will be held weekly during the network implementation, and monthly thereafter, unless otherwise agreed by the parties, to review the most recent progress reports and discuss any particular program problem areas. The scheduling of meetings will be by mutual agreement.

 

 
 

 

In addition to the foregoing, for the initial operational testing of the NOC equipment and through Customer’s expected proof of concept trial, HNS shall make available the appropriate technical resources for teleconferences, on an as-needed basis, for reviewing network and resolving any significant HNS-related issues on a top priority basis.

 

3.0    SERVICE PERFORMANCE

 

The following provisions shall apply to the HX NOC equipment operated by HNS..

 

3.1   Service Performance Standard

 

HNS will use commercially reasonable efforts to make the Services available (“Service Availability”) *** for each calendar month of the Term, such that the aggregate number of minutes of Service interruption for the HX NOC for a given calendar month of the Term shall not exceed ***.

 

3.2   Service Performance Conditions

 

HNS will use commercially reasonable efforts to provide the Services in accordance with the Service performance standard set forth in Paragraph 3.1 above. In the event that HNS fails to meet such Service performance standard in any calendar month, as Customer's sole and exclusive remedy, HNS will pay Customer liquidated damages calculated in accordance with Paragraph 3.4 below. A failure to meet the Service performance standard does not constitute a Service interruption for purposes of calculating liquidated damages under this section when due to any of the following causes:

 

A. The failure or nonperformance of any Customer-provided facilities or equipment, or third-party facilities or equipment acquired by HNS on behalf of Customer, including any out-of-tolerance earth station conditions not caused by HNS

 

B. The fault, negligent act, or negligent failure to act of Customer, its employees, agents, or invitees.

 

C. Preventive maintenance and/or other scheduled Service outages (when done pursuant to a preventive maintenance schedule provided by HNS, and reasonably agreed by Customer) as may be necessary to maintain the Services in satisfactory operating condition, to provide additional system capacity, to protect the overall performance of the Services, to protect the overall performance of the Services, or any other such or for any other reasonable cause. For the avoidance of doubt, preventive maintenance schedules in respect of Customer’s own NOC equipment shall be mutually agreed to occur outside of each of Customer’s typical network usage hours.

 


*** Confidential treatment requested.

 

 
 

 

D. An event of Force Majeure suspending HNS' performance obligations in accordance the applicable terms of this Agreement.

 

E. The unavailability of Services to Customer, pursuant to Federal Communications Commission (“FCC”) rules and regulations published at 47 CFR 64.401, during emergency conditions such as major natural or man-made disasters and emergencies involving United States national defense and security.

 

3.3   Service Interruption

 

The Services shall be available on a 24-hour per day, 365-days per year basis (the “Scheduled Service Time”). The duration of a Service interruption is measured by the number of hours during the Scheduled Service Time that elapse from the time that a trouble ticket is opened to the time that HNS notifies Customer that the Services have been restored. Customer’s availability for a given calendar month shall be a percentage equal to 100% minus a fraction, the numerator of which shall be equal to the aggregate number of minutes of interruption for Customer's HX NOC Equipment, and the denominator of which shall be equal to the total number of minutes of scheduled Service time for such month.

 

3.4   Service Interruption Liquidated Damages

 

Any applicable liquidated damages due Customer for a Service interruption will be calculated by HNS on a monthly basis, as specified below, and paid by HNS within thirty (30) days after the event giving rise to a claim for liquidated damages. ***

 

4.0    CUSTOMER RESPONSIBILITIES

 

4.1   PROGRAM MANAGER

 

Customer will designate a primary point of contact for overall coordination of Customer related activities.

 


*** Confidential treatment requested.

 

 
 

 

4.2 LICENSES

 

Except for the licenses associated with HNS’s NOC operations, Customer will be responsible for obtaining all necessary FCC and FAA licenses for operating the network. HNS, however, will provide Customer reasonable support in applying for such licenses. Customer shall remain responsible for actually filing the FCC applications and holding and maintaining the licenses.

 

4.3 CUSTOMER SUPPLIED EQUIPMENT

 

All Customer-owned Equipment (with the exception of the HX NOC) located at the NOC shall be operated by the Customer including monitoring, control, trouble isolation and resolution. Hughes services pertaining to this Customer-owned equipment shall be limited to installation or replacement of Customer supplied equipment upon request by the Customer.

 

Customer supplied equipment necessary for HNS to perform system integration and testing shall be in good working order at the time of the system integration.

 

4.4     CUSTOMER REMOTE EQUIPMENT INSTALLATION, MAINTENANCE AND TROUBLESHOOTING RESPONSIBILITIES

 

Except for HNS remotely servicing the remote equipment, such as, resetting such equipment, uploading software to such equipment as requested by Customer, or making mutually agreed configuration changes to the remote equipment Customer is responsible for all remote equipment installation, maintenance and troubleshooting and field service issues.

 

4.5   TEST FACILITY

 

Customer and HNS shall agree on the requirements of any test lab (in addition to the production NOCs) which might be necessary for the troubleshooting of system performance issues or testing of new software and/or configurations of customer or HNS supplied software or hardware. Once this determination is made, HNS will price any additional resources that are required.

 

4.6    OTHER CUSTOMER OBLIGATIONS

 

Customer shall also accept all work satisfactorily completed under Development Services Agreement.

 

 
 

 

EXHIBIT B

 

TO MASTER SERVICES AGREEMENT

 

NOC OPERATIONS, MAINTENANCE AND TECHNICAL SUPPORT SERVICES

 

 
 

 

EXHIBIT B

 

NOC OPERATIONS, MAINTENANCE AND TECHNICAL SUPPORT SERVICES

 

SCOPE

 

This Exhibit B defines the work to be performed by HNS (HNS) to provide HX NOC operations, maintenance, and technical support services.

 

HX NOC operations and maintenance services consists of operating and maintaining the Customer’s dedicated HX NOC facilities installed at *** .

 

Support Services

 

Hub and network operations centers are staffed 24 hours per day, 365 days per year, with HNS technical support personnel. In the event of any failure of any Customer-owned HX NOC Equipment, HNS will replace the failed item with a redundant or spare component from the Customer’s spare inventory, and will repair the failed item on average within: thirty (30)days for HNS manufactured equipment and within forty five (45) days for equipment manufactured by a third party. HNS will then return the repaired item to the Customer’s spare inventory.

 

Technical systems and software support will be provided for operational problems by HNS. Technical support services are those services, related to the isolation and resolution of problems occurring within the Hughes supplied equipment and software. Customer is responsible for isolation and troubleshooting of aeronautical terminal problems, except that HNS will provide status monitoring of the remote terminals. The operational status of each remote terminal (active or inactive) will be accessible to Customer via the network management system.

 

The various technical support services that will be provided to Customer as part of this Maintenance Agreement are described below.

· NOC and system level support 24 hours per day, seven days per week. In the event of a NOC operational issue, HNS will open a Customer Case Record (CCR) and notify the customer of the event. Periodic updates will be made to the ticket which track major problem isolation steps and results.
· Customer shall be provided with a URL and a Username/Password that will enable them to read their CCRs via the Internet. This access will also show the last 60 days of activities (tickets opened/closed) and provides a means of commenting back to the assigned support engineer or HNS management.
· HNS will provide Customer Service Bulletins (CSBs) periodically to notify Customer of problems that have been reported with the system, the current correction status of these problems and/or operational procedures to provide a work around to the problems. CSBs also provide additional information, not available in the current system documentation.

 


*** Confidential treatment requested.

 

 
 

 

· Upgrades to the current version of software within the Customer’s Hub equipment will be made as necessary to incorporate bug fixes. Update schedules will be mutually agreed with the Customer.
· HNS will provide the Customer with updates to the standard system documentation via the internet web site and/or on a CDROM
· Customer access to the HX network management system for terminal related monitoring, maintenance and diagnostic functions such as: terminal commissioning support, display of terminal status, display of terminal link statistics, and terminal reset commands. Remote terminal software downloads or configuration changes will be the responsibility of HNS.

 

· HNS will provide Customer access to the HX network management system for the monitoring of alarm conditions with respect to HNS NOC equipment. Any NOC related software downloads or configuration changes will be the responsibility of HNS.

 

2.0Problem Severity Levels

 

When a CCR is opened a severity level is assigned based upon the impact or potential impact of the problem. The various severity level designations are described below.

 

Severity 1: Network down
Severity 2: Problem that will cause a severity 1 circumstance if not corrected
Severity 3: Recurring operational problem
Severity 4: Technical questions / future release request / software upgrades
Severity 5: Single event problem with minor impact
Severity 6: Currently used for advance warranty issues if applicable
Severity 7: Problems that will be resolved in a future software release.

 

The specific severity level definitions, actions, and escalation timeframes for critical problems (severity level 1 through 3 are described below.

 

2.1      Severity Level 1 - Network down

 

A network may be declared down if either:

 

(a) 50% or more of the remote sites are not communicating

(b) 50% or more of the remote connections fail.

 

The goal is to have the network restored within one (1) hour of the event. The following are the escalations for Severity Level 1:

 

 
 

 

Level   Time CCR
Opened
  Responsibility   Action
             
1   0 hr   Network Operator   Open CCR, document problem, notify section supervisor.
2   0 hr   Network Engineer   Work to resolve the problem.
3   0 hr   Section Manager   Support network engineer and obtain additional resources as required.  Inform network engineering management and program manager as appropriate.
4   1 hr   Network Engineering Director, Program Manager   Network engineering director determines if development engineering involvement is necessary and reviews the situation with the program manager. Program manager reviews the situation with the Customer.
5   1 hr   Sr. Director of Network Engineering   The senior director examines the situation and provides additional resources if required,   estimates the time to resolution,  and escalates to senior management.
6   8 hrs    Senior Vice President   SVP examines the actions taken, determines if additional resourcs are required, reviews the status and next steps with the Customer’s executives.
7 & 8   20 hrs   QA War Room Exec VP   QA war room reviews the overall actions, determines if additional actions are required, advises the executive vp and the OOTC of the status, and determines whether process changes are required.

 

 
 

 

2.2     Severity Level 2 - Condition exists that has a major negative impact on the customer or if left unchecked could result in a severity level 1 event

 

Examples of this are:

Loss of redundancy

Continuous connectivity problems

Failure of a previously implemented protocol or application.

Failure of a newly applied patch or fix to an existing problem.

 

The goal is to address the problem within 4 hours with a work-around, patch, parts replacement or an alternative plan that has been agreed with by the Customer. If the original problem is resolved with a temporary fix the original CCR is to be closed and a second CCR opened at a lower severity level to track the ongoing problem resolution.

 

Level   Time CCR
Opened
  Responsibility   Action
1   0 hr   Network Operator   Open CCR, document problem, notify section supervisor.
2   1 hr   Network Engineer   Work with Customer to resolve the problem.
3   4 hr   Section Manager   Support network engineer and obtain additional resources as required.  Inform network engineering management and the program manager as appropriate.
4   6 hr   Network Egineering Director, Program Manager   Network engineering director determines if development Engineering involvement is necessary and reviews the situation with the program manager.  The program manager reviews the situation with the Customer.
5   12 hr   Sr. Director of Network Engineering   The Sr Director examines the situation, provides additional resources if required, estimates the time to resolution and escalates to senior management.
6   24 hrs   Senior Vice President   SVP examines the actions taken, determines if additional resources are required, and advises Customer executives as to status and next steps.
7 & 8   48 hrs   QA War Room, Executive VP   QA war room determines if additional actions are required, advises the executive vp and the OOTC of the status, and determines whether process changes are required.

 

 
 

 

2.3    Severity Level 3 - Reoccurring operational issue with moderate impact

 

Examples are daily events including the following:

a) Hub component resets

b) Remote resets due to HNS system issue

c) Improper implementation of a new protocol or feature

 

The goal is to address the condition within 10 Days with either a patch or a final fix acceptable to the customer. If the solution is temporary, the original CCR will be closed and a new severity level 7 CCR will be opened to track planning and implementation of the permanent solution.

 

Level   Time CCR
Opened
  Responsibility   Action
1   0 hr   Network Operator   Open CCR, document problem, and notify section supervisor.
2   8 hr   Network Engineer   Work with Customer to resolve the problem.
3   4 d   Section Manager   Obtain additional resources as required, inform network engineering management and program manager as appropriate.
4   5 d   Network Engineering Director   Network engineering director reviews the situation with development engineering and the program manager if appropriate.  Program manager reviews the situation with the Customer.
5   6 d   Sr. Director of Operations Support   The senior director examines the situation and determines if additional resources are required, estimates the time to resolution, and escalates to senior management.
6   10 d   Senior Vice President   SVP examines the actions taken, determines if additional resources are required, and advises Customer’s executives of status and next steps.

 

 
 

 

3.0    SERVICE LIMITATIONS

 

The Technical Support Services are offered with the limitations outlined in this section.

 

Technical Support Services do not include support and service for the following:

 

1) Service and repair of software, equipment accessories, attachments, or any other devices not specifically purchased by Customer under the Master Purchase Agreement.

 

2) Servicing Equipment and Software that has been changed, modified, or altered other than by means of approved upgrades and configuration changes.

 

4.0 CUSTOMER RESPONSIBILITIES

 

4.1 FAULT ISOLATION AND PROBLEM DETERMINATION

 

Customer shall maintain a technical staff with the capability of performing airborne terminal fault isolation and problem determination. Further, the Customer's trained staff shall be readily accessible by phone during periods when the Customer requests Technical Support. The Customer's staff shall assist HNS personnel in system troubleshooting, fault isolation, and problem determination to the extent requested.

 

4.2 SPARES

 

Customer should purchase and maintain the HNS recommended complement of spares

 

 
 

 

EXHIBIT C

 

TO MASTER SERVICES AGREEMENT

 

INITIAL SERVICE ORDER AND PRICE SCHEDULE

 

 
 

 

EXHIBIT C

 

INITIAL SERVICE ORDER, PRICE SCHEDULE AND PAYMENT TERMS

 

1.       INITIAL SERVICE ORDER

 

A. NOC Operations, Technical Support and Maintenance

 

***

 

B. Remote Services

 

***

 

C. Backhaul Services

 

***

 

D. Space Segment

 

***

 

2.       OPTIONAL SERVICES

 

A.        HX Expansion Services

 

***

 

B.        Customer Furnished Equipment Expansion Services

 

***

 

3.        TRAINING

 

Customer Site training does not include per diem and airfare

 

***

 


*** Confidential treatment requested.

 

 
 

 

4. PAYMENT TERMS

 

Program Management, Backhaul Services, NOC Operations, Maintenance and Technical Support Services will be invoiced one month in advance. Invoices for NOC Operations, Maintenance and Technical Support charges will commence on the earlier of (a) the date of activation of the NOC Equipment, or (b) forty-five (45) days prior to the start of Customer’s Proof of Concept test for its initial airline customer. Invoices for backhaul services will start on the earlier of (a) the date invoices for NOC Operations commence, or (b) the date such services are activated

 

Subject to the conditions described below, Space Segment Services will be invoiced one quarter in advance. Invoices for space segment will commence on activation of space segment services.

 

(note: The payment terms in respect of space segment are subject to HNS securing the agreement of it space segment vendor(s) that HNS will be relieved of its obligation to the applicable vendor in the event of the bankruptcy, insolvency or payment default of Row 44.

 

Except as otherwise provided in this Section, payment will be due net thirty (30) days from date of invoice.

 

 
 

 

[Row 44 Letterhead]

 

June 6, 2008

 

Philip K. O'Brien
Vice President
Associate General Counsel
Hughes Network Systems
11717 Exploration Lane
Germantown, MD  20876

 

Re: Clarification of Master Equipment Purchase Agreement—Modem Warranty

 

Dear Phil:

 

In connection with that certain Master Equipment Purchase Agreement (the “Agreement”), dated on or about December 21, 2007, between Hughes Network Systems, LLC (“HNS”) and Row 44, Inc. (“Row 44”), HNS and Row 44 acknowledge and agree that for purposes of the warranty exclusion clause set forth in Section 9(D)(i) of the Agreement, Row 44’s assembly procedures provided to HNS (namely, the use of applied heat sinks, hot glue and related steps to secure certain components of the modem module as outlined in the AP Labs document 5140316-1-AI, 5140317-1-AI and 5140302_A) will not void the warranty on the entire modem module; provided, that HNS shall not be required to provide warranty service on either (a) the actual sub-components of the modem that are modified by Row 44 and which fail as a result of such modifications, or (b) modules or components which fail as a result of such modifications.

 

If the above clarification of the Agreement is acceptable to HNS, please acknowledge so by your signature below.

 

  Yours truly,
  /s/ John LaValle
   
  John LaValle
  Chief Operating Officer

 

Acknowledged and agreed:  
   
Hughes Network Systems, LLC  
     
By: /s/ Philip K. O’Brien  
     
Name: Philip K. O’Brien  
     
Title: V.P. Legal  

 

 
 

 

 

June 30, 2009

Mr. John Guidon, CEO

Mr. John LaValle, CFO

Row 44, Inc.

31280 Oak Crest Drive, Suite #5

Westlake Village, CA 91361

 

Gentlemen:

 

This letter will set forth the terms under which Hughes Network Systems (HNS) will be supplying space segment and related services for the period between July 1, 2009 and December 31, 2009.

 

I.              Revised Capacity

 

Transponder capacity on each of the existing Row44 transponders will be reduced to the amounts in the table below effective July 1, 2009 per Row44’s transponder “slim-down” request. The amount and pricing for capacity each month of this period will be as set forth in the table below:

 

* **

 

By a date not later than November 1, 2009, Row 44 will advise HNS of its request to either continue to receive capacity at the levels specified above, or change these levels to different amounts. Row 44 acknowledges and agrees, however, HNS makes no guarantee as to the availability of additional capacity on the transponders listed above, or any other transponders on the applicable satellites. ***

 

II.           SES Deferral Payments

 

HNS has requested that SES defer the repayment of the amounts otherwise due SES on account of the lower prices provided in the first quarter for a period of ninety (90) days. ***

 

III.          NOC Operations Charges

 

HNS has agreed to reduce the “NOC Operations” charge from *** to *** . This reduction will commence in July, 2009, and will continue until the date that HNS equipment has been installed and is operational in a commercial aircraft and is being used for the generation of revenue (as opposed to pilots or tests), after which time the price will revert to the contract level of *** .

 

IV.          Payments for Certain Services to be Provided after June 30, 2009.

 

As previously discussed, Row 44 will be required to make payments for each of the charges listed above *** . Thus, assuming HNS’ request for further deferral of the Q1 SES amounts is granted, the payment schedule for the balance of the year would be as follows:

 

***

 


*** Confidential treatment requested.

 

 
 

 

Note: All charges are exclusive of applicable taxes. Taxes may, at HNS’ option, be billed separately and will be due net 30 days from invoice.

 

***

 

In the event this request is not granted, the payment schedule will be as follows:

 

***

 

Note: All charges are exclusive of applicable taxes. Taxes may, at HNS’ option, be billed separately and will be due net 30 days from invoice.

 

***

 

Should HNS terminate service, HNS will terminate Row44 related space segment agreements with SES and Intelsat and HNS makes no representation about its ability to re-secure space segment or restart services at a later date.

 

V. Payments for other Equipment and other Charges to be provided after July 1, 2009.

 

Unless otherwise specified by HNS, charges for development services provided by HNS will be billed in accordance with the current regime and will be due net 30 days from the date of invoice. Notwithstanding the foregoing, in the event that Row 44 requires that a significant development project be undertaken by HNS which may be reasonably expected to consume more than 100 man-days, HNS may require that an alternative payment structure be utilized, which may include some amount of the total project cost to be paid in advance. In the event that any additional equipment is required by Row 44, such equipment will be invoiced and paid for in advance of shipment.

 

VI. Payment for Amount Unpaid as of June 26, 2009

 

***

 

This note will be prepared by HNS and submitted to Row 44 for signature by July 7, 2009.

 

In the event that these arrangements are in accordance with your understandings, we would appreciate it if you could signify the same by signing of copy of this letter and returning it to us. Thank you very much for your consideration.

 

  Very truly yours,
   
  /s/ Philip K. O’Brien
  Philip K. O’Brien
  Vice President, Legal

 

Accepted:  
Row 44, Inc.  
/s/ John Guidon
By: John Guidon  
Title: Chief Executive Officer  
Date: June 30, 2009  

 

 
 

 

AMENDMENT NO. 3 TO MASTER SERVICES AGREEMENT

 

This AMENDMENT No. 3 (the “Amendment” ) to Master Services Agreement is entered into November ____, 2010 (the “Amendment Effective Date” ) by and between Hughes Network Systems, LLC ( “HNS” ) located at 11717 Exploration Lane, Germantown MD 20876, and Row 44, Inc. ( “Row 44” or “Customer” ) located at 31280 Oak Crest Drive, Suite #5, Westlake Village, CA 91361

 

Whereas , Row 44 and HNS entered into a Master Services Agreement on or about December 28, 2007 (hereafter referred to as the “MSA”) which agreement has been heretofore amended on two prior occasions; and

 

Whereas, Row 44 now desires to purchase and HNS desires to sell, certain services in Europe, which services are substantially similar to the services provided pursuant to the MSA, as previously amended; and

 

WHEREAS , the parties now desire to amend the terms of the MSA to cover the provision and purchase of the European services herein described; the delivery dates for space segment services contained in this MSA will be per Attachment III.

.

Now therefore , for and in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Row 44 and HNS hereby agree as follows:

 

1.        SCOPE OF SERVICES

 

During the Amendment No. 3 Term (as defined below), HNS will provide, and Row 44 will accept and pay for the services in accordance with and subject to the terms and conditions set forth herein and Attachments I, II and III hereto and incorporated herein (which services are hereafter referred to as the “Services”).:

 

Attachment I – Statement of Work

Attachment II – NOC Operations, Maintenance and Technical Support Services

Attachment III – Service Pricing and Payment Terms

 

 

During the Term, Row 44 may order additional Services subject to the terms hereof, for same prices set forth in this Agreement (except for additional space segment services, which are subject to adjustment in accordance with the term set forth in Section 3 of Attachment III), including the Exhibits hereto. Notwithstanding the foregoing, Row 44 acknowledges that additional Space Segment Services will be subject to the availability of such Space Segment capacity. In order to increase the likelihood that HNS will be able to provide any such additional Space Segment capacity when such capacity is required by Row 44, the parties will establish a mutually acceptable methodology for forecasting and ordering any additional space segment that may be required by Row 44. In addition, on a regular basis HNS will provide Row 44 with its best estimate of the amount of Space Segment capacity currently available and anticipated to become available on any of the satellites used by Row 44.

 

 
 

 

2.        TERM OF AGREEMENT

 

The term of this Agreement (“Amendment No. 3 Term”) and the term of Services provided hereunder will remain in effect for a period which ends on December 31, 2011, unless terminated earlier as provided herein.

 

3.    TERMS APPLICABLE TO THE PROVISION OF SATELLITE CAPACITY.

 

In addition to the terms set forth herein, the additional terms and conditions set forth in Annex A to this Amendment shall apply in respect of HNS’ provision of satellite capacity to Row 44.

 

4.    OTHER TERMS

 

Except as amended herein, all terms and conditions of the MSA as amended shall remain in full force and effect. For the avoidance of doubt, inasmuch as the provisions of Section 2.A of the MSA dealt with certain rights and obligations of the parties relating to exclusivity in the North American market, this Amendment is not intended to extend any such right or obligation outside of North America.

 

IN WITNESS WHEREOF , the Parties hereto have caused this Amendment No. 3 to be executed as of the Amendment Effective Date by and through their duly authorized representatives.

 

Hughes Network Systems, LLC   Row 44, Inc.
     
By: /s/ Philip K. O’Brien   By: /s/ John Guidon
         
Title: V.P. Legal   Title: C.E.O.
         
Date: 11/15/2010   Date: 11/12/2010

 

 
 

 

ANNEX A

 

This Annex sets forth certain additional terms and conditions in respect of the provision, sale and use of satellite capacity, which shall be binding on Row 44 during the period that such capacity is being provided by HNS to Row 44 for Row 44’s European NOC. For purposes of this Annex, Row 44 shall be referred to as the “Customer.”

 

I. DEFINITIONS

 

Affiliates ” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control ( i.e. , the power to direct affairs by reason of ownership of voting stock, by contract or otherwise) with such Person and any member, director, officer or employee of such Person.

 

Authorization ” shall mean, the HNS written document which provides technical details such as satellite, transmit frequency and contractual power level for Customer carriers.

 

Governmental Communications Authority ” shall mean the governmental body or bodies in Europe that are required to approve the transmissions over Customer’s system.

 

Hughes ” or “HNS” shall mean Hughes Network Systems, LLC, or any of its Affiliates.

 

Eutelsat ” shall mean Eutelsat Communications SA.

 

Laws ” shall mean all international, federal, state, local and other laws, rules and other regulations, including without limitation, those issued by the Governmental Communications Authorities.

 

Non-Preemptible ” shall mean transponders or partial capacity that is not protected in the event of a satellite failure but is not subject to preemption to restore any other service.

 

Person ” shall mean any person or entity, whether an individual, trustee, corporation, general partnership, limited partnership, trust, unincorporated organization, business association, firm, joint venture, governmental agency or authority, or otherwise.

 

Preemptible ” shall mean capacity that is not protected in the event of a failure but may be used by HNS and/or the Satellite Operator to recover other carriers or service affected by a satellite failure. HNS shall have the right to immediately preempt or interrupt Customer’s use of Customer’s Capacity in the event that any HNS or the Satellite Operator domestic satellite(s) suffers a failure to meet any applicable performance specifications. This preemption will be for service recovery only and not for business only reasons.

 

Satellite ” shall mean the Satellite(s) specified in Attachment III to this Amendment or the Replacement Satellite thereof from which Customer’s Transponder Capacity is being provided at any given time.

 

 
 

 

Satellite Operator ” shall mean Eutelsat.

 

Transponder(s) ” shall mean a specified component of the Satellite which, for a particular frequency band, receives, amplifies, translates frequency and retransmits radio signals. Each Transponder contains one traveling wave tube amplifier (a “ TWTA ”). Transponder shall also mean, for purposes of this definition, any replacement of alternate components thereof.

 

Transponder Capacity ” shall mean the capacity on the Satellite for Use by Customer as specified in Attachment III to the Amendment 3. Transponder Capacity shall also mean the capacity on a Transponder other than the one specified in Attachment III, to which HNS or the Satellite Operator directs Customer to move, after notice thereof from HNS or the Satellite Operator, as the case may be. In the case where the Customer’s outroute traffic is multiplexed into a shared outroute, the “Transponder Capacity” for the outroute traffic shall mean the number of Mbps of the Customer’s traffic in the shared outroute.

 

Transponder Capacity Failure ” shall mean the failure of Hughes to provide Customer’s aggregate Transponder Capacity on a Transponder which meets a saturated downlink EIRP level of 43 dBW. Determination that a Transponder Capacity Failure has occurred shall be made by Hughes or the Satellite Operator in its sole discretion using facilities located at the Satellite Operator’s telemetry, tracking and control earth station.

 

Usage ” or “ Use ” shall refer to Customer’s (or its uplinking or other agents’) radio transmission to, or utilization of, the Satellite(s) or Customer’s Transponder Capacity.

 

User ” shall mean the actual owner of a Transponder, including HNS or the Satellite Operator, if there remain any unsold or unleased Transponders, or any permitted lessee, licensee, or assignee of such Transponder, or any entity to which HNS or the Satellite Operator provides services on a Transponder.

 

II. CERTAIN UNDERSTANDINGS

 

1.      Ownership of Transponders . Customer understands and agrees that the Satellite Operator is the authorized operator of the Satellite(s). Neither this Amendment 3 nor Customer’s Use of Transponder Capacity shall, or shall be deemed to, convey title or any other ownership interest to Customer in or to any Transponder. Customer acknowledges and agrees (i) that nothing contained in the MSA shall prevent any sale, mortgage, or encumbrance of the Satellite or any Transponder thereof by the Satellite Operator, (ii) that Customer’s Transponder Capacity is provided on a leased basis and is not being sold to Customer, (iii) that neither any Transponder nor any Satellite, nor any lease thereof nor any interest of any type therein, shall be subject to any claim, prior, subsequent or otherwise, of Customer or its creditors as a result of the MSA, and (iv) that, as to any Transponder, the rights of Customer under this Amendment III will be subject and subordinate to the rights of any purchaser purchasing such Transponder and leasing it back to HNS pursuant to a sale and leaseback transaction.

 

 
 

 

2.      Control of Satellite . Customer understands and agrees that the Satellite Operator shall control and provide for the operation of the Satellite. Customer agrees that the Satellite Operator shall be responsible for: (i) securing, providing and maintaining the license(s) for the Satellite; (ii) maintaining the Satellite; (iii) complying at all times during the term of this Amendment with all applicable regulations relating to the Satellite.

 

III. SERVICE DEFINITION

 

HNS shall provide authorization for Customer to operate on carriers as specified in Attachment III on the Transponder specified in said Attachment III, or as such Transponder Capacity may be changed in accordance with the terms herein provided.

HNS shall provide in writing to Customer a Satellite Capacity Authorization document which will provide all technical elements of the carriers authorized for this capacity. Customer shall make best efforts to operate within the provided authorization.

 

IV. CONTINUITY OF SERVICE

 

1.      Preemption/Interruption of Service . Customer recognizes and agrees that for “Technical or Safety Reason(s)”, which shall include, but shall not be limited to, (1) the protection of the overall health or performance of the Satellite or its Transponders; (2) the prevention of interference or cross-talk; (3) the protection of public safety; or (4) compliance with an order from the governmental authorities, HNS and/or the Satellite Operator may take the following “Action(s)”: (i) preempt or interfere with Customer’s Use of any Transponder or other component of the Satellite, (ii) reassign TWTAs to different Transponders on the Satellite, or (iii) reassign the frequency assignment of Customer’s Transponder Capacity. Customer acknowledges and agrees that an Action by HNS and/or the Satellite Operator may result in the preemption or interruption of the Use of Customer’s Transponder Capacity. To the extent technically feasible, HNS shall give Customer oral or written notice prior to taking an Action and shall use reasonable efforts to schedule and conduct such Action so as to minimize the disruption of Customer’s Use of Customer’s Transponder Capacity. Customer acknowledges and agrees that if such preemption or interruption occurs, then Customer shall cooperate with and assist HNS during such periods and Customer may be entitled to Service Credits pursuant to Section 3 of this Attachment I or the termination of the provision of Space Segment Services pursuant to Section VIII below.

 

2.      Provision of Continuing Service . In the event of a Transponder Capacity Failure, HNS will make best efforts with the Satellite Operator to restore Customer’s Transponder Capacity using a spare component of a Transponder on the Satellite (including a spare traveling wave tube), if available, or if such spare component is unavailable, then by using an alternate Transponder on the Satellite, if available. The availability of such spare component or alternate Transponder on the Satellite, on a permanent or temporary basis, shall be determined by the Satellite Operator.

 

 
 

 

V. CUSTOMER OBLIGATIONS

 

1.    Non-interference and Use Restrictions . Customer’s transmissions to and from the Satellite and its use of the Customer’s Transponder Capacity shall comply with all applicable governmental laws, rules and regulations. Customer will follow established practices and procedures for frequency coordination and will not use the Customer’s Transponder Capacity, or any portion thereof, in a manner which would or could be expected to, under standard engineering practice, harm the Customer’s Transponder Capacity or interfere with the use of or harm any portion of the Transponder from which the Customer’s Transponder Capacity is provided that is not assigned to Customer, any other Transponder, the Satellite, or any other in-orbit satellite or transponder on such satellite. Customer shall also comply with the operational requirements as may be issued by HNS from time to time, in its reasonable discretion.

 

2. Permitted Use . The Customer’s Transponder Capacity may be used by Customer solely for transmission of its own or its customers’ digital telecommunications services

 

3 Compliance With Laws . From the Effective Date and through and during the Amendment No. 3 Term, Customer (which includes any and all uplinking or other agents of Customer) shall comply with the terms in this Annex and shall be responsible for complying with, and shall comply with all Laws (including the Obscenity Laws defined below) applicable to it regarding the operation and Use of the Satellite and the Transponders, or Customer’s lease or Use of Customer’s Transponder Capacity (including, but not limited to, the transmission of any programming or material).

 

4. Transmission Parameters . Customer transmissions to the Satellite must be within the technical parameters specified by HNS or the Satellite Operator for the transmission type Used and the Transponder Used. If Customer leases Partial Transponder Capacity, Customer shall supply HNS with all information reasonably requested, including but not limited to transmission parameters. Customer shall comply with the Satellite Access Procedures provided by HNS from time to time. Customer’s Use of Customer’s Transponder Capacity shall not interfere with the Use of that or any other Transponder by others and shall not cause physical harm to that or any other Transponder or to the Satellite. In order to minimize interference among various users of the Transponder Capacity, Customer shall notify HNS in a timely manner of Customer’s proposed transmission parameters, including power, frequency, modulation, and such other information as HNS may reasonably request. Customer shall not initiate transmission or change its transmission parameters until written approval of such initiation or change is received from HNS. It is specifically contemplated by HNS and Customer that if Customer requires Partial Transponder Capacity, HNS may initially specify, and later change (upon ten days advance notice to Customer), the operating center frequency of Customer’s carriers in order to place intermodulation products at frequencies which allow for maximum use of the Transponder.

 

 
 

 

5.    Customer’s Transmitting Terminals . Customer shall be responsible for the provision, installation, operation, maintenance of, and for securing all necessary licenses and/or authorizations for all facilities and equipment not owned or operated by HNS (“Customer-Provided Facilities”), for transmitting signals to, or receiving signals from, the Satellite in accordance with the requirements set forth in this Annex. Customer shall configure, equip, and operate earth terminal facilities and all other equipment used in connection with Customer’s Use of Transponder Capacity to conform to the characteristics and technical parameters of the Satellite as provided by HNS from time to time. Customer shall operate all Customer Provided Facilities with qualified and authorized personnel and in a manner that allows for the immediate cessation of transmission. Upon written or oral notice from the satellite provider that operational or technical reasons necessitate a cessation (as determined by the Satellite Operator in its sole discretion), or that Customer’s Use is in violation of any law, Customer shall immediately cease transmission. HNS shall have the right, but not the obligation, to inspect any Customer-Provided Facilities together with associated facilities and equipment used by Customer, or by a third party under the authority of Customer, to transmit to any of the Customer's Transponder Capacity. HNS will use all reasonable efforts to schedule inspections to minimize the disruption of the operation of the facilities, and Customer shall make the facilities available for inspection at all reasonable times. Customer shall, upon HNS’ request, provide measured proof that any transmissions from Customer-Provided Facilities meet or exceed applicable requirements established by Governmental Communications Authorities .

 

6.    Cooperation . Customer shall cooperate with HNS in order to facilitate HNS’ provision of Customer’s Transponder Capacity on a continuous basis. For example (and by way of illustration and not limitation), Customer shall cooperate with HNS in trouble determination and fault isolation activities. Customer shall furnish HNS with such relevant information as HNS may reasonably require in order to provide and protect the Transponder(s) used in providing Customer’s Transponder Capacity. Customer shall promptly notify HNS when it believes that a Transponder Capacity Failure has occurred.

 

7.    Additional Usage Representations and Obligations . Customer has not been convicted for the criminal violation of, and has not been found by any governmental authority with appropriate jurisdiction (collectively, the “Governmental Authority”) to have violated any Laws concerning illegal or obscene program material or the transmission thereof (the “Obscenity Laws”), and Customer is not aware of any pending investigation (including, without limitation, a grand jury investigation) involving Customer’s programming or any pending proceeding against Customer for the violation of any Obscenity Laws. Customer will notify HNS as soon as it receives notification of, or becomes aware of, any pending investigation by any Governmental Authority, or any pending criminal proceeding against Customer, which investigation or proceeding concerns transmissions by Customer potentially in violation of any Law relating to the Use of Customer’s Transponder Capacity, including without limitation, Obscenity Laws. Customer will not Use, or allow the Use of, Customer’s Transponder Capacity for direct distribution of programming to television viewers unless the programming is scrambled such that television viewers can receive the programming only through the use of a decoder authorized by Customer or Customer’s authorized agent.

 

 
 

 

VI. OUTAGES

 

1. Failure of Capacity . If, after the commencement date of services hereunder, the Customer’s Transponder Capacity fails to meet the applicable specifications described in Attachment A for (a) a cumulative period of ten (10) hours during any consecutive 30-day period, or (b) any period of time following a catastrophic event under circumstances that make it clearly ascertainable that a failure described in clause (a) will occur, the Customer’s Transponder Capacity shall be deemed to have suffered a “Confirmed Failure,” unless such failure is the result of a Force Majeure event, in which event the consequences of such failure shall be governed under said Section. Any such failure(s) must be confirmed by HNS. If confirmed, the failure shall be measured as commencing from the later to occur of (i) Customer’s cessation of use of the affected Customer’s Transponder Capacity and (ii) notice from Customer to HNS of such failure. Any such failure shall be deemed to have ended upon the earlier to occur of (x) Customer’s resumption of use of the Customer’s Transponder Capacity and (y) notice by HNS to Customer that the affected Customer Transponder Capacity meets the applicable specifications.

 

In the event of a Confirmed Failure of Customer’s Transponder Capacity, HNS or the Satellite Operator shall, as soon as possible and to the extent technically feasible, employ certain redundant equipment units on the Satellite (“Spare Equipment”) on a first-needed, first-served basis as among Customer and other Transponder owners, customers, and users, including without limitation, those who may take service via capacity provided by the Satellite Operator, but who may have no direct right to access the capacity themselves, such as compressed digital channel customers (“Protected Parties”), as a substitute for an equipment unit which has failed; provided, that Customer acknowledges that the Satellite Operator may elect to use “Substitute Capacity” (as provided in below), if available, in lieu of using Spare Equipment.

 

Customer acknowledges and agrees that the Spare Equipment redundancy plan of the Satellite may require the Satellite Operator to reassign certain SSPAs or TWTAs, as applicable, among Transponders to make use of Spare Equipment. In circumstances in which a spare SSPA or TWTA is required to be employed for any Protected Party and to do so requires a change in the SSPA or TWTA assigned to Customer, Customer shall, on notice from HNS or the Satellite Operator, immediately cease transmitting to the Satellite to allow the SSPA or TWTA that is assigned to its Transponder to be reassigned and a different unit (that meets the Performance Specifications) to be put in its place.

 

If: (a) the Customer's Transponder Capacity suffers a Confirmed Failure, and (b) the Spare Equipment associated with such Customer's Transponder Capacity is not available or the use of such Spare Equipment would not correct the failure, and (c) equivalent capacity on another Transponder meeting the Performance Specifications (the "Substitute Capacity"), is available and its use by Customer in accordance with the Satellite Operator’s Operational Requirements is not predicted to interfere with the use or rights of others using the Satellite, in each case as determined by the Satellite Operator, acting in good faith, then the Satellite Operator, as soon as possible and to the extent technically feasible, employ such Substitute Capacity for the Customer's Transponder Capacity to satisfy HNS’ obligations under the MSA. In the event such Substitute Capacity for the failed Customer's Transponder Capacity is deployed, such Substitute Capacity shall be deemed to be Customer's Transponder Capacity for all purposes under the Amendment 3.

 

 
 

 

In the event that two or more Transponders on the Satellite simultaneously fail to meet their respective service or performance specifications and Spare Equipment or Substitute Capacity is available for some, but not all of the affected capacity, then the allocation of such Spare Equipment or Substitute Capacity shall be determined by the Satellite Operator. As used in this Section, the term "simultaneously" shall be deemed to mean occurring within a 24-hour period.

 

2.     Service Credits . In the event of a “Confirmed Outage” of Customer’s Transponder Capacity which Outage results in the Service Performance Standard specified in Section 3 of Attachment I not being met, Customer shall be entitled to Service Credits in accordance with the provisions of said Section 3.

 

3.     Replacement of Satellite and/or Communications Payload . During the Amendment No. 3 Term, HNS or the Satellite Operator may replace the Satellite or one of its communications payloads (e.g. Ku or C-band) with another satellite (a “Replacement Satellite”) at the same orbital location or at such other orbital location to which such Replacement Satellite may be authorized by the Governmental Communications Authorities to be located. In such circumstances, provided there is available substantially comparable substitute capacity on the Replacement Satellite, HNS shall provide such capacity to Customer (the “Replacement Capacity”) and Amendment 3 shall continue with such Replacement Capacity in lieu of the capacity originally provided for the remainder of its scheduled Capacity Term. The Replacement Capacity shall be deemed substantially comparable if the performance specifications for the Replacement Capacity (the “Replacement Performance Specifications”) have materially the same or better coverage and performance than the original specifications. HNS shall use all reasonable efforts to minimize any disruption of operations while the Customer’s Transponder Capacity is being transferred from one satellite to the other and Customer may be entitled to Service Credits during any period that the Customer’s Transponder Capacity may be unavailable from both satellites. In the event of a replacement of Customer’s Transponder Capacity under this Section, all references in this Annex to the Satellite, Customer’s Transponder Capacity shall thereafter be deemed to refer to the Replacement Satellite. In the event that the Replacement satellite cannot be served via an existing Hughes RFT at the Greisheim NOC, Hughes will provide pricing for an additional RFT if feasible or alternative teleport approach if available.

 

VII. INDEMNIFICATION

 

1. Indemnification .

 

a) Customer shall indemnify and save HNS and the Satellite Operator harmless from all claims, liabilities losses, costs or damages, including attorneys fees and costs, arising out of (i) Customer’s Use of Customer’s Transponder Capacity pursuant to this Attachment, including, without limitation, Customer’s violation or alleged violation of any of the Laws, including without limitation, the Obscenity Laws described in Section V or any actual or alleged libel, slander, obscenity, indecency, infringement of copyright, breach in the privacy or security of transmissions; (ii) Customer’s breach of its obligations under the MSA; (iii) any disputes between or among Customer and its transmission recipients or its programs or other transmission content suppliers; or (iv) any claims made under any warranty, representation or statement by Customer to any third party concerning Customer’s Transponder Capacity.

 

 
 

 

b) Customer shall pay all expenses (including attorneys’ fees) incurred by HNS in connection with all legal or other formal or informal proceedings concerning claims of third parties arising out of or related to the items specified in Section 1(a) above, and Customer shall satisfy all judgments, costs, or other awards which may be incurred by or rendered against HNS.

 

c) HNS shall have the sole right of defense in any legal or other formal or informal proceedings concerning claims of third parties, provided, however, that HNS shall conduct such defense with legal counsel reasonably satisfactory to Customer. Customer shall pay any settlement of any such claim or legal or other formal or informal proceeding, but Customer shall not agree to any settlement of any third party claim without first giving thirty (30) days prior written notice of the terms and conditions of such settlement to HNS and obtaining HNS’ written consent to such settlement.

 

2. Injunctive Relief

 

a) HNS’ Right to Injunctive Relief . In order to protect against or prevent violations of Laws or to protect the Satellite, other satellites and/or the transponder capacity or other Users (including HNS) from interference or other similar breaches of the MSA, HNS shall have the right immediately to obtain injunctive relief, including a temporary restraining order on notice of four (4) hours or more to Customer, to prevent Customer from breaching, or to compel Customer to perform, its obligations under the MSA.

 

b). Customer’s Right to Injunctive Relief . In order to protect Customer’s right to Use Customer’s Transponder Capacity from a wrongful termination by HNS pursuant to Section VIII below, or a wrongful denial by HNS of Customer’s access pursuant to Section VIII, Customer shall have the right immediately to seek injunctive relief, including a temporary restraining order on notice of four (4) hours or more to HNS, if any such wrongful termination or denial of access occurs.

 

4. Right to Deny Access .

 

a) If Customer violates any provision of this Attachment, and, following notice from HNS, continues to violate any such provision, then in addition to its other rights hereunder, HNS shall have the immediate right to prevent Customer from accessing Customer’s Transponder Capacity to the extent, but only to the extent necessary and for the time necessary to prevent such breach from continuing.

 

b) If, in connection with Using Customer’s Transponder Capacity,

 

 
 

 

i) Customer is convicted under any Obscenity Law or has been found by any Governmental Authority to have violated any such law;

 

ii) based on any Use of Customer’s Transponder Capacity by Customer, HNS is indicted or otherwise charged as a criminal defendant, or is convicted under any Obscenity law, or becomes the subject of a criminal proceeding or a governmental action seeking a fine, license revocation or other sanctions, or any Governmental Authority seeks a cease and desist or other similar order or filing;

 

iii) A Governmental Communications Authority has issued an order initiating a proceeding to revoke HNS or the Satellite Operator’s authorization to operate the Satellite;

 

iv) HNS obtains a court order pursuant to this Section, or a court or Governmental Authority of competent jurisdiction orders HNS to deny access to user or orders user to cease transmission; or

 

v) HNS receives notice (the “Illegal Programming Notice”), written or oral, from a Governmental Authority that such authority considers Customer and/or any other user’s programming to be in violation of Obscenity Laws (the “Illegal Programming”), and that if HNS does not cease transmitting such Illegal Programming, then HNS and/or its parent or affiliates and/or any of their executives will be indicted or otherwise charged as a criminal defendant, will become the subject of a criminal proceeding or a governmental action seeking a fine, license revocation or other sanctions, or that such Governmental Authority will seek a cease and desist or other similar order or filing (with HNS being obligated, to the extent permitted by law, to provide Customer with a copy of such Illegal Programming Notice, if written, or with other verification, including the details thereof, if oral);

 

then, upon written notice from HNS to Customer (the “Denial of Access Notice”), which may be oral directed to Customer, Customer shall cease using Customer’s Transponder Capacity, immediately, in the case of a denial of access pursuant to subparagraphs (i), (ii), (iii) or (iv) above, or within 24 hours following receipt of such notice, in the case of a denial of access pursuant to subparagraph (v), above; and if user does not voluntarily cease using such capacity at the appropriate time, then HNS shall have the right to take such steps as they may deem necessary to prevent user from accessing Customer’s Transponder Capacity. Provided, however, that if user has more than one programming service, then the denial of access by HNS shall apply only to the Transponder used to provide the illegal Programming Service; and provided further, however, that if, upon receipt of the Denial of access Notice from HNS, user does not immediately cease transmission of such Illegal Programming Service, then HNS shall have the right to take such steps as they deem necessary to prevent user from accessing the Transponder used to transmit such Illegal Programming Service (and if, thereafter, Customer transmits such Illegal Programming Service using any of Customer’s Transponder Capacity, then HNS shall have the immediate right, without further notification, to take such steps as HNS deems necessary to prevent Customer from accessing any of Customer’s Transponder Capacity). As used herein, “user” shall mean Customer and any person to whom Customer transfers all or part of its right to Use Customer’s Transponder Capacity, including without limitation, a sublessee, licensee or assignee.

 

 
 

 

VIII. TERMINATION OF SPACE SEGMENT SERVICES

 

The provision of in Amendment 3 relative to Space Segment Services shall terminate automatically as speicifed in said Amendment, unless terminated earlier pursuant to one of the following paragraphs:

 

1.   Events of Customer Default . In the event that an Event of Customer Default, as defined in the MSA, occurs, then HNS may, by giving written notice thereof to Customer, terminate the provisions of Amendment 3 relative to Space Segment Services as of a date specified in such notice of termination. In the event that HNS terminates Amendment 3 for any such reason, in addition to all of HNS’ other remedies at law or in equity, HNS may declare immediately due and payable a “Termination Fee” equal to the monthly fees remaining unpaid over the balance of the term of this Amendment 3.

 

Further, in such event, HNS shall be entitled to use the Customer's Transponder Capacity for whatever purpose HNS sees fit and Customer shall not be entitled to any equitable relief with respect to such use or any refund of amounts paid to HNS. Customer acknowledges that HNS’ rights set forth in this section: (i) are reasonable under all of the circumstances existing as of this date; (ii) constitute liquidated damages for the loss of a bargain; and (iii) do not constitute a penalty.

 

2.  Termination for Transponder Capacity Failure . If a Transponder Capacity Failure continues uninterrupted for more than ten (10) consecutive days, or such other period as is mutually agreed upon in writing by HNS and Customer, then the provisions of the MSA relative to Space Segment may be immediately terminated by either party by written notice to the other delivered on or before the thirtieth day after the calendar day on which the Transponder Capacity Failure began. If so terminated, HNS shall refund to Customer a prorated amount of any prepaid charges for the terminated transponder capacity and HNS shall have no other or further liability to Customer.

 

3.   Termination for Removal of Satellite . If, during the Term, the Satellite Operator or HNS, in their sole discretion, (1) determines that it is necessary to remove the Satellite from operation and (2) does not elect to provide equivalent replacement capacity to Customer at the same orbital slot as was previously occupied by the Satellite, then it is understood and agreed that upon removing the Satellite from its assigned orbital location, HNS shall have no further obligations to Customer relative to the provision Space Segment under in respect of that Satellite under the MSA ; provided, however, that until the Satellite is removed, HNS shall continue to make available Customer’s Transponder Capacity as provided for herein. HNS will, to the extent possible, provide Customer with ninety (90) days notice prior to the disposition of the Satellite. Upon any termination of the MSA pursuant to this Section, HNS shall refund to Customer a prorated amount of any prepaid charges for the terminated Transponder Capacity. Except as set forth in the preceding sentence, HNS shall have no liability to Customer upon such termination.

 

 
 

 

ATTACHMENT I

STATEMENT OF WORK

 

1.0 SCOPE OF WORK

 

In accordance with the terms hereof, HNS will provide services in Europe which required to provide full duplex point-to-multipoint satellite communication system using a dedicated HX Network (“Network”) consisting of certain network operations center (“NOC”) equipment, and Customer supplied and Customer operated integrated aeronautical terminal units. The Equipment associated with the Network is being provided in accordance with the purchase order previously issued by Customer for the European NOC Equipment.

 

The program effort associated with the maintenance and operation of the Network will be carried out as follows:

 

HNS will provide services including;

 

1) HNS North America will be the prime contractor for and Row44 point of contact for all program management services, including network engineering and implementation of Equipment and Services.

 

2) Provision and operation of Row44 dedicated inroute Ku-band space segment (the “Space Segment”) per Customer’s instructions subject to space segment availability. Provision and operation of Row44 outroute capacity per Customer’s instructions.

 

3) * **

 

4) Read-only access to monthly Service reports to provide information regarding the Services including service NOC outages during the prior calendar month, and planned activities for the upcoming calendar month.

 

5) ***

 

2.0 DELIVERABLE SERVICES

 

This section sets forth the services to be provided under this Agreement.

 

2.1 NOC OPERATIONS AND MAINTENANCE

 

HNS will provide the NOC Operations and Maintenance Services as described in Attachments II and III. 

 

 

*** Confidential treatment requested.

 

 
 

 

2.2 SPACE SEGMENT

 

Dedicated transponder capacity to support the Customer's dedicated outroute and inroutes will be procured by HNS on the ***. The satellite is configured with redundant traveling wave tube amplifiers (“TWTAs”), which provide inherent backup capability in the event of a primary TWTA failure.

 

2.3 REPORTS AND OTHER INFORMATION; REMOTE ACCESS

 

HNS will provide Customer with read-only access to the following reports via a web-based application in HNS standard formats:

 

1. Chronological list of trouble reports summarizing NOC related or customer reported problem(s) and resolution(s) of problems with timed duration of outage. This report will also provide information on HNS’ performance in resolving the problem in accordance with the applicable severity level.

 

2. Network service availability is reported on the Network Outage reports for network outage conditions and/or Operations Trouble Tickets.

 

3. Other reports as may be made available in accordance with Attachment II.

 

Customer may request other reports and information, which, upon mutual agreement, HNS will provide for an additional fee.

 

2.4 HNS PROGRAM TASKS

 

HNS has the overall responsibility for implementation of Customer’s dedicated European Network as described in this Amendment. This section details some of the specific tasks that will be the responsibility of HNS during the accomplishment of this work. Section 4.0 notes Customer's responsibilities related to the network implementation.

 

2.4.1 Program Management Team

 

In order to ensure that work under the Agreement proceeds at the planned rate, HNS’ program management team will consist of experienced professionals in the various areas of expertise required. This team will be headed by a Program Manager to coordinate all HNS resources required for the successful conduct of the work, and to ensure that required coordination takes place between HNS and Customer personnel.

 

Tasks to be performed by the program management team include:

  


*** Confidential treatment requested.

 

 
 

  

· Schedules
· Status reporting
· Staffing
· Subcontractor interface (if applicable)
· Space segment technical support
· System configuration
· Documentation preparation

   

2.4.2 Progress Reports and Status Reviews

 

A program status review meeting will be held weekly during the network implementation, and monthly thereafter, unless otherwise agreed by the parties, to review the most recent progress reports and discuss any particular program problem areas. The scheduling of meetings will be by mutual agreement. HNS will prepare and action item list and trouble Trouble Ticket status to track project status.

 

I

3.0 SERVICE PERFORMANCE

 

The following provisions shall apply to the European HX NOC equipment operated by HNS.

 

3.1 Service Performance Standard

 

HNS will use commercially reasonable efforts to make the Services available (“Service Availability”) * ** of the Scheduled Service Time (as defined in Paragraph 3.3 below) for each calendar month of the Term, such that the aggregate number of minutes of Service interruption for the HX NOC for a given calendar month of the Term shall not exceed *** of the aggregate number of minutes of Scheduled Service Time.

 

3.2 Service Performance Conditions

 

HNS will use commercially reasonable efforts to provide the Services in accordance with the Service performance standard set forth in Paragraph 3.1 above. In the event that HNS fails to meet such Service performance standard in any calendar month, as Customer's sole and exclusive remedy, HNS will pay Customer liquidated damages calculated in accordance with Paragraph 3.4 below. A failure to meet the Service performance standard does not constitute a Service interruption for purposes of calculating liquidated damages under this section when due to any of the following causes:

 

A. The failure or nonperformance of any Customer-provided facilities or equipment, or third-party facilities or equipment acquired by HNS on behalf of Customer, including any out-of-tolerance earth station conditions not caused by HNS

 

 

*** Confidential treatment requested.

 

 
 

 

B. The fault, negligent act, or negligent failure to act of Customer, its employees, agents, or invitees.

 

C. Preventive maintenance and/or other scheduled Service outages (when done pursuant to a preventive maintenance schedule provided by HNS, and reasonably agreed by Customer) as may be necessary to maintain the Services in satisfactory operating condition, to provide additional system capacity, to protect the overall performance of the Services, to protect the overall performance of the Services, or any other such or for any other reasonable cause. For the avoidance of doubt, preventive maintenance schedules in respect of Customer’s own NOC equipment shall be mutually agreed to occur outside of each of Customer’s typical network usage hours.

 

D. An event of Force Majeure suspending HNS' performance obligations in accordance the applicable terms of this Agreement.

 

E. The unavailability of Services to Customer, pursuant to orders of applicable Governmental Communications authorities, during emergency conditions such as major natural or man-made disasters and emergencies involving national defense and security.

 

3.3 Service Interruption

 

The Services shall be available on a 24-hour per day, 365-days per year basis (the “Scheduled Service Time”). The duration of a Service interruption is measured by the number of hours during the Scheduled Service Time that elapse from the time that a trouble ticket is opened to the time that HNS notifies Customer that the Services have been restored. Customer’s availability for a given calendar month shall be a percentage equal to 100% minus a fraction, the numerator of which shall be equal to the aggregate number of minutes of interruption for Customer's HX NOC Equipment, and the denominator of which shall be equal to the total number of minutes of scheduled Service time for such month.

 

3.4 Service Interruption Liquidated Damages

 

* **

 

4.0 CUSTOMER RESPONSIBILITIES

 

4.1 PROGRAM MANAGER

 

Customer will designate a primary point of contact for overall coordination of Customer related activities. 

 

 

*** Confidential treatment requested. 

 

 
 

 

4.2 LICENSES

 

Except for the licenses associated with HNS’s NOC operations, Customer will be responsible for obtaining all necessary licenses for operating the network, including licenses for governmental bodies having responsibilities for communications and air travel . HNS, however, will provide Customer reasonable support in applying for such licenses. Customer shall remain responsible for actually filing the applications and holding and maintaining the licenses.

 

4.3 CUSTOMER SUPPLIED EQUIPMENT

 

All Customer-owned Equipment (with the exception of the HX NOC) located at the NOC shall be operated by the Customer including monitoring, control, trouble isolation and resolution. HNS’ services pertaining to this Customer-owned equipment shall be limited to installation or replacement of Customer supplied equipment upon request by the Customer.

 

Customer supplied equipment necessary for HNS to perform system integration and testing shall be in good working order at the time of the system integration.

 

4.4         CUSTOMER REMOTE EQUIPMENT INSTALLATION, MAINTENANCE AND TROUBLESHOOTING RESPONSIBILITIES

 

Except for HNS remotely servicing the remote equipment, such as, resetting such equipment, uploading software to such equipment as requested by Customer, or making mutually agreed configuration changes to the remote equipment Customer is responsible for all remote equipment installation, maintenance and troubleshooting and field service issues.

 

 
 

 

ATTACHMENT II

 

NOC OPERATIONS, MAINTENANCE AND TECHNICAL SUPPORT SERVICES

 

1. General

 

This Attachment II defines the work to be performed by HNS (HNS) to provide European HX NOC operations, maintenance, and technical support services.

 

European HX NOC operations and maintenance services consists of operating and maintaining the Customer’s dedicated HX NOC facilities installed at the Greisheim NOC.

 

2. Support Services

 

* **

 

Technical systems and software support will be provided for operational problems by HNS. Technical support services are those services, related to the isolation and resolution of problems occurring within the Hughes supplied equipment and software. Customer is responsible for isolation and troubleshooting of aeronautical terminal problems, except that HNS will provide status monitoring of the remote terminals. The operational status of each remote terminal (active or inactive) will be accessible to Customer via the network management system.

 

The various technical support services that will be provided to Customer as part of this Maintenance Agreement are described below.

· NOC and system level support 24 hours per day, seven days per week. In the event of a NOC operational issue, HNS will open a Customer Case Record (CCR) and notify the customer of the event. Periodic updates will be made to the ticket which track major problem isolation steps and results.
· Customer shall be provided with a URL and a Username/Password that will enable them to read their CCRs via the Internet. This access will also show the last 60 days of activities (tickets opened/closed) and provides a means of commenting back to the assigned support engineer or HNS management.
· HNS will provide Customer Service Bulletins (CSBs) periodically to notify Customer of problems that have been reported with the system, the current correction status of these problems and/or operational procedures to provide a work around to the problems. CSBs also provide additional information, not available in the current system documentation.
· Upgrades to the current version of software within the Customer’s Hub equipment will be made as necessary to incorporate bug fixes. Update schedules will be mutually agreed with the Customer.
· Customer access to the HX network Vision system for terminal related monitoring, maintenance and diagnostic functions such as: terminal commissioning support, display of terminal status, display of terminal link statistics, and terminal reset commands. Remote terminal software downloads or configuration changes will be the responsibility of HNS.

 

 

*** Confidential treatment requested.

 

 
 

 

· HNS will provide Customer access to the HX network management system for the monitoring of alarm conditions with respect to HNS HX-NOC (not the NOC components that are on the shared platform) equipment. Any NOC related software downloads or configuration changes will be the responsibility of HNS.

 

3. Problem Severity Levels

 

When a CCR is opened a severity level is assigned based upon the impact or potential impact of the problem. The various severity level designations are described below.

 

Severity 1: Network down
Severity 2: Problem that will cause a severity 1 circumstance if not corrected
Severity 3: Recurring operational problem
Severity 4: Technical questions / future release request / software upgrades
Severity 5: Single event problem with minor impact
Severity 6: Currently used for advance warranty issues if applicable
Severity 7: Problems that will be resolved in a future software release.

 

The specific severity level definitions, actions, and escalation timeframes for critical problems (severity level 1 through 3 are described below.

 

3.1 Severity Level 1 - Network down

 

A network may be declared down if either:

 

50% or more of the remote sites are not communicating

50% or more of the remote connections fail.

 

The goal is to have the network restored within one (1) hour of the event. The following are the escalations for Severity Level 1:

 

 
 

 

Level  

Time CCR

Opened

  Responsibility   Action
             
1   0 hr   Network Operator   Open CCR, document problem, notify section supervisor.
2   0 hr   Network Engineer   Work to resolve the problem.
3   0 hr   Section Manager   Support network engineer and obtain additional resources as required.  Inform network engineering management and program manager as appropriate.
4   1 hr   Network Engineering Director, Program Manager   Network engineering director determines if development engineering involvement is necessary and reviews the situation with the program manager. Program manager reviews the situation with the Customer.
5   1 hr   Sr. Director of Network Engineering   The senior director examines the situation and provides additional resources if required,   estimates the time to resolution,  and escalates to senior management.
6   8 hrs    Senior Vice President   SVP examines the actions taken, determines if additional resources are required, reviews the status and next steps with the Customer’s executives.
7 & 8   20 hrs   QA War Room Exec VP   QA war room reviews the overall actions, determines if additional actions are required, advises the executive vp and the OOTC of the status, and determines whether process changes are required.         

 

2.2        Severity Level 2 - Condition exists that has a major negative impact on the customer or if left unchecked could result in a severity level 1 event

 

Examples of this are:

Loss of redundancy

Continuous connectivity problems

Failure of a previously implemented protocol or application.

Failure of a newly applied patch or fix to an existing problem.

 

The goal is to address the problem within 4 hours with a work-around, patch, parts replacement or an alternative plan that has been agreed with by the Customer. If the original problem is resolved with a temporary fix the original CCR is to be closed and a second CCR opened at a lower severity level to track the ongoing problem resolution.

 

 
 

 

Level  

Time CCR

Opened

  Responsibility   Action
1   0 hr   Network Operator   Open CCR, document problem, notify section supervisor.
2   1 hr   Network Engineer   Work with Customer to resolve the problem.
3   4 hr   Section Manager   Support network engineer and obtain additional resources as required.  Inform network engineering management and the program manager as appropriate.
4   6 hr   Network Engineering Director, Program Manager   Network engineering director determines if development Engineering involvement is necessary and reviews the situation with the program manager.  The program manager reviews the situation with the Customer.
5   12 hr   Sr. Director of Network Engineering   The Sr Director examines the situation, provides additional resources if required, estimates the time to resolution and escalates to senior management.
6   24 hrs   Senior Vice President   SVP examines the actions taken, determines if additional resources are required, and advises Customer executives as to status and next steps.
7 & 8   48 hrs   QA War Room, Executive VP   QA war room determines if additional actions are required, advises the executive vp and the OOTC of the status, and determines whether process changes are required.

 

2.3 Severity Level 3 - Reoccurring operational issue with moderate impact

 

Examples are daily events including the following:

a) Hub component resets
b) Remote resets due to HNS system issue
c) Improper implementation of a new protocol or feature

 

 
 

 

The goal is to address the condition within 10 Days with either a patch or a final fix acceptable to Customer. If the solution is temporary, the original CCR will be closed and a new severity level 7 CCR will be opened to track planning and implementation of the permanent solution.

 

Level  

Time CCR

Opened

  Responsibility   Action
1   0 hr   Network Operator   Open CCR, document problem, and notify section supervisor.
2   8 hr   Network Engineer   Work with Customer to resolve the problem.
3   4 d   Section Manager   Obtain additional resources as required, inform network engineering management and program manager as appropriate.
4   5 d   Network Engineering Director   Network engineering director reviews the situation with development engineering and the program manager if appropriate.  Program manager reviews the situation with the Customer.
5   6 d   Sr. Director of Operations Support   The senior director examines the situation and determines if additional resources are required, estimates the time to resolution, and escalates to senior management.
6   10 d   Senior Vice President   SVP examines the actions taken, determines if additional resources are required, and advises Customer’s executives of status and next steps.

 

 
 

 

4.0 SERVICE LIMITATIONS

 

The Technical Support Services are offered with the limitations outlined in this section.

 

Technical Support Services do not include support and service for the following:

 

1) Service and repair of software, equipment accessories, attachments, or any other devices not specifically purchased by Customer under the Master Purchase Agreement.

 

2) Servicing Equipment and Software that has been changed, modified, or altered other than by means of approved upgrades and configuration changes.

 

4.0 CUSTOMER RESPONSIBILITIES

 

4.1 FAULT ISOLATION AND PROBLEM DETERMINATION

 

Customer shall maintain a technical staff with the capability of performing airborne terminal fault isolation and problem determination. Further, the Customer's trained staff shall be readily accessible by phone during periods when the Customer requests Technical Support. The Customer's staff shall assist HNS personnel in system troubleshooting, fault isolation, and problem determination to the extent requested.

 

4.2 SPARES

 

Customer shall purchase and maintain the HNS recommended complement of spares

 

 
 

 

ATTACHMENT III

 

SERVICE ORDER, PRICE SCHEDULE AND PAYMENT TERMS

 

1.       INITIAL SERVICE ORDER

 

1.1 NOC Operations, Technical Support and Maintenance

 

* **

 

1.2 Remote Services

 

***

 

1.3 Backhaul Services

 

***

 

1.4 Space Segment

 

***

 

2.       OPTIONAL SERVICES

 

A. Customer Furnished Equipment Expansion Services

 

***

 

3. PAYMENT TERMS

 

Program Management, Backhaul Services, NOC Operations, Maintenance and Technical Support Services will be invoiced one month in advance. Invoices for NOC Operations, Maintenance and Technical Support charges will commence on the date of activation of the NOC Equipment. Invoices for backhaul services will start on the date such services are activated. The NOC Operations and Maintenance Charges described in Section 1.1 above will commence on December 1, 2010.

 

Except as otherwise provided in this Section, payment will be due net thirty (30) days from date of invoice.

 

Except for Space Segment Services for the month of December, 2010 (which will be invoiced and paid for at the same time as the January, 2011 Services), Space Segment Services will be invoiced monthly in advance. Invoices for space segment will be due and payable in accordance with the schedule set forth below. 

 

 

*** Confidential treatment requested.

 

 
 

 

***

 

In the event that Customer requires that the Space Segment described above be provided by HNS for a period beyond December 31, 2011, Customer will so advise HNS by a date not later than June 30, 2011, after which point, Customer and HNS will exercise their respective best efforts to reach agreement on the payment terms and prices for any such capacity after December 31, 2011.

 


*** Confidential treatment requested.

 

 
 

 

AMENDMENT NO. 4 TO MASTER SERVICES AGREEMENT

 

This AMENDMENT No. 4 (the “Amendment” ) to Master Services Agreement is entered into November ____, 2010 (the “Amendment Effective Date” ) by and between Hughes Network Systems, LLC ( “HNS” ) located at 11717 Exploration Lane, Germantown MD 20876, and Row 44, Inc. ( “Row 44” or “Customer” ) located at 31280 Oak Crest Drive, Suite #5, Westlake Village, CA 91361

 

Whereas , Row 44 and HNS entered into a Master Services Agreement on or about December 28, 2007 (hereafter referred to as the “MSA”) which agreement has been heretofore amended on two prior occasions; and

 

Whereas, Row 44 now desires to purchase and HNS desires to sell, certain additional satellite capacity in North America; and

 

WHEREAS , the parties now desire to amend the terms of the MSA to cover the provision and purchase of the additional satellite capacity herein described.

.

Now therefore , for and in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Row 44 and HNS hereby agree as follows:

 

1.          ADDITIONAL CAPACITY

 

 Commencing November 23, 2010, the amount of satellite capacity to be provided by HNS during the Term of the Agreement will be increased to the levels described in the table below:

* **

 

2.         NOC OPERATIONS CHARGE

***

 

 

*** Confidential treatment requested.

 

 
 

 

3.          PAYMENT SCHEDULE

 

As previously agreed by the parties, Row44 will be required to make payments for each of the charges described above on before the end of the last day of the month prior to the month for which services are to provided.

 

In the event that any payment is not received by the due date, HNS may, at its option, immediately terminate services as of the first day of the next following month. By way of example, in the event that the July 2011 payment is not made by the end of the day on June 30, 2011, HNS may terminate or suspend service on July 1, 2011.

 

Should HNS terminate service, HNS will terminate Row44 related space segment agreements with * ** and HNS makes no representation about its ability to re-secure space segment or restart services at a later date.

 

Further, the table below sets forth a schedule for the payment of the monthly NOC Operations and Maintenance charges, along with the monthly satellite capacity charges, as modified by this Amendment.

 

***

 

4.    OTHER TERMS

 

Except as amended herein, all terms and conditions of the MSA as amended shall remain in full force and effect. 

 

 

*** Confidential treatment requested.

 

 
 

 

IN WITNESS WHEREOF , the Parties hereto have caused this Amendment No. 3 to be executed as of the Amendment Effective Date by and through their duly authorized representatives.

 

Hughes Network Systems, LLC   Row 44, Inc.
By: /s/ Philip K. O’Brien   By: /s/ John Guidon
Title: V.P. Legal   Title: C.E.O.
Date: 11/18/2010   Date: 11/17/2010

 

 
 

 

AMENDMENT NO. 5 TO MASTER SERVICES AGREEMENT

 

This AMENDMENT No. 5 (the “Amendment” ) to Master Services Agreement is entered into January ____, 2011 (the “Amendment Effective Date” ) by and between Hughes Network Systems, LLC ( “HNS” ) located at 11717 Exploration Lane, Germantown MD 20876, and Row 44, Inc. ( “Row 44” or “Customer” ) located at 31280 Oak Crest Drive, Suite #5, Westlake Village, CA 91361

 

Whereas , Row 44 and HNS entered into a Master Services Agreement on or about December 28, 2007 (hereafter referred to as the “MSA”) which agreement has been heretofore amended on a number of prior occasions; and

 

Whereas, Row 44 now desires to purchase and HNS desires to sell, certain additional satellite capacity in North America; and

 

WHEREAS , the parties now desire to amend the terms of the MSA to cover the provision and purchase of the additional satellite capacity herein described.

.

Now therefore , for and in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Row 44 and HNS hereby agree as follows:

 

1.          ADDITIONAL CAPACITY

 

Commencing January 24, 2011, the amount of * ** to be provided by HNS during the Term of the Agreement will be increased to the level described in the table below:

 

***

 

III. Payments for Services

 

Row44 will be required to make payments for the charges listed above before the end of the last day of the month prior to the month for which services are to be provided.

 

In the event that any payment is not received by the due date, HNS may, at its option, immediately terminate services as of the first day of the next following month. ***

 

Should HNS terminate service, HNS will terminate Row44 related space segment agreements with * ** and HNS makes no representation about its ability to re-secure space segment or restart services at a later date.

 

IV. Payment Schedule

 

***

 

4.     OTHER TERMS

 

Except as amended herein, all terms and conditions of the MSA as amended shall remain in full force and effect.

 

 

*** Confidential treatment requested.

 

 
 

 

IN WITNESS WHEREOF , the Parties hereto have caused this Amendment No. 3 to be executed as of the Amendment Effective Date by and through their duly authorized representatives.

 

Hughes Network Systems, LLC   Row 44, Inc.
     
By: /s/ Philip K. O’Brien   By: /s/ John LaValle
         
Title: V.P. Legal   Title: COO & CFO
         
Date: 01/15/2011   Date: 01/14/2011

 

 
 

 

AMENDMENT NO. 6 TO MASTER SERVICES AGREEMENT

 

This AMENDMENT No. 6 (the “Amendment” ) to Master Services Agreement is entered into January ____, 2011 (the “Amendment Effective Date” ) by and between Hughes Network Systems, LLC ( “HNS” ) located at 11717 Exploration Lane, Germantown MD 20876, and Row 44, Inc. ( “Row 44” or “Customer” ) located at 31280 Oak Crest Drive, Suite #5, Westlake Village, CA 91361

 

Whereas , Row 44 and HNS entered into a Master Services Agreement on or about December 28, 2007 (hereafter referred to as the “MSA”) which agreement has been heretofore amended on a number of prior occasions; and

 

Whereas, Row 44 now desires to purchase and HNS desires to sell, certain additional satellite capacity in North America; and

 

WHEREAS , the parties now desire to amend the terms of the MSA to cover the provision and purchase of the additional satellite capacity herein described.

.

Now therefore , for and in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Row 44 and HNS hereby agree as follows:

 

1.           ADDITIONAL CAPACITY

 

Commencing April 1, 2011, the amount of satellite capacity to be provided by HNS on both the * ** and the *** will be increased by *** , to the price levels listed below. For the sake of clarity, the table below also include the pricing and technical parameters for *** .

 

***

 

III. Payments for Services

 

Row44 will be required to make payments for the charges listed above before the end of the last day of the month prior to the month for which services are to be provided.

 

In the event that any payment is not received by the due date, HNS may, at its option, immediately terminate services as of the first day of the next following month. *** .

 

Should HNS terminate service, HNS will terminate Row44 related space segment agreements with *** and HNS makes no representation about its ability to re-secure space segment or restart services at a later date.

 

4.     OTHER TERMS

 

Except as amended herein, all terms and conditions of the MSA as amended shall remain in full force and effect. 

 

 

*** Confidential treatment requested.

 

 
 

 

 

IN WITNESS WHEREOF , the Parties hereto have caused this Amendment No. 3 to be executed as of the Amendment Effective Date by and through their duly authorized representatives.

 

Hughes Network Systems, LLC   Row 44, Inc.
     
By: /s/ Philip K. O’Brien   By: /s/ John LaValle
         
Title: V.P. Legal   Title: COO & CFO
         
Date: 03/30/2011   Date: 03/30/2011

 

 
 

 

AMENDMENT NO. 7 TO MASTER SERVICES AGREEMENT

 

This AMENDMENT No. 7 (the “Amendment” ) to Master Services Agreement is entered into July ____, 2011 (the “Amendment Effective Date” ) by and between Hughes Network Systems, LLC ( “HNS” ) located at 11717 Exploration Lane, Germantown MD 20876, and Row 44, Inc. ( “Row 44” or “Customer” ) located at 4353 Park Terrace Drive , Westlake Village, CA 91361

 

Whereas , Row 44 and HNS entered into a Master Services Agreement on or about December 28, 2007 (hereafter referred to as the “MSA”) which agreement has been heretofore amended on a number of prior occasions; and

 

WHEREAS, Amendment No. 3 to the MSA provided, inter alia , that HNS would sell and Customer would purchase certain space segment capacity on the * ** ; and

 

Whereas, Row 44 now desires to purchase and HNS desires to sell, certain additional space segment capacity on the *** , pursuant to the terms hereof; and

 

WHEREAS , the parties now desire to amend the terms of the MSA to cover the provision and purchase of such additional capacity.

.

Now therefore , for and in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Customer and HNS hereby agree as follows:

 

1.        TERM OF THIS AMENDMENT

 

The term of this Amendment (“Amendment No. 7 Term”) and the term of Services provided pursuant to Amendment No. 3 to the MSA and hereunder will commence January 1, 2012 and remain in effect for a period of 36 months through December 31, 2014, unless terminated earlier as provided herein.

 

2.     ADDITIONAL SATELLITE CAPACITY.

 

Commencing January 1, 2012, the amount of satellite capacity to be provided by HNS to Customer, and the price for such capacity will be as specified in Section 1 to Attachment A appended hereto. The payment and other terms relating to such capacity shall be as specified in Section 2 to Attachment A.

 

3.     OTHER TERMS

 

Except as amended herein, all terms and conditions of the MSA as amended shall remain in full force and effect.

 

IN WITNESS WHEREOF , the Parties hereto have caused this Amendment No. 7 to be executed as of the Amendment Effective Date by and through their duly authorized representatives.

 

 

*** Confidential treatment requested.

 

 
 

 

Hughes Network Systems, LLC   Row 44, Inc.
     
By: /s/ Philip K. O’Brien   By: /s/ John LaValle
         
Title: V.P. Legal   Title: COO & CFO
         
Date: 09/29/2011   Date: 07/29/2011

 

 
 

 

ATTACHMENT A

 

1. SPACE SEGMENT ON * **

 

Commencing on January 1, 2012, the amount of capacity to be provided by HNS to Customer will be as specified below:

 

***

 

2. PAY MENT and other TERMS

 

A. Space Segment Pricing:

 

***

 

B. Additional Terms:

 

1. 36 month term (expires on 12/31/14)

 

***

 

C. Year 1 Space Segment Payment Schedule

 

***

 

Year 2 Space Segment Payment Schedule

 

***

 

Year 3 Space Segment Payment Schedule

 

***

 

In the event that Customer determines that it is not able to utilize the space segment capacity specified above, Customer may provide HNS with written notice of such inability ***. Upon receipt of such notice from Customer, HNS will attempt to remarket the relevant unused capacity to third parties. Further, to the extent HNS is successful in such remarketing efforts, HNS will relieve Customer of its payment obligation hereunder. Customer acknowledges, however, if Customer does return any space segment capacity to HNS for remarketing, HNS makes no guarantee or representation that this capacity will be available later, should Customer’s requirements change.

 

***

 

 

*** Confidential treatment requested.

 

 
 

 

AMENDMENT NO. 8 TO MASTER SERVICES AGREEMENT

 

This AMENDMENT No. 8 (the “Amendment”) to Master Services Agreement is made effective August 3, 2011 (the “Amendment Effective Date”) by and between Hughes Network Systems, LLC (“HNS”) located at 11717 Exploration Lane, Germantown MD 20876, and Row 44, Inc. (“Row 44” or “Customer”) located at 4353 Park Terrace Drive Westlake Village, CA 91361

 

Whereas , Row 44 and HNS entered into a Master Services Agreement on or about December 28, 2007 (hereafter referred to as the “MSA”) which agreement has been heretofore amended on a number of prior occasions; and

 

Whereas, Row 44 now desires to purchase and HNS desires to sell, certain additional satellite capacity in North America; and

 

WHEREAS, the parties now desire to amend the terms of the MSA to cover the provision and purchase of the additional satellite capacity herein described.

 

.

 

Now therefore , for and in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Row 44 and HNS hereby agree as follows:

 

1.         ADDITIONAL CAPACITY

 

Commencing August 1, 2011, the amount of satellite capacity to be provided by HNS on both the * ** and the *** will be increased by *** , to the price levels listed below. For the sake of clarity, the table below also include the pricing and technical parameters for *** ,

 

***

 

Note: The values listed above for percent of Bandwidth may need to be slightly changed depending upon transponder power performance. 

 

III. Payments for Services

 

Row44 will be required to make payments for the charges listed above before the end of the last day of the month prior to the month for which services are to be provided.

 

In the event that any payment is not received by the due date, HNS may, at its option, immediately terminate services as of the first day of the next following month. ***

 

Should HNS terminate service, HNS will terminate Row44 related space segment agreements with * ** and HNS makes no representation about its ability to re-secure space segment or restart services at a later date.

 

 

*** Confidential treatment requested.

 

 
 

 

 

 

4.    OTHER TERMS

 

Except as amended herein, all terms and conditions of the MSA as amended shall remain in full force and effect.

 

IN WITNESS WHEREOF , the Parties hereto have caused this Amendment No. 8 to be executed as of the Amendment Effective Date by and through their duly authorized representatives.

 

Hughes Network Systems, LLC   Row 44, Inc.  
By: /s/ Philip K. O’Brien   By: /s/ John Guidon  
Title: V.P. Legal   Title: C.E.O.  
Date: 08/03/2011   Date: 08/03/2011  

 

 
 

 

AMENDMENT NO. 9 TO MASTER SERVICES AGREEMENT

 

This AMENDMENT No. 9 (the “Amendment”) to Master Services Agreement is entered into August ____, 2011 (the “Amendment Effective Date”) by and between Hughes Network Systems, LLC (“HNS”) located at 11717 Exploration Lane, Germantown MD 20876, and Row 44, Inc. (“Row 44” or “Customer”) located at 4353 Park Terrace Drive Westlake Village, CA 91361

 

Whereas , Row 44 and HNS entered into a Master Services Agreement on or about December 28, 2007 (hereafter referred to as the “MSA”) which agreement has been heretofore amended on a number of prior occasions; and

 

Whereas, Row 44 now desires to purchase and HNS desires to sell, certain additional satellite capacity in North America; and

 

WHEREAS , the parties now desire to amend the terms of the MSA to cover the provision and purchase of the additional satellite capacity herein described.

.

Now therefore , for and in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Row 44 and HNS hereby agree as follows:

 

1.          ADDITIONAL CAPACITY

 

Commencing September 19, 2011, the amount of outroute satellite capacity to be provided by HNS on * ** will be increased by *** . Commencing on September 29, 2011, the amount of satellite capacity to be provided by HNS on *** to the price levels listed below.

 

***

 

Note: The values listed above for percent of Bandwidth may need to be slightly changed depending upon transponder power performance. 

 

III.          Payments for Services

 

Row44 will be required to make payments for the charges listed above before the end of the last day of the month prior to the month for which services are to be provided.

 

The payment due September 30, 2011 will include the pro-rated services for the month of September plus the payment due for October services. The payment due September 30, 2011 is *** calculated as follows:

 

***

 

 

 

*** Confidential treatment requested.

 

 
 

 

In the event that any payment is not received by the due date, HNS may, at its option, immediately terminate services as of the first day of the next following month. ***

 

Should HNS terminate service, HNS will terminate Row44 related space segment agreements with *** and HNS makes no representation about its ability to re-secure space segment or restart services at a later date.

 

4.    OTHER TERMS

 

Except as amended herein, all terms and conditions of the MSA as amended shall remain in full force and effect.

 

IN WITNESS WHEREOF , the Parties hereto have caused this Amendment No. 8 to be executed as of the Amendment Effective Date by and through their duly authorized representatives.

 

Hughes Network Systems, LLC   Row 44, Inc.  
       
By: /s/ Philip K. O’Brien   By: /s/ John Guidon  
       
Title: V.P. Legal   Title: C.E.O.  
       
Date:     Date: 09/07/2011  

 

 
 

 

AMENDMENT #10 TO MASTER SERVICES AGREEMENT

 

This AMENDMENT No. 10 (the “Amendment”) to Master Services Agreement is entered into December ____, 2011 (the “Amendment Effective Date”) by and between Hughes Network Systems, LLC (“HNS”) located at 11717 Exploration Lane, Germantown MD 20876, and Row 44, Inc. (“Row 44” or “Customer”) located at 4353 Park Terrace Drive Westlake Village, CA 91361

 

Whereas , Row 44 and HNS entered into a Master Services Agreement on or about December 28, 2007 (hereafter referred to as the “MSA”) which agreement has been heretofore amended on a number of prior occasions; and

 

Whereas, Row 44 now desires to purchase and HNS desires to sell, certain additional satellite capacity in North America; and

 

WHEREAS , the parties now desire to amend the terms of the MSA to cover the provision and purchase of the additional satellite capacity herein described.

.

Now therefore , for and in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Row 44 and HNS hereby agree as follows:

 

1.          ADDITIONAL CAPACITY

 

Commencing December 9, 2011, the amount of satellite capacity to be provided by HNS on * ** will be increased by *** . In addition, the amount *** . This table also lists the amount of satellite capacity, on the other satellites utilized by Customer, as well as the applicable *** .

 

***

 

2.           PAYMENT FOR CAPACITY

 

Row44 will be required to make payments for the charges listed above before the end of the last day of the month prior to the month for which services are to be provided.

 

The payment due December 30, 2011 will include the pro-rated services increased capacity on *** plus the payment due for January services. Thus, the payment due December 30, 2011 is *** , calculated as follows:

 

***

 

In the event that any payment is not received by the due date, HNS may, at its option, immediately terminate services as of the first day of the next following month. * **

 

 

*** Confidential treatment requested.

  

 
 

 

Should HNS terminate service, HNS will terminate Row44 related space segment agreements with *** and HNS makes no representation about its ability to re-secure space segment or restart services at a later date.

 

3.    OTHER TERMS

 

Except as amended herein, all terms and conditions of the MSA as amended shall remain in full force and effect.

 

IN WITNESS WHEREOF , the Parties hereto have caused this Amendment No. 8 to be executed as of the Amendment Effective Date by and through their duly authorized representatives.

 

Hughes Network Systems, LLC   Row 44, Inc.  
       
By: /s/ Philip K. O’Brien   By: /s/ John LaValle  
         
Title: V.P. Legal   Title: COO & CFO  
         
Date: 12/19/2011   Date: 12/19/2011  

 

 

*** Confidential treatment requested.

 

 
 

 

AMENDMENT #11 TO MASTER SERVICES AGREEMENT

 

This AMENDMENT No. 11 (the “Amendment”) to Master Services Agreement is entered into January ____, 2012 (the “Amendment Effective Date”) by and between Hughes Network Systems, LLC (“HNS”) located at 11717 Exploration Lane, Germantown MD 20876, and Row 44, Inc. (“Row 44” or “Customer”) located at 4353 Park Terrace Drive Westlake Village, CA 91361

 

Whereas , Row 44 and HNS entered into a Master Services Agreement on or about December 28, 2007 (hereafter referred to as the “MSA”) which agreement has been heretofore amended on a number of prior occasions; and

 

Whereas, Row 44 now desires to purchase and HNS desires to sell, certain additional satellite capacity in North America; and

 

WHEREAS , the parties now desire to amend the terms of the MSA to cover the provision and purchase of the additional satellite capacity herein described.

.

Now therefore , for and in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Row 44 and HNS hereby agree as follows:

 

1.          ADDITIONAL CAPACITY

 

Commencing January 26, 2012, the amount of satellite capacity to be provided by HNS on the * ** will be increased to provide *** . In addition, commencing February 21, 2012, the amount of satellite capacity to be provided by HNS on *** will be increased to provide *** and *** . Finally, commencing March 20, 2012, the amount of satellite capacity to be provided by HNS on *** will be increased to provide *** . The table below sets forth the amount of capacity to be provided on *** once all the additional capacity has been provided. This table also lists the applicable *** .

 

***

 

 

*** Confidential treatment requested.

 

 
 

 

2.           PAYMENT FOR CAPACITY

 

Row44 will be required to make payments for the charges listed above before the end of the last day of the month prior to the month for which services are to be provided.

 

The payment due January 31, 2012 will include the pro-rated services increased capacity on * ** plus the payment due for February services. Thus, the payment due January 31, 2012 is *** , calculated as follows:

 

***

 

The payment due February 29, 2012 will include the pro-rated services increased capacity on *** plus the payment due for March services. Thus, the payment due February 29, 2012 is *** , calculated as follows:

 

***

  

The payment due March 31, 2012 will include the pro-rated services increased capacity on *** plus the payment due for April services. Thus, the payment due March 31, 2012 is *** , calculated as follows:

 

***

  

In the event that any payment is not received by the due date, HNS may, at its option, immediately terminate services as of the first day of the next following month.

 

Should HNS terminate service, HNS will terminate Row44 related space segment agreements with *** and HNS makes no representation about its ability to re-secure space segment or restart services at a later date.

 

 

 

*** Confidential treatment requested.

 

 
 

 

3.           OTHER TERMS

 

Except as amended herein, all terms and conditions of the MSA as amended shall remain in full force and effect.

 

IN WITNESS WHEREOF , the Parties hereto have caused this Amendment No. 11 to be executed as of the Amendment Effective Date by and through their duly authorized representatives.

 

Hughes Network Systems, LLC   Row 44, Inc.  
       
By: /s/ Philip K. O’Brien   By: /s/ John LaValle  
       
Title: V.P. Legal   Title: COO & CFO  
       
Date: 01/23/2012   Date: 01/20/2012  

 

 
 

 

AMENDMENT #12 TO MASTER SERVICES AGREEMENT

 

This AMENDMENT No. 12 (the “Amendment”) to Master Services Agreement is entered into June _____, 2012 (the “Amendment Effective Date”) by and between Hughes Network Systems, LLC (“HNS”) located at 11717 Exploration Lane, Germantown MD 20876, and Row 44, Inc. (“Row 44” or “Customer”) located at 4353 Park Terrace Drive Westlake Village, CA 91361

 

Whereas , Row 44 and HNS entered into a Master Services Agreement on or about December 28, 2007 (hereafter referred to as the “MSA”) which agreement has been heretofore amended on a number of prior occasions; and

 

Whereas, Row 44 now desires to purchase and HNS desires to sell, certain additional satellite capacity in North America; and

 

* **

 

***

 

WHEREAS , the parties now desire to amend the terms of the MSA to cover these revisions.

.

Now therefore , for and in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Row 44 and HNS hereby agree as follows:

 

1.          BACKGROUND

 

The initial term of the MSA is to expire on or about December 28, 2012. The parties now desire to extend the term of services to be provided pursuant to the MSA through December 31, 2015. ***

 

2.          TERM OF AGREEMENT

 

The parties now agree that the term of services to be provided pursuant to this MSA (i.e., space segment services and Hub operations, maintenance and technical support services), shall be extended through December 31, 2015. Therefore, the term for any satellite space segment capacity previously acquired by Customer under the MSA and any previously executed amendments, as well as the term for any capacity to be provided pursuant to this Amendment and any subsequent amendments, shall continue through December 31, 2015.

 

3.          EXCLUSIVITY

 

* **

 

 

*** Confidential treatment requested.

 

 
 

 

4.          ADDITIONAL CAPACITY

 

Currently, Customer has satellite capacity on *** . The total amount of capacity currently being provided by HNS to Customer on each of these satellites is set forth in the table below. Customer now wants to increase the amount of capacity to be provided on each of these *** satellites. The increase in capacity will be accomplished in a series of steps over the next few months, such that the total amount of increased capacity, along with the dates by which such capacity will be provided, will be as set forth in the table below.

 

***

 

The parties contemplate that increases in capacity will be completed in steps over several months where the amount of outroute and inroute capacity being provided is increased over time. In order to effect these increases, the following process will be used. Customer will provide written notice to HNS listing the details of the requested increase at least 30 days in advance of the time Customer is requesting that such capacity be made available. The details to be provided by Customer will include the name of the satellite, the amount of the requested increase in outroute capacity, the amount of the requested increase in inroute capacity, and such as information as may be reasonably required. Upon receipt of this information, HNS will provide a response to Customer indicating whether or not it will be able to effect such increase in accordance with the Customer’s request. If HNS has notified Customer that it can accommodate Customer’s request, this confirmation notice will then be deemed to be Customer’s firm commitment to acquire the increased capacity in accordance with the agreed schedule. In the event that HNS is not able to accommodate Customer’s request, HNS will so notify Customer, including the reasons why it is not able to fulfill the Customer’s request. Customer may then re-request the increase in capacity and this process will be repeated.

 

5.          PRICING AND DISCOUNTS

 

Subject to the terms hereof, and except as provided below, the price for the services to be provided pursuant to the MSA will continue to be as specified therein; *** . The current charge of *** for Hub operations, maintenance and technical support services shall be reduced to a base price *** and *** . In respect of the price for satellite space segment capacity, Customer acknowledges that the number of megahertz for which charges will apply will equal the greater of (i) the actual number of megahertz used, or (ii) in the case of outroute utilization, the amount of “power equivalent bandwidth” actually used. In addition, the amount of the increase in the Hub operations, maintenance and technical support services price to account for the additional Hub equipment is *** .

 

Notwithstanding the foregoing, the parties are currently negotiating the terms of an agreement whereby HNS would extend certain discounts on the Services to be provided hereunder in consideration of Customer granting HNS the right to acquire equity in the Customer. The amount of the discount has been agreed to be *** . Thus, the “after discount” price for the various service elements will be as specified in the table below:

 

***

 

These discounts will be applied in accordance with the following schedule:

 

 
 

 

* **

 

The parties further agree that the invoices for Services to be provided pursuant to the MSA will reflect both the “pre-discount” and “after discount” prices. Finally, the parties agree that that the discounts herein contemplated will be applied in accordance with the table above even though the terms of the Discounts for Equity agreement have not yet been finalized; provided, however, that if such terms have not been finalized by September 1, 2012, such discounts will be suspended until such time as the final agreement between the parties has been executed.

 

Payment for services shall be made on the last day of the month prior to the month in which the services are to be rendered. In the event that any payment is not received by the due date, HNS may, at its option, immediately terminate services as of the first day of the next following month.

 

Should HNS terminate service, HNS will terminate Row44 related space segment agreements with *** and HNS makes no representation about its ability to re-secure space segment or restart services at a later date.

 

6.           OTHER TERMS

 

Except as amended herein, all terms and conditions of the MSA as amended shall remain in full force and effect.

 

IN WITNESS WHEREOF , the Parties hereto have caused this Amendment No. 12 to be executed as of the Amendment Effective Date by and through their duly authorized representatives.

 

Hughes Network Systems, LLC   Row 44, Inc.  
       
By: /s/ Philip K. O’Brien   By: Michael Pigott  
       
Title: V.P. Legal   Title: VP Legal & GC  
       
Date: 09/11/12   Date: 09/11/2012  

 

 

*** Confidential treatment requested.

 

 
 

 

AMENDMENT NO. 13 TO MASTER SERVICES AGREEMENT

 

This AMENDMENT No. 13 (the “Amendment”) to Master Services Agreement is entered into January 18, 2013 (the “Amendment Effective Date”) by and between Hughes Network Systems, LLC (“HNS”) located at 11717 Exploration Lane, Germantown MD 20876, and Row 44, Inc. (“Row 44” or “Customer”) located at 4353 Park Terrace Drive Westlake Village, CA 91361.

 

 

Whereas , Row 44 and HNS entered into a Master Services Agreement on or about December 28, 2007 (hereafter referred to as the “MSA”) which agreement has been heretofore amended on twelve prior occasions; and

 

Whereas, Row 44 now desires to purchase and HNS desires to sell, certain services enabling the provision of transatlantic aeronautic services, which services are substantially similar to the services provided pursuant to the MSA, as previously amended; and

 

WHEREAS , the parties now desire to amend the terms of the MSA to cover the provision and purchase of the services herein described; the delivery dates for space segment and other services contained in this MSA will be as specified in Section 3 below.

 

Now therefore , for and in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Row 44 and HNS hereby agree as follows:

 

1.           BACKGROUND

 

HNS currently provides Equipment and Services to Customer which enables Customer to provide an Internet access services to passengers on commercial aircraft in North America and certain parts of Europe (which airborne Internet access service is hereafter referred to as the “Aero-Service”). Customer now desires to enable the provision of an Aero-Service for transatlantic aircraft. This Amendment sets forth a description of the space segment to be provided by HNS to enable these Aero-Services, as well as certain other services to be provided by HNS which are required for these Services.

 

2.           TERM OF SERVICES UNDER THIS AMENDMENT

 

The term of the Services to be provided hereunder will continue through the term of the MSA; i.e., the term will continue through December 31, 2015.

 

3    SATELLITE CAPACITY, RELATED SERVICES AND ASSOCIATED PRICING

 

Customer will purchase and HNS will sell, certain satellite capacity on the * ** . A description of this capacity, as well as the prices therefor, is set forth in the table below.

 

 

*** Confidential treatment requested.

 

 
 

 

A.           * ** Capacity:

 

***

 

*The outroute symbol rate in the case where the outroute and *** inroutes occupy *** of bandwidth will be set to the highest symbol rate supported by the available power and link budget.

 

***

 

B.          Related Services

 

***

 

4.     SATELLITE CONTOURS

 

A description of the satellite coverage for the *** is set forth in Attachment I to this Amendment.

 

5.     LICENSES

 

Customer will be responsible for securing any required licenses or authorizations to enable the provision of the *** .

 

6.     OTHER TERMS

 

Except as amended herein, all terms and conditions of the MSA as amended shall remain in full force and effect.

 

IN WITNESS WHEREOF , the Parties hereto have caused this Amendment No. 3 to be executed as of the Amendment Effective Date by and through their duly authorized representatives.

 

Hughes Network Systems, LLC   Row 44, Inc.  
By: /s/ Patrick K. O’Brien   By: /s/ Illegible  
Title: VP Legal   Title: CTO  
Date: 01/27/13   Date: 01/18/13  

 

 

*** Confidential treatment requested.

 

 
 

 

ATTACHMENT I

This Attachment includes a description of the coverage to be provided by the * ** .

*** Space Segment

***

 

 

*** Confidential treatment requested.

 

 

 

 

CONFIDENTIAL TREATMENT REQUESTED FOR PORTIONS OF THIS DOCUMENT. PORTIONS FOR WHICH CONFIDENTIAL TREATMENT IS REQUESTED HAVE BEEN MARKED WITH THREE ASTERISKS [***] AND A FOOTNOTE INDICATING “CONFIDENTIAL TREATMENT REQUESTED”. MATERIAL OMITTED HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

DATED 26th June 2008

 

AGREEMENT

 

BETWEEN

 

Cathay Pacific Airways Limited

AND

Hong Kong Dr a gon Airlines Limited

 

AND

 

Inflight Productions Limited

 

For the Supp l y of

 

Programming and Product i on Services

For Inflight Entertainment

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 1 of 57
 

 

TABLE OF CONTENT

 

1. DEFINITIONS AND INTERPRETATION 4
     
2. PROVISION OF SERVICES 8
     
3. TERM 8
     
4. IFP'S OBLIGATIONS 8
     
5. AIRLINE  OBLIGATION 13
     
6. SERVICE COSTS 15
     
7. SHARING OF COST SAVING 20
     
8. PAYMENT SCHEDULE, INVOICING AND  REPORTING 21
     
9. CANCELLATION 22
     
10. APPROVAL PROCESS 23
     
11. BUDGET  PROCESS  AND  MEETINGS 24
     
12. BUSINESS PARTNERS 25
     
13. INTELLECTUAL PROPERTY RIGHTS 25
     
14. INSURANCE 26
     
15 . REPRESENTATIONS AND  WARRANTIES 26
     
16. TERMINATION 26
     
17. INDEMNITY BY IFP 27
     
18. ENTIRE AGREEMENT 28
     
19. REMEDIES CUMULATIVE 28
     
20. NO WAIVER 28
     
21. SEVERANCE 28
     
22. AMENDMENT 28
     
23. CONFIDENTIALITY 28
     
24. ADVERTISING 29
     
25. ASSIGNMENT 29
     
26. EXPENSES 29
     
27. FORCE MAJEURE 29
     
28. AUDIT 30
     
29. RIGHT OF REPLACEMENT 30

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 2 of 57
 

 

30. NO AGENCY OR PARTNERSHIP 31
     
31. NOTICES 31
     
32. SUCCESSORS 32
     
33. LAW  AND JURISDICTION 32

 

SCHEDULE  1- PROGRAMME SPECIFICATIONS 34
   
SCHEDULE  2- PROGRAMMING GUIDELINES 51
   
SCHEDULE  3- CONTACT AND  DELIVERY  DETAILS 53
   
SCHEDULE  4 - BUDGET  FOR   2007 56
   
SCHEDULE 5- KEY PERFORMANCE INDICATORS 57

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 3 of 57
 

 

THIS AGREEMENT is dated 26th June 2008 and is made:

 

BETWEEN

 

(1) CATHAY PACIFIC AIRWAYS LIMITED, a company incorporated under the laws of Hong Kong, with its place of business at Cathay City, 8 Scenic Road, Hong Kong International Airport, Lantau, Hong Kong (hereinafter referred to as "Cathay"),

 

(2) HONG KONG DRAGON AIRLINES LIMITED, a company incorporated under the laws of Hong Kong, with its place of business at Dragonair House, 11 Tung Fai Road, Hong Kong International Airport, Lantau, Hong Kong (hereinafter referred to as "Dragonair")

(with Cathay and Dragonair together referred to as "the Airline")

 

(3) INFLIGHT PRODUCTIONS LIMITED, a company incorporated under the laws of United Kingdom, with its place of business at 15 Stukeley Street, London, WC2B 5LT, United Kingdom (hereinafter referred to as "IFP"),

 

(together the "Parties" and each a "Party" as the case may be) .

 

BACKGROUND

 

(A) The Airline wishes to appoint IFP to provide inflight programming services for Audio, Western Movies and Western Short Feature Programmes on the Airlines' Aircraft including but not limited to the following:

 

(i) For Audio programming, the services include, but are not limited to, negotiation of Mechanical Royalties and Presenter fees, account management, industry expertise and technical processes such as programming, editing, duplication, encoding, quality control, labelling etc. and delivery;

 

(ii) For video programming of Western Movies and Western Short Features, the services include, but are not limited to, negotiation of License Fees, account management, industry expertise and technical processes such as programming, editing, encoding, subtitling, quality control, labelling, etc. and delivery;

 

(B) IFP has considerable expertise in the above areas and has represented to Airline that it is well qualified to be appointed hereunder. The Parties wish to enter into this Agreement to set out the terms on which IFP will provide the Services to the Airline.

 

BY WHICH IT IS AGREED as follows:-

 

1. DEFINITIONS AND INTERPRETATION

 

1.1 Unless the context otherwise requires in this Agreement, the following expressions have the following meanings : -

 

"AOD" means   audio  on  demand  and  shall  comprise  of  Music Albums and Audio Programmes, offered to passengers on Aircraft equipped  with  an AVOD system,  which are accessed   using  AOD functions such  as  fast  forward, rewind and pause;
   
"AVOD" means audio and video on demand and means Cathay's digital s y s t e m using  vid e o  and  audio  compre ss ion   to s upply Programme s to pa sse ng e rs wh e n r e quest e d;

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 4 of 57
 

 

"Agreement" means this agreement and any and all schedules, appendices and exhibits attached  to it or incorporated  in it  by reference, as varied from time to time in accordance with its terms;
   
"Aircraft" means all aircraft  whether  video   cassette  based   (Non- AVOD Aircraft) or AVOD equipped   (AVOD Aircraft) operated by the Airline, during the Term of this Agreem e nt;
   
" Asian Movies" means featured   film   which  is   shown   in  Asian language including but not limited to Cantonese, Mandarin, Japane s e, Korean and Hindi;
   
"Asian Short Features" means short features   programme which   is shown  in Asian language including but not limited to Cantonese, Mandarin, Japanese and Hindi ;
   
"Audio" means audio programmes   that   include  Radio   Channel, Music Albums and Boarding Music, refer to programme specification in Schedule 1;
   
"Boarding Music" means   the  music played  on board Aircraft  prior  to   take off and landing;
   
"Business Partners" means  any  other  supplier, sub-contractor,   consultant, agent,   licensor, either  future  or  existing,  nominated   by the Airline;
   
"BOP" means the Airlines' Budget Operating Plan  circulated annually between August and October each year detailing flights   and   routes   scheduled   for  the   following year . It is a guideline document  only   and  subject   to change;
   
"COs" m ea n the  CDs which  are   used   on   non-AVOD   Aircraft incorporating th e Rad io Channel Programmes;
   
"Digital Media" mean s   Programmes in the form of an encoded compression  file rather than a video cassette or CDs;
   
"Distributor" means the distributor from whom a Programme is licensed and who owns the right to License and di st ribute the Programme for airline use;
   
"Duplication" means the act of making   cassette copies from the Ma s ter for video programmes and the act of making  copies from th e Intermaster for audio programmes;
   
"Effective Date" means 1st April 2007 (April on board cycle);
   
"Encoding" mean s the proc ess of transforming the Programme into a digitally compre sse d file ;
   
"Exhibition" m ea ns the estimated number  of   flights on   which   the Programmes will be shown, otherwise known as scree nings, which are calculated from the Airlin e ' s BOP during e ach ann u al budget proce ss ;

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 5 of 57
 

 

"Exhibition Period" means  the  time   period   dur i ng which  the  Airl i ne   is authorised  to exhibit  the Programmes   on board the Aircraft.
   
"Flashcard" means the   proprietary  card containing  digital  storage used to transfer  music and speech onto aircraft  IFE Systems;
   
"IFE" means  the Airline's inflight en te rta i nm e nt programmes;
   
"Interactive Screens" means the   screens, which show information   regarding the  Programmes to  help   passengers   nav i gate  and  use the AVOD system in order to arrive  at the desired Programme choice;
   
"Intermaster" means digitally encoded CD   combining   two or more Radio  Programmes, used  to   d u plicate CDs   for  onboard use;
   
"Key Performance Indicators" means  a   set   of   agreed parameters by   which the  Airline   measures the  perfo r mance of IFP, refer  to Schedule   5 for details;
   
"License" means an agreement given   by a Distributor to permit the use of the Programmes on the Aircraft;
   
"License Fee" means  the   amount   negotiated by  IFP, and   paid  by  the Airline, that permits the  A i rline   to   play  the  contracted Programmes;
   
"Management Fee" means   the  annual fees  agreed between th e   Parties   for IFP to carry out the  Services;
   
"Mechanical Royalties" means those royalties and fees required   to copy musical works from  one   medium to   another during the recording and duplicat i on process;
   
"Master" means the original master copy  of a Programme Licensed from  the  Distributor;
   
"MPAA" means the Movie Pictures  Association of Amer i ca;
   
"Music Albums" means  a selection of   music   albums wh i ch  form  Cathay's Audio-on-Demand library and  are   updated regularly  as required by Cathay;
   
"Performance Reviews" means the  review which will   be   conducted   twice a year whereby the Air l ine will rev i ew IFP's performance against the  agreed Key Performance Indicators.
   
"Presenter" means  the professional radio presenter or artist employed to work specifically on t h e Airline ' s account;
   
"Programmes" means programmes to   be  supplied by   IFP   under  te r ms and conditions of this Agree m ent.   These programmes include all Western Movies, Wes t ern Sho r t Feat u res Programmes and all Audio  programmes.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 6 of 57
 

 

"Programming Costs" means  the  total   cost   incurred in   compiling the  Audio Programmes  based  on  an  hourly  rate   and   time  in  the audio studio and on a computer edit facility;
   
"Public  Performance Rights" means the  right to   perform  music   on  board the Aircraft including that contained in Audio, Western Movies and Western Short Features;
   
"Personnel" mean IFP' s personnel   who   will  provide  the   Services   to the Airline during the Term of the Agreement;
   
"Radio Channel" means the channels under which Audio Programmes compiled  by IFP are offered   to  all passengers   on board an Aircraft;
   
"Services" mean the supply of all required services for inflight programming  for  Audio,  Western  Movies  and  Western Short Features Programmes for Airline  by IFP hereunder including the services specified in Clause 4 of this Agreement ;
   
"Service Costs" has the meaning   ascribed to it in Clause 6;
   
"Sting" means airline, channel or genre promotional  material;
   
"Sub-load Ticket" means a ticket  issued by the   Airline  to IFP for meetings in  Hong   Kong,  which   is  not   a  confirmed ticket but   a stand-by  ticket and has the sa me boarding   priority as if IFP 's Personnel were an Airline employee   travelling  on busines s;
   
"Technical Costs" mean th e   total  of technical  costs including   editing, subtitling, encoding,   duplication,   quality  control  and lab e lling   costs;
   
"Term" has the meaning  ascribed to it in Clause 3;
   
"Western Movies" me ans f eat ured films which is   shown   in   English  and selected European languages including Italian, French, German and Dutch, refer to programme spe cifi cat ions in Schedule 1; and
   
"Western Short Features" means   sh or t   features  programme which   is s hown   in English, ref er to programme specifications in Schedule 1.

 

1.2 In this Agreement, unless the context otherwise r eq uir es: -

 

1.2.1 referenc es to Clauses and Schedules are to the clauses of and sc hedules to this Agreement;

 

1.2.2 Clause headings and the table of contents are for convenience only and have no legal effect;

 

1.2.3 referenc es to (or to a specified provision of) this Agreem e nt or any other document are to this Agreement, that document or that provision as in force for the time b e ing and as amended, varied or supp l e ment ed in accordance with its terms;

 

1.2.4 r e f e r ences to (or to a s p ecif i ed provis ion of) any Ord in ance or enactment are to that Ordinance or enactment or that provis ion as ame nd ed, modified, extended, r e -enacted, conso lid ated or r ep l aced and in force for the time being;

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 7 of 57
 

  

1.2.5 words importing the singular include the plural and vice versa;

 

1.2.6 words importing one gender include any other gender;

 

1.2.7 references to persons includes bodies corporate, firms or unincorporated associations; and

 

1.2.8 the Schedule(s) form(s) part of this Agreement and references to this Agreement include the Schedule(s).

 

2. PROVISION OF SERVICES

 

2 . 1 IFP agrees to continue to provide the Services and the Airline hereby agrees to accept the provision of such Services from IFP, on and subject to the terms set out in this Agreement.

 

2.2 The Parties hereby agree that as consideration for the provision of such Services by IFP, the Airline shall pay for such Services in the manner provided for in Clause 6.

 

3. TERM

 

3.1 The parties acknowledge that IFP have been providing the Services to the Airline since the Effective Date , and this Agreement shall be deemed to have commenced as of the Effective Date (April on board cycle) and shall continue to be in force until 31st December 2009 (December on board cycle) ('Initial Term), unless either Party terminates this Agreement in accordance with Clause 16 or until such date as the Parties otherwise agree in writing (the "Term").

 

4. IFP'S OBLIGATIONS

 

4.1 Account Servicing

 

4.1.1 IFP warrants that all Personnel involved in the performance of the Services will be of high caliber and suitably skilled and experienced to perform properly the tasks assigned to them. IFP must provide dedicated account management available to deal with all operational and financial issues and available at time zone permissible hours to deal with requests made by the Airline.

 

4.2 For Audio Programming:

 

4 . 2.1 Programming

 

(a) IFP shall supply the Airline with a varied selection of Audio Programm e s as specified in SCHEDULE 1 - PROGRAMME SPECIFICATIONS for each agreed Exhibition Period.

 

(b) IFP shall be responsible for suggesting a selection of Audio Programmes to match the Airline's demographics issued to IFP from time to time and the guideline document detailed in SCHEDULE 2 - PROGRAMMING GUIDELINES for each agreed E x hibition Period. The said programming guidelines may be updated from time to time upon mutual agreement of the Parties.

 

(c) IFP s hall ensur e that each Audio Programme is consistent throughout and features songs and artists, which are relevant to the title of the Radio Channel or the Music Album category.

 

(d) The Airline shall retain the right to amend the number of Audio Programmes, Radio Channels, Music Album categories, frequency and general programme specification during the period of the Agreement. How e ver, if th e c urr e nt s pecification c h a ng es s ub s tantially th e n the Parti es a gree to review th e Manag e ment F ee.

 

CX and KA Western Programming Agreement - IFP Final 26 Jun 08 Page 8 of 57
 

 

4.2.2 Royalties and Pres enters

 

(a) IFP will negotiate all Presenter fees, and shall ensure t hat all fees are competitive and favourable to the Airline .

 

(b) IFP shall use best endeavours to ensure that no Pres enter used on any of the Radio Channels shall work in the same capacity for a direct competitor of the Airline without prior permission of the Air l i ne, such permission n ot to be unreasonably withheld.

 

( c) IFP shall be responsible for clearing Mecha n ica l Royalties fo r t he Au dio Programmes and obtaining permission for it and/or Airline to copy, duplicate, store on IFE equipment, record and use the Audio Programmes on the Airlines' Aircraft as anticipated hereunder including in respect of all copyright works comprised in the Audio Programmes including in all music, lyrics, songs and sound recordings and for paying all Mechanical Royal t ies and other fees due to the copyright owner or the rele va nt roya lty body in the country where t he P rogr ammes are produced or as required. In the UK, the rights are held by PPL (Phonographic Performance Ltd) representing record companies and MCPS (Mechanical Copyright Protection Society) represent i ng composers, authors and publishers. Mechanical Royalties are also payable to equivalent agencies i n locations where the Programme is produced outside the UK;

 

(d) IFP will advise the Airline in advance of the Presenters and Mechanical Royalties fees negotiated on the Airline's behalf . IFP warrants that i t will use best endeavours to negotiate favourable terms fo r the Airl i ne and w ill provide the Airline with realistic indicative pricing during the annual budget process for approval by the Airline. IFP w ill not agree to or commit to any Presenter Fees or Mechanical Royalties t hat are gr e at er than as stipulated i n the annual budget without Airlines' consent.

 

(e) IFP hereby warrants that it will secure all rights required f o r Airline to copy and load Audio Prog r ammes onto its Aircraft and for the same to be used in AOD format or otherwise and will be solely liab le for any claims by any rights holder in any territory.

 

4.2.3 Technical & Logistics

 

(a) Editing

 

i ) IFP s hall be responsible for editing Aud i o in accordance with the requirements of the Airline. Editing will generally i nvolve IFP editing the Audio Programme to combine and mix music and speech content to the agreed duration, to i nclude advertisements and other materials as requested by the Airl i ne and to remove any mat e rial detail e d in SCHEDULE 2 PROGRAMMING GUIDELINES.

 

ii) IFP shall indemnify the Airline for any loss or damage aris i ng or suffered due to errors or negligence in te rms of editing, such as incorrect Stings or incorrectly placed advertisements. The total of such liability shall be limited to the tot a l cost of Dupl icat ion and editing for the particular Programme(s ) i n quest i on. IFP will not be liable under this clause if the error or negligence is the result of another third party .

 

( b ) Duplication and Encoding

 

i) IFP shall arrange Duplication of all Audio Programmes in CD form at, Encoding of the Programme in Digita l Media format and/or Duplicat ion of the Boarding Music in Flashcard format according to specifications required by the Airline.

 

ii) IFP will use best endeavours to recycle Boarding Music Flas hcards where possible .

 

CX and KA Western Programming Agreement - IFP Final 26 Jun 08 Page 9 of 57
 

 

iii) IFP warrants that all Duplicat i on and Encoding of Audio Programmes shall be to the technica l standard specif i ed by the manufacturers of the IFE equipment sel ected fo r installation by the Airline on its Aircraft and shall otherwise be undertaken to best industry standards. The technical standa r d and format of the CDs, Digital Media and Flashcards supplied to t he Airline shall comply with the technical requirements of the Airlines' equipment and any other technical requirements specified by the A i rlines ' designated engineers or representatives and shall o t herwise be of merchantable quality and fit for purpose.

 

(c) Quality Control and Labelling

 

i) IFP shall be responsible for all quality cont rol and labe lli ng of all CDs in accordance with the label list issued by the Airline. IFP acknowledges that quality control and correct labelling i s of the utmost importance and IFP shall b e responsible for loss and damage suffered by the Airline due to incorrect labelling or poor quality control procedures. Should t h ere be any m i stakes i n labelling or quality control, IFP will be responsi bl e for rectifying the situation at the i r own cost .

 

(d) Delivery

 

i) IFP shall arrange for the delivery of the requ i red num be r of CDs, the Digital Media and the Flashcards conta i ning the Audio Programmes for each Exhibition Period to the delivery addresses set out in SCHEDULE 3 -CONTACT AND DELIVERY or such address as is otherwise specified by the Airline no later t han the date of the agreed monthly timeline prior to t he commencement of each Exhibition Period.

 

ii) Time of delivery shall be of the essence. In case of late delivery Airline may at its discretion choose to accept a payment equal to the total value of all the Programming Costs and Technical Costs arising under this Agreement for that particular month or such pro- rata payment as the parties shall ag ree, as full compensat i o n fo r such late delivery.

 

4 . 3 For Video Programm in g (Western Movies and Western Short Features):

 

4.3.1 Programm ing

 

(a) IFP shall supply the Airline with a varied selection of Western Movies and Western Short Features Programmes as specif i ed in SCHEDULE 1 - PROGRAMME SPECIFICATIONS for each agreed E x hibit i o n Per i od.

 

(b) IFP shall be responsible for suggesting a select i on of Western Movies a nd Western Short Features Programmes to match the Airline's demograp hi cs issued to IFP from time to time and the guideline doc u ment de t ailed in SCHEDULE 2 - PROGRAMMING GUIDELINES for each agreed Exhibit i on Period. The said programming guidel i nes may be updated from time to time upon mutual agreement of the Parties.

 

(c) The Airline shall reta i n the right to amend the number of Western Movies and Western Short Features Programmes, channels, frequency and general programme specification during the period of t h e Agreement. However, if the current specification changes substantially then the Parties agree to review the Management Fee.

 

4.3 . 2 Licensing

 

(a) IFP will negotiate License Fees with D ist ributors based on the Exhib i tions and commitments agreed with the Airline during the annual b udg e t process.

 

CX and KA Western Programming Agreement - IFP Final 26 Jun 08 Page 10 of 57
 

 

(b) IFP shall obtain Licenses for the Western Movies and Western Short Features Programmes from Distributors, subject to the rights held by each Distributor. Such License shall set forth the Western Movies and Western Short Features Programme title, Exhibition Period and the length (in number of minutes) of the Programme.

 

(c) IFP will advise the Airline in advance of any License Fee and any other fees payable for exhibition of the Western Movies and Western Short Features Programmes negotiated on the Airline's behalf, where such License Fees may exceed the amount agreed in the annual budget. IFP warrants that it will use best endeavours to negotiate favourable terms for the Airline and will provide the Airline with realistic indicative pricing during the annual budget process for approval by the Airline. IFP will not agree or commit to any Licence Fees or other fees that are greater than as stipulated in the budget, without Airlines' consent .

 

(d) At the request of the Airline, IFP will license Western Movies and Western Short Features Programmes, in dual language format whether dubbed or subtitled. Any additional costs will be agreed in advance with the Airline during the annual budget process.

 

(e) If a language, whether dubbed or subtitled, is created specifically for the Airline, dependant on the revenue of the booking to the Distributor, the Airline may have to bear the Technical Costs of the relevant Programme, for example, the encoding of language. IFP will advise the cost in writing to the Airline for approval prior to the booking being placed in the event that the costs are outside the scope of the budget.

 

4.3.3 Technical & Logistics

 

(a) Following approval of the Western Movies and Western Short Features Programmes as detailed in Clause 10,

 

i) IFP shall arrange Duplication of the relevant Programmes in cassette format (VHS, V8 or Hi - 8) according to the tape quantity required by the Airline; and/or

 

ii) IFP shall arrange Encoding of the relevant Programmes in Digital Media according to the standard required by the Airline, IFP shall ensure that all such Duplication and Encoding is permitted under the relevant Licences.

 

(b) Editing

 

i) IFP shall be responsible for arranging of Editing all West e rn Movies and Western Short Features Programmes according to the requirements of the Airline. Editing will generally involve the Distributor's designated laboratories in Hollywood or IFP editing the Programme to include advertisements, the Airline's logos, channel Stings, warning boards, and other materials as requested by the Airline and removing sensitive scenes as outlined in the guidelines detailed in SCHEDULE 2- PROGRAMMING GUIDELINES. -

 

ii) IFP shall indemnify the Airline for any loss or damage arising or suffered due to errors or negligence in terms of editing, such as incorrect Stings or incorrectly placed adverti s ements. The total of such liability shall be limited to the total cost of Duplication and editing for the particular Programme(s) in question. IFP will not be liable under this clause if the error or negligence is the result of another third party.

 

(c) Subtitling

 

i) IFP s hall arrang e s ub t itling of all We s tern Movi e s a nd W es tern S hort Fea tur e s Programm es wh e r e r e quir e d by th e Airlin e .

 

CX and KA Western Programming Agreement - IFP Final 26 Jun 08 Page 11 of 57
 

 

(d) Duplication and Encoding

 

i) IFP warrants that all Duplication and Encoding of all Western Movi es and We ste rn Short Features Programmes shall be to t he technical stan dard specified by the man ufacturers of the IFE equipment selected for installation by t he Airline on its A ircraft and shall otherwise be undertaken to best industry standards. T h e technical standard and format of the cassette and the Digital Media supplied to the Airline shall comply with the techn ic al requirements of the Airlines' equipment and any other te c h n ica l re qui rements specified by the Airlines' designated engineers or rep resentat i ves and shall otherwise be of merchantable quality fit for purpose.

 

ii) IFP shall be responsible for the Encoding of advertisements and shall be required to coordinate with the Airline's nom inated Business Partners in order to ensure tha t the advertisements are encoded correctly and according to the timelin es agr eed between the Parties .

 

(e) Quality Control and Labelling

 

i) IFP shall be responsible for all quality control and the labelling of all Western Movies and Western Short Feat ures Programmes in accordance with the label list issued by the Airline.

 

ii) IFP acknowledge that quality control and correct labelling is of t h e utmost importance and IFP shall be res po ns i ble for loss and damage suffered by the Airline due to incorr ect labell i ng or poor quality control procedures, unless due to reasons attr i bu ta b le to the Airline.

 

ii i) Sho ul d there be any mistakes in labell ing or quality control, IFP will be responsible for rectifying the situation at their own cost.

 

(f) Delivery

 

i) IFP shall arrange for the delivery of t he required numbe r of cas settes and the Digital Media containing t h e Western Mov i es and Western Short Features Programmes for each Ex h ibition Period to the address set out in SCHEDULE 3 - CONTACT AND DELIVERY or such other address as is otherwise specified by Airline no later than the date of the agreed month l y t i meline prior to the commencement of each Exhibition Period.

 

ii) Time of deli very shall be of the essence. In case of late de l ivery Airline may at its discretion choose to accept a payment equal to the total value of the License Fees and Tech n ica l Costs arising under this Agreement for that particular month or such pro-rata payment as the parties shall agree, as full compensation for such late delivery.

 

(g) Tape Destruction for Western Mov ies

 

i) IFP shall be responsible for the destruct i on and dega ussin g of all Western Movie Programme cassettes ret urned by th e Airlin e to IFP or IFP's nominated subcontractor.

 

ii) IFP warrants that it is solely liable for the per fo rmance of any sub-contractor appointed to perform this activity and that any sub -contractor used will follow the guidelines set out by the Distributors and the MPAA when destroying and degaussing the cassettes.

 

4.4 Third Parties

 

4.4 . 1 IFP shall as required by Airline supply the Airlines' nom inated Business Partners with full details of the Programme s, i ncluding photographs, inclusion in the Airl i nes ' inflight entertainment guides, the Interactive Screens of the IFE system, onboard advertising and the Airlines' websites in accordance with a timetable to be agreed by t he Par t ies from time to time.

 

CX and KA Western Programming Agreement - IFP Final 26 Jun 08 Page 12 of 57
 

 

4.4.2 IFP will provide or contract with strategic th i rd part i es in order to prov i de the equipment, materials, t ech nolog y, software, goods and personnel which are required by IFP to ensure that it fulfi ll s i ts obligations hereunder.

 

4.4.3 IFP warrants that when contracting with third par t ies such as Dist r ibutors and Presenters, commitments made in any agreements w ith such parties shall not exceed the commitments including timelines agreed with the Airline. The Airline will not be liable for any liabi l ities arisi n g or incur r ed by IFP relating to IFP contracting with third parties beyond th e pa r ameters agre ed with and scope of authority provided by Airline.

 

4.5 IFP hereby undertakes with the Airline that it sha l l at a ll t i mes during the continuance of th i s Agreement:-

 

4.5.1 provide the Services in accordance with the terms of this Agreement, to the highest business standards, and in an efficient and competent manner with due and professional skill and care;

 

4 . 5.2 comply with all applicable laws, ordinances, regulations and relevant standards in the performance of the Services;

 

4.5.3 all physical items and media supplied hereunder inc l uding COs, cassettes and the like will be provided to specification and wi ll be of merchantable quality and fit for purpose.

 

4.6 In the event that IFP fails to provide the Services or the Serv i ces do not conform to the standards or specifications set out in this Agreement, the Airline, without prejudice to any other right it may have, shall be entitled to:-

 

4.6 . 1 request IFP t o, at the cost and expense of FP, to redeliver any Serv ic es which are deficient or non-conforming;

 

4.6.2 request that IFP carry out relevant repairs or recti f icat i on of the rele v ant Services at such place as reasonably requested by the A i rl in e;

 

4.6.3 carry out the repairs or rectification of the rele vant Services itse lf or b y others and hold IFP accountable t herefor ; and/o r

 

4.6.4 withhold all or part of the payment of the Service Costs until the Services in question are satisfactorily provided or corrected or where t he Serv ic e Costs have been paid , request IFP to refund t he Serv ic e Costs on a pro rata basis in respect of th e Services in question .

 

4. 7 Upon notification by the Airline under Clause 4.6 of any deficiency i n or no n- compliance of the Services, IFP shall promptly take such action as may b e requ i red by the Airline pursuant to Clause 4.6.

 

4.8 In the event that in the Airline's opinion , IFP has fail e d to satisfactorily carry out the actions specified in any of Clauses 4.6.1 to 4.6.4 as required by the A irlin e, the Airline shall be entitled to: -

 

4.8.1 refuse to accept any Services or any further per f ormance of I FP without liability;

 

4 . 8.2 engage any person to provide the Services and requir e IFP to bear the fu ll cost thereof; and/or

 

4.8.3 terminate this Agr e ement and treat itself as discharged by IFP's b reach.

 

5. AIRLINE OBLIGATION

 

5.1 Programming

 

5.1.1 In the event that the Airline procures programm e s t hroug h sou rc es o t her adherence to technical specification, copyrights and all other associated exhibition right s and f ees in relation to such programmes.

 

CX and KA Western Programming Agreement - IFP Final 26 Jun 08 Page 13 of 57
 

 

5.2 Information

 

5.2.1 The Airline will provide details of the BOP by no later than October each year of this Agreement in order for IFP to calculate the required flight levels for movie Licen se Fees and the r equired quantities of Cassettes, CDs, Intermasters and Flashcards for the following year's budget.

 

5.2.2 Th e Airline will at times to be agreed advise IFP of the required quantity and format of the cassettes, CDs, Flashcards, Digital Media for each Exhibition Period.

 

5.2.3 The Airline shall agree to keep IFP informed as to the technical specification of equipment installed on each Aircraft, and the relevant specification for each applicable IFE system. Th e Airline shall give IFP notice of any change or addition in specification in accordance with the monthly timeline.

 

5 .2.4 The Airline shall agree to provide updated retrofit plans, demographics and available survey results to IFP; however, IFP must proactively request information of this nature in order to provide the Services.

 

5 . 2.5 The Airline shall notify IFP of the labelling requirements and packaging requirements in preparation for shipment .

 

5.3 Advertising & Promotional Material

 

5.3.1 The Airline or its appointed agents sha ll supp ly written details to IFP of any spo n so r ship, advertising, airline logos etc to be included in the Programme s in accordance with the monthly timeline. Such details shall include the name of each sponsor or advertiser, the duration of the advertisement and any special instructions pe rtain ing to the p l acing of the advertisement.

 

5 . 3.2 The Airline or it s appointed agents s hall arrange for the delivery to IFP of th e advertisements required for in ser tion in accordance with the monthly timeline . Such advertisements sha ll normally be delivered on Betacam SP together with a review copy on VHS.

 

5.3 . 3 In the eve nt that the Airline chooses to u se promotional m ateria l of the Programmes, it mu st use the promotional materi a l su ppli ed by the Distributors and comply with all written instruc tions supplied with s uch promotional material. The Airline agrees not to modify suc h material in any way and to use the promotional material so lely for the Airline's inflight entertainment guides, the Interact ive Sc r ee n s of the IFE system, onboard advertis ing and the Airlines ' websites. It is the responsibility of the Airline to obtain permission for any other use of the promotional materials of the Programmes.

 

5.4 Video Cassettes, CDs and Digital Media

 

5.4.1 The Airline shall use its reasonable endeavours to e nsur e that the video cassettes, CDs or Digital Media incorporating Programmes r emain in Cathay's or Dragonair's pos sessi on and control (as the case may be) for the authorised Exhibition Period.

 

5.4.2 The Airline will use r easonable endeavours to prevent damage to or l oss, theft, conversion or destruction of any cassette, CDs or Digital Media incorporating the Programmes. The Airline will not if y IFP in writing of any such damage, theft, lo ss conversion or destruction and will cooperate with IFP and or th e D i s tributor in any reasonable attempt to r ecove r s uch ca ss ettes, CDs or Digital M e dia.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 14 of 57
 

 

5.4.3 The Airline shall undertake not to duplicate, copy, edit , exhibit, promote or sell any of the cassettes, CDs or Digital Media ot h er than t he permitted use of the Programmes on flights operated by the Air l ine and excepting material that is the property of the Airline.

 

5.4.4 At the conclusion of the agreed Exhibition Period for a Programme , the Airline shall within forty five ( 45) days of the end of the Exhibition Per iod;

 

(a) Return the movie cassettes to the address detailed in SCHEDULE 3 - CONTACT AND DELIVERY for IFP to arrange d est ruct i on of th e cassettes; and

 

(b) erase all Digital Media from the Aircraft's digital servers.

 

5.5 Music Royalt i es Licenses

 

5.5.1 The Airline shall make all necessary payments for any and all r i ghts, Licenses and other clearances for the performance of music conta i ned in the soundtrack of the Programmes or advertisement that may be applicable by Public Performance Rights regulations in the Airli n es' country of registration .

 

6. SERVICE COSTS

 

6.1 In consideration of the Services to be rendered by IFP under this Agreement, the Airline shall pay to IFP the fees specified below (the " Serv i ce Costs"). The detailed budget is included in SCHEDULE 4- BUDGET FOR 2007

 

6.2 For Audio Programming

 

6.2.1 Management Fee

 

( a) The annual Management Fee for Audio has been agreed by the parties and will be reviewed annually pursuant to Clause 11 or as otherwise ag ree d by the parties and will be paid in equal installments on a monthly basis . The Management Fee comprises a labour cost, overhead cost and a prof it margin and these costs will be taken into account in fixing any adjustmen t to the Management Fee .

 

(b) Labour Cost:

 

i) should include costs of in-house labour working directly on the Airlines' account, for example, Personnel involved in account servicing, programming, logistics support, etc. Labo ur costs re l a ted to technical processes, such as editing, Encod i ng, Duplicat i on, quality control and labelling should not be included in any assessment of labour costs for the p urposes of assessing t he Management Fee;

 

ii) should reflect actual salary cost and include all staff benefits, insurance, pension, healthcare, tax, a n d other benefits; and

 

iii) will be calculated based on the estimated man-days required and man-day rates of each of IFP's Person n el involved in the p ro vis i on of the Services.

 

(c) Overhead Cost:

 

i) should include all non-labour related operating costs, i nclu di n g rent , rates, labour cost related to support ser vices such as finance, I.T., and other like costs required for the provisio n of the Se rvices . Overhead costs related to technical processes should not be included and they should be covered by the rates of techn i cal services; and

 

ii) should be presented as a percentage of the labour cost, name l y, *** for this Agreement.

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 15 of 57
 

 

(d) Profit Margin:

 

i) should be calculated as a percentage of total of the labour cost and overhead cost, namely, *** for this Agreement.]

 

(e) The agreed annual Management Fee for Audio is fixed and firm for the duration of this Agreement, unless agreed otherwise between the parties taking into account any adjustment in labour costs and overhead costs.

 

6 . 2.2 Programming Cost

 

(a) Programming Cost shall include the hourly rates for programming in a studio and using a computer edit facility, but does not include the cost of the producers.

 

(b) Programming Cost shall be agreed during the annual budget meetings and will be discussed on a Programme by Programme basis showing a detailed breakdown of the hours spent using studio and computer for each Audio Programme . It will also include the Programming Costs related to AOD Music Albums and Boarding Music.

 

(c) The agreed rate for programming in studio is *** for Radio Channels produced in Hong Kong, *** for Radio Channels produced in Singapore and *** for Radio Channels produced in London and Los Angeles. The agreed rate for programming using a computer edit facility is *** .

 

6.2.3 Presenter Cost

 

(a) IFP will use best endeavours to provide competitive prices for costs of Presenters and will ensure that such costs charged to the Airline shall not exceed those agreed between the Parties during the annual budget review process.

 

(b) Presenter costs will be charged to the Airline at cost with no mark up or commission whatsoever and will be subject to review on an annual basis.

 

6.2.4 Mechanical Royalties

 

(a) IFP s hall be responsible for using best effort s to under s tand the relevant royalty laws and negotiating favourable Mechanical Royalties on behalf of the Airline . The current agreement is *** of the cost related to mu s ic production (Management Fee and Programming Cost), CD Duplication and Encoding.

 

(b) Mechanical Royalties will be charged to the Airline at cost with no mark up.

 

6.2.5 Technical Costs

 

(a) All Technical Costs of whatever nature will be charged to the Airline at cost, with no additional mark up or commission. All Technical Costs will be subject to review on an annual basis and shall not exceed costs stipulated in the annual budget unless agreed by Airline.

 

(b) Duplication Cost

 

i) For Cathay, 6 CDs are used to contain the 22 Radio Channels and the agreed unit cost is *** . Intermasters are used for the Duplication of the Radio Channels and the agreed unit cost is *** . Flashcards are used for the Duplication of Boarding Music and the agreed unit cost is *** .

 

ii) For Dragonair, 4 CDs are u s ed to contain 16 Radio Channels and the agreed unit cost is *** per CD . Intermasters are used for the Duplication of the Radio Channels and the agreed unit cost i s *** . Fla s hcards and Ca s sett e s ar e u se d for the Dupli c ation of Boarding Mu s i c and th e a g re e d unit c o s t i s *** for Fl as h c ard a nd *** for casse tt e .

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 16 of 57
 

 

iii) Costs relating to Duplication includes costs for quality checking/labelling and all associated Duplicat i on costs.

 

iv) Duplication costs charged to the Airline will remain fixed and firm for the duration of this Agreement unless subject to a decrease due to efficiencies in working practice. Duplication costs may not exceed the costs stipulated for Duplication in the annual budget unless agreed by Airline.

 

(c) Encoding Cost for Cathay

 

i) The agreed encoding rate is *** per minute for encoding of Radio Channels, *** per minute for encoding of Boarding Music in Flashcard for Panasonic Sy s tem, and *** per minute for encoding of Boarding Music in CD Rom for KID System.

 

ii) The Cost of Encoding includes costs for quality checking and all associated Encoding costs.

 

iii) Encoding costs charged to the Airline will remain fixed and firm for the duration of this Agreement unless subject to a decrease due to efficiencies in working practice. Encoding costs may not exceed the costs stipulated for Encoding in the annual budget unless agreed by the Airline.

 

6.3 For Video Programming

 

6.3.1 Management Fee

 

(a) The annual Management Fee for video Programmes has been agreed by the parties and will be reviewed annually pursuant to Clause 11 or as otherwise a greed and will be paid in equal instalments on a monthly basis. The Management Fee comprises labour cost, overhead cost and a profit margin and these costs will be taken into account in fixing any adjustment to the Management Fee.

 

(b) Labour Costs:

 

i) should include costs of in - house labour working directly on the Airline's account, for example, Personnel involved in account servicing, programming, logistics support, etc. Labour costs related to technical proce ss es, such as editing, Encoding, Duplication, quality control and labelling should not be includ ed in the labour co s ts for the purpos es of assessing the Management Fee;

 

ii) should reflect actual sa lary cost and include all staff benefits, insurance, pen si on, healthcare, tax, and other benefits; and

 

iii) will be calculated to each category, Western Movies and We s tern Short Features, based on the estimated man-day s required and man-day rates of each of IFP's Personnel involved in the provi s ion of the Servic es for each category.

 

(c) Overhead Costs:

 

i) should include all non-labour related operating costs, including rent, rates, labour cost related to support services s uch as finance, I.T . , and other like costs r e quired for the provision of the Services. Overhead costs related to technical processes should not be included and they s hould be covered by the rates of technical services; and

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 17 of 57
 

 

ii) should be presented as a percentage of th e Labou r Cost, namely/ *** for this Agreem e nt.

 

(d) Profit M arg in:

 

i) s h o uld be calculated as a percentage of tot al of the labour co s t a nd overhead cost namely, *** for this Agreement.

 

(e) The agreed annual Management Fee for video is fixed and f i rm for the duration of this Agreement, unless agreed otherwise between the parties, taking into account any adjustment in labour costs and overhead costs.

 

6.3.2 License Fees

 

(a) In all circumstances, IFP will use best endeavours to negotiate favourable and continuously improving rates and terms with Distributors and will pass on any reduction in price to the Airline. IFP will on request provide the Airline the details of terms negotiated with Distributors includ in g copies of relevant agreements .

 

(b) The Parties will jointly agree the necessary commitments to be made with individual Distributors.

 

(c) License Fees will be charged to the Airline at cost with no mark up or commission whatsoever and will be subject to rev iew on an annual basis.

 

6.3.3 Technical Costs

 

(a) All Technical Costs of whatever nature will be charged to the Airline at cost, with no additional mark up or commission. All Technical Costs will be subject to review on an annual basis and shall not exceed the costs stipulated in the annual budget unless otherwise agreed .

 

(b) In the event that the same programme is u sed for both Cat h ay a n d Dragonair, the Technical Costs should be equally shared between Cathay and Dragonair.

 

(c) Master Cost

 

i) For Western Movies, the master costs are included in the cost of License Fees;

 

ii) For Western Short Features, the mast er cost is charged by t he Distributors and the budgeted master cost i s *** for 30-minute Programmes and *** for 60-minute Prog r ammes. IFP will ensure that the Master costs charged to the Airline shall not exceed those agreed between the Parties du r ing the annual budget review process. Any increase in budgeted costs must be agreed in advance by Airline.

 

(d) Insertion Fee for Western Movie Programmes

 

i) The insertion fee refers to the cost to insert adverti seme nts , channel Stings , and warning boards into the Programmes.

 

ii) IFP will use best endeavours to pro v ide competitive prices for insertion fees and will ensure that the insertion fe es charged to the Airline shall not exceed those agreed b e tween the Pa rt ie s dur i ng the annual budget review process. The budgeted insertion fee is *** per movie and this may not be increased unless the Airl i ne provides approval in advance.

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 18 of 57
 

 

(e) Editing Cost for Western Short Feature Programmes

 

i) The Editing refers to the process to insert advertisements , channel st ings, warning boards to the Programmes and removal of sensitive sce nes from the Programmes.

 

ii) Editing Cost i s calculated based on the hourly rates of *** , the number of edit hours required and th e cost of betacam SP tape for eac h cassette length, as agreed between the Parties dur i ng th e annual budget review process. The agreed unit editing cost is *** for 135-minute programm e and *** for 60-min programme and *** for 60 - minute p rogr a m me s hown on AVOD system only.

 

iii ) The hourly rates of *** for Editing will remain fixed and firm for the duration of this Agreement unless subject to a decrease due to efficiencies in working practice.

 

iv) Editi ng costs may not exceed the costs stipulated in the annual budget unle ss agreed by the parties.

 

(f) Subtitling Cost

 

i) IFP will use best endeavours to provide competitive prices for subtitling costs and will ensure that the s ub t it ling cost charged to the Airline shall not exceed those agreed between the Pa r ties during the annual budget review process. Th e b udge t ed subtitling cost is *** for 30-minute programme and *** for 50- minute programme and th ese may not be increased unless t he Airline provides approval in advance.

 

(g) Duplication Cost

 

i) Duplication for Western Movies is performed by the D i stributor's designated laboratories in Hollywood. IFP will use best e n deavours to prov ide competitive prices for Duplicat i on and will ensure that the Duplication rates charged to the A i rline shall not exceed t hose agreed between the Parties during the annual budget rev iew process. The lock-up cost and applicable tax of *** will be added to the Duplication cost. The budge ted Duplication rates are:

 

    VHS Tap e   V8 or Hi -8 Tape
For Cathay:        
120-minute   ***   ***
Kids Movies   ***   ***
For Dragonair:        
120-minute   ***   ***
Kids Movies   ***   ***

 

ii) Duplication for Western Short Features is performed by IFP. The agreed duplication rates are:

 

    VHS Tape   V8 or Hi-8   Tape
For Cathay:        
135-minute   ***   ***
60-minute   ***   ***
For Dragonair:        
130-minute   ***   ***
80 - minute   ***   ***
60-minute   ***   ***
30-minute   ***   ***

 

  iii) Duplication cost charged to the Airline will remain fixed and firm for the duration of this Agreement unless subject to a decrease due to efficiencies in working practice. For the avo i dance of doubt Duplication costs may not exceed the costs stipulated for Duplication in the annual budget unl ess agreed in advance b y Airline .

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 19 of 57
 

 

(h) Encoding Cost

 

i) Encoding for Western Movies is perfo r med by the Distributor's designated laboratories in Hollywood. IFP will use best endeavours to provide competitive prices for Encodi n g and will ensure that t he Encoding rates charged to the Airline shall not exceed those agreed between the Parties during the annual budget review process. The budgeted Encoding rate is *** for recall fee, *** per minute for sing l e language, *** per m in ute for dual lan guage, *** per minute for adding a seco nd lang u age to a recall file and *** for cost of encryption and o ut p u t.

 

ii) Encoding for Western Short Feat ures and advertisements is performed by IFP. The agreed encoding rate is *** per minute for single language and dual language. Encod i ng Cost charged to t he Airline will remain fixed and firm for the duration of this Agreement unless subject to a decrease due to efficiencies in working p ra ctice.

 

iii) If the Digital Media of a Western Movie is available in IF P 's li brary, IFP will offer the Airline a recall rate of *** per min ute .

 

iv) For the avoidance of doubt Encoding costs may not exceed the costs stipulated for Encoding in the an n ual budget un less agreed i n advance by Airline .

 

(i) Cost of Quality Control, Labelling and Destruct i on

 

i) For Western Movies, IFP will use best ende avours to provide competitive prices for quality control, la be lli ng and destruction and will ensure that the costs charged to the Airline shall not exceed those agreed between the Parties during the annual budget revi ew process. The agreed unit price per casse t te is *** .

 

ii) For Western Short Features, the costs of Quality Control and Labelling are covered by the Duplication Cost and Encoding Cost while destruction of cassette is perform ed b y t he Air l ine.

 

6.4 Other Costs

 

6.4 . 1 The cost of providing all Services hereunder (other t ha n as specified above as being the subject of specific fees and charges ) i nclud ing the cost of co- ordinating, managing and sending promotional materials to the relevant parties , for the Interactive Screens will be covered by the Management Fee for Audio and video.

 

6.4 . 2 IFP will send master cassettes and other mate r ial t o Hong Ko ng or IFP's London office via the Airline's designated cour i er company, who w ill invoice the Airline directly.

 

6.4.3 If IFP incur costs over budget in providing Services and such increase in costs are not agreed in advance by Airline, then IFP shall b e responsible for such costs.

 

7. SHARING OF COST SAVING

 

7.1 The Airline agrees to share a portion of the cost savings achie ve d by IFP t hroug h the negotiation of the License Fees for Western Movies and Western Short Features as an incentive to IFP to optimize License Fees in favour of the A i rline.

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 20 of 57
 

 

7.2 For Western Movies:

 

7.2.1 For the period of ***

 

     (a) The saving in License Fees has been calculated based on rates proposed in the IFP response to the RFP minus the actual spend on License Fees (excluding the deal with *** ); and

 

     (b) The Airline has shared with *** of the saving achieved which was *** .

 

7.2.2 For the year of ***

 

     (a) The saving in License Fees shall be calculated based on a target reduction of *** (or another amount to be mutually agreed) from the rates agreed in the annual budget minus the actual spend on License Fees; and

 

     (b) The Airline will share with IFP *** of the saving achieved or *** whichever is lower provided that the IFP scores an average of *** or higher on the Key Performance Indicators during the two Performance Reviews per year.

 

7.3 For Western Short Features:

 

7.3.1 For the period of ***

 

    (a) The saving in License Fees has been calculated based on rates proposed in the IFP response to the RFP minus the actual spend on License Fees (excluding the deal with ***); and

 

     (b) The Airline has shared with IFP *** of the saving achieved which was *** .

 

7.3.2 For the year of ***

 

     (a) The saving in License Fees shall be calculated based on a target reduction of *** (or another amount to be mutually agreed) from the rates agreed in the annual budget minus the actual spend on License Fees; and

 

     (b) The Airline will share with IFP *** of the saving achieved or *** whichever is lower provided that the IFP scores an average of *** or higher on the Key Performance Indicators during the two Performance Reviews per year.

 

8. PAYMENT SCHEDULE, INVOICING AND REPORTING

 

8.1 IFP shall issue invoices in US Dollar or UK Pounds to the Airline the month prior to the Exhibition Period concerned, i.e. the invoice will be received by the Airline on the 1st day of the month prior to the Exhibition Period in question. For example, the Airline will receive invoices for January play cycle by 1st December.

 

8.2 Encoding fees will be charged as per the budgeted amount using an average for each title based on the number of languages required. A reconciliation against actual will take place on a quarterly basis and a credit or invoice will be issued for the difference.

 

8.3 Quotations for any additional requirements not detailed in the annual budget must be sent in advance to the Manager Inflight Communication and Entertainment of the Airline for approval. Only expenses that have been pre-approved by the Airline will be payable by the Airline.

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 21 of 57
 

 

8.4 Amounts payable by the Airline under this Agreement shall absent dispute be paid in full within forty five (45) days of the end of the month after the receipt by the Airline of the relevant invoice from IFP. All monthly invoices from IFP shall be addressed for the attention of the Airline's Manager Inflight Communication and Entertainment.

 

8.5 A summary report of the expenses will be provided to the Airline twice a year. The Parties will agree the format for such report.

 

8.6 If any withholding, deduction or retention is required by law to be made by the Airline in respect of any payments made to IFP under this Agreement, IFP shall not be entitled to be paid or reimbursed the amount of such withholding, deduction or retention or to be paid an extra amount to ensure that it receives the payment it would have received if such withholding, deduction or retention were not made.

 

9. CANCELLATION

 

9.1 The Airline may require IFP to change, reject, cancel or stop any and all bookings, or previously agreed Programmes, and IFP shall in such circumstances take all possible steps to comply, provided that IFP can do so within its contractual obligations to Distributors, and other suppliers, as such obligations have been entered into in accordance with the authority provided by Airline. IFP shall be fully responsible for any liabilities or costs incurred due to IFP entering into contracts with Distributors which provide for commitments greater than that agreed to by Airline. If Airline changes, cancels or stops any previously agreed bookings, it will pay IFP reasonable costs of work completed to date relating to the bookings in question, based on the terms of Clause 6. In the event of this occurrence, IFP will provide supporting documentation needed to determine the amount of payment and will use best endeavours to mitigate the cost to the Airline. IFP shall not be entitled to any such payment if Airlines' changed, cancelled or cessation of a booking is due to a breach by IFP on its obligation hereunder.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 22 of 57
 

 

9.2 In the event that a Programme agreed to by the Parties as detailed in Clause 10 subsequently becomes unavailable by the Distributor, then IFP will use best endeavours to ensure that any additional costs incurred by the Airline from any third party or Business Partners as a result of such late change in a Programme title are covered by the Distributor. Such costs may include but are not limited to costs related to integration, Interactive Screen changes, translation and will be covered by the Distributor in terms of a credit payment or reduction in future licence fees from the Distributor in question.

 

10. APPROVALPROCESS

 

10.1 IFP shall provide the Airline with a selection of recommendations for each Programme including a synopsis of the content for video Programmes and a line up of proposed tracks and artists for audio Programmes according to the monthly programming timeline.

 

10.1.1 For Western Movie Programmes, it is approximately nine (9) weeks prior to the first day of the scheduled Exhibition Period.

 

10.1.2 For Western Short Feature Programmes, it is approximately fifteen (15) weeks prior to the first day of the scheduled Exhibition Period.

 

10.1.3 For Audio Programmes, it is approximately thirteen (13) weeks prior to the first day of the scheduled Exhibition Period.

 

10.2 The Airline shall confirm the Programmes to be produced or licensed according to the monthly programming timeline.

 

10.2.1 For Western Movie Programmes, it is approximately eight (8) weeks prior to the first day of the scheduled Exhibition Period.

 

10.2.2 For Western Short Feature Programmes, it is approximately fourteen (14) weeks prior to the first day of the scheduled Exhibition Period.

 

10.2.3 For Audio Programmes, it is approximately twelve (12) weeks prior to the first day of the scheduled Exhibition Period.

 

10.3 The following procedures should be followed for the approval process:

 

10.3.1 In the event of a notification by the Airline that any of the Programmes proposed in Clause 10.1 for approval are unsuitable for any reason and rejected by the Airline, IFP shall arrange for alternative Programmes to be suggested for immediate consideration by the Airline.

 

10.3.2 The process described in Clause 10.3.1 shall be repeated until such time as the Airline has approved the suggested Programme line up for the Exhibition Period in question and such process shall be undertaken in accordance with a timetable as may be agreed by the Parties. Once approved by the Airline, the Airline shall be liable for any additional costs incurred by IFP in implementing any further changes or amendments to the Programme(s) as requested by the Airline.

 

10.4 The Airline's written approval of the Programmes will be IFP's authority to proceed. The Airline will endeavour to provide approvals within the time period detailed in Clause 10.2.

 

10.5 Any reference in this Agreement to the Airline's written approval shall mean written approval by representatives of the Airline who are authorised to approve IFP's work and whose names are set out below:

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 23 of 57
 

 

"Authorised Person" of the Airline

 

Manager, Product

 

Manager Inflight Communication & Entertainment

 

10.6 Any reference in this Agreement to Airline's written approval regarding commercial and contractual issues shall mean written approval by representatives of the Airline who are authorised to approve IFP's commercial and contractual issues and whose names are set out below:

 

"Authorised Person" of the Airline Manager

 

Purchasing, Marketing & Product Assistant

 

Purchasing Manager - Marketing

 

10.7 Any change to the foregoing authorised persons during the term of this Agreement will be notified in writing by the Airline to IFP.

 

10.8 For the purposes of this Agreement "written approval" shall include approval signified by:

 

10.8.1 fax on the Airline's notepaper bearing the signature of an Authorised Person;

 

10.8.2 oral approval given by an Authorised Person provided this is in circumstances where time does not permit written approval and is subsequently supported by written confirmation within 24 hours; and

 

10.8.3 e-mail emanating from the personal e-mail address of an Authorised Person.

 

10.9 Where approvals or consents are required from Airline, Cathay has the authority to provide the same on behalf of itself and Dragonair, and IFP shall only obtain such approvals or consents from Cathay accordingly.

 

10.10 Where an obligation is owed to IFP hereunder by Airline, such obligation shall be satisfied by either Cathay or Dragonair performing or undertaking the obligation.

 

11. BUDGET PROCESS AND MEETINGS

 

11.1 Budget Process

 

11.1.1 In September every year the Parties will jointly determine the annual costs for all aspects of the Services for the following year. 2 007 Budget is included in SCHEDULE 4 - BUDGET FOR 2007

 

11.1.2 IFP will be responsible for drafting the budget, and providing indicative pricing for annual costs for all aspects of the Services.

 

11.1.3 The Parties will jointly calculate the required number of Exhibitions, number of cassettes and COs to be used for the following year's budget using the information provided by the Airline.

 

11.2 Meetings

 

11.2.1 Throughout the year, the Parties will be expected to meet on a regular basis in order to conduct performance reviews, discuss strategy, analyse passenger feedback and survey results, decide themes and finalise budgets and commercial issues.

 

11.2.2 In order to conduct such meetings, if such meetings are to be held in Hong Kong, the Airline will provide Sub-load Tickets to relevant IFP Personnel, as deemed necessary. The issuance of tickets will be at the sole discretion of the Manager Inflight Communication and Entertainment of the Airline. At all times IFP's employees must adhere to the Airline's Sub-load travel policy issued to IFP from time to time.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 24 of 57
 

 

11.2..3 On a bi-annual basis (twice every year), the Parties will conduct a Performance Review whereby the Airline will score IFP's performance against a set of predetermined Key Performance Indicators while IFP will give feedback on the Airline's performance. The Key Performance Indicators and the Airline feedback form are detailed in SCHEDULE 5 - KEY PERFORMANCE INDICATORS.

 

12. BUSINESS PARTNERS

 

12.1 IFP shall co-operate fully with all the Airline's suppliers who have been appointed to provide the Airline's IFE services. IFP shall endeavour to ensure that all aspects of the Services are correctly integrated where necessary with other work, services, materials, processes and equipment supplied or operated by the Airline's Business Partners in fulfilment of the Services and in meeting the deadlines laid down by the Airline or the Airline's Business Partners. The Airline will ensure that its Business Partners who have been appointed to provide services that are relevant to this Agreement cooperate with IFP as reasonably necessary for IFP to perform the Services under this Agreement.

 

12.2. IFP warrants that it will use best endeavours to work co-operatively with all nominated Business Partners of the Airline to ensure that attention to detail, timelines, minimisation of additional costs and on time delivery are ensured for the Services.

 

13. INTELLECTUAL PROPERTY RIGHTS

 

13.1 The Airline retains all Intellectual Property Rights in all specifications, documents and reports supplied to IFP by the Airline in connection with this Agreement and the Services.

 

13.2. IFP will be responsible for obtaining and warrants that it will obtain all copyright permissions and Exhibition rights and all other similar rights and permissions relating to the Programmes required to enable the Airline to use the Programmes on all Aircraft as anticipated hereunder, including all rights to duplicate, load and for passengers to use such Programmes and associated copyright works and all charges, fees, or royalties chargeable for the exercise of the above rights and liabilities shall be borne by FP.

 

13.3 IFP further warrants that the Exhibitions of the Programmes (including any foreign language sound track and/or subtitles) and reproduction or use of the Programmes will not infringe the copyright, performing rights, moral rights or any other rights of any third party whatsoever and that the Programmes will not be obscene or defamatory.

 

13.4 Ownership and all copyright and all other intellectual property rights in the Programmes shall be retained at all times by the original Distributors, suppliers or copyright owners.

 

13.5 All rights, title and interest in material, such as airline logos, fillers or advertisements which are inserted in Programmes exclusively for the - Airline (including all Intellectual Property Rights therein) shall vest in and/or remain the property of the Airline or the third party supplier of such material (as the case may be).

 

13.6 For the purposes of this Clause, "Intellectual Property Rights" means patents, trademarks, design rights (whether registrable or otherwise), applications for any of the foregoing, copyright, database rights, know-how, trade or business names and other similar rights or obligations whether registrable or not in any country.

 

13.7 The parties acknowledge that Airline will be responsible for paying any royalties due to Phonographic Performance (South East Asia) Ltd and CASH in respect of Public Performance Rights and the performance of music and sound recordings on Aircraft.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 25 of 57
 

 

14. INSURANCE

 

14.1 Without limiting any obligation of IFP hereunder, it is agreed that IFP shall effect and maintain at its own expense at all times for the duration of this Agreement the following policies of insurance:-

 

14.1.1 Workers' Compensation and Employers' Liability Insurance with a limit of liability of not less than *** covering all claims and liabilities in respect of the death of or injury to any person employed by, or who is deemed to be a worker of IFP or any sub-contractor of IFP in connection with the provision of the Services;

 

14.1.2 Insurance covering general third party liability with a limit of liability of not less than *** ; and

 

14.1.3 such other insurance as reasonably requested by the Airline in writing from time to time.

 

14.2 IFP shall:-

 

14.2.1 observe and perform all terms and conditions of such insurance and pay all deductibles;

 

14.2.2 on request provide the Airline with the certificates or policies of the insurances, other details of the insurance and evidence of currency and premium payment; and

 

14.2.3 ensure that all insurance arranged by IFP are effected with reputable financially secure insurers approved by the Airline and that all insurance is on terms acceptable to the Airline.

 

14.3 If IFP fails to take out any of the insurance required under this Clause, the Airline may at its sole discretion take out and maintain such insurances and deduct the costs from any moneys due to IFP or treat the failure to insure as a material breach under this Agreement.

 

15. REPRESENTATIONS AND WARRANTIES

 

15.1 Each Party represents and warrants to other Party as follows:-

 

15.1.1 it is a company or corporation duly incorporated under the laws of the place of its incorporation and has the corporate power and authority to accept the terms of this Agreement and to perform its obligations under it; and

 

15.1.2 its entry into this Agreement has been duly and validly authorised and all requisite corporate action has been taken in order to make such entry valid and binding upon it in accordance with the terms of this Agreement.

 

16. TERMINATION

 

16.1 Either Party may terminate this Agreement by giving to the other Party no less than *** notice in writing after the Initial Term.

 

16.2 Either Party may terminate this Agreement with immediate effect by sending a written notice to the other Party if:

 

16.2.1 that other Party commits a material breach of its obligations under this Agreement and, in the case of a breach capable of remedy as determined under Clause 16.3, such breach is not remedied within fourteen (14) days of that other Party being specifically required to do so;

 

16.2.2 a receiver, manager, administrator or like person takes possession or is appointed of the whole or any part of the undertaking or property of that other Party;

 

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 26 of 57
 

 

16.2.3 an order is made by a Court for the winding-up of that other Party or a resolution is passed by the shareholders of that other Party for its winding-up, except for the purposes of amalgamation or reconstruction in such manner that the resulting company is bound by and assumes the obligations imposed on that other Party by this Agreement;

 

16.2.4 that other Party ceases to pay its debts or becomes unable to pay its debts;

 

16.2.5 anything having a similar effect with any of the events referred to in Clauses 16.2.2 to 16.2.4 inclusive under the law of any jurisdiction occurs in relation to that other Party;

 

16.2.6 that other Party disposes of the whole or any substantial part of its undertaking or assets; or

 

16.2.7 that other Party ceases or threatens to cease to carry on all or any substantial part of its business.

 

16.3 For the purposes of Clause 16.2.1, a breach shall be considered capable of remedy if the Party in breach can comply with the provision in question in all respects to the sole satisfaction of the other Party, other than as to the time of performance, provided that time of performance is not of the essence.

 

16.4 The termination of this Agreement shall be without prejudice to any rights, obligations and liabilities of any Party which have accrued at the time of termination.

 

16.5 Upon any termination of this Agreement (howsoever occasioned), IFP shall forthwith deliver up to the Airline all copies of any information and data supplied to IFP hereunder and shall certify to the Airline that no copies of such information or data have been retained.

 

17. INDEMNITY BY IFP

 

17.1 IFP shall indemnify on demand and hold harmless the Airline and its employees, directors, agents and officers from and against any and all costs, damages, expenses, losses, claims or liability incurred by it (including all costs and expenses which the Airline may incur in defending any proceedings) arising out of or in connection with (directly or indirectly) this Agreement, including but not limited to:-

 

17.1.1 any breach of any terms of this Agreement or the performance of the

Services by IFP;

 

17.1.2 any breach of any warranty or undertaking given by IFP or implied by applicable law in relation to the Services or the provision of the Services;

 

17.1.3 any negligent or wrongful act or omission of IFP or its employees, directors, agents or officers;

 

17.1.4 any disputes, claims or proceedings brought by a third party alleging that the Services (or the provision thereof) or the Programmes and/or associated materials provided by IFP hereunder or the copying or use thereof infringe any patent, copyright, design right, trademark or other intellectual property rights of any other person; and/or

 

17.1.5 any non-compliance of the Services with the specifications set out in SCHEDULE 1- PROGRAMME SPECIFICATIONS. except to the extent that such costs, damages, expenses, losses, claims or liability are due to the gross negligence or wilful misconduct of the Airline or its employees, directors, agents or officers.

 

17.2 This indemnity shall survive termination of this Agreement.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 27 of 57
 

 

18. ENTIRE AGREEMENT

 

18.1 This Agreement supersedes any agreements made or existing between the Parties before or simultaneously with this Agreement in respect of the provision of services similar to the Services (all of which shall be deemed to have been terminated by mutual consent with effect from the commencement date of this Agreement but without prejudice to the rights and liabilities of the Parties accrued before such date), and constitutes the entire understanding between the Parties in relation to the subject matter of this Agreement.

 

19. REMEDIES CUMULATIVE

 

19.1 The rights of the Parties under this Agreement are cumulative and do not exclude or restrict any other rights (except as otherwise provided in the Agreement).

 

20. NO WAIVER

 

20.1 No delay or failure by either Party to exercise any of its powers, rights or remedies under this Agreement shall operate as a waiver of them, nor shall any single or partial exercise of any such powers, rights or remedies preclude any other or further exercise of them. No provision of this Agreement and no breach of any provision of this Agreement shall be waived, altered or modified except by written instrument. No waiver of any breach shall affect or alter this Agreement, but each and every provision of this Agreement shall continue in full force and effect with respect to any other breach then existing or subsequent breach of any provision.

 

21. SEVERANCE

 

21.1 If any provision of this Agreement is not or ceases to be legal, valid, binding and enforceable under the law of any jurisdiction, neither the legality, validity, binding effect or enforceability of the remaining provisions under that law nor the legality, validity, binding effect or enforceability of that provision under the law of any other jurisdiction shall be affected.

 

22. AMENDMENT

 

22.1 No amendment to this Agreement will be effective unless in writing and executed by all the Parties.

 

23. CONFIDENTIALITY

 

23.1 Each Party shall treat as confidential all confidential information obtained from the other pursuant to this Agreement and shall not divulge such information to any person (except to such party's own employees and then only to those employees who need to know the same) and shall not use the information for any purpose other than for which it was provided without the other Party's prior written consent. This clause shall not extend to information (i) which was rightfully in the possession of such Party prior to the commencement of negotiations leading to this Agreement, (ii) which is already public knowledge or becomes so at a future date (otherwise than in breach of this clause), (iii) which is trivial or obvious, (iv) which is required to be disclosed to comply with any court order or stock exchange requirement, or (v) where disclosure is required by law. Each Party shall ensure that its employees are aware of and comply with the provisions of this clause. If IFP appoints any sub-contractor then IFP may disclose confidential information to such subcontractors, subject to Airline's prior consent, which shall not be unreasonably withheld, and such sub-contractors or assignees agreeing to the same confidentiality terms as contained herein.

 

23.2 The provisions of this Clause 23 shall survive the expiration or termination of this Agreement.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 28 of 57
 

 

23.3 In particular during and after termination of this Agreement IFP acknowledges its responsibility to treat in complete confidence all the demographic, marketing and sales information and statistics relating to the Airlines' business which Airline may supply IFP in the course of this Agreement.

 

24. ADVERTISING

 

24.1 Neither IFP or its affiliates nor any of its employees, agents or subcontractors shall mention the name of the Airline in any advertisement, public relations exercise or promotional material relating to or arising out of this Agreement without the prior written permission of the Airline. Such permission shall not be unreasonably withheld.

 

25. ASSIGNMENT

 

25.1 No Party may assign or subcontract any of the rights or obligations of that Party under this Agreement without the prior written consent of other Party to this Agreement. Such consents shall not be unreasonably conditioned, withheld or delayed except that the Airline may assign or sub-contract the whole or any part of its rights or obligations to any of its subsidiaries or affiliates.

 

25.2 In the event of the Airline consenting to any sub-contracting of the whole or any part of this Agreement, IFP undertakes and warrants to the Airline as follows:

 

25.2.1 that any agreement between IFP and such a sub-contractor shall be in the same form as the relevant parts of this Agreement and without limitation the agreement with a subcontractor shall include provisions regarding confidentiality and liability for loss, termination, force majeure, damage, negligence and infringement to intellectual property rights where appropriate;

 

25.2.2 that the sub-contractor shall comply with its obligations under such Agreement so as to ensure that all the obligations of IFP under this Agreement are fully performed and IFP shall be responsible for all liabilities, acts and omissions of any subcontractor; and

 

25.2.3 that if it subcontracts any part of the Services, that its subcontractors shall be fully experienced, properly qualified and properly organised, equipped and financed to undertake such subcontracted Services.

 

25.3 If in the course of providing the Services during the Term of this Agreement IFP decides to use the services of any company in which IFP has a material financial interest, IFP will declare this and before commissioning such services obtain the consent of the Airline thereto.

 

26. EXPENSES

 

26.1 Each of the Parties is responsible for that Party's own legal and other expenses incurred in the negotiation, preparation and completion of this Agreement.

 

27. FORCE MAJEURE

 

27.1 In this Agreement, "force majeure" shall mean any cause preventing a Party from performing any or all of its obligations which arises from or is attributable to acts, events, omissions or accidents beyond the reasonable control of the Party so prevented, including without limitation, strikes, lock-out or other industrial disputes (whether involving the workforce of the Party so prevented or of any other Party), act of God, war, riot, civil commotion, malicious damage, compliance with any law or governmental order, rule, regulation or direction, accident, breakdown of plant or machinery, fire, flood, or storm.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 29 of 57
 

 

27.2 If a Party is prevented or delayed in the performance of any of its obligations under this Agreement by force majeure, that Party shall immediately serve notice in writing on the other Party specifying the nature and extent of the circumstances giving rise to force majeure, and shall, subject to service of such notice and to performance of its obligation under Clause 27.4, have no liability in respect of the performance of such of its obligations as are prevented by the force majeure events during the continuation of such events, and for such time after they cease as is necessary for that Party, using all reasonable endeavours, to recommence its affected operations in order for it to perform its obligations.

 

27.3 If a Party is prevented from performance of its obligations for a continuous period in excess of three (3) months, the other Party may terminate this Agreement immediately on service of written notice upon the Party so prevented, in which case no Party shall have any liability to any other except that rights and liabilities which accrued prior to such termination shall not be affected.

 

27.4 The Party claiming to be prevented or delayed in the performance of any of its obligations under this Agreement by reason of force majeure shall use all reasonable endeavours to bring the force majeure event to a close or to find a solution by which the Agreement may be performed despite the continuance of the force majeure event.

 

28. AUDIT

 

28.1 In respect of all expenditure and costs which is incurred by IFP hereunder and which is reimbursable by the Airline under this Agreement, IFP shall maintain such accounts and records (the 'Records) as are reasonably necessary for the purpose of enabling the Airline to conduct an audit of that expenditure.

 

28.2 IFP will allow the Airline, by its own personnel or by a professionally qualified independent auditor, access to all the Records during the term of this Agreement and for 12 months afterwards on not less than 10 days written notice at any time during normal business hours for the purposes of auditing or otherwise inspecting them, provided that in the absence of exceptional circumstances IFP shall not be obliged to allow such access or inspection more than once during any 6 month period.

 

28.3 Should any audit or inspection of the Records by the Airline reveal that the Airline has been overcharged, IFP shall reimburse to the Airline the amount of the overcharge within 7 days and should the total overcharge for the year exceed HK$100,000 then the Airline will also refund any professional costs related to the performance of the audit (i.e. the cost of the auditors).

 

28.4 IFP will afford to the Airline all reasonable assistance in the carrying out of such audit, whilst the Airline and its auditor will ensure that any information obtained in the course of the audit concerning IFP's business is kept in the strictest confidence and not used for any purpose other than the proper conduct of the audit.

 

29. RIGHT OF REPLACEMENT

 

29.1 The Airline reserves the right to demand the replacement at any time by giving three (3) months’ notice of any employee agent or subcontractor of IFP working on the Airline's account if in the opinion of the Airline the performance of such person is unsatisfactory. The Airline agrees to inform IFP in writing of the reasons and supporting evidence for the demand to replace such employee, agent or sub-contractor. If IFP receives such a demand it shall replace such person.

 

29.2 IFP warrants that the core team will remain as specified at the outset of this Agreement unless any of this core team leaves IFP. In such circumstances, IFP warrants that it will replace such personnel with personnel of the same or higher caliber and experience.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 30 of 57
 

 

29.3 It is imperative that a dedicated account manager is appointed to work on the Airline account. Should the current account manager leave IFP for whatever reason, the Airline is entitled to review the resumes of any prospective candidates for this role and approve the appointment, since working with the account manager will be a critical factor in the success of the working relationship of the Parties.

 

30. NO AGENCY OR PARTNERSHIP

 

30.1 Nothing in this Agreement shall constitute or be deemed to constitute a partnership between the Parties hereto or constitute IFP as agents of the Airline for any purpose whatsoever and IFP shall have no authority or power to bind the Airline or to contract in the name of or create a liability against the Airline in any way or for any purpose. For the avoidance of doubt in all its contracts for third party goods or services, IFP shall act as principal at law.

 

31. NOTICES

 

31.1 Every notice or communication under this Agreement must be in writing and may, without prejudice to any other form of delivery, be delivered personally or sent by post or transmitted by fax or email.

 

31.1.1 In the case of posting, the envelope containing the notice or communication must be addressed to the intended recipient at the authorised address of that Party and must be properly stamped or have the proper postage prepaid for delivery by the most expeditious service available (which will be airmail if that service is available) and, in the case of a fax or email, the transmission must be sent to the intended recipient at the authorised number or address of that Party.

 

31.1.2 Subject to Clause 31.2, for the purpose of Clause 31, please refer to SCHEDULE 3 - CONTACT AND DELIVERY DETAILS for the authorised address, fax number and email of each Party.

 

31.2 No change in any of the particulars set out in SCHEDULE 3 - CONTACT AND DELIVERY DETAILS will be effective against a Party until it has been notified to that Party.

 

31.3 A notice or communication will be deemed to have been duly given and received:-

 

31.3.1 on personal delivery to an addressee or on a business day to a place for the receipt of letters at that addressee's authorised address; or

 

31.3.2 in the case of posting, where the addressee's authorised address is in the same country as the country of posting, at 10 a.m. (local time at the place where the address is located) on the second business day after the day of posting; or

 

31.3.3 in the case of posting, where the addressee's authorised address is not the same country as the country of posting, at 10 a.m. (local time at the place where that address is located) on the fifth business day after the day of posting; or -

 

31.3.4 in the case of a fax, on issue to the sender of an O.K. result confirmation report or, if the day of issue is not a business day, at 10 a.m. (local time where the authorised fax number of the intended recipient is located) on the next business day or

 

31.3.5 in the case of an email, when the sender receive acknowledgement from the address.

 

31.4 For the purpose of Clause 31.3, a "business day" means a day which is not a Saturday or a Sunday or a public holiday in the country of posting or transmission or in the country where the authorised address or fax number of the intended recipient is located and, where a notice is posted, which is not a day when there is a disruption of postal services in either country which prevents collection or delivery.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 31 of 57
 

 

32. SUCCESSORS

 

32.1 This Agreement is binding on the successors of each Party.

 

33. LAW AND JURISDICTION

 

33.1 This Agreement is governed by and will be construed in accordance with Hong Kong law.

 

33.2 The parties submit to the non-exclusive jurisdiction of the Hong Kong courts and each Party waives any obligation to proceeding in Hong Kong on the grounds of venue or inconvenient forum.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 32 of 57
 

 

IN WITNESS whereof the Parties hereto have caused this Agreement to be duly executed by their authorised representatives the day and year first above written

 

Signed for   Witnessed by:
CATHAY PACIFIC AIRWAYS LTD. by:    
     
/s/ Alex McGowan   /s/ Eva Chan
Alex McGowan   Eva Chan
Manager Product   Assistant Purchasing Manager - Marketing
     
Date: 7/14/2008   Date: 7/14/2008
     
Signed for   Witnessed by:
HONG KONG DRAGON AIRLINES LTD.    
by its duly authorized agent:    
     
/s/ Alex McGowan   /s/ Eva Chan
Alex McGowan   Eva Chan
Manager Product   Assistant Purchasing Manager - Marketing
     
Date: 7/14/2008   Date:7/14/2008
     
Signed for   Witnessed by:
INFLIGHT PRODUCTIONS LTD.    
by:    
     
/s/ Joan Barker   /s/ Janet Winstanley
Joan Barker   Janet Winstanley
Sales & Marketing Director   Client Services Manager
     
Date: 8/1/2008   Date: 8/1/2008

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 33 of 57
 

 

SCHEDULE 1 -PROGRAMME SPECIFICATIONS

 

For Cathay:

 

Specification of Western Movies

 

1. Overall Strategy for Movies

 

(a) Cathay aims to present a diverse and interesting range of movies from Hollywood's blockbusters to popular Asian movies, from the hottest new releases to classic movies.

 

(b) The selection includes new releases, popular blockbusters and internationally acclaimed art house movies in multiple languages catering to the Cathay's diverse demographic mix. The languages include English, Cantonese, Mandarin, Japanese, Korean, Hindi, French, Italian and German

 

(c) Movies are only available on routes of over 2 hours 40 minutes flying time.

 

(d) On regional aircraft, *** movies are offered each month on the Distributed Channels ( *** on inbound flights and *** on outbound flights) in all classes.

 

(e) On long-haul Aircraft equipped with Panasonic 3000 IFE system, *** movies are offered each month on the Distributed Channels ( *** on inbound flights and *** on outbound flights) in Economy Class while *** movies are offered each month on the AVOD system in First and Business Class.

 

(f) On long-haul Aircraft equipped with Panasonic eX2 IFE system, *** Movies on the AVOD system are offered in all classes.

 

2. Movies Categories

 

(a) A total of 50 movies are offered each month under the following categories:

 

    Quantity available each flight    
    Distributed Channel        
Categories   Regional
aircraft
  Long-haul
aircraft
  AVOD   Description
New Release   ***   ***   ***   Hollywood's hottest new blockbusters. ( *** of them are updated every month.)
Re-View   ***   ***   ***   Hit movies from the past few years. ( *** of them areupdated every month.)
Arthouse   ***   ***   ***   The best independent films and arthouse movies. ( *** of them are updated every month.)
Asia on Film   ***   ***   ***   Quality Asian cinema_ selected from the best in the region.( *** of them are updated everymonth.)
Disney   ***   ***   ***   A selection of Disney movies for the young ones aboard. ( *** of them is updated every month.)
Your Favourites   ***   ***   ***   Our selection of specially- themed movies. ( *** of them are updated every month.)
Total   ***   ***   ***    

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 34 of 57
 

 

3. Specification of Western Movies

 

(a) Please refer to the Video Channel Line-up for details.

 

(b) The quantity of movies shown below is the total number of movies required every month for both inbound and outbound flights.

 

Categories   Quantity   Movie Code   Language   Subtitles
For distributed channels of long-haul flights of all aircraft:
New Releases   ***   0/B: A, C,E, G, I, K1/B: B, D, F,H J L   English (+1)   Chinese
Re-View   ***   0/B: M
1/B: N
  English ( +1)   Chinese
Arthouse   ***   0/B: 0
1/B: p
  Original   Chinese
Disney   ***   0/B: Y, AA
1/B: Z, BB
  English and Cantonese   N/A
For distributed channels of long-haul flights of long-haul aircraft only:
Re-View   ***   0/B: CC
1/B: DD
  English (+1)   Chinese
(optional)
Arthouse   ***   0/B: EE
1/ B: FF
  Original   Chinese
(optional)
For AVOD of long-haul flights of long-haul aircraft only:
Re-View   ***   N/A   English (+1)   Chinese
(optional)
Arthouse   ***   N/A   Original   Chinese
(optional)
Your Favourites   ***   N/A   English (+1)   Chinese
(optional)
TOTAL   ***            

 

(c) Remarks:

"0/B" means outbound flight, "1/B" means inbound flight

The following movies are held over from the previous month:

*** movies from New Releases

*** movies from Disney

*** movies from Re-View in AVOD system

*** movies from Arthouse in AVOD system

*** movies from Your Favourites in AVOD system

"English (+1)" means the movie should be in English and it is preferable to have audio soundtrack of an additional language, which can be French, German, Italian, Japanese or Korean.

"Original" means the audio soundtrack should be in original language of the movie, e.g. English, French, German and Italian.

"Chinese (optional)" mea ns it is preferable to have Chinese subtitles if it is available.

 

(d) Other Requirements

 

There should be at least one movie with each of the additional languages in the movie mix each month.

 

For *** out of the *** movies held over in the New Release category, the choice of additional language should be different from the one shown in the previous month.

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 35 of 57
 

 

Specification of Western Short Features

 

1. Overall Strategy for Short Features

 

(a) Popular TV programmes are acquired from around the world. The selection includes popular sitcoms, lifestyle, documentary and sport programmes in English, Cantonese, Mandarin, Japanese and Hindi.

 

(b) As well as high rating shows, we also seek to include a variety of niche programming that has received critical acclaim.

 

(c) A total of up to *** of Western Short Features is offered on Distributed Channels ( *** on inbound flights and *** on outbound flights) in all classes of regional Aircraft and in Economy Class of long-haul Aircraft equipped with Panasonic 3000 IFE system.

 

(d) Over *** of Western Short Features are shown on AVOD system each month in First and Business Class of long-haul Aircraft equipped with Panasonic 3000 IFE system and in all classes of long-haul Aircraft equipped with Panasonic eX2 IFE system.

 

(e) On routes over 2 hours 40 minutes flying time, compilations of 135-minute short feature programmes are shown on repeating cycles. There are 8 TV channels on flights operated by regional Aircraft while there are 12 TV channels on flights operated by long-haul Aircraft.

 

(f) On routes under 2 hours 40 minutes flying time, compilations of 50-minute short feature programmes are shown on repeating cycles. There are 20 TV channels on flights operated by regional Aircraft while there are 26 TV channels on flights operated by long-haul Aircraft.

 

(g) All programmes, except those in the TV Series category (TV box sets) are updated monthly, while at least one box set is updated every month. For short features offered on the Disney Channel, 2 hours of the programming is updated every 3 months.

 

(h) 50-minute and 135-minute programming blocks are combinations of 30-minute programmes and 50-minute programmes. The number of programmes selected in a programming block may vary depending on the actual runtime of the programmes included. Extra fillers may be required to fill up a 50-min. or 135-min. programming block.

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 36 of 57
 

 

2. Short Features Categories

 

(a) Over 80 hours of short features are offered each month under the following categories:

 

Categories   Quantity   Description
HKTV  

30 min x ***

50 min x ***

  Cantonese programmes and variety shows
TV Asia  

30 min x ***

60 min x ***

  An entertaining selection of Asian short features
Comedy   30 min x ***   Smash-hit comedies from all around the globe
E! Entertainment  

30min x ***

60min x ***

  Gossip, style news and celebrity interviews from Hollywood
Lifestyle & Reality  

30 min x ***

60 min x ***

  Must-watch international reality and lifestyle shows

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 37 of 57
 

 

Categories   Quantity   Description
Drama   60 min x ***   Action, romance and more from the world's hottest dramas
Documentary  

30 min x ***

60 min x ***

  Riveting and thought-provoking documentaries
Discovery   60 min x ***   Exploring the history and mysteries of our planet
Disney Channel   30 min x ***   The most popular cartoons from the Disney Channel
Sport  

30min x ***

60 min x ***

  News, profiles and highlights from the sporting world
News & Sports  

15 min x *** (Daily)

30 min x *** (Weekly)

***

(1 Hour)

  Daily news and coverage of major sporting events

TV Series

(Box Sets)

 

30 min x ***

3 x 60 minx ***

(21 hours)

  Get hooked on box-sets of the hottest TV shows on the planet
Total   ***    

 

(b) Remarks:
TV Series is only available in the AVOD library. It consists of *** Drama box sets ( *** x 60 min), *** Documentary box set ( *** x 60 min) and *** Comedy box set ( *** x 30 min). Drama and Documentary box sets are updated quarterly, while the Comedy box set is updated bi-monthly.

 

3. Channel Line-up for Distributed Channels

 

    No. of channels available on each flight
    Flights over 2 hr. 40 min.
(Long-haul flights)
  Flights under 2 hr. 40 min.
(Short-haul flights)
Category  

Regional

Aircraft

 

Long-haul

Aircraft

 

Regional

Aircraft

 

Long-haul

Aircraft

HKTV   ***   ***   ***   ***
TV Asia   ***   ***   ***   ***
Comedy   ***   ***   ***   ***
E! Entertainment   *** (Outbound)   ***   ***   ***
Lifestyle & Reality   *** (Inbound)   ***   ***   ***
Drama   *** (Inbound)   ***   ***   ***
Documentary   *** (Outbound)   ***   ***   ***
Discovery   ***   ***   ***   ***
Disney Channel   ***   ***   ***   ***
Sport   ***   ***   ***   ***
News & Sports   ***   ***   ***   ***
Total  

*** (Inbound)

*** (Outbound)

 

*** (Inbound)

*** (Outbound)

  ***   ***

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 38 of 57
 

 

4. Specificat i on of Western Short Features

 

(a) Please refer to the Video Channel Line-up for details.

 

(b) The quantity s hown below is the tota l number of Western Short Features Programmes required every month for both inbound and outbound flights.

 

Categories   Quantity   Language   Subtitles

Comedy

  30 min x ***  

Engli sh

 

Chinese

(5 hour s)

E! Entertainment

  30 min x *** 60 min x ***  

English

 

N/A

Lifestyle & Reality

  30 min x *** 60 min x ***  

English

 

N/A

Drama

  60 min x ***  

English

 

Chinese

(6 hours)

Documentary

  30 min x *** min x ***  

English

 

N/A

Discovery

  60 min x ***  

English

 

N/A

Disney Channel

  30 min x ***  

English and

Cantonese

 

N/A

Sport

  30 min x *** 60 min x ***  

English

 

 N/A

TV Series

(Box Sets)

 

30 min x *** (Comedy)

3 x 60 min x ***

(2 Drama, 1Documentary) ***

 

 

English

 

  

N/A

TOTAL   ***        

 

(c) Remarks:

Chinese s ubtitle s are requi re d for *** hours of programmes in the category of Comedy and *** hours of programmes in the category of Drama.

Drama and Documentary box set s are updated quarter l y, while Comedy box set is updated bi-monthly.

 

Technical Specification for Western Movies and Western Short Features

(a) Specification for Broadcast Channel s

NTSC system

VH S cassettes

Ster eo

 

(b) Specification for AVOD

Encoding: MPEG 1 @ 352 x 240

Constant bit rate

Video bit rate @ 1.5 Mb/s

Audio bit rate @ 128kb/s

NTSC@ 30 fps

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 39 of 57
 

 

Specification of Audio

 

1. Overall Strategy for Audio

 

(a) Cathay strives to bring passengers the best audio enter tainm e nt in t he sky. The music incorporates various genres and styles from all aro u nd the wor ld. It is carefully chosen to suit all musical tastes. There are currently 22 broadcast radio channels in 9 different languages for passengers to select from. The programmes range from the latest pop and roc k to classical, jazz, relaxation t ips and i nterview s with the stars. They are available for passengers of all classes.

 

(b) Aud io on Demand (AOD) system with a CD library is avai la ble to passengers in First and Business Class on long-haul aircraft equipped with Pa n asonic 3000 IF E system and passengers in all classes on long-haul aircraft equipped with Panaso ni c eX2 IFE system. There is also a Juke Box function that allows passengers to compile their own song list.

 

(c) There are currently 10 categories featur in g approximate ly 150 CD a l bums from around the globe. 15 CDs are updated on a monthly basis. In addition to the CD library, 12 CDs are selected specifica lly for children.

 

(d) Boarding music is produced every year and is played on all f l ights during take off and landing for passengers to rela x and enjoy.

 

2. Radio Channels

 

(a) Ther e are a total of 22 customised radio channels available in all classes on all routes . All channels are broadcast in a repeating cycle of 120 minutes.

 

 

No.

  Channel
name
 

 

Description

 

Update

frequency

 

 

Language

1   Hot : HK  

Hosted programme with the greatest

Cantonese pop from HK charts. Upbeat & Lively, targets passengers of 20s to 40s .

  Monthly   Cantones e
2  

A Musical

Journey

  Hosted programme with the most memorable tunes. Stories interweave between songs. Targets more matu re _Qassengers.   Monthly   Cantonese
3  

Mandarin

Zone

 

Hosted programme with latest

Mandarin hits including artist interviews.

  Monthly   Manda rin
4  

Chinese All

Time Hits

 

Hosted programme with the most

memorable Chinese hits from the good old days.

  Monthly   Can to nese
5   J-Pop  

Hosted programme with the latest

Japanese Pop music or New Enka .

  Mon t h l y   Japanese
6  

Mumbai

Beat

  Hosted programme with a mi x of Indian fusion, Bollywood remi xes, Bollywood songs, ghazals and older film music.   Monthly  

Indian

 

-

7  

Philippine

Soundwave

 

Host ed programme the latest and best from the Philippine music

wo rld .

  Mon th l y   Ta galog
8  

Classical

Moods

 

Popular and fam iliar light classics

from the great composers, uninterrupted. (No Presenter)

  Monthly   N/A
9  

Classical

Choice

 

Hosted programme with a mix of

favourite pieces from the lighter s i de of the classical-music repertoire,

with works by a varied collection o f

composers .

  Monthly   Engli s h
10  

All Time

Hits

  Hosted programme with favourite hits from the 50s, 60s and 70s.   Monthly   Eng li sh

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 40 of 57
 

 

No.   Channel
name
  Description   Update
frequency
  Language
11   Rewind   Hosted by programme with the 80's to 90's pop or rock show .   Monthly   Engl ish
12   Popzone  

Hosted programme with the fastest moving, high-flying chart show

direct from Planet Pop! All the lates t tracks are here from some of the biggest stars in music today.

  Monthly   English
13   Rock   Hosted programme with a select ion of the best rock in the sky as he plays new and classic music from some of the world's greatest bands.   Monthly   English
14   Dancescape   Hosted programme with the DJ's personal selection, get in the beat or simply chill out to these tun es.   Monthly   English
15   Easy Moods  

Hosted programme with a mellow

mix of light contemporary love songs and ballads from a diverse group of artists.

  Monthly   English
16   Jazz   Hosted programme with a co llection of coo l, laid-back jaz z.   Monthly   English
17   Serenity   two hours of physical and mental relaxation, peaceful music, health and travel tips etc. (No pre sen ter)   Bi-monthly   English
18  

Music

Specia l

  Hosted programme with two hours of music a nd celebrity_ interviews.   Bi - monthly   English
19   J-Medley   H osted programme with older pop songs and all time hits from 70s to early 2000s. This channel also include s some in str umen tal pieces, light jazz and well-known Enka .   Bi-monthly   Japanese
20  

Korean

Music Box

  Hosted programme with music from t h e movies, TV a nd c hart-t oppi ng artists of Korea.   Bi-monthly   Korean
21   Malay Hits   Hosted programme with the c urrent Malaysian music . A big portion of the channel will spotlight the l atest Malay pop so ng s, and ther e are also some more popular Indonesian pop songs .   Bi-monthly   Malay
22   Thai Mix  

Ho s ted programme with a variety of

Thai contemporary hits.

  Bi-month ly   Thai

 

(b) Each audio channe l is 120 minutes in length and has approximately 26 tra cks.

 

(c) All channels, except 'Classical Moods' and "Serenity", are ho ste d with one presenter .

 

(d) The prese nt ers must be suitab le for Cathay's demographics, and sho uld not have strong accents .

 

(e) There are currently no sponsored channels.

 

(f) Jingles are somet imes u sed and are permitted. (g) Presenters usu a lly make reference to Cat hay.

 

(h) Presenters may cond uct interviews with celebrities or guests where appropriate.

 

(i) Method of recording i s f l exible as long as the e nd product is s uit a bl e for in f light li s tening. Th e y can b e r eco rd ed eit h er on computer or in studio.

 

(j) 16 channels a r e updated e v e ry month whil e 6 channels a re updat ed bi-monthly.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 41 of 57
 

 

3. Audio on Demand (AOD) Libra ry

 

(a) The AOD Library is availab le to passengers in First and Busine s s C l ass on l ong -haul aircraft equipped with Panasonic 3000 IFE system a nd passengers in all classes on long-haul aircraft equipped with Panasonic eX2 IFE system. There are currently 10 ca teg ories featuring u p to 150 CD alb um s.

 

Genre   Description
All Time Hits   "Best of ... . " compilations from major artists and specifically to feature off i c iall y released 'Greatest Hits ' albums by i n te rn ati o nal se lli ng artists .
     
Classic Albums   C l ass i c albums are generally considered to have stood the test of time, and remained popular throughout chang i ng tre n ds in recent music history, e.g . Hotel California of Eagles, Sgt. Pepper's Lone ly Hearts Club Band of Beatles .
     
Rock & Pop  

The biggest new releases and interna t ionally renowned pop and rock performers, Wes tern pop COs from the US and UK charts, e . g. Confess i ons On The Dance Floor of Mado nn a a n d X & Y of Coldplav.

     
Easy Listening   A coo l and pop collectio n of contemporary easy listening ballads.
     
Country   A dedicated chan n el for 'Co untry ' enthus iasts .
     
Jazz   A dedicated cha nn el for 'Jazz' enthu sias t s . Fo cus on in te rnationally popular artists.
     
Soundtracks   Introduce classic musicals, soundtracks of movies like Grease, Saturday Night Fever etc .
     
C la ssica l   Includes classical and ope r a mus i c . Mostly well-known popu l ar favour i tes with a few more c hallenging wo rk s .
     
Cantonese   Latest Cantonese pop albums , pl u s new releases of older art ists (e .g . Greatest Hits rel eases) . New albums of old songs incl ud i n g New and Best of, e.g. Tribute to Leslie Cheung.
     
Asian Selection   Primarily pop for Mandarin like Fis h Leong, Stefanie Sun, old COs like Teresa Teng , Emil Cha u ; Korea n e.g . BoA, Ra i n & Japanese including some old albums like The best of P ink La dy, New Enka e . g. Kiyosh iHi kawa ; Japanese easy listening e.g. Ken H i ra i & Rimi Natsukawa ; and selections from o t her countries occasionally ( Philippines, Hindi) .

 

(b) There is currently a CD library of approximate ly 150 COs.

 

(c) There is a Juke Box function that allows passengers to compile their own song list.

 

(d) 15 COs will be c hang ed every month to ensure that the assortment i s up-to-date.

 

(e) The COs are divided into 10 categories a nd a mi n imum of five COs is required in each category.

 

(f) In addition to the CD library, 12 COs are specially se l ected for children, aged from 3 to teen. COs in the Kids category are updated on a d hoc basis as agre ed between t he parties.

 

4. Boarding Mu sic

 

(a) Bo arding music i s played du r ing take off and landing when t he IFE system is switched off.

 

(b) Flashcards (2 types: PCMCIA a nd Compact Flash) are used for boa rding m usic .

 

(c) 3 sets of boarding music are pr od uced every year: 1st set is used in January, February, Ju l y and August, 2nd set is used in March, April, September and October and 3rd set is u sed in May, June , November and December.
CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 42 of 57
 

 

(d) Boarding music is 30 minutes long and can range from 3 to 7 tracks depending on the length of the track.

 

(e) For exi s ting Panasonic PRAM Sy s tem, 6 flashcards are required per year, based on 2 duplications for each new variation of boarding music (i.e. 3 variations produced per year)

 

(f) For Airbus A340-600 iPRAM System, 1 flashcard is needed per aircraft that holds ALL boarding music for a whole year. Under cur r ent practice , the flashcard is sourced locally by Cathay and Cathay's engineer s programme the boarding music into the flashcards.

 

(g) Requirement s for boarding music: it should be non-intrusive, easy list e ning and reflect Cathay's branding .

 

Technical Specifications for Audio

 

1. Radio Channels

 

(a) One set of CDs is requir e d for each aircraft and extra sets of CDs are required as buffer.

 

(b) All CDs should contain mono tracks and there are no stereo track s . On each CD, there should be 4 mono tracks.

 

(c) For aircraft equipped with Panasonic eX2 IFE sy s tem, the "Radio Chann e ls " will be run in AOD format. For all other aircraft, the "Radio Channels" will be run on CD format .

 

(d) The update frequency and channels per track information are detailed below:

 

CD no.   Channel
no.
  Current Categories   Programme
Cycle
CD 1ex   4   Hot: HK   Monthly
    5   A Musi c al Journey    
    6   Mand a rin Z one    
    7   Chine s e All Time Hits    
CD 2 ex   8   J-P o p   Monthly
    9   Mumbai B e at    
    10   Philippine Soundwave    
    11   Classical Moods    
CD 3 ex   12   Cla ss ical Choice   Monthly
    1 3   All Tim e Hit s    
    14   Rewind    
    15   Pop Zone    
CD 4 ex   1 6   Rock   Monthly
    17   Danc es c a pe    
    18   Ea s y Mood s    
    19   Jazz    
CD se x   20   S e renity   Bi-monthly
    21   Mu s ic Special    
    22   J - M e dley    
    23   Korean Mu s i c Bo x    
CD 6 e x   2 4   Malay Hits   Bi - monthly
    25   Thai Mi x    

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 43 of 57
 

 

2. AOD specification

 

(a) Audio Elementary Str e am: AES

Layer 1 & 2 Audio (MP1MP2 NOT MP3 )

Joint stereo/stereo/mono/dual

Bit rate @ 128 Kbs

Sample Ra t e @ 44 . 1KHz

(b) Transport stream file format :

PAT PID = O x OO PMT PID = Ox3F
PCR PID = Ox30
Video ES 1PID = O x 30
Audio ES 1PID=O x 31

Audio ES 1PID = Ox32 OPTIONAL

Audio ES 1PID=O x 33 OPTIONAL
Audio ES 1 PID= Ox 34 OPTIONAL

 

3. Boarding Music specification

 

(a ) For the current Panasonic IFE Sys te m, PRAM is u s ed. Mo del i s RDA X 7 6 73-01 and RDAX7675-01 which supports 40MB PCMCIA flashcards . A ll fla s hcards need to be encoded by the Panasonic encoder. IFP is required to update t he flashca r ds w i th t he encoded cont e nts

 

(b) For Airbus A340-600 iPRAM System, the unit is integrated i n to the Air b u s FAP u n it which s upports up to 256MB COMPACT FLASH flashcard s . The c o nte nt s are encoded i n MP3 format and put on the flashcard via the KID Compi l er t o o l. IFP i s requ i red to provide the content in a CD for Cathay to update it to th e COMPACT FLASH flashcard on the aircraft.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 44 of 57
 

 

For Dragonair:

 

Specification of Western Movies

 

1. Overall Strategy for Movies

 

(a) Dragonair aims to present a diverse and interest i ng r ange of movies from Hollywood's blockbusters to popular Asian movies, with conten t free from controversial topics touching on political, rac ial, cultura l and religious issues .

 

(b) The selection includes new releases, popular blockbuste rs and Asian movies in multiple languages catering to the airline 's diverse demographic mix.

 

(c) Movies are only available on routes over 2 hours 40 m i nutes fly i ng time.

 

(d) *** movies are offered each month, *** are Hollywood mo v ies, *** are Asian movies and *** are movies from Disney, i.e. *** movies on inbound f l ig ht s and *** on outbound flights .

 

(e) The Hollywood movies are shown on both mainscreen and personal TV wh i le Asian movies and Disney movies are shown on personal TV only.

 

(f) The Hollywood movies are updated on bi-weekly bas is, the Asian movies are updated on monthly basis while the Disney movies are upda t ed on quarterly bas is .

 

(g) For the movies shown on the Japanese routes, they are r equir ed to be duplicated with En glish and Japanese audio soundtracks to cater for the Japanese passengers. Chinese subtitles are required.

 

(h) For Western movies, there is English soundtrack with appropriate Chinese subtitles. For Film Asia movies, there is original language soundt r ack with Chinese and English subtitles .

 

2. Movie Categories

 

(a) A total of *** movie s, *** for inbound flights and *** for outbound flig h ts, are offered each month under the following categories :

 

 

Categories

 

 

Description

 

Q u antity

Requ ired

Blockbusters  

Showcasing all the action from the biggest

Hollywood blockbusters

  ***
Film Asia   Get ahead with this fine selection of the late s t Asian mov i es   ***
D isn ey   Disney movies fo r the kids and the who l e family   ***

 

3. Specification of Western Movies

 

(a) Please refer to the Video Channel Line-up for details.

 

(b) The quantity shown below is the total number of programmes requi re d every month for both inbound and outbound flights.

 

 

Categories

 

 

Language

 

 

Subtitles

 

Update

Frequency

  Quantity
per cycle
Blockbusters  

 

English

 

Chinese

 

Bi-weekly

 

***

 Disney

 

Eng l ish and Cantonese

 

N/A

 

Quarterly

 

***

(c) Chinese subtitles can be in T rad itional Chinese or Simplif i ed Chin ese .

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 45 of 57
 

 

Specif i cation of Western Short Features

 

1. Overall Strategy for Short Features

 

(a) In view of Dragonair's operating network, the majority of the routes have a f lying time of under 2 hours and 40 minutes. As such, only s hort f eature programmes w i ll be broadcasted on these rou tes, resulting in a demand for a wide variety of quality short feature programmes in the genres of lifestyle, sports, documenta r y, popular sitcoms, business and entertainment, etc.

 

(b) For routes less than 2 hours flying time, compilations of 60-minute short feature programmes are shown on repeating cycles . For route s between 2 hours and 2 hours 40 minutes, compilations of 80-minute programmes are shown . For routes over 2 hours 40 minute s flying time, movies and compi l ations of 135-min ute are shown.

 

(c) There is 1 main-screen channel on all classes of the A321 fleet. T h ere are 5 PTV channels on First Class and 1 main-screen channel on Business and Eco nomy class on the A33R fleet while there are 10 PTV channels on all classes of t h e A33A and A33L fleets.

 

(d) All programmes are updated monthly except for those featured in the mainscreen that they are updated bi-weekly and programmes in Disney & Disney Channel t hat they are updated quarterly. The programming is diffe rent for inbou n d and outbound flights.

 

(e) For SO-minute and 135-minute programming blocks, they are comb i na t ion of 30- minute and 60-minute programmes. The number of programmes selected in a programming block may vary depending on the actual runtime of the programmes included. Extra fillers may be required to fill up an 80-minu t e or 135-minute programming block.

 

(f) The 60-minute and 80-minute short feature programm ing blocks showing on main screen of the A33R and A321 aircraft are updated bi-weekly and t hey wi ll be shown on the channel of "O n Air TV " . The programmes s hown on the main-screen channels cannot be repeated due to the lack of channel choices as well as the presence of frequent fliers on our regional flights .

 

(g) The language requirements for Western short feature programmes should include a soundtrack in English with appropriate Chinese subtit l es. For Asian shor t feat ure programmes, t here should be original languages soundtrack (Cantonese, Man da r in or Japanese, etc.) with Engli sh subtitles.

 

2 . Short Feature Categories

 

(a) A total of *** hrs of programmes are offered each month under t he following categories:

 

 

Categories

 

 

Description

 

Quantity per

Month

Asian TV

_(Cantonese)

  Lifestyle, travel, and variety shows, documentary , magazine programmes.  

 

*** hrs

Asian TV (Mandarin)  

Lifestyle, travel, and variety shows, documentary,

magazine programmes. (Mandarin)

 

-

*** h rs

 

Comedy

 

 

Sitcoms, popular shows

  *** hrs

 

Disco ve r y

  Documentaries about nature, science, history and culture.  

 

*** h rs

 

Lifestyle

  Technological trends, fashion, fine dinning/cooking, travel, design (e.g. i nterior, architecture), modern living  

 

*** hrs

 

Sports

  Profiles, classic matches, documentaries from t he world of sport  

 

*** hrs

 

Drama

 

 

Dramatic, action, romantic TV hits from US & UK

 

 

*** hrs

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 46 of 57
 

 

Categories

 

Description

 

Quantity per

Month

Business

  Current affairs, documentaries and profiles from   a business   perspective.  

*** hrs

Ent-Magazine

  Gossip, news and interviews from behind t he scenes from   Hollywood and beyond. Light- hearted Reality  TV shows and contests.  

*** hrs

Disney

Channel

  Animation and TV hits   for the kids and t he whole family (Disney)_  

*** hrs

 

3. Specification of Western Short Features

 

(a) Please refer to the Video Channel Line-up for details .

 

(b) The quantity shown below is the total number of programmes re qu ired every month for both inbound and outbound flights.

 

 

Categories

 

 

Language

 

 

Subtitles

 

Quantity per

Month

 

Comedy

 

 

English

 

 

Chinese

 

 

*** hrs

 

Discovery

 

 

English

 

 

Chinese

 

 

*** hrs

 

Lifestyle

 

 

English

 

 

Chinese

 

 

*** hrs

 

Sports

 

 

English

 

 

Chinese

 

 

*** hrs

 

Drama

 

 

English

 

 

Chinese

 

 

*** hrs

 

Business

 

 

English

 

 

Chinese

 

 

*** hrs

 

Ent-Magazi ne

 

 

English

 

 

Chinese

 

 

*** hrs

             

Disn ey

Channel

 

Cantonese

 

N/A

 

*** hrs

(c) Chinese subtitles can be in Traditional Chinese or Simplified Chinese.

 

Technical Specification for Western Movies and Western Short Features

 

(a) Specification for Broadcast Channels
NTSC system
VHS cassettes
Hi-8 tapes

Stereo broadcast

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 47 of 57
 

 

Specification of Audio

 

1. Overall Strategy for Audio

 

(a) Tune in to On Air Radio, Dragonair's hip 16-channel selection of inflight airwaves for passengers of all cabin classes . With a wide range of premium audio entertainment showcasing the newest and best of East and West, timeless classics of rock and jazz, stirring orchestral performances and music from favourite movies, as well as soothing sounds and mellow melodies to relax with, the programming strategy of On Air Radio is simply to give the greatest choice of aud io entertainment to Dragonair's passengers.

 

(b) On Air Radio's 16-customised audio channels are available in all cabin classes on IFE-equipped aircraft. All channels are broadcast in a repeating cycle of 120 minutes. Of which, 4 channels are presented by DJs.

 

2. Radio Channels

 

(a) There are a total of 16 customised radio channels available in all classes on all routes. All channels are broadcast in a r epeating cycle of 120 minutes.

 

 

No.

  Channel
name
 

 

Description

  Update
frequency
 

 

Language

1   Canto Pop   Hosted Programme .   Includes  an artist feature segment which showcases three tracks from a single artist, plus a review of their musical history  and sometimes an interview .   Monthly   Cantonese
2  

Mandarin

Pop

 

Hosted programme. The hottest stars from Hong Kong, Taiwan, Main land China and Asia are featured in this jam-packed Mandarin pop show featuring a ll the latest hits!

  Month ly   Mandarin
3  

Chinese

Gold

  Hosted programme with the very be s t Chinese Go ld hit s including an hour each of Cantonese and Mandarin track s , to take pa ssenge rs on a musical journey   throuqh time!   Monthly  

Cantonese

& Mandarin

4   Pop Hits  

H osted programme. An up-tempo

and fun mix of new and forthcom i ng releases plus some more established tracks from the international pop charts.

  Monthly   Engli s h
5  

Classical

Moods

  Popular and familiar   li ght classics from the great composers, uninterrupted. (No presenter)   Monthly   N/A
6   Jazz   A collection of cool, laid-back ja zz. (No presenter)   Monthly   Eng li sh
7   Rewind  

A programme of 80's to 90's pop or rock show. (No presenter)

  Monthly   Eng l ish
8   Easy Moods  

A mellow mix of light contemporary lov e songs and ballads from a diverse group of artist s . (No presenter)

  Monthly   English
9   Rock   A se l ection of the best rock in the sky as we play new and classic music from some of the world's greatest bands. (No presenter)   Monthly   Engli s h
10  

All Time

Hit s

 

A programme of favourit e hit s from th e 50 s , 60 s and 70 s. (No pr es ent e r)

  Monthly   Engli s h

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 48 of 57
 

 

 

No.

  Channel name  

 

Description

  Update frequency  

 

Language

11   Dancescape   Get in the beat  or simply chill out  to these  tunes. (No presenter)   Mont hly   English
12   J-Pop  

The latest Japanese Pop music or New Enka. (No presenter)

  Mont hly   Japanese
13  

Korean

Music Box

  Music from   the movies, TV and chart-topping artists of Korea. (No presenter)   Bi-monthly   Korean
14   Thai Mix   A variety of Thai contemporary hits. (No presenter)   Bi- m o n thly   Thai
15  

Taiwanese

Favourites

  A great   mix   of current Taiwanese  or Min Nan song, plus recent  classics . The selection of music  will have huge appeal  to the   ta rget audience. (No presenter)   Bi-month ly   Taiwa nes e
16  

Chinese

Classical

  An enchanting and captivating mix of traditional Chinese classical music played  on traditional instruments, plus  pieces composed by famous Chinese  composers for western orchestras. (No presenter)   Bi-month ly   N / A
(b) Each audio channel is 120 minutes in length and has approximately 26 track s .

 

(c) All channels, except ' Canto Pop', 'Mandarin Pop ' , 'Pop Hits ' and 'Ch in ese Gold ' , are not hosted.

 

(d) The presenters must be s uitable for Dragonair's demographics, and should not have strong accents.

 

(e) Jingles are sometimes used and are permitted. (f) Presenters usually make reference to Dragonair.

 

(g) A monthly marketing message (i.e . related to promotions, latest news, selling of the Dragonair's brand) w i ll be provided to the presenter on the 13th of each month, so that it will be included in each hosted channel's talks, for programmes to be run 2 months later .

 

(h) Presenters may conduct interviews with celebrities or guests where appropriate.

 

(i) Method of recording is fle xib le as long as the end product is su ita b l e for inflight listening. They can be recorded either on com put er or in studio .

 

3. Boarding Music

 

(a) Boarding music is played on all flights during take off and landing for passengers to relax and enjoy . Dragonair commissioned local music i an Johnny Yim to compose five exclusive tracks of ambient music representing five uniq u e aspects of our region's cultures .

 

(b) Dragonair commissioned the exclusive composition of the 5 instrumenta l" music pieces for use as ambient music and/or any purposes as i t desires.

 

(c) Since the Masters for the boarding music have been prod uc ed, IFP is on ly required to update and encode the flashcards and cassettes acco r ding to this schedule.

 

4. Technical Specificat i ons

 

(a) Broadcast specifications

One set of CDs is required for each Aircraft in the Dragonair Fle e t and extra sets of CDs are requir e d as buffe r.

All CDs should contain mono tracks and there are no stereo tracks. On each CD, there should be 4 mono t racks.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 49 of 57
 

 

(b) Boarding Music Specifications

A combination of PRAM/BGM Reproducers that suppo r ts flashcards and cassette tapes is used across the Dragonair's fleet of A330, A321 and A320 aircraft. T he models that support flashcards are RDAX7675-51 and RDAX7675-01. The models that support cassette tapes are RDAX7271KA01, RDAX7271ZZZZ and RDAX7271CX01.

All flashcards and cassette tapes need to be encoded by the Panasonic encoder. IFP is required to update the flashcards and cassette tape s with the encoded contents
There are 2 storage formats for the Boarding Mus ic. Below is a summary of the BGM Source and st orage formats of the respective aircraft:

 

Fleet Boarding Music Source

 

A330   Flashcard   Cassette   A320   Flashcard   Cassette   A321   Flashcard
HYA       Yes   HSD       Yes   HTD   Yes
HYB       Yes   HSE       Yes   HTE   Yes
HYD       Yes   HSF       Yes   HTF   Yes
HYE       Yes   HSG       Yes   HTG   Yes
HYF       Yes   HSH       Yes   HTH   Yes
HYG   Yes       HSI       Yes   HTI   Yes
HYH   Yes       HSJ       Yes        
HYI   Yes       HSK   Yes            
HYJ   Yes       HSL   Yes            
HYO   Yes       HSM   Yes            
HWF   Yes       HSN   Yes            
HWG   Yes                        
A330   Flashcard   Cassette   A320   Flashcard   Cassette   A321   Flashcard
HWH   Yes                        
HWI   Yes                        
HWJ   Yes                        
HWK   Yes                        

 

No of cassette based a/c                12

No of flashcard based a/c               21

(c) Boarding Music Update Schedules & Process
Cassette tape-based aircraft - In view of the durability of the cassettes and to pre-empt wear and tear, cassettes are updated on a bi -monthly basis, in each ODD month.
Flashcard-based aircraft - As the boarding music is stored digitally in the system memory, the boarding music only needs to be updated whenever the - actual boarding music is required for change.
Due to the Panasonic IFE sys tems ' proprietary encoding requ i rements, the boarding music update for flashcards and cassettes must be performed at a facility equipped with the relevant Panasonic encoder hardware and software.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 50 of 57
 

 

SCHEDULE 2- PROGRAMMING GUIDELINES

 

For Video Programmes

 

1. For Western Movies, wherever possible, the threatical (unedited) ve rsion is preferred.

 

2. For Western Short Features, only episode-based programmes s houl d be considered and TV serial should not be selected as long as programme is offered as broadcast channels instead of AVOD.

 

3. Programmes selected must not contain the following scenes or elements, or t he related scenes or elements must be edited out :

 

3.1 Full frontal nudity

 

3.2 Derogatory portrayal of China or Chinese citizens

 

3 .3 Possession I Satanism

 

3.4 Active promotion of other airlines

 

3.5 Explicit sex scene, including special sexual orientation

 

3.6 Extremely strong language and swearing

 

3.7 Extensive nudity

 

3.8 Extreme violence, including extreme scenes of blood and gore

 

4. Attention must be brought to Cathay if programmes contain the following elements :

 

4.1 Scenes or reference to aircraft crashes, hijacks, disasters, and hostage-taking

 

4.2 Controversial political issues, including criticism of Commun ist doctrine or Government

 

4.3 Religious content, including scenes disrespectful to sacred animals

 

4.4 Containing explicit refer e nce to Cathay Pacif i c or other airlines

 

5 . For Western Movies, movie rating (e.g. R, PG-13) from terrestrial release must be provided for reference. Att e ntion mu st be brough t to th e A ir lin e if any NC-17 is r eco mmended.

 

6. Applicable warnings and intensity levels must be indicated for each mov ie during t itle selection recommendation:

 

6.1 Warnings

 

A: Strong adult themes                      - Including drug use, criminal acts, etc. C: Aircraft incidents

 

L: Strong language

 

N: Nudity

 

P: Political th emes

 

R: Religious content

 

S: Sexual content

 

V: Violence, blood or gore

 

6.2 Intensity L e v e ls

 

Th e Intensity levels of eac h warning should be indicat e d by High ( H ), Medium (M), or Low (L).

 

e.g. Fo r a TV programme with a high intensity of strong l ang u age, med ium violence, and low sex ual content, t h e warnings s hould be indi cated as fo llow ed : L (H), V (M), S (L)

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 51 of 57
 

 

For Audio Programmes

 

1. Audio content must not contain:

 

1.1 Offensive swearing

 

1.2 Religious criticism

 

1.3 Controversial political issues

 

1.4 Interviews should not be overtly promotional

 

1.5 Reference to aircraft disasters or crashes

 

1.6 Promotion of competitive airlines

 

1. 7 Derogatory portrayal of China or Chinese citizens

 

1.8 Presenters or interviewees with language and dialect, which may be hard to follow, for example, Irish, Scottish, Afro-Caribbean.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 52 of 57
 

 

SCHEDULE 3 -CONTACT AND DELIVERY DETAILS

 

Contact Information of the Airline:

 

8/F North Tower

Cathay Pacific City

8 Scenic Road

Hong Kong International Airport

Lantau, Hong Kong

 

Contact Per so n:

Mr. Clement Au

Manager Inflight Communication and Entertainment

Tel: (852) 2747 5148
Fax: (852) 2141 5148
Em ai I: Clement_a u@cathaypacific.com

 

Ms . Eva Chan

Assistant Purchasing Manager - Marketing

Tel: (852) 2747 4187
Fax: (852) 21414187
Email: e va _c han@cathaypacific .c om

 

Contact Information of IFP:

 

15 Stukeley Street

London WC2B

5LT United

Kingdom

 

Contact Person :

Ms . Janet Winstanl e y

Client Services Manager

Tel: (44) 20 7400 07 33
Fa x: (44) 20 7400 0745
Email: janet.winstanley@inflightproductions.com

 

Delivery Address for Promotional Materials:

 

ACP Magazines Asia Limited

Suite 604 - 605

625 King's Road

North Point, Island East

Hong Kong

 

Contact Per son:

Elisabeth Attwood

Entertainment editor

Tel : (852) 3921 7051
Fax : (852) 39217099
Email: eattwood@acpmagazines.com.hk

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 53 of 57
 

 

Delivery Address for Video Cassettes:

 

For Cathay:

Cathay Pacific Airways

C/0 HAECO

2/F, 80 South Perimeter Road

Hong Kong International Airport

Lantau, Hong Kong

 

Contact Person:

Mr. Frankie Leung

Tel: (852) 2787 6336
Fa x: (852) 2767 6852
Email: ow.leung@haeco.com

 

For Dragonair:

Dragonair

C/O Cabin Services of

China Aircraft Services Ltd.

4N505 Passenger Terminal Building

1Cheong Hong Road

Hong Kong International Airport

Lantau , Hong Kong

 

Contact Pe rso n:

Mr. Patrick Chan

Tel: (852) 2261 2311
Fax: (852) 2261 2312
Email: patrick.chan@casl.com.hk

 

Delivery Address for Audio COs:

 

For Cathay:

Cathay Pacific Airways

C/0 HAECO

2/F, 80 South Perimeter Road

Hong Kong International Airport

Lantau, Hong Kong

 

Contact Person:

Mr. Frankie Leung

T e l : (852) 2787 6336
Fax: (852) 2767 6852
Email: ow.leung@haeco.com

 

For Dragonair:

Cathay Pacific Airways

C/0 HAECO

2/F , 80 South Perimeter Road

Hong Kong International Airport

Lantau, Hong Kong

 

Contact Per son:

Mr. Victor Kwan

Tel: (852) 2767 6776
Emai l: victor.kwan@haeco.com

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 54 of 57
 

 

Delivery Address for Boarding Music Flashcard:

 

Cathay Pacific Airways

Product Department

8/F North Tower

Cathay City

8 Scenic Road

Hong Kong International Airport

Lantau, Hong Kong

 

For Cathay:

Contact Person:

Ms. Mimi Chan

Tel: (852) 2747 5345
Fax: (852) 2141 5345
Email: mimi_chan@cathaypacific.com

 

For Dragonair:

Contact Person

Ms. Mun Wong

Tel: (852) 2747 4133
Fax: (852) 2141 4133
Email: siu_mun_wong@cathaypacific.com

 

Delivery Address for Digital Media for Media Integration for Cathay:

 

Inflight Productions Limited

15 Stukeley Street

London WC2B

SLT United

Kingdom

 

Contact Person:

Mr. Marc Fegredo

AVOD Coordinator

Tel : ( 44) 207 400 8582
Fax: (44) 207 400 0707
Email: marc.fegredo@inflightproductions.com

 

Delivery Address for the Airline to return the cassette of Western Movies for destruction:

 

Inflight Productions Inc

Suite 201,615 N Nash St.

El Segundo, CA 90245

USA

 

Contact Person:

Ms. Sharon Engelenburg, Operations Manager

Tel: (1) 310 414 6900 ext 114
Email: sharon.engelenburg@inflightproductions.com

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 55 of 57
 

 

SCHEDULE 4- BUDGET FOR 2007

 

(To be inserted)

 

***

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 56 of 57
 

 

SCHEDULE 5- KEY PERFORMANCE INDICATORS

 

(To be inserted)

 

CX and KA Western Programming Agreement - IFP Final 26JUN08 Page 57 of 57
 

 

Key Performance Indicators - IFP Production Services

 

Evaluation Period: Overview

 

The Key Performance Indicators are a set of recognized parameters by which CX measures the service providers performance

 

Frequency

 

The basis of the Key performance indicators outlined in this document will be completed every 6 months as part of the Supplier Performance Evaluation Process. The reviews are likely to take place in July and January.

 

The KPI's will be evaluated on an annual basis to ensure they accurately reflect appropriate parameters for measurement.

 

Scoring Panel

In response to the evaluation process key members of CX who interface with the service provider on a regular basis w i ll complete the evaluation sheet judging the service provider against each of the 6 constructs outlined and will give a score ranging from 1 - 5 as detailed below.

 

Scoring Mechanism

Each person scoring the performance of the service provider will enter a "1" under the appropriate score, I.e. 5, 4 , 3 , 2 , or 1 for each statement. The KPI spreadsheet will automatically calcu l ate the overall scores.

 

Totally Satisfied/Far exceeds expectations 5
Mostly Satisfied/Always meets but at times exceeds expectations 4
Somewhat Satisfied/meets expectations 3
Dissatisfied/below  expectations 2
Fail 1

 

Comments will be provided during the review process for each of the 6 sections. Where a " 1" or "2 " has been awarded, specific comments related to that particular sco r e will be deta i led and shared with the service provider .

 

S c h e dule 5a - K ey Perf or mance Indi c at o rs P a ge 1 of 9

 

 
 

 

360 Degree Feedback

 

Supplier: Inflight Productions Limited

 

Duration: _ _ _ _ ___________

 

The aim of 360 degree feedback is for the supplier to provide feedback on Cathay P a c i fic ' s performance. It should focus on ways in which an improvement in Ca t hay ' s way of wor ki ng could help the supplier perform the role for which they have been appoin t ed mor e effic i ently. The feedback is meant to be constructive and will help identify areas for Cathay to focus in order to improve the working relationship and eff i ciency of the supplier.

 

Scores:

5: Excellent
4: Good
3: Average
2: Development Needed
1: Poor I Disappoint i ng

 

Please underline and bold the score for the evaluation period, e.g. 2.

 

     
1. Communication   SCORE
     
•     Lines of communication are clearly defined and effective (i.e .   work i n pract i ce)   1 2 3 4 5
     
•      Levels of authority and decision making  power are clearly understood.   1 2 3 4 5
     
•     Role responsibilities within  the IFE team and APD team are clearly set out and defined .   (Does confusion arise as to who performs   w hich r ole?)   1 2 3 4 5
     
•      Important information told to one member  of CX is disseminated   to the corr e ct people .   1 2 3 4 5
     
•      A coherent   message is given from all contact points within CX (are t here conflicting   messages?)   1 2 3 4 5
     
•      Deadlines and timescales are clearly communicated   1 2 3 4 5
     
Overall Score   12345
     
Comments    
     
2. Personnel and  working relationship   SCORE
     
•      People are quick to respond to queries   and emails.   1 2 3 4 5
     
•      Approvals on programming suggestion s   are timely.   12 3 4 5
     
•      Cx personnel are easy to deal with, professional, yet help f u l   a n d approachable.   12345
     
•      Cx personnel have adequate knowledge   of IFE technical iss u es required   to perform   their role effectively?   1 2345

 

Schedule 5b - IFP Feedback to Cathay

 

 
 

 

Overall Score   12345
     
Comments    
     
5. Information sharing   SCORE
     
•      The format  and analysis of survey  results and AVOD usage data is easy to understand  and well presented.   1 2 3 4 5
     
•     CX provides  regular  updates  with regards information related to Cathay, such as new routes, new initiatives etc.   1 2 3 4 5
     
     Cx provides correct  duplication volumes  in sufficient time.   1 2 3 4 5
     
Overall Score   12345
     
Comments    
     
6. Third Parties   SCORE
     
•      Cx helps to ensure  that  third  party  suppliers  integrate well.   1 2 3 4 5
     
•     Cx understands the challenges of working  with other third  parties.   1 2 3 4 5
     
•     Cx is effective at coordinating themes and ideas among all IFE suppliers.   1 2 3 4 5
     
•     Cx helps to ensure that  third  party  suppliers  meet  their  deadlines.   1 2 3 4 5
     
Overall Score   12345
     
Summary    

 

Schedule 5b - IFP Feedback to Cathay

 

 
 

 

AGREEMENT BETWEEN

CATHAY PACIFIC AIRWAYS LIMITED, HONG KONG DRAGON AIRLINES LIMITED AND INFLIGHT PRODUCTIONS LIMITED

 

For the Supply of Programming and Production Services for Inflight Entertainment (Western Programmes)

 

AGREEMENT AMENDMENT

 

T h is AGREEMENT AMENDMENT ("Amendment") is dated 21st February 2012 and Is made between Cathay Pacific Airways Lim ited ("Cathay "), Hong Kong Dragon Airlines Lim i ted ("Dragonair") and Infilght Productions Limited ("IFP") to amend the AGREEMENT ("Agreement") which was made on 26th June 2008 , as amended by Agreemen t Amendment which w a s made on 15th July 2009 and the extension n otice letter which was made on 30th September 2011.

 

RECITALS

 

The parties agree to extend the Term of the Agreement for e i ghteen (18) months and the Term will be further rene wed for another one (1) year subject to Cathay's/Dragonalr ' s discretion.

 

The definitions in the Agreement are incorporated by r efere nce into this Amendment, and shall be deemed to have the same meanings as those ascribed to them In the Agreement unless otherwise set forth herein.

  

NOW, THEREFORE, the parties agree this Agreement Amendment to supersede the previous extension letter dated 30th Septembe r 2011 and to amend the Agreement as follows:

 

1. At the end o f the Term of the Agreement at 31 st December 2011 , the Term shall be extended for eighteen (18) months t ill 30th June 2013. Subject to written notice from Cathay to IFP at least three (3) months pri or to the expiry of the Agreement, the Agreement shall be further e x tended for one (1) year till 3oth June 2014.

 

2. The Reg ional AVOD Movie License rates shall be reduced starting from *** till *** , as per the commercial proposal sent from IFP to Cathay on *** .

 

Distributor  

LH/PTV Rate

(average over 3 months)

 

Regional AVOD Rate

(average over 3 months)

Disney   ***   ***
Paramount   ***   ***
Sony   ***   ***
Univer sa l   ***   ***
Twentieth Century Fox   ***   ***
Warner  Brothers   ***   ***
Cincsky   ***   ***
ElM   ***   ***
Jaguar   ***   ***
TSI   ***   ***

 

3. Th e following Service Costs shall be amended starting from *** till *** as stated in *** commercial proposal:

 

3.1 The Recall Fees sha ll be covered by *** for the New Release titles booked by Cathay within the fir st 3 months of release .

 

3 . 2 The unit rate for VHS Duplication Cost shall be aligned t o *** for all lengths up to 150 minutes at the Lab. Aero for both Cathay and Dragonair:

  

    VHS T a p e
135-minute   ***
90- minute   ***
60-min ut e   ***

 

 

*** Confidential treatment requested.

 

 
 

 

3.3 The unit rate for V8 Duplication Cost shall be aligned to *** at Lab. Aero for Dragonair :

 

    V8 Tape
135-mlnute   ***
90-minute   ***

 

3.4 The unit rate for BGM Flashcard Duplication Cost shall be reduced from *** for Dragonair.

 

4. All other terms and conditions of the Agreement shall remain In full force and effect.

  

IN WITNESS whereof the Parties hereto have caused this Agreement to be duly executed by their authorised representatives the day and year first above written .

 

Signed  for   Witnessed   by:
CATHAY PACIFIC AIRWAYS LTD. by:    
     
/s/ Gloria Chow-Vanderwell   /s/ Penny Chan
Name: Gloria Chow-Vanderwell   Name: Penny Chan
Job Title: Product Manager   Job Title: Assistant Purchasing Manager
Cathay Pacific Airways Ltd.   Cathay Pacific Airways Ltd.
     
Date: 2/28/2012   Date: 2/28/2012
     
Signed  for   Witnessed   by:
HONG KONG DRAGON AIRLINES LTD.    
by its duly authorized agent:    
     
/s/ Gloria Chow-Vanderwell   /s/ Penny Chan
Name: Gloria Chow-Vanderwell   Name: Penny Chan
Job Title: Product Manager   Job Title: Assistant Purchasing Manager
Cathay Pacific Airways Ltd.   Cathay Pacific Airways Ltd.
     
Date: 2/18/2012   Date: 2/28/2012
     
Signed  for   Witnessed   by:
INFLIGHT PRODUCTIONS LTD.    
by:    
     
/s/ Roberts G. Hamler   /s/ Suzi Hennessy
Name: Roberts G. Hamler   Name: Suzi Hennessy
Job Title: CEO   Job Title: VP Operations
Inflight Productions Limited   Inflight Productions Limited
     
Date: 2/22/2012   Date: 2/22/2012

 

 

*** Confidential treatment requested.

 

 

 

 

Exhibit 10.12

 

CONFIDENTIAL TREATMENT REQUESTED FOR PORTIONS OF THIS DOCUMENT. PORTIONS FOR WHICH CONFIDENTIAL TREATMENT IS REQUESTED HAVE BEEN MARKED WITH THREE ASTERISKS [***] AND A FOOTNOTE INDICATING “CONFIDENTIAL TREATMENT REQUESTED”. MATERIAL OMITTED HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

 

AMENDED AND RESTATED

 

SUPPLY AND SERVICES AGREEMENT

 

by and between

 

ROW 44, INC.

 

and

 

SOUTHWEST AIRLINES CO.

 

 

 

 
 

 

  Table of Contents  
     
    Page
     
ARTICLE 1. DEFINITIONS 1
     
  Definitions 1
  Captions, References and Construction 2
  Financial Terms 2
     
ARTICLE 2. SUPPLY 2
     
2.1 Deliverables, Acceptance. 2
2.2 Regulatory Activities. 4
2.3 Supply of Broadband System. 5
2.4 Inspection Rights 6
2.5 Technical Assistance 7
2.6 System Software License. 7
     
ARTICLE 3. THE SERVICES 8
     
3.1 Subscription; Commissioning; Additional Features 8
3.2 Wi-Fi Service. 8
3.3 Additional Included Services 9
3.4 Entertainment Portal Service. 10
3.5 Elected Services 10
3.6 Operational Data Service 11
3.7 Television Service. 12
3.8 VOD Only Solution. 13
3.9 Right to Receive Additional Services 13
     
ARTICLE 4. AGREEMENTS AND ACKNOWLEDGEMENTS 13
     
4.1 Southwest Responsibilities. 13
4.2 Row 44 Responsibilities . 13
4.3 Other Agreements and Acknowledgements. 14
     
ARTICLE 5. REPRESENTATIONS, WARRANTIES AND COVENANTS 16
     
5.1 By Row 44: 16
5.2 By Southwest: 18
     
ARTICLE 6. PRICING AND PAYMENT 19

 

i
 

 

6.1 System Units. 19
6.2 Services. 19
6.3 Invoice and Payment. 19
6.4 Taxes. 20
     
ARTICLE 7. INDEMNIFICATION AND INSURANCE 22
     
7.1 Indemnity By Row 44 22
7.2 Intellectual Property Indemnity 22
7.3 Indemnity by Southwest 23
7.4 Third Party Actions 23
7.5 Cooperation 24
7.6 Insurance. 24
     
ARTICLE 8. TERM AND TERMINATION 25
     
8.1 Term 25
8.2 Termination by Row 44 for Failure to Pay 25
8.3 Termination by Either Party for Breach or Insolvency 25
8.4 Termination by Southwest 26
8.5 Effect of Expiration or Termination of this Agreement for Any Reason 26
8.6 Remedies Cumulative and Nonexclusive 26
8.7 Rights In Bankruptcy 27
8.8 Operations after Termination 27
8.9 Notice of Termination 27
8.10 Wind Down 27
8.11 Post-Termination Assistance 27
     
ARTICLE 9. DISPUTE RESOLUTION 27
     
9.1 Escalation 27
9.2 Binding Arbitration. 27
9.3 Governing Law; Jurisdiction; Venue 29
     
ARTICLE 10 . CONFIDENTIALITY, PUBLICATION AND PUBLICITY 30
     
10.1 Confidentiality 30
10.2 Publicity 31
10.3 Employees and Consultants 31
     
ARTICLE 11. OTHER PROVISIONS 31
     
11.1 Assignment 31
11.2 Severability 32
11.3 Notices 32
11.4 Entire Agreement 32
11.5 Independent Contractors 33
11.6 Waiver 33

 

 

ii
 

 

11.7 Counterparts 33
11.8 Waiver of Rule of Construction 33
11.9 Force Majeure 33
11.10 Liability Limitations 33
11.11 Third Party Beneficiaries 34
     
     
     

 

Exhibits :  
       
  Exhibit A – Definitions  
       
  Exhibit B – Hardware Agreement Exhibits  
       
  Exhibit C – Commissioning Procedure  
       
  Exhibit D – Entertainment Portal Service  
       
  Exhibit E – Television Service  
       
  Exhibit F – Wi-Fi Service and Operational Data Service  
       
  Exhibit G – Content Filtering and Procedures  
       
  Exhibit H – Network Description  
       
  Exhibit I – VOD Only Solution Product  
       
  Exhibit J – Security Provisions  

 

iii
 

 

AMENDED AND RESTATED AGREEMENT

 

THIS AMENDED AND RESTATED SUPPLY AND SERVICES AGREEMENT (this “ Agreement ”), effective as of February 1, 2013 (the “ Effective Date ”), is by and between Row 44, Inc., a Delaware corporation (“ Row 44 ”), and Southwest Airlines Co., a Texas corporation (“ Southwest ”). Row 44 and Southwest are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties ”. The Parties acknowledge and agree that it is the intention of the Parties to continue operating under the terms of the Supply Agreement (as defined below) and Services Agreement (as defined below) unmodified by this Agreement until the Effective Date in the event this Agreement is executed by both Parties prior to such date.

 

RECITALS

 

WHEREAS, Row 44 has developed a satellite based broadband Internet system composed of System Software (as defined in Exhibit A ), System Hardware (as defined in Exhibit A ) and other components (collectively defined in Exhibit A as the “ Broadband System ” and each instance of such system referred to as a “ System Unit ”) for use on commercial aircraft;

 

WHEREAS, the Parties have executed that certain Supply Agreement, dated as of August 13, 2010 (as amended and modified from time to time in accordance with its terms, the “ Supply Agreement ”) pursuant to which Southwest purchases certain quantities of such System Units from Row 44;

 

WHEREAS, the Parties have also executed that certain Services Agreement, dated as of January 26, 2010 (as amended and modified from time to time in accordance with its terms, the “ Services Agreement ”) pursuant to which Row 44 provides to Southwest, among other services, the Wi-Fi Service in connection with Southwest’s and Southwest’s customers’ use of the Broadband System; and

 

WHEREAS, in accordance with Section 16.4 of the Supply Agreement and Section 10.4 of the Services Agreement, the Parties wish to amend and restate the Supply Agreement and Services Agreement as one agreement to read as set forth herein.

 

NOW, THEREFORE, in consideration of the agreements, representations, warranties, promises and covenants contained herein, and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the Parties, intending to be legally bound, agree to the foregoing and as follows:

 

ARTICLE 1.

DEFINITIONS

 

1.1 Definitions . Capitalized terms used in this Agreement, including in any Exhibits and/or other documents attached to or otherwise made a part of this Agreement, shall have the meanings ascribed to them in Exhibit A attached hereto or shall be otherwise defined in the context in which they are used and shall have the meanings ascribed to them therein. All defined terms include the plural as well as the singular.

 

1
 

 

1.2 Captions, References and Construction . Captions, titles and headings to articles and sections of this Agreement are inserted for convenience of reference only and are not intended to affect the interpretation or construction of this Agreement. Any reference herein to a particular Section or Article number (e.g., “Section 2”) shall be deemed a reference to all Sections of this Agreement that bear sub numbers to the number of the referenced Section or Article (e.g., Sections 2.1, 2.1.1, etc.). The terms “this Agreement”, “herein”, “hereof”, “hereunder” and similar expressions refer to this Agreement and not to any particular article, section or other portion hereof. Unless otherwise specified, “days” means calendar days. Any use of the term “including” in this Agreement shall be construed as if followed by the phrase “without limitation” or “but not limited to”.

 

1.3 Financial Terms . All financial and accounting terms not otherwise defined in this Agreement, whether capitalized or not, will have the meanings assigned to them in accordance with GAAP.

 

ARTICLE 2.

SUPPLY

 

2.1 Deliverables, Acceptance .

 

2.1.1 Deliverables . Row 44 shall ensure that each Deliverable under this Agreement, and components thereof, when delivered to Southwest, conforms to the Specifications. Each shipment of a System Unit shall contain the quality control certificates and other documentation as are set forth on Exhibit B .

 

2.1.2 Acceptance . “ Acceptance ” for each applicable Deliverable under this Agreement, or components thereof, shall occur only when: (a) Row 44 has provided to Southwest such Deliverable, or components thereof, and Row 44 has completed all tasks required to be completed by Row 44 that are identified by the Parties as a pre-condition to Southwest’s acceptance; (b) such Deliverable, or components thereof, have passed the Southwest required receiving inspection in accordance with its Maintenance Procedures Manual (MPM) or equivalent (c) to the extent requested by Southwest, Row 44 has corrected, to Southwest’s satisfaction, all Defects identified by the Parties during the receiving inspection of such Deliverable, or components thereof. Notwithstanding the foregoing, Acceptance of a Deliverable shall take place no more than * ** after delivery of such Deliverable, or components thereof, to Southwest unless one of the criteria listed in this Section 2.1.2 is not achieved and Southwest provides notice to Row 44 of the same.

 

2.1.3 Failure to Achieve Acceptance . In the event Acceptance is not achieved within *** following delivery of a Deliverable, or components thereof, to Southwest, Southwest shall be entitled, at its election to ***

 

 

 

 *** Confidential treatment requested.

 

2
 

 

2.1.4 Supply Agreements . ***

 

2.1.5 Direct Negotiations . Southwest may negotiate directly with Vendors for on-going maintenance service agreements. Row 44 shall provide all required contact information and reasonably cooperate in providing background information as requested except where providing that information may violate existing agreements.

 

2.1.6 Specifications .

 

2.1.6.1 Changes by Row 44 . Row 44 may from time to time propose changes to the Specifications or a System Unit or a component thereof, including, as applicable, to update such System Unit or component thereof for features, performance, reliability or improved safety, and Row 44 shall propose any changes to the Specifications or a System Unit or a component thereof required to cause such System Unit or component thereof to comply with applicable Law. Before making a decision to proceed with any such change in Specifications or any material change in the System Units (i.e., a change that affects the form, fit or function of such System Unit) or manufacturing process, such change must first be discussed with Southwest to enable a thorough assessment of its impact, including potential unexpected or unintended ramifications. If such change is ultimately deemed necessary or advisable by Row 44 and agreed to in writing by Southwest, such consent to not be unreasonably withheld or delayed, Row 44 may make such change *** If Row 44 determines to make changes to System Units or a component thereof for its other customers, including, as applicable, to update such System Unit or component thereof for features, performance, reliability or improved safety, Row 44 shall promptly notify Southwest of such changes and make such changes available to Southwest at the same time as any other Row 44 customer. All such changes will be subject to the acceptance process set forth in Section 2.1.2 and Section 2.1.3 . Notwithstanding the foregoing, and for the avoidance of doubt, except as necessary to cause a System Unit or component thereof to comply with applicable Law, the Parties acknowledge and agree that the foregoing is not intended to provide a guarantee to Southwest that the System Units will be upgraded at no cost to Southwest to incorporate new or improved functionality developed in the future. Nothing in this Section shall be interpreted to in any way diminish the hardware reliability standards in Exhibit B, or any of the service levels set forth in Exhibits D, E, and F.

 

2.1.6.2 Change Requests by Southwest . At any time and from time to time during the Term, Southwest may request an update to the Specifications or a System Unit or a component thereof. Following receipt of such request, Row 44 shall notify Southwest whether such update is technically feasible and the estimated costs of implementing such update. If the update, in Row 44’s reasonable opinion is technically feasible, Southwest may request that Row 44 update the Specifications or a System Unit or a component thereof accordingly and the costs of the development of such update shall be paid by (a) Row 44, if Row 44 makes such proposed update available to System Units of other customers of Row 44 at no charge, or (b) Southwest, if Row 44 does not make such proposed update available to System Units of other customers of Row 44 or if Row 44 charges other customers for the proposed update, in which case Southwest shall pay no more than the amount charged such other customers. If the update is not technically feasible, Row 44 shall provide written notice thereof to Southwest, and the Parties shall use commercially reasonable efforts to develop a technically feasible solution that addresses Southwest’s request. If Southwest proposes an update to the Specifications or a System Unit or a component thereof that is custom-tailored to Southwest, then Southwest may request that Row 44 not make such update available to System Units of other customers of Row 44, in which case the costs of the development of such update shall be paid by Southwest and Row 44 shall not make any such updates available to System Units of other customers of Row 44.

 

 

 

 *** Confidential treatment requested.

 

3
 

 

2.2 Regulatory Activities .

 

2.2.1 Regulatory Activities . Subject to, and in accordance with, the terms and conditions of this Agreement and the requirements of all applicable Laws, Row 44, at its sole cost and expense, shall (a) take all actions necessary and file all Regulatory Filings with respect to the Broadband System required to allow Southwest to use the Broadband System to provide wireless Internet connectivity on the Designated Aircraft in ***, (b) respond in a timely fashion to requests for data and information from Regulatory Authorities with respect to the Broadband System; and (c) meet with officials of Regulatory Authorities at such times as may be requested by such Regulatory Authorities with respect to the Broadband System (“ Regulatory Activities ”). Row 44 shall keep Southwest timely informed of all material events and developments occurring in the course of the Regulatory Activities, including scheduled Row 44 regulatory strategy discussions and meetings with Regulatory Authorities relating to the Broadband System.

 

2.2.2 Row 44/Southwest Mutual Assistance . Upon written request from either party, the other party shall use commercially reasonable efforts to assist the requesting party in connection with any meetings and operator specific documentation with Regulatory Authorities related to the Broadband System.

 

2.2.3 Provision of Regulatory Information to Southwest . Row 44 shall use commercially reasonable efforts to assist Southwest in connection with its conduct of all of its Regulatory Activities, including by (a) providing Southwest with copies of the relevant sections of any United States regulatory filings for the Broadband System filed by or on behalf of, and controlled by, Row 44 as necessary for Southwest to make Regulatory Filings for the Broadband System and (b) supplying or granting Southwest the right to reference any reasonably requested data controlled by Row 44 that is necessary and required by applicable Laws to allow Southwest to meet its Regulatory Filing obligations. Southwest will have a right of access, a right of reference and the right to use and incorporate all information provided to it pursuant to this Section 2.2.3 solely to support its Regulatory Activities and in connection with Southwest’s use of the Broadband System and in accordance with the terms of this Agreement.

 

2.2.4 Governmental Inspections and Inquiries . Row 44 will advise Southwest promptly after it first has Knowledge thereof, but in no event later than *** after Row 44 first has Knowledge thereof, of any planned Regulatory Authority visit to the facilities of Row 44 or its Affiliates or subcontractors where System Units or components thereof are produced, stored or handled or any written or oral inquiries by a Regulatory Authority concerning such facilities, the procedures of Row 44 or its Affiliates or subcontractors for the production, storage or handling of the System Units or components thereof, or the use of the Broadband System. If a Regulatory Authority makes an unannounced or unplanned visit, or if Row 44 does not have at least *** of the visit, Row 44 will inform Southwest of the visit as soon as reasonably practicable after it first has Knowledge thereof, but in no event later than *** after Row 44 has Knowledge of the visit. Row 44 shall cause all of its contractual agreements with its subcontractors to include a requirement that each such subcontractor shall provide to Row 44 advance notice of any planned Regulatory Authority visit, and notice as soon as reasonably practicable of any unannounced or unplanned Regulatory Authority visit, to such subcontractor’s facilities relating to the production or operation of the System Units or components thereof or that is generally applicable to production of commercial aviation equipment. If a visit by a Regulatory Authority relates to the production or operation of System Units or components thereof or is generally applicable to production of commercial aviation equipment, Row 44 will furnish to Southwest (a) minutes of the inspection generated by Row 44 promptly following such inspection and (b) any report or correspondence provided by Row 44, or any Affiliate or subcontractor of Row 44, or their respective representatives, as the case may be, to the Regulatory Authority or issued by or provided by the Regulatory Authority to Row 44, or any Affiliate or subcontractor of Row 44, or any of their respective representatives, as the case may be, in connection with such visit or inquiry as soon as reasonably practicable thereafter. Row 44 shall enter into agreements with each of its subcontractors that require such subcontractors to provide the notices and other materials and information contemplated by this Section 2.2.4 .

 

 

 *** Confidential treatment requested.

 

4
 

 

 

2.2.5 Southwest Participation Right . Southwest will have the right, at its option, upon written request at any time, to participate in any and all of Row 44’s material regulatory strategy discussions and material meetings with Regulatory Authorities relating to the Broadband System. Row 44 shall provide reasonable prior written notice to Southwest of any such meetings and copies of all material correspondence with regard thereto.

 

2.3 Supply of Broadband System .

 

2.3.1 Purchase Orders . Subject to the terms hereof, Southwest may submit requests for delivery of System Units using its standard purchase order (“ Purchase Order ”) setting forth the number of System Units requested, and any additional instructions (provided the same are not in conflict with this Agreement). Each Purchase Order shall also include a mutually agreeable delivery schedule for the System Units subject to such Purchase Order. Row 44 shall deliver the System Units specified in each Purchase Order on or before the delivery date set forth therein. The terms and conditions of this Agreement shall be referenced in, apply to, and form a part of every Purchase Order, and shall supersede any printed terms and conditions on any Purchase Order or acknowledgement form. In the event of a conflict between the terms and conditions of this Agreement and the printed terms and conditions of any Purchase Order or acknowledgement form, the terms and conditions of this Agreement shall control. All Purchase Orders shall be governed by this Agreement whether or not expressly noted on such Purchase Orders. Row 44 agrees to reference Purchase Order numbers on all packing slips, freight bills, invoices and other documents submitted to Southwest related to Row 44’s performance hereunder.

 

5
 

 

2.3.2 Delivery by Row 44 . Row 44 shall provide to Southwest those quantities of System Units as set forth on Southwest’s applicable Purchase Order. Row 44 shall (a) deliver the System Units *** to Southwest’s designated facility, (b) arrange delivery of the System Units pursuant to Southwest’s written instructions and (c) deliver all System Units by the dates set forth in the applicable Purchase Order or otherwise agreed upon by the Parties in writing (whether hereunder or otherwise); *** Time is of the essence with respect to all delivery dates set forth herein and in each applicable Purchase Order. The satellite antenna assembly component of the System Units will be shipped to Southwest in a re-usable *** container, which containers shall at all times remain the property of Row 44, and be returned to Row 44, at its expense, in order to be reused for later shipments of satellite antenna assemblies to customers of Row 44, including Southwest.

 

2.3.3 Failure to Deliver . ***

 

2.3.4 Hardware Reliability . With respect to Line Removal Units (“ LRU ”) Row 44 shall use commercially reasonable efforts to meet the reliability standards outlined in Exhibit B as measured by Southwest’s FAA approved maintenance program. Should any unit fall below the reliability standard, Row 44 shall ***

 

2.3.5 Spares . Southwest shall maintain an inventory of spare System Unit components pursuant to the reliability standards and turn time standards in Exhibit B and in the quantities as agreed upon by the Parties for System Unit components. Orders for spare System Unit components shall be subject to the same Purchase Order terms as set forth herein; provided , that , Row 44 shall use its best efforts to expedite delivery of an order to replace an un-repairable component or to supplement the spare pool. Spare pricing shall be as set forth on Exhibit B-2.

 

2.3.6 Obsolescence Program . Row 44 shall maintain an obsolescence program throughout the term of the Agreement in accordance with this Section. Row 44 will use commercially reasonable efforts to require all Vendors to develop and implement obsolescence requirements such that Vendors will provide obsolescence notices to Row 44 *** prior to the planned obsolescence of an LRU or critical system subcomponent (that is not immediately replaced with a future technology revision at comparable or better performance and backwards compatibility). Row 44 will immediately notify Southwest as soon as a pending obsolescence event is known to Row 44. Subject to the foregoing, Row 44 will coordinate with the Vendor and Southwest to establish an obsolescence implementation plan which includes ***. Row 44 will use diligent efforts to minimize cost and operational impact of any LRU or critical system subcomponent obsolescence.

 

2.4 Inspection Rights. Southwest will have the right on reasonable prior notice to conduct reasonable inspections of the facilities of Row 44 and its Affiliates and Vendors where System Units are produced, stored or handled and to audit the procedures of Row 44 and its Affiliates and Vendors for the production, storage and handling of the System Units or components thereof for purposes of quality control. All such inspection requests shall be copied to Row 44 and Row 44 shall have the right to jointly participate in such inspections. Row 44 shall enter into agreements with each of its Vendors permitting Southwest to inspect the facilities and audit the procedures of such subcontractors pursuant to this Section 2.4.1.

 

 

 

 *** Confidential treatment requested.

 

6
 

 

2.5 Technical Assistance . Upon request by Southwest, Row 44 shall provide technical assistance to Southwest in connection with Southwest’s installation and maintenance of the System Units on its aircraft. ***  For any installation, Row 44 agrees to provide remote technical assistance at its expense. Notwithstanding the foregoing, in the event third party engineering or DER support is required with respect to an installation, the *** .

 

2.6 System Software License .

 

2.6.1 License . Row 44 hereby grants to Southwest a non-exclusive, perpetual, worldwide license to use the System Software, including any third party software embedded therein, in the manner specified in this Agreement in connection with the use of the applicable component of the System Unit in which the System Software is included as part of the Broadband System. Open source software made by Row 44 shall be subject to the applicable open source software license as set forth on Exhibit B-2 hereto.

 

2.6.1.1 Documentation. Row 44 hereby grants to Southwest a non-exclusive, perpetual, worldwide license to use the Documentation in conjunction with Southwest’s use of the System Software and the Broadband System.

 

2.6.1.2 Right to Copy. Southwest may make copies of the Documentation for purposes of using or maintaining the System Units; provided, that all such Documentation is subject to the confidentiality provisions of this Agreement.

 

2.6.2 Escrow . Row 44 shall maintain all technical data with respect to STCs for the System Units, and the System Software and its associated Documentation in escrow in accordance with the following terms:

 

2.6.2.1 No later than ***, Row 44 agrees to place in escrow the source code for all System Software and the technical data with respect to the STCs for the System Units and related materials, with Southwest as the beneficiary of such escrow. Iron Mountain will serve as escrow agent (the “Escrow Agent” ), and Row 44 will provide a copy of the applicable escrow agreement to Southwest promptly after its execution. The escrowed materials shall be current as of the date placed in escrow with updates to be provided at reasonable intervals, but not less than every six months during the Term and with the release of a material modification to the System Software. Upon the occurrence of one of the following conditions, the Escrow Agent shall be authorized to release the escrowed materials to Southwest:

 

***

  

Row 44 represents, warrants, and covenants that (a) the materials deposited with the Escrow Agent at all times constitute a complete and correct set of the source code for the System Software as well as any corrections, enhancements, or other revisions to which Southwest is entitled under this Agreement, and (b) the materials deposited with the Escrow Agent are and shall be sufficient for trained computer programmers of general proficiency to maintain and support the System Software without further assistance from Row 44.

 

 

 

 *** Confidential treatment requested.

 

7
 

 

Upon release of the escrowed materials, the materials subject to the escrow above are hereby subject to a *** license to use such materials solely in connection with the use and maintenance of the applicable component of the System Unit in which such software is embedded. Row 44 agrees that Southwest shall have all of the benefits of a licensee as set forth in 11 U.S.C. § 365(n), with respect to all licenses granted under this Agreement.

 

ARTICLE 3.

THE SERVICES

 

3.1 Subscription; Commissioning; Additional Features . Pursuant to the terms and conditions contained herein, Row 44 hereby agrees to provide, and Southwest hereby agrees to purchase, the Wi-Fi Service, the Operational Data Service, the Entertainment Portal Service, the Additional Included Services, Television Service, VOD Only Solution (subject to the terms of this Agreement), and the Elected Services (if any), related to the satellite and Internet backhaul connectivity to be purchased by Southwest from Row 44 pursuant to the terms contained herein (collectively, the “ Services ”) for use in connection with each System Unit installed on a Commissioned Aircraft. As part of the installation process for System Units on Southwest’s aircraft, each such aircraft shall undergo the service commissioning procedure set forth in Exhibit C (the “ Commissioning Procedure ”). After Southwest has completed the Commissioning Procedure, each such aircraft shall be operational for use in connection with the Wi-Fi Service and other services to be provided hereunder (each a “ Commissioned Aircraft ”) unless Southwest provides notice to Row 44 that such aircraft is not operational for maintenance, scheduling or other reasons, in which case such aircraft shall not be considered a Commissioned Aircraft. Row 44 may make additional commissioning and/or maintenance services available to Southwest from time to time during the Term, which shall be subject to the fees and costs associated therewith as the Parties mutually agree in writing.

 

3.2 Wi-Fi Service .

 

3.2.1 Calculation of Wi-Fi Service Fees .

 

3.2.1.1 Wi-Fi Fee. ***

 

3.2.1.2 Subscription Fee. ***

 

3.2.1.3 Wi-Fi Service Subsidy. Beginning on ***, Row 44 shall subsidize the cost of “free-to-the-passenger” access to the Wi-Fi Service by the following amounts per year: (i) *** for calendar year *** ; (ii) *** for calendar year *** ; and (iii) *** for each of calendar years *** , *** , *** and *** (the “ Wi-Fi Subsidy ”). The Subsidy will be accounted for on a monthly pro-rata basis, provided that any accrual shortfall will be accounted for and payable to Southwest in the last month of the applicable calendar year.

 

 

 

 *** Confidential treatment requested.

 

8
 

 

3.2.1.4 No Net Revenue Split. For avoidance of doubt, amounts charged for the Wi-Fi Service are not subject to Net Revenue Split.

 

3.2.1.5 ***

 

3.2.2 Passenger Charges and Offerings . Southwest will determine the passenger charges, if any, for the Wi-Fi Service and any other services provided to its passengers by or for Row 44. ***  Southwest shall provide reasonable advance notice to Row 44 prior to making offers of ***in order for Southwest and Row 44 to coordinate authentication and logistics regarding implementing the same.

 

3.3 Additional Included Services . *** Row 44 shall provide the following services to Southwest (the “ Additional Included Services ”):

 

3.3.1 Network Operations and Maintenance. During the Term, Row 44 shall maintain a network operations center that monitors the functionality and performance of System Units and performance of the Wi-Fi Service on Commissioned Aircraft on a 24/7 basis. Row 44 shall also maintain during the Term a 24/7 technical support phone number/e-mail for technical support inquiries from Southwest regarding operation of the Wi-Fi Service.

 

3.3.2 Training . In connection with the operation of the Wi-Fi Service, Row 44 will provide comprehensive training in the operation and functionality of the Wi-Fi Service (in accordance with Southwest’s requests with respect to scheduling and frequency) to Southwest’s employees who will operate the Wi-Fi Service on board the Commissioned Aircraft. Row 44 will also provide comprehensive training related to the functionality and use of any third party billing service provider that Row 44 offers as part of its service offering. Such training will include written training materials and be provided in-person, by remote video conference or teleconference, in Southwest's discretion, and on a “train the trainer” basis.

 

3.3.3 Reports . Row 44 shall provide Southwest regular reports and access to a reporting web service with respect to such reports and information as Row 44 generally collects or makes available to its customers and that Southwest reasonably requests regarding the performance and use of the Wi-Fi Services by Southwest’s customers including, but not limited to information by flight, purchases by device type, aircraft availability, customer usage time, and data usage.

 

3.3.4 Legal Process Compliance . During the Term, Row 44 shall comply with, and shall ensure that the Services comply with, the Communications Assistance for Law Enforcement Act and such similar Laws or agreements impacting Row 44 and/or the Services. Except to the extent prohibited under applicable Law, Row 44 shall keep Southwest informed of all compliance actions taken by Row 44 in support of such technical compliance, and, upon request from Row 44, Southwest shall provide reasonably requested cooperation to Row 44 to support such compliance.

 

 

 

 *** Confidential treatment requested.

 

9
 

 

3.3.5 Coordination with Regulatory Authorities; Maintenance of Licenses and Permits . Row 44 shall coordinate with the FCC, the FAA and other Regulatory Authorities and maintain all licenses, permits, and other Regulatory Approvals as necessary for (i) Row 44’s performance of this Agreement and (ii) Southwest’s and its customers’ use of the Broadband System in accordance with the terms herein.

 

3.3.6 Privacy and Security . Row 44 shall comply with the privacy and data security obligations set forth in Exhibit J . Row 44 shall not sell or otherwise provide web analytics data to any third party and shall only use such data for Row 44 financing and internal activities and in connection with providing its Services to Southwest pursuant to the terms of this Agreement.

 

3.3.7 Basic Web Analytics . Row 44 shall provide Basic Web Analytics for any Internet content accessed, acquired or transmitted by Southwest or customers of Southwest via the Wi-Fi Service. Basic Web Analytics should include, but not limited to ***. Southwest, in its sole discretion, may supply Row 44 with tags to its in-house web analytics tools, and Row 44 agrees to apply those tags into its system and, if such tags report to a server under Row 44’s control, include the results of such tags in Row 44’s Basic Web Analytics reports. If such tags report to a server under Southwest’s control, Southwest agrees to provide reports of the results of such tags to Row 44 only to the extent that (a) a Southwest tag replaces a standard Row 44 tag and (b) the tags provide results with respect to the Entertainment Portal; provided that (i) Southwest shall not be required to provide such reports more frequently than *** and (ii) ***, then Southwest shall not be required to provide such reports. For the avoidance of doubt, Southwest shall not be required pursuant to the immediately preceding sentence to provide any reports to Row 44 with respect to tag results from southwest.com.

 

3.4 Entertainment Portal Service .

 

3.4.1 Provision of Service and Maintenance . Row 44 shall develop and make the Entertainment Portal available to Southwest in accordance with the specifications set forth in Exhibit D (“ Entertainment Portal Service ”). Southwest shall have the right to approve the look and feel of the Entertainment Portal creative submitted by Row 44. Row 44 shall provide maintenance and support services in connection with the Entertainment Portal in accordance with the maintenance and support terms set forth in Exhibit D .

 

3.4.2 Entertainment Portal Revenue Share . ***

 

3.5 Elected Services. Pursuant to the terms and conditions set forth below, Row 44 shall provide the following services (the “ Elected Services ”) as requested by Southwest in writing from time to time throughout the Term (or as specifically elected pursuant to this Agreement):

  

 

 

 *** Confidential treatment requested.

 

10
 

 

3.5.1 Billing Services . ***

 

3.5.2 Content Control and Filtering . Row 44 shall provide content control and filtering services consistent with the content control and filtering services and procedures set forth on Exhibit G (the “ Content Control Services ”) for ***. For aircraft commissioned during the installation period, Content Control Services shall be invoiced***. Thereafter, Row 44 shall invoice Southwest on an annual basis for Content Control Services for the total number of Commissioned Aircraft and Southwest shall pay the invoice within *** of receipt of a correct invoice. As of the Effective Date, Southwest elects to use the Content Control Services. Southwest shall have the right to terminate the Content Control Services at any time upon delivery of a notice of such cancellation to Row 44; provided that Southwest shall not be entitled to any refund for any remaining Content Control Service fees previously invoiced and paid.

 

3.5.3 Advanced Web Analytics . Subject to terms and requirements mutually agreed upon in writing between Southwest and Row 44, upon written request from Southwest, Row 44 shall implement advanced web analytics that provide information not included in Basic Web Analytics for any Internet content accessed, acquired or transmitted by Southwest or customers of Southwest via the Wi-Fi Service, all in such format and containing such detail and at such cost as mutually agreed upon in writing by Southwest and Row 44.

 

3.5.4 Additional Work . Any additional services not otherwise described herein and provided by Row 44 in connection with this Agreement shall be provided pursuant to a written, fully executed and mutually agreeable statement of work and purchase order covering, without limitation, pricing and payment terms, schedule and responsibilities for such work.

 

3.6 Operational Data Service . In addition to the Wi-Fi Service, Row 44 shall provide Southwest access to a wired or wireless operational data connection (the “Operational Data Service”). Subject to the service restrictions set forth herein, the Operational Data Service shall be implemented by Row 44 as a direct wired connection or separately addressed (SSID) Wi-Fi connection with substantially the same functionality as the Wi-Fi Service for use by Southwest solely to transmit operational data to and from Commissioned Aircraft. If Southwest anticipates transmitting more than an average of *** of data per flight (take-off and landing) measured daily across all flights, in a single transmission or series of transmissions, Southwest will provide reasonable advance notice to Row 44 of such anticipated transmission(s) and will reasonably cooperate with Row 44 regarding the timing and implementation of such transmission(s), subject to Southwest’s right to prioritize Operational Data Service over customer traffic usage at any time. If Southwest transmits more than ***, measured daily across all flights and averaged on a *** , such excess will be charged at *** for usage during periods the Wi-Fi Service is *** of Southwest and if Southwest transmits more than ***, measured daily across all flights and averaged on a *** , such excess will be charged at *** for usage during periods in which the Wi-Fi Service is *** of Southwest, each as measured on a per aircraft basis. Row 44 shall deliver Southwest a *** report on Operational Data Service, including total fleet wide usage and per aircraft usage, and, if applicable, accompanied by an invoice from Row 44 for amounts due hereunder, which invoice shall be due and payable within *** of receipt.

 

 

 

 *** Confidential treatment requested.

 

11
 

 

3.7 Television Service.

 

3.7.1 Provision of Television Service . Row 44 shall provide the Television Service in accordance with the Service Levels on all of Southwest’s aircraft equipped with the Wi-Fi Service and the Supplemental Television Hardware.

 

3.7.2 Television Service Description . The Television Service will be a Wi-Fi accessible, IPTV-based, live television service consisting of *** (the “ Television Service ”). The Television Service will be implemented and maintained in accordance with the terms of Exhibit E .

 

3.7.3 Supplemental Television Hardware . ***

 

3.7.4 Television Service Revenue Share . ***

 

3.7.5 Changes and Updates . All content selection included for the Television Service shall be mutually agreed upon by the Parties. VOD content shall be refreshed by Row 44 on a mutually agreed upon schedule during the Term and with the goal of always providing an up-to-date selection of content for Television Service users. During the Term, Row 44 will work to always provide a line-up of live television content that appeals to the widest potential audience of users of the Television Service.

 

3.7.6 Termination of Television Service . Following ***, in the event the (i) Television Service take rate is below *** for a period of *** or (ii) Row 44 fails to meet the to-be-agreed upon Service Level for the Television Service for a period of *** , then, for a period of *** after the occurrence of either such condition, Southwest may elect to cancel the Television Service upon *** prior written notice to Row 44. For the avoidance of doubt, the actual date of cancellation of the Television Service will be *** after the foregoing notice is delivered to Row 44 no matter when that delivery occurs during the ***evaluation period.

 

3.7.7 Television Service Free Options . Upon at least three (3) months prior written notice to Row 44, Southwest shall have the option to offer the Television Service on a “free-to-all-passengers” basis for the remainder of the Term.

 

3.7.7.1 ***

 

 

3.7.7.2 ***

 

 

3.7.7.3 provided , however , that with respect to each of the foregoing options, the provisions of Section 3.7.4.2 (related to Special Television Content) and Section 3.7.4.3 (related to advertisements) shall remain in effect. Southwest may additionally offer the Television Service on a free promotional (not to all passengers) basis at the existing per passenger price.

 

 

 

 *** Confidential treatment requested.

 

12
 

 

3.8 VOD Only Solution. ***

 

 

3.9 ***

 

 

ARTICLE 4.

AGREEMENTS AND ACKNOWLEDGEMENTS

 

4.1 Southwest Responsibilities .

 

4.1.1 Out, On, Off, In (OOOI) Data . OOOI data from Commissioned Aircraft will be provided to Row 44 electronically in real time to support aircraft performance tracking for aircraft in operational service.

 

4.1.2 Terms of Service; Privacy Policy . The Services will be provided to Southwest’s customers subject to terms of service and a privacy policy prepared (and updated as needed) by Row 44 and approved by Southwest. Southwest shall use Row 44’s Entertainment Portal Service landing page or develop and maintain a landing page (the “ Landing Page ”) as the first accessible web page when a customer accesses the Wi-Fi Service. The Landing Page will provide an opportunity for each customer to accept the terms of service (including terms for applicable laws for CALEA, etc.) and disclose Southwest’s privacy policy.

 

4.1.3 No Modification of System Units . Southwest acknowledges and agrees that the configuration and performance of the System Units are critical to the ability for Row 44 to provide the Wi-Fi Service. Therefore, during the Term, Southwest shall not modify or alter the configuration of the System Units without prior notice to Row 44.

 

4.2 Row 44 Responsibilities .

 

4.2.1 ***

 

4.2.2 Technology and Product Enhancements . During the Term, Row 44 agrees to (a) use commercially reasonable efforts to improve and enhance the Services on an ongoing basis so that the Services at all times during the Term represent a leading Internet and Internet based entertainment services system for use on commercial aircraft, (b) provide Southwest a product roadmap (and periodic updates thereto) outlining expected improvements and enhancements of Row 44’s products and services and expansions to Row 44’s coverage areas, including future capabilities of the Services and equipment updates, and (c) meet and confer with Southwest on at least *** basis regarding the foregoing.

 

If Southwest, in its sole but reasonable discretion, determines that the Services do not represent a leading Internet system then active and in service for use on commercial aircraft, including consideration of all features then provided by Row 44’s system, then Southwest may provide written notice to Row 44 of the same. Thereafter, for a period of ***, the Parties shall meet and confer in good faith regarding improvements to the Row 44 system to make it a leading Internet system and/or the implementation of the alternative leading Internet service technology and features on Southwest’s fleet, including a reasonable timeline for each of the foregoing. After such meet and confer period, Southwest may choose, in its sole discretion, to adopt the improvements offered by Row 44 or continue with the current Service.

 

 

 

 *** Confidential treatment requested.

 

13
 

 

In the implementation of any agreed upon improvements or alternative technology, Row 44 agrees: (i) to fund the R&D associated with any such item and (ii) to sell all associated hardware to Southwest at Row 44’s cost. In addition, if the alternative technology implemented results in a modified cost structure for Row 44’s provision of the Services, then the Parties shall implement a proportional adjustment to the prices paid to Row 44 described herein.

 

If following the foregoing, Southwest reasonably determines that Row 44 is unable or unwilling to implement a feature set that results in a leading Internet system, Southwest may terminate the Agreement without penalty upon *** prior written notice to Row 44.

 

4.2.3 Third Party Subcontractors . Row 44 shall obtain Southwest’s prior written consent, which Southwest may withhold in its sole discretion, before entering into new agreements with, or materially amending or extending existing agreements with, or otherwise engaging, any subcontractors (including Affiliates of Row 44) that may supply any part of the Deliverables or Services to Southwest. At Southwest’s request, Row 44 shall provide information regarding the subcontractors’ qualifications and a listing of Row 44’s subcontractors’ key personnel including, if requested by Southwest, resumes of proposed subcontractor personnel. Row 44 shall remain directly responsible to Southwest for its subcontractors and shall indemnify Southwest for the actions or omissions of its subcontractors under the terms and conditions specified in ARTICLE 7 .

 

4.2.4 Records . Row 44 shall maintain books of account and records, in accordance with its standard practices and procedures, of all transactions arising in connection with its obligations pursuant to this Agreement for a period of five years from the expiration or earlier termination of this Agreement. Row 44 shall keep and maintain complete and accurate books and records with respect to Row 44’s operations, including information necessary to permit calculation and verification of amounts due hereunder.

 

4.2.5 Network Maintenance . Exhibit H describes Row 44’s network as of the Effective Date. Row 44 will ***

 

4.3 Other Agreements and Acknowledgements .

 

4.3.1 Network Security; Prohibited Actions . Southwest will not engage in, or knowingly permit customers of Southwest to engage in, any of the following activities: (a) any course of action that is intended to or does materially compromise the performance, security or integrity of the servers, computer systems, satellites or any other devices or software connected directly or indirectly to the network comprising the Service; (b) any material increase in traffic levels for malicious or illegal purposes that causes a substantial degradation of performance or denial of service to Row 44 or other customers of Row 44; (c) tampering, hacking or other intrusion or unauthorized access to any system controlled by Row 44 or through which network access is dependent; or (d) the infringement of the legal rights of other network users (including other users of the Service or the Internet), service providers and content providers, except to the extent the Service itself is the cause of the infringement. In the event Southwest or any customer of Southwest undertakes any of the above activities, Row 44 shall, in the event the continuance of such activity is reasonably likely to affect the operation of the Broadband System (including the access controls built into the Broadband System) or Row 44’s network, be authorized to disable access to the Services (including for a particular aircraft or customer of Southwest) until such activity ceases; provided, however, that any disabling of Services will be limited to that reasonably required to protect the Broadband System operations in the applicable circumstance. Notwithstanding the foregoing, Row 44 shall be under no obligation to monitor the content Southwest or customers of Southwest transmit using the Services, except as may be required by applicable Law. Southwest may not resell or redistribute (whether for a fee or otherwise) the Services provided by Row 44, or any portion thereof, except for the sale of access to the Services from Southwest to Southwest’s passengers.

 

 

 

 *** Confidential treatment requested.

 

14
 

 

4.3.2 Intellectual Property Ownership .

 

4.3.2.1 Southwest Information and Materials. All information, materials and technology, including computer software, provided to Row 44 by Southwest in connection with the Service, including modifications, changes and derivatives thereto whether or not created as part of the services provided hereunder (the “ Southwest Materials ”) are and shall remain the property of Southwest or its licensors, which shall retain all Intellectual Property Rights therein. Row 44 obtains no right, title, or interest therein, except that during the Term Row 44 may use the Southwest Materials for the sole, exclusive and limited purpose of performing the services in connection with the Service in compliance with the terms and conditions of this Agreement. Row 44 shall comply with the terms of any license or other agreement applicable to such Southwest Material. All Southwest Materials shall be subject to the confidentiality provisions of this Agreement. Row 44 shall not encumber the Southwest Materials in any way, and promptly shall return to Southwest any and all Southwest Materials in Row 44’s possession or control upon Southwest’s request and, in any event, upon termination or expiration of this Agreement. For clarity, as between the Parties, Row 44 will own the Intellectual Property Rights in the Row 44 Materials (a) owned by Row 44 prior to the August 13, 2010 or (b) independently created or acquired by Row 44 after August 13, 2010 provided such materials do not constitute a derivative work of or misappropriate or infringe upon any Southwest Materials, Southwest Intellectual Property Rights or Southwest Confidential Information.

 

4.3.2.2 Row 44 Information and Materials. All information, materials and technology, including computer software, provided to Southwest by Row 44 in connection with the Service, including modifications, changes and derivatives thereto whether or not created as part of the services provided hereunder (the “ Row 44 Materials ”) are and shall remain the property of Row 44 or its licensors, which shall retain all Intellectual Property Rights therein. Southwest obtains no right, title, or interest therein, except that during the Term Southwest may use the Row 44 Materials for the sole, exclusive and limited purpose of performing its obligations in connection with the Service in compliance with the terms and conditions of this Agreement. Southwest shall comply with the terms of any license or other agreement applicable to such Row 44 Material. All Row 44 Materials shall be subject to the confidentiality provisions of this Agreement

 

15
 

 

4.3.3 Audits .

 

4.3.3.1 Compliance Audits. Within *** following a written request from a Party (an “ Auditing Party ”), the other Party (the “ Responding Party ”) shall provide the Auditing Party, such Auditing Party’s auditors (including internal audit staff and external auditors), inspectors, regulators and other reasonably designated representatives as such Auditing Party may from time to time designate in writing (collectively, the “ Auditors ”), with access to, at reasonable times, data and records relating to the Services for purposes of verifying compliance with this Agreement. The Responding Party shall provide any reasonable assistance that the Auditing Party may reasonably require with respect to such audits. All financial and non-financial transactions resulting from this Agreement shall be documented by Row 44 and subject to audit by the Southwest Auditors. Row 44 and Southwest shall meet to review each audit report promptly and to agree upon an appropriate and effective manner in which to respond to the deficiencies identified and changes recommended by such audit report. Notwithstanding the foregoing, Southwest acknowledges and agrees that the documents and data provided to Southwest shall be subject to reasonable redaction in support of Row 44’s confidentiality obligations and compliance with applicable Law. Each Party shall be responsible for any costs associated with the exercise of its audits rights set forth herein.

 

4.3.3.2 . Fee and Net Revenue Split Audits. Upon notice from Southwest, Row 44 shall provide the Southwest Auditors with access to such financial books and records and supporting documentation as may be reasonably requested by Southwest’s Auditors. Southwest’s Auditors may audit Row 44’s charges and/or payments to Southwest to determine if such charges and/or payments are accurate and in accordance with this Agreement. If, as a result of such audit, Southwest determines that Row 44 has overcharged or underpaid Southwest, Southwest shall notify Row 44 of the amount of such overcharge or underpayment and Row 44 shall (in addition to any and all other remedies that may be available to Southwest) promptly pay to Southwest the amount of the overcharge or amounts owed due to underpayment, plus interest, calculated from the date of receipt by Row 44 of the overcharged or underpaid amount until the date of payment to Southwest. In addition to Southwest’s rights set forth in this Section 4.3.3.2 , in the event any such audit reveals an overcharge or underpayment to Southwest in excess of *** or more, Row 44 shall (in addition to any and all other remedies that may be available to Southwest) reimburse Southwest for the cost of such audit.

 

ARTICLE 5.

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

5.1 By Row 44 :

 

 

 

 

 *** Confidential treatment requested.

 

16
 

 

5.1.1 Performance of the Services . Row 44 represents and warrants to Southwest that Row 44 has the skills, resources and expertise to provide and shall provide all Services in accordance with the terms and conditions of this Agreement. Without limiting the generality of the foregoing, Row 44 represents and warrants to Southwest that: (a) all Services provided under this Agreement shall be provided in a timely, professional and workmanlike manner consistent with the highest industry standards of quality and integrity; provided , however , that where this Agreement specifies a particular standard or criteria for performance, this warranty is not intended to and does not diminish that standard or criteria for performance; and (b) other than the applicable fees set forth herein, no additional cost or expense shall be required of Southwest in order for Row 44 to be able to provide the Services as required under this Agreement.

 

5.1.2 ***

 

5.1.3 System Hardware . Except for Row 44’s (or its Vendors) right to receive payment for such System Unit (or component, as applicable), Row 44 represents and warrants to Southwest that each System Unit shall be provided to Southwest free and clear of all liens and encumbrances and when initially provided to Southwest shall be provided in new condition and shall not have been previously refurbished or reconditioned. This warranty shall survive the expiration or termination of this Agreement. ***

 

 

5.1.4 No Violation of Laws . Row 44 represents and warrants to Southwest that Row 44, the Broadband System, and each System Unit is not, and covenants that none of them shall be and, to the extent applicable, Southwest’s use of the Broadband System (in conformance with the terms of this Agreement and the other agreements entered into between the Parties in connection with the Broadband System) and each System Unit, shall not be, in violation of any Laws, and Row 44 has not failed, and shall not fail, to obtain any licenses, permits, franchises or other governmental authorizations necessary for the performance of this Agreement, ownership of its properties or the conduct of its business, which violation or failure, either individually or in the aggregate, might adversely affect its business, properties or financial condition, the consummation of the transactions contemplated by this Agreement, or the performance of its obligations hereunder. This warranty shall survive the expiration or termination of this Agreement.

 

5.1.5 Disabling Code . Row 44 represents and warrants to Southwest that the Broadband System, including the System Software, does not contain any virus, worm, trap door, back door, timer, clock, counter or other limiting routine, instruction or design that would erase data or programming or otherwise cause any of the Deliverables to become inoperable or incapable of being used in the full manner for which it was designed and created (collectively, a “ Disabling Code ”); provided , that , Disabling Code shall not include (a) features of the Broadband System designed to allow Row 44 to operate its service, including providing network traffic management, (b) features of the Broadband System that allow Southwest to deactivate or modify features of the Broadband System and (c) features of the Broadband System required by Row 44’s applicable regulatory licenses, agreements or applicable Law. In the event a Disabling Code is identified, Row 44 shall take all steps necessary, at no additional cost or expense to Southwest, to: (i) restore and/or reconstruct any and all Confidential Information and data lost by Southwest as a result of such Disabling Code; (ii) furnish to Southwest new Deliverables without the presence of Disabling Codes; and (iii) at the request of Southwest, install and implement such new Deliverables. This warranty shall survive any expiration or termination of this Agreement until Southwest discontinues its use of the applicable Deliverables.

 

 

 

 

 *** Confidential treatment requested.

 

17
 

 

5.1.6 Legal and Corporate Authority . Row 44 represents and warrants to Southwest that: (a) Row 44 is a Delaware corporation, and is qualified and registered to transact business in all locations where the failure to be so qualified would have a material adverse effect on the performance of its obligations hereunder; (b) Row 44 has all necessary corporate rights, powers and authority to enter into and perform this Agreement, and the execution, delivery and performance of this Agreement by Row 44 have been duly authorized by all necessary corporate action; (c) as of the Effective Date, the execution and performance of this Agreement by Row 44 does not violate any Law and does not breach any agreement, covenant, court order, judgment or decree to which Row 44 is a party or by which it is bound; and (d) Row 44 has, and promises that it shall maintain in effect, all governmental licenses and permits necessary for it to provide the Services contemplated by this Agreement. These warranties shall survive the expiration or termination of this Agreement.

 

5.1.7 Litigation . Row 44 represents and warrants to Southwest that there is no action, suit, claim, investigation or proceeding pending, or to Row 44’s Knowledge, threatened in writing, by or affecting Row 44 or the Services which, if adversely decided, might adversely affect: (a) Row 44’s ability to enter into this Agreement; (b) Row 44’s performance of its obligations herein; or (c) except as previously disclosed to Southwest in writing, Southwest’s or its customers’ use of the Services or Broadband System. At all times during the Term, Row 44 shall promptly notify Southwest of any action, suit, claim, investigation or proceeding initiated by or against Row 44 that may adversely affect Row 44’s ability to perform under this Agreement or Southwest’s use of the Services, including where amounts in dispute may result in a material adverse change in the financial condition of Row 44.

 

5.1.8 ***

 

5.1.9 Notification . Row 44 agrees that it shall notify Southwest promptly in writing of the breach or existence of circumstances that could reasonably be expected to result in a breach of any of its representations, warranties or covenants in this Agreement.

 

5.2 By Southwest :

 

5.2.1 Legal and Corporate Authority . Southwest represents and warrants to Row 44 that: (a) Southwest is a Texas corporation, and is qualified and registered to transact business in all locations where the failure to be so qualified would have a material adverse effect on the performance of its obligations hereunder; (b) Southwest has all necessary corporate rights, powers and authority to enter into and perform this Agreement, and the execution, delivery and performance of this Agreement by Southwest have been duly authorized by all necessary corporate action; and (c) as of the Effective Date, the execution and performance of this Agreement by Southwest does not violate any Law and does not breach any agreement, covenant, court order, judgment or decree to which Southwest is a party or by which it is bound. These warranties shall survive the expiration or termination of this Agreement.

 

 

 

 

 *** Confidential treatment requested.

 

18
 

 

ARTICLE 6.

PRICING AND PAYMENT

 

6.1 System Units .

 

6.1.1 System Unit Cost . Southwest shall pay Row 44 for each System Unit Accepted by Southwest in accordance with the pricing terms agreed to by the Parties as set forth in Exhibit B attached hereto. The charges specified in this Agreement are the total charges for the Deliverables provided to Southwest under this Agreement, and no other fees, costs or expenses may be charged to Southwest except as set forth herein. Row 44 shall have the right to increase pricing for System Units ***  The Parties agree to meet and confer regularly during the Term regarding updates to the System Units and components thereof that may facilitate a decrease in the cost and related prices of the System Units and components thereof. ***

 

6.2 Services . ***

 

6.3 Invoice and Payment .

 

6.3.1 Merchant of Record . Unless sold directly by Southwest or otherwise agreed hereunder, Row 44 shall be the merchant of record for the Services.

 

6.3.2 Accounting . Within *** Row 44 shall calculate the *** received by Row 44 as well as any fees owed by and to Southwest hereunder, and submit to Southwest: (i) a report for the applicable period detailing the use of the Services and the features included therein, and the System Units purchased by Southwest, in a form to be mutually agreed upon by the parties, (ii) a summary of the calculation of *** for the applicable period in a format to be mutually agreed upon by the parties, and (iii) either a *** for *** for said period, or *** for *** for such period, all in accordance with this Agreement. ***

 

6.3.3 All payments shall be in United States Dollars and made by wire transfer to such account(s) as designated by Southwest and Row 44 from time to time during the Term. Each party agrees that the respective fees set forth in this Agreement are exclusive of all surcharges and taxes, except for taxes based solely on the net income of a party or its respective business franchise.

 

 

 

 

 *** Confidential treatment requested.

 

19
 

 

6.3.4 Row 44 shall invoice Southwest for System Units (and any overage of fees due to Row 44 in excess of payments due to Southwest), with the invoices being sent to the following address:

 

Southwest Airlines Co.

 

***

 

6.3.5 Except as otherwise provided herein, Southwest shall pay each correct invoice for the purchase of System Hardware or Supplemental Television Hardware within *** following Southwest’s receipt of such invoice (provided that such items have been delivered). Except as otherwise provided herein, Southwest shall pay each correct invoice for all other fees owed hereunder within *** following Southwest’s receipt of such invoice (provided that the Services there under have been performed).

 

6.3.6 All payments shall be in United States Dollars and made by wire transfer to such account(s) as designated by Row 44 from time to time during the Term. Southwest acknowledges that the prices set forth in this Agreement are exclusive of all applicable fees, surcharges and taxes with respect to the Hardware and Services, except for taxes based solely on the net income of Row 44 or its business franchise.

 

6.4 Taxes.

 

6.4.1 Row 44 Tax Withholding Where Row 44 is the merchant of record, Row 44 shall pay and agrees to indemnify and hold Southwest harmless from any taxes (except for taxes based on net income or capital or any franchise taxes, excess profit taxes or other taxes levied on Southwest’s business) imposed by any federal, state, or local government in connection with this Agreement. If a claim is made against Southwest for any such taxes, Southwest will promptly notify Row 44. If requested by Row 44 in writing, Southwest will, at Row 44’s expense, take such action as Row 44 may reasonably direct with respect to such asserted liability and will not pay such taxes except under protest. If payment is made, Southwest will, at Row 44’s expense, take such action as Row 44 may reasonably direct to recover payment and will, if requested, permit Row 44 in Southwest’s name to file a claim or commence an action to recover such payment. If all or any part of any such taxes is refunded, Southwest will repay Row 44 such part thereof as Row 44 will have paid.

 

As Southwest’s designated service provider, Row 44 shall receive and execute Southwest’s direction with respect to the collection of taxes from Southwest passengers in the provision of the Services provided under this Agreement. Prior to the launch of any Entertainment Portal Service feature an assessment of the tax implications of such feature shall be performed by Row 44 and the parties shall mutually agreed on a best practices for the collection and remittance of any applicable tax for such Service.

 

6.4.3 Southwest Tax Withholding . Where Southwest is the merchant of record, Southwest shall pay and agrees to indemnify and hold Row 44 harmless from any taxes (except for taxes based on net income or capital or any franchise taxes, excess profit taxes or other taxes levied on Row 44’s business) imposed by any federal, state, or local government in connection with this Agreement. If a claim is made against Row 44 for any such taxes, Row 44 will promptly notify Southwest. If requested by Southwest in writing, Row 44 will, at Southwest’s expense, take such action as Southwest may reasonably direct with respect to such asserted liability and will not pay such taxes except under protest. If payment is made, Row 44 will, at Southwest’s expense, take such action as Southwest may reasonably direct to recover payment and will, if requested, permit Southwest in Row 44’s name to file a claim or commence an action to recover such payment. If all or any part of any such taxes is refunded, Row 44 will repay Southwest such part thereof as Southwest will have paid.

 

 

 

 *** Confidential treatment requested.

  

20
 

 

6.4.4 Section 1441:

 

6.4.4.1 Documents Required/Failure to Provide Document . Row 44 hereby agrees to provide Southwest with any documentation requested by Southwest to allow Southwest to comply with its obligations under Section 1441 of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (collectively, “ Section 1441 ”), including without limitation, (i) a valid U.S. Taxpayer Identification Number, and (ii) a properly completed Form W-8BEN, Form W-8ECI, Form W-8IMY, as applicable, or any similar form requested by Southwest. If Row 44 fails to provide any such documentation to Southwest upon *** written notice from Southwest then, notwithstanding any provision of this Agreement to the contrary, Southwest shall thereafter have the right to (i) withhold any amounts due to Row 44 under this Agreement until Row 44 complies with this Section, (ii) withhold any amounts required by Section 1441 with respect to any payments due to Row 44 under this Agreement and deposit such amounts with the Internal Revenue Service, or (iii) terminate this Agreement.

 

6.4.4.2 Continuing Obligation/Failure to Provide . Row 44 shall have the obligation during the term of this Agreement to update any information provided to Southwest under Section 6.4.4 and shall provide Southwest with any additional documentation or forms requested by Southwest for compliance with Section 1441. If Row 44 fails to comply with this Section upon *** written notice from Southwest then, notwithstanding any provision of this Agreement to the contrary, Southwest shall thereafter have the right to (i) withhold any amounts due to Row 44 under this Agreement until Row 44 complies with this Section, (ii) withhold any amounts required by Section 1441 with respect to any payments due to Row 44 under this Agreement and deposit such amounts with the Internal Revenue Service, or (iii) terminate this Agreement.

 

6.4.4.3 Tax Indemnity . Row 44 shall defend, indemnify and hold harmless Southwest, its affiliates, and their respective officers, directors, agents and employees from and against any and all claims, threatened or actual, brought by United States taxing authorities under Section 1441 as a result of or arising out of Row 44’s breach of its obligations under this Section 6.4 . Row 44 agrees to pay, without limitation, any litigation costs, attorneys’ fees, penalties, interest or any tax incurred by Southwest as a result of or arising out of Row 44’s breach of its obligations under this Section 6.4 .

 

 

 

 

 *** Confidential treatment requested.

 

21
 

 

ARTICLE 7.

INDEMNIFICATION AND INSURANCE

 

7.1 Indemnity By Row 44 . Subject to Section 11.10 , Row 44 shall be liable to and shall indemnify, defend and hold harmless Southwest, and its subsidiaries and Affiliates and their respective directors, officers and employees and permitted assigns from and against any Losses arising out of, connected with or resulting from following:

 

7.1.1 Use of the Services or System Units in conformance with the requirements of this Agreement and applicable Law and in connection with the use of the Broadband System;

 

7.1.2 any act or omission where there was a duty to act, by Row 44 or its Affiliates or any of their respective employees, officers, directors, shareholders or agents hired by Row 44 or its Affiliates;

 

7.1.3 any breach by Row 44 or its Affiliates of a covenant, representation or warranty herein;

 

7.1.4 the failure of Row 44 or its Affiliates or the Services or the Broadband System to comply with any applicable Laws; or

 

7.1.5 personal injury or property damages arising out of, connected with or resulting from any act or omission where there was a duty to act, by Row 44 or its subcontractors, suppliers, personnel or agents.

 

Amounts owing under this ARTICLE 7 shall be paid promptly upon written demand for indemnification containing in reasonable detail the facts giving rise to such liability. The terms of this ARTICLE 7 shall survive the termination or expiration of this Agreement.

  

7.2 Intellectual Property Indemnity . Row 44 shall be liable to and shall indemnify, defend and hold harmless Southwest, and its subsidiaries and Affiliates and their respective directors, officers and employees and permitted assigns from and against any Losses arising out of, connected with or resulting from any claim arising out of or relating to any infringement, inducement of infringement, dilution, misappropriation or other violation of any third party Intellectual Property Rights arising from: (a) the materials and/or technology provided or approved for use by Row 44 in connection with the Broadband System; (b) the System Units or components thereof; or (c) the Services or Southwest’s or its passengers’ use thereof. In the event either Party makes a good faith determination that a third party claim as described in the preceding sentence will not be fully and finally dismissed, then upon such Party’s election, in addition to its other obligations set forth in this Section 7.2, Row 44 shall as promptly as practicable either (i) procure for Southwest the right to use the Services or System Units free of such liability for infringement, (ii) replace the applicable Service or component with a non-infringing interchangeable substitute of at least similar performance and capability, or (iii) modify the applicable Service or component so that it becomes non-infringing without materially impairing its performance or interchangeability, or (iv) if none of the above is practical, remove the System Units from Southwest’s aircraft at Row 44’s expense. Notwithstanding the foregoing, Row 44 intellectual property indemnity obligations under this Section 7.2 shall not apply to the extent the applicable Loss would not have occurred but for any of the following: (A) Southwest’s use of the System Units or Services in a manner for which they were neither contemplated nor designed, (B) the use of the Services or System Units modified in an unauthorized manner by a party other than Row 44 or any party under the direction of Row 44, (C) any combination of a Service or a System Unit by a party other than Row 44 or any party under the direction of Row 44 with any other service, device, equipment or technology, other than as necessary or foreseeable for reasonable use of the Broadband System or any component thereof, (D) the failure by Southwest to use a non-infringing interchangeable substitute Service furnished by Row 44, at no additional cost, expense or undue burden to Southwest, to avoid further infringement, and (E) the infringement of a third party’s Intellectual Property Rights by any intellectual property owned, controlled or licensed by Southwest (other than intellectual property controlled or licensed by Southwest pursuant to this Agreement or the Supply Agreement).

 

22
 

 

7.3 Indemnity by Southwest . Subject to Section 11.10 , Southwest shall be liable to and shall indemnify, defend and hold harmless Row 44, and its subsidiaries and Affiliates and their respective directors, officers and employees and permitted assigns from and against any Losses arising out of, connected with or resulting from Southwest’s negligence or willful misconduct and resulting in injury to or death to any person or material loss or damage to any property.

 

7.4 Third Party Actions . A party entitled to indemnification hereunder (an “ Indemnified Party ”) shall give prompt written notice to the Party that is obligated to provide indemnification hereunder (an “ Indemnifying Party ”) of the commencement or assertion of any action, proceeding, demand, or claim by a third party (collectively, a “ third party action ”) in respect of which such Indemnified Party shall seek indemnification hereunder. Any failure so to notify an Indemnifying Party shall not relieve such Indemnifying Party from any liability that it may have to such Indemnified Party under this ARTICLE 7 unless the failure to give such notice materially and adversely prejudices such Indemnifying Party. The Indemnifying Party shall have the right to assume control of the defense of, settle, or otherwise dispose of such third party action on such terms as it deems appropriate; provided , however , that:

 

7.4.1 The Indemnified Party shall be entitled, at its own expense, to participate in the defense of such third party action ( provided , however , that the Indemnifying Party shall pay the attorneys’ fees of the Indemnified Party if (a) the employment of separate counsel shall have been authorized in writing by such Indemnifying Party in connection with the defense of such third party action, (b) the Indemnifying Party shall not have employed counsel reasonably satisfactory to the Indemnified Party to have charge of such third party action, (c) the Indemnified Party shall have reasonably concluded that there may be defenses available to such Indemnified Party that are different from or additional to those available to the Indemnifying Party, or (d) the Indemnified Party’s counsel shall have advised the Indemnified Party that there is a conflict of interest that could make it inappropriate under applicable standards of professional conduct to have common counsel);

 

7.4.2 The Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into or making any settlement, compromise, admission, or acknowledgment of the validity of such third party action or any liability in respect thereof;

 

23
 

 

7.4.3 No Indemnifying Party shall consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by each claimant or plaintiff to each Indemnified Party of a release from all liability in respect of such third party action; and

 

7.4.4 The Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in the defense of), and the Indemnified Party shall be entitled to have sole control over, the defense or settlement, compromise, admission, or acknowledgment of any third party action (a) as to which the Indemnifying Party fails to assume the defense within a reasonable length of time, (b) to the extent the third party action seeks an order, injunction, or other equitable relief against the Indemnified Party which, if successful, would materially adversely affect the business, operations, assets, or financial condition of the Indemnified Party, or (c) if the third party action seeks damages in excess of the amount recoverable from the Indemnifying Party under Section 11.10 .

 

7.5 Cooperation . The parties hereto shall extend reasonable cooperation in connection with the defense of any third party action pursuant to this ARTICLE 7 and, in connection therewith, shall furnish such records, information, and testimony and attend such conferences, discovery proceedings, hearings, trials, and appeals as may be reasonably requested.

 

7.6 Insurance .

 

7.6.1 Row 44, at its own expense, shall procure and maintain during the Term, policies of insurance that include the following coverage: (a) Aviation Products Liability Insurance: Covering against any and all liabilities which Row 44 becomes legally obligated to pay as damages because of personal injury, sickness or disease, including death at any time resulting therefrom sustained by any person and because of injury to or destruction of property including the loss of use thereof arising out of or in connection with the handling, use of or any condition existing in the Broadband System (“ Products Hazard ”), including training aids, instructions, manuals, drawings, engineering or other data, engineering or other advice and/or services and/or labor given or supplied by Row 44 relating to the Broadband System, which arises out of, results from or is in connection with an accident which is neither expected nor intended (an “ Occurrence ”) arising out of the Products Hazard in the amount of US$100,000,000 per occurrence and in the amount of US$100,000,000 in the aggregate; (b) Grounding Liability Insurance: Covering against any and all liabilities which Row 44 becomes legally obligated to pay as damages for loss of use of completed aircraft occurring after delivery and acceptance of the Broadband System by Southwest and caused by a grounding (the complete and continuous withdrawal from all flight operations at or about the same time of one or more aircraft due to a mandatory order of the FAA or EASA due to an existing, alleged or suspected like defect, fault or condition affecting the safe operation of two or more like model aircraft) following an Occurrence arising out of the Products Hazard in the amount of US$100,000,000 per occurrence and in the amount of US$100,000,000 in the aggregate and the combined coverage under this Section 7.6.1 is US$100,000,000 in the aggregate; (c) Non-Aviation Commercial General Liability Insurance: Covering against any and all liabilities which Row 44 becomes legally obligated to pay as damages for non-aviation related exposures (Commercial General Liability Insurance) and exposures over and above the underlying General Liability policies (Umbrella Excess Liability Insurance) in the amount of US$100,000,000 in the aggregate; (d) Workers' Compensation Insurance for its own employees that meets the statutory limits of the states in which Row 44 operates and all federal statutes and regulations, (e) Employers Liability of not less than $1,000,000 combined single limit per occurrence, and (f) Comprehensive Automobile Liability (including Automobile Non-Ownership Liability) with a combined single limit of not less than $5,000,000 per occurrence (provided that Row 44 shall have thirty (30) days following the Effective Date in which to obtain such Comprehensive Automobile Liability coverage). Southwest and all subsidiary and affiliated companies are to be named as additional insureds under the aforementioned policies.

 

24
 

 

7.6.2 Insurance certificates and notices of modification or termination shall clearly state Row 44’s name and shall be sent to:

 

Southwest Airlines Co.

***

 

ARTICLE 8.

TERM AND TERMINATION

 

8.1 Term . The initial term of the Agreement will shall commence on the Effective Date and shall continue until December 31, 2020 (the “ Term ”).

 

8.2 Termination by Row 44 for Failure to Pay . Each Party may terminate this Agreement upon the failure of the other Party to pay any undisputed amount when due hereunder, if such failure continues for 10 days after the receiving Party provides the paying Party with written notice of such failure.

 

8.3 Termination by Either Party for Breach or Insolvency . Either Party shall have the right to terminate this Agreement prior to the expiration of the Term upon the occurrence of any of the following:

 

8.3.1 Upon the breach of any representations, warranties or obligations by the other Party if the breaching Party has not cured such breach within 60 day after written notice thereof by the non-breaching Party; or

 

8.3.2 immediately upon written notice, if (a) the other Party, pursuant to or within the meaning of Bankruptcy Law, (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a custodian of it or for any substantial part of its property, or (iv) makes a general assignment for the benefit of its creditors, or (b) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the other Party in an involuntary case, (ii) appoints a custodian of the other Party or for any substantial part of its property, or (iii) orders the winding up or liquidation of the other Party.

 

 

 

 

 *** Confidential treatment requested.

 

25
 

 

8.4 Termination by Southwest . Southwest may terminate this Agreement if:

 

8.4.1 Southwest determines that Row 44’s financial condition makes it reasonably likely that (a) Row 44 will (i) be unable to (1) continue as a going concern, (2) pay its debts as they become due, or (3) fulfill its obligations under this Agreement (including without limitation those set forth in Section 4.2 ), or (ii) pursuant to or within the meaning of Bankruptcy Law, (1) commence a voluntary case, (2) consent to the entry of an order for relief against it in an involuntary case, (3) consent to the appointment of a custodian of it or for any substantial part of its property, or (4) make a general assignment for the benefit of its creditors, or (b) a court of competent jurisdiction will enter an order or decree under any Bankruptcy Law that (i) is for relief against Row 44 in an involuntary case, (ii) appoints a custodian of Row 44 or for any substantial part of its property, or (iii) orders the winding up or liquidation of Row 44;

 

8.4.2 Row 44 fails to meet any Service Level for more than twelve percent of Southwest’s Commissioned Aircraft for (a) three consecutive months or (b) four months out of any consecutive six months period, and in no event shall any such failure be subject to a cure period.

 

8.4.3 Any Regulatory Authority takes any action, any Law is enacted, or any action, suit, claim, investigation or proceeding is initiated, or any Regulatory Approval is not obtained, in each case that adversely impacts or adversely conditions, or is reasonably expected to adversely impact or adversely condition, Southwest’s ability to deliver the Wi-Fi Service to its passengers; or

 

8.4.4 Row 44 assigns or otherwise transfers this Agreement (within the meaning of Section 11.1 ) without the prior written consent of Southwest (provided that (a) Southwest must provide at least six months advance notice of a termination pursuant to this Section 8.4.4 and (b) such notice of termination must be provided no later than one year after such assignment or transfer by Row 44).

 

8.5 Effect of Expiration or Termination of this Agreement for Any Reason . Upon the expiration or termination of this Agreement by either Party for any reason, the following provisions will apply:

 

8.5.1 Subject to Southwest’s rights to use materials placed in escrow hereunder, each Party will return the originals and any copies of the other Party’s Confidential Information and Proprietary Information; provided , that , each Party may retain copies of any Confidential Information or Proprietary Information that is subject to a continuing license pursuant to a fully executed written agreement between the Parties, and one copy of the other Party’s Proprietary Information in possession of its legal counsel for the purposes of monitoring its obligations hereunder and exercising any surviving rights;

 

8.5.2 Subject to Section 11.10 , neither Party will be relieved of any liability or obligation of such Party that accrued, or which arose during or relates to any period, prior to the effective date of such termination, including without limitation any payment obligations; and

 

8.5.3 The provisions of ARTICLE 1, Sections 2.6, 3.3.6, 4.2.4, 4.3.2, 4.3.3, 5.1.2, 5.1.3, 5.1.4, 5.1.5, 5.1.6, 5.2, 6.3, 6.4, 7.1, 7.2, 7.3, 7.4, 7.5, ARTICLE 8, ARTICLE 9, ARTICLE 10 and ARTICLE 11, as applicable, will survive the expiration or termination of this Agreement and remain in full force and effect in accordance with their terms.

 

8.6 Remedies Cumulative and Nonexclusive . All of the non-breaching Party’s remedies will be cumulative, and the exercise of one remedy hereunder by the non-breaching Party will not be deemed to be an election of remedies.

   

26
 

 

 

8.7 Rights In Bankruptcy . The Parties agree that Row 44 is a licensor to Southwest of intellectual property (as defined in 11 U.S.C. § 101 (35A), including trade secrets, inventions, process and design). In addition to all other rights and remedies that Southwest has or may come to have at law, in equity, or otherwise under this Agreement or applicable bankruptcy and non-bankruptcy law, in the event that Row 44 were to become a debtor or debtor in possession under Title 11 of the United States Code, Southwest shall be entitled to all rights under Title 11 of the United States Code, and specifically those rights afforded by 11 U.S.C. § 365(n) of Title 11 of the United States Code in the event of any rejection of this Agreement under 11 U.S.C. § 365.

 

8.8 Operations after Termination . ***

 

8.9 Notice of Termination . All termination notices delivered by either Party in connection with this Agreement must be delivered in writing.

 

8.10 Wind Down . ***

 

8.11 Post-Termination Assistance . ***

 

 

ARTICLE 9.

DISPUTE RESOLUTION

 

9.1 Escalation . Upon the occurrence of any event that, pursuant to the express provisions of this Agreement, is subject to the escalation provisions set out in this Section 9.1 , or upon the occurrence of any other material Dispute under this Agreement by written notice by a Party to the other Party, the following procedures shall apply:

 

9.1.1 The Parties will attempt to resolve the Dispute promptly by negotiations between a designated Southwest Vice President and the Chief Executive Officer of Row 44, or their respective designees (collectively, the “ Senior Officers ”). The Senior Officers will meet in person or by telephone within 10 Business Days after the notice of the Dispute and attempt in good faith to resolve the Dispute.

 

9.1.2 In the event the Senior Officers do not resolve the Dispute within 30 Business Days from receipt of notice of a Dispute (which time period may be extended by written agreement of the Senior Officers), either Party may refer the Dispute to arbitration in accordance with Section 9.2 .

 

9.2 Binding Arbitration .

 

9.2.1 Any controversy, dispute or claim (whether lying in contract or tort) between the Parties arising out of or related to this Agreement or the breach, termination or validity thereof (“ Dispute ”) shall, after the expiration of the time period set forth in Section 9.1.2 at the request of any Party be submitted to arbitration in accordance with this Section 9.2 .

 

 

 

 

 *** Confidential treatment requested.

 

27
 

 

9.2.2 All Disputes shall, except as provided herein, be solely and finally settled by a single arbitrator; provided , however , in the event the amount in controversy, whether in an individual Dispute or in the aggregate as to multiple Disputes between the Parties, is ***, the Parties agree to submit such Disputes to a board of arbitrators consisting of three arbitrators, as set forth below (the term “ Arbitrators ” shall refer to the board of arbitrators or the single arbitrator, as applicable). The arbitration proceedings shall be held in Dallas, Texas, and except as otherwise may be provided in this Section 9.2 , the arbitration proceedings shall be conducted in accordance with the Commercial Arbitration Rules (the “ AAA Rules ”) of the American Arbitration Association (the “ AAA ”).

 

9.2.3 If either Party determines to submit a Dispute for arbitration pursuant to this Section 9.2 , such Party shall furnish the other Party to the Dispute with a dated, written statement (the “ Arbitration Notice ”) indicating (i) such Party’s intent to commence arbitration proceedings, (ii) the nature, with reasonable detail, of the Dispute, and (iii) the remedy or remedies such Party will seek. Where the Parties use a single arbitrator, within *** of the Arbitration Notice, the Parties shall select a single arbitrator from a list of members of the AAA’s National Panel of Commercial Arbitrators. If the parties use a single arbitrator, that arbitrator must be “neutral.” A “neutral” arbitrator shall be a Party who would not be subject to disqualification under rule No. 17 of the AAA Rules. If the Parties do not reach agreement on the selection of a single arbitrator within the *** period, the AAA shall have the right to make such selection upon the request of any Party to the arbitration proceedings. Where the Parties use a board of arbitrators, within *** of the date of the Arbitration Notice, the Party commencing the arbitration (the “ Petitioner ”) and the Party with whom the Petitioner has its Dispute (the “ Respondent ”) shall each select one qualifying arbitrator (and provide written notice of such selection to the Respondent and Petitioner). A “qualifying” arbitrator is a Party who is not (i) an Affiliate of either the Petitioner or Respondent or (ii) counsel to any such Party at such time. If either the Petitioner or Respondent fails to select a qualifying arbitrator or provide such notice within the *** period, the AAA shall have the right to make such selection upon the request of any party to the arbitration proceedings. (Such qualifying arbitrators hereafter may be referred to, respectively, as the “ First Arbitrator ” and the “ Second Arbitrator .”).

  

 

 

 

 *** Confidential treatment requested.

  

28
 

 

9.2.4 Within *** following their selection, the First Arbitrator and Second Arbitrator shall mutually select (and provide written notice to the Respondent and the Petitioner of such selection) a third arbitrator (the “ Third Arbitrator ”) from a list of members of the AAA’s National Panel of Commercial Arbitrators. The Third Arbitrator must be “neutral.” A “neutral” arbitrator shall be an individual who would not be subject to disqualification under rule No. 17 of the AAA Rules. At any time within *** after the date of the Arbitration Notice, the Petitioner and Respondent can make discovery requests of the other (including requests for delivery of documents, production of witnesses for deposition testimony and delivery of interrogatory responses). The recipient of a discovery request shall have *** after the receipt of such request to object to any or all portions of such request and make an application to the Arbitrators to limit the scope of such discovery request, and shall respond to any portions of such request not so objected to within *** of the receipt of such request. All objections shall be in writing and shall indicate the reasons for such objections. Within five Business Days after the end of the period for the submission by the requested party of an application to limit the discovery request, the Arbitrators shall grant or deny such discovery request, in whole or in part, to the extent the Arbitrators determine such discovery is or is not, as the case may be, reasonably necessary to enable the requesting party to obtain information relevant to the Dispute without unreasonably burdening the requested party. The requested party shall comply with a discovery request granted by the Arbitrators within ***after such discovery request is granted, or within such longer period as the Arbitrators may determine upon application of the requested party for extension thereof for reasonable cause. Neither party shall be permitted to make more than one application for discovery to the Arbitrators. All depositions shall be taken in the city in which the Person being deposed resides or has its principal place of business, unless otherwise agreed by the parties. The Arbitrators are not authorized to subpoena documents or perform independent investigations. Hearings must commence no later than *** following the date of the Arbitration Notice and such hearings shall be conducted for no more than five Business Days. Each of the Petitioner and the Respondent shall submit a brief, outlining such party’s claim for relief or defense to any claim, to the other and to the Arbitrators on or before the tenth day before the date of the first hearing. Reply briefs must be exchanged and submitted to the Arbitrators on or before the third day before the date of the first hearing.

 

9.2.5 The Respondent and Petitioner shall each submit to the Arbitrators within 20 days following the last hearing a proposed order for disposing of the Dispute(s) presented. The final decision of the Arbitrators is due on or before the thirtieth day following the date of the last hearing. The Arbitrators shall issue a final decision that, in their judgment, is consistent with the terms of this Agreement, the intent of the parties, and Law, as supported by evidence presented by the Petitioner and Respondent in the arbitration proceeding or, if the subject matter of the Dispute is not clearly addressed in or determinable under this Agreement, that, in their opinion, would be most fair to the Petitioner and Respondent. The Arbitrators shall have no authority to award any punitive, special or exemplary damages. The Arbitrators shall be required to provide reasons for their decision. The foregoing time periods and procedural steps may be modified or extended by the Arbitrators in their discretion to the extent they deem necessary to prevent fundamental unfairness; provided that , at all times the Arbitrators shall be mindful of the parties’ desire for the most expeditious possible resolution of Disputes.

 

9.2.6 To the extent permissible under applicable Law, the Parties agree that the award of the Arbitrators shall be final and shall not be subject to judicial review. Judgment on the arbitration award may be entered and enforced in any court having jurisdiction over the Parties or their assets. It is the intent of the Parties that the arbitration provisions hereof be enforced to the fullest extent permitted by applicable Law, including the Federal Arbitration Act, 9 U.S.C. § 2. Nothing contained in this Section 9.2 shall prevent the Parties from seeking injunctive relief or require arbitration of any issue for which injunctive relief is sought by either Party hereto.

 

9.3 Governing Law; Jurisdiction; Venue . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REFERENCE TO ANY CONFLICT OF LAW RULES). FOR ANY PROCEEDINGS IN AID OF ARBITRATION UNDER SECTION 9.2 OR ANY REQUEST FOR INJUNCTIVE RELIEF, EACH PARTY EXPRESSLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE OF DELAWARE AND TO THE VENUE OF FEDERAL AND STATE COURTS SITUATED IN KENT COUNTY, DELAWARE , AND AGREES TO ACCEPT SERVICE OF PROCESS BY REGISTERED MAIL. EACH PARTY IRREVOCABLY WAIVES ANY OBJECTION IT MIGHT OTHERWISE HAVE TO SUCH VENUE AND ANY RIGHT TO REMOVE OR TRANSFER JURISDICTION TO ANY OTHER FORUM.

 

 

 

 

 *** Confidential treatment requested.

   

29
 

 

ARTICLE 10.

CONFIDENTIALITY, PUBLICATION AND PUBLICITY

 

10.1 Confidentiality . All Confidential Information disclosed by or on behalf of one Party to the other Party hereunder will be maintained in confidence by the receiving Party and will not be disclosed to a third party or used for any purpose whatsoever except as follows:

 

10.1.1 If a Party reasonably believes based on advice of outside counsel that the Confidential Information is required to be disclosed (a) to governmental or other regulatory agencies in order to obtain patents or (b) to comply with applicable stock exchange requirements or Securities and Exchange Commission regulations, then such disclosure may be made only to the extent reasonably necessary to obtain patents or approvals, or to comply with such requirements and regulations as appropriate, and such receiving Party seeks confidential treatment to the extent reasonably practicable;

 

10.1.2 If a Party reasonably believes it is necessary for Confidential Information to be disclosed to employees, agents, consultants, Affiliates and/or other third parties for the purpose of conducting activities permitted under this Agreement in accordance with this Agreement, Confidential Information may be disclosed to such employees, agents, consultants, Affiliates and/or other third parties only to the extent necessary, and only if such individuals agree to be bound by confidentiality obligations substantially equivalent to the terms herein;

 

10.1.3 If a Party reasonably believes it is necessary to disclose the terms and conditions of this Agreement to actual or prospective investors, lenders, real estate or equipment lessors or acquirors or other potential or current financing sources of a Party (collectively “ Financing Sources ”), such terms and conditions may be disclosed to such Financing Sources provided that the Financing Sources agree to be bound by confidentiality obligations substantially equivalent to the terms herein; or

 

10.1.4 If a Party reasonably believes that Confidential Information is required to be disclosed by law, regulation, request from a governmental or other regulatory agency or court order, then provided that notice of such disclosure is promptly delivered to the disclosing Party in order to provide an opportunity to challenge or limit the disclosure obligations, and provided further that the receiving Party works in good faith with the disclosing Party to seek confidential treatment of such disclosure and to disclose only to the extent reasonably necessary to comply with the applicable law or court order, such Confidential Information may be disclosed to the extent legally required. If such required disclosure involves filing information with the SEC, then, in addition to the notification obligation above, the Parties will cooperate in making any request for confidential treatment from the SEC that a Party may deem necessary to protect trade secrets and other commercial and financial information the disclosure of which could result in competitive harm.

 

30
 

 

10.2 Publicity . Subject to Section 10.1 , any publication, news release or other public announcement relating to this Agreement or the terms hereof that either Party wishes to release shall first be provided to the other Party for review within a reasonable period in advance, and the submitting Party shall not release such announcement without the prior written consent of the other Party.

 

10.3 Employees and Consultants . Each Party hereby agrees and covenants that all of its employees and consultants and all of the employees and consultants of its Affiliates who participate in any activities under this Agreement or have access to any Confidential Information or Proprietary Information are or will, prior to their participation or access, be bound by written obligations to maintain such Confidential Information or Proprietary Information in confidence and not to use or transfer such information or materials except as expressly permitted hereunder. Each Party agrees to use, and to cause its Affiliates to use, reasonable commercial efforts to enforce such obligations.

 

ARTICLE 11.

OTHER PROVISIONS

 

11.1 Assignment . In the event that either Party desires to assign or otherwise transfer this Agreement or any obligation of such Party hereunder (the “Assigning Party”), the Assigning Party shall seek the prior written consent of the other Party, such consent not to be unreasonably withheld or delayed (the “Remaining Party”) (it being understood that for purposes of the foregoing restriction on assignment and transfer, a change of control of either Party (directly or indirectly, and whether by merger, consolidation, share exchange, stock sale or other similar transaction) and sale of all or substantially all of the assets of a Party, shall be deemed to constitute an assignment or transfer); provided, however, that Southwest may assign this Agreement and the rights, obligations and interests of Southwest, in whole or in part, to any of its Affiliates, to any purchaser of all, or substantially all, of its assets or to any successor corporation resulting from any merger, consolidation, share exchange, stock sale or other similar transaction, and provided further that Row 44 may assign or sell its rights to receive any amounts due hereunder. If the Remaining Party does not provide its consent within 30 days after a request for consent by the Assigning Party, then the Remaining Party shall be deemed to have withheld its consent. In the event that the Remaining Party consents to any assignment or transfer proposed by the Assigning Party, then this Agreement shall continue in full force and effect according to its terms from and after such assignment or transfer, with the assignee or transferee being substituted herein for the Assigning Party. In the event that Southwest does not consent to a proposed Row 44 assignment or transfer, and Row 44 completes the assignment or transfer, then this Agreement shall continue in full force and effect according to its terms from and after such assignment or transfer, with the assignee or transferee being substituted herein for the Assigning Party, and Southwest will have the termination right set forth in Section 8.4.4. This Agreement will inure to the benefit of Southwest and Row 44 and their respective successors.

 

31
 

 

11.2 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affect the substantive rights of the Parties. The Parties will in such an instance use their reasonable best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) that, insofar as practical, implement the purposes of this Agreement.

 

11.3 Notices . All notices, documents or other communications that are required or permitted hereunder will be in writing and sufficient if delivered personally, sent by telefacsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

***

 

With a copy to:

 

***

  

***

  

With a copy to:

 

***

  

or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. Any such communication will be deemed delivered (i) if sent by mail, as aforesaid, on the date upon which the return receipt is signed or delivery is refused or the notice is designated by the postal authorities as not deliverable, as the case may be, (ii) if sent by telefacsimile, as aforesaid, when sent (with confirmation of receipt), and (iii) if sent by courier or hand delivered, as aforesaid, when received.

 

11.4 Entire Agreement . This Agreement, the exhibits hereto, and, when executed, the agreements contemplated herein, contain the entire understanding of the Parties with respect to the subject matter hereof, and all express or implied agreements and understandings, either oral or written, heretofore made are expressly superseded by the same. Except as expressly set forth in this Agreement, this Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both Parties. The exhibits to this Agreement are deemed incorporated herein as if directly set forth herein in their entirety.

 

 

 

 

 *** Confidential treatment requested.

 

32
 

 

11.5 Independent Contractors . It is expressly agreed that Row 44 and Southwest will be independent contractors and that the relationship between the two Parties will not constitute a partnership, joint venture or agency. Neither Row 44 nor Southwest will have the authority to make any statements, representations or commitments of any kind, or to take any action, which will be binding on the other, without the prior consent of the other Party.

 

11.6 Waiver. The waiver by either Party hereto of any right hereunder or the failure to perform or of a breach by the other Party will not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise.

 

11.7 Counterparts . This Agreement may be executed in identical duplicate copies exchanged by telefacsimile transmission. The Parties agree to execute two identical original copies of this Agreement after exchanging signed telefacsimile versions. Each identical counterpart will be deemed an original, but all of which together will constitute one and the same instrument.

 

11.8 Waiver of Rule of Construction . Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement will be construed against the drafting Party will not apply.

 

11.9 Force Majeure . Either Party’s timely performance of any part of this Agreement, other than payment obligations, shall be excused to the extent that it is hindered, delayed or otherwise made impractical by any cause beyond the reasonable control of that Party and not caused by the negligence of the non-performing Party (collectively referred to as “ Force Majeure ”). If any Force Majeure condition(s) occur, the non-performing Party shall make reasonable efforts to notify the other Party of the nature of any such condition and the extent of the delay, and shall make reasonable, good faith efforts to resume performance as soon as possible.

 

11.10 Liability Limitations . EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN, ROW 44 SPECIFICALLY DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, RELATING TO THE SERVICES PROVIDED BY ROW 44 HEREUNDER, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND OR NATURE (INCLUDING LOST PROFITS AND LOST REVENUES), WHETHER FORESEEABLE OR NOT, ARISING OUT OF OR RELATING TO THIS AGREEMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY LOSSES OR DAMAGES OF ANY KIND OR NATURE ARISING OUT OF RELATING TO THIS AGREEMENT IN EXCESS OF THE TOTAL AMOUNT ACTUALLY PAID TO AND RECEIVED BY ROW 44 FROM SOUTHWEST DURING THE 12 MONTH PERIOD PRIOR TO SUCH CLAIM, WHICH AMOUNT WILL BE THE MAXIMUM AGGREGATE LIABILITY OF EITHER PARTY TO THE OTHER PARTY HEREUNDER. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN SHALL BE DEEMED TO LIMIT ANY LIABILITY WITH RESPECT TO (A) AN OBLIGATION OF INDEMNITY SET FORTH IN THIS AGREEMENT, (B) FOR DAMAGES RESULTING FROM A BREACH OF AN OBLIGATION OF CONFIDENTIALITY, (C) A BREACH OF THE OBLIGATIONS IN EXHIBIT J HEREUNDER, (D) FOR PERSONAL INJURY OR PATENT INFRINGEMENT OR (E) ANY RIGHT OR REMEDY AVAILABLE TO SOUTHWEST AT LAW OR EQUITY BASED ON ROW 44’S FRAUDULENT ACTS, FRAUDULENT OMISSIONS OR INTENTIONAL MISREPRESENTATIONS. THE PAST, PRESENT OR FUTURE DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS OF SOUTHWEST AND ITS AFFILIATES SHALL NOT HAVE ANY PERSONAL LIABILITY OR OBLIGATION TO ROW 44 ARISING UNDER THIS AGREEMENT.

 

33
 

 

11.11 Third Party Beneficiaries . Except as otherwise expressly provided in this Agreement, nothing herein expressed or implied is intended or will be construed to confer upon or to give to any third party any rights or remedies by reason of this Agreement. Except as otherwise expressly provided in this Agreement, there are no intended third party beneficiaries under or by reason of this Agreement.

 

[Remainder of this page is intentionally left blank.]

 

34
 

 

IN WITNESS WHEREOF , the Parties have executed this Agreement to be effective as of the Effective Date.

 

SOUTHWEST AIRLINES CO.   ROW 44, INC.  
           
By: /s/ Dave Ridley   By: /s/ John LaValle  
Name: Dave Ridley   Name: John LaValle  
Title:  SVP – Chief Marketing Officer   Title:  CEO  

 

 

Signature Page to Amended and restated supply and services Agreement

 

 
 

 

EXHIBIT A

 

Definitions

 

AAA ” has the meaning set forth in Section 9.2.2 .

 

AAA Rules ” has the meaning set forth in Section 9.2.2 .

 

Acceptance ” has the meaning set forth in Section 2.1.2 .

 

Additional Included Services ” has the meaning set forth in Section 3.3 .

 

Affiliate ” means an individual, trust, business trust, joint venture, partnership, corporation, association or other legal entity that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with an entity. For purposes of this definition only, “ Control ” and, with correlative meanings, the terms “ Controlled by ” and “ under common Control with ” means (a) the possession, directly or indirectly, of the power to direct the management or policies of a legal entity, whether through the ownership of voting securities or by contract relating to voting rights or corporate governance, or (b) the ownership, directly or indirectly, of more than 50% of the voting securities or other ownership interest of a legal entity.

 

Agreement ” has the meaning set forth in the Preamble.

 

Arbitration Notice ” has the meaning set forth in Section 9.2.3 .

 

Arbitrators ” has the meaning set forth in Section 9.2.2 .

 

Assigning Party ” has the meaning set forth in Section 11.1 .

 

Auditing Party ” has the meaning set forth Section 4.3.3.1 .

 

Auditors ” has the meaning set forth in Section 4.3.3.1 .

 

Authenticate ” or “ Authentication ” has the meaning set forth in Section 3.2.1.1 .

 

Available ” has the meaning set forth in Exhibit E .

 

Bankruptcy Law ” means Title 11, United State Code , or any similar Federal or state law for the relief of debtors.

 

Basic Web Analytics” means the measurement, collection, analysis and reporting of internet data, including internet usage, substantially as provided to Southwest by Row 44 with respect to use of the Broadband System on Southwest aircraft as of the Effective Date, including, without limitation, access to the Row 44 live web portal regarding usage and reports from free applications such as Google Analytics regarding usage of the Service. 

 

Broadband System ” means the satellite based broadband internet system composed of the System Software, the System Hardware and all other hardware and software components necessary for the system to operate in accordance with the Specifications (as defined in the Supply Agreement).

 

Exhibit A- 1
 

 

Business Day ” means a day that is not a Saturday, Sunday or a day on which banking institutions in either New York, New York or Dallas, Texas are required by law to remain closed.

 

Commissioned Aircraft ” has the meaning set forth in Section 3.1 .

 

Commissioning Procedure ” has the meaning set forth in Section 3.1 .

 

Confidential Information ” means the terms and conditions of this Agreement, information disclosed by a Party to the other Party in connection with this Agreement or the performance of its obligations hereunder, or related to any use, method, compound, research project, work in progress, future development, scientific, engineering, manufacturing, marketing, business plan, Know-How, and financial and personnel matters relating to a Party, or its present or future products, sales, suppliers, employees, investors or business, whether disclosed in oral, written, graphic or electronic form, and whether or not specifically marked as confidential or proprietary, other than information that (a) is known by recipient at the time of its receipt, and not through a prior disclosure by or on behalf of the disclosing Party, as documented by contemporaneous business records; (b) is properly in the public domain through no fault of the recipient; (c) is subsequently disclosed to the recipient by a third party who may lawfully do so and is not directly or indirectly under an obligation of confidentiality to the disclosing Party, as documented by written business records in existence prior to the receipt of such information from the disclosing Party; or (d) is developed by the recipient independently of, and without reference to or use of, the information received from the disclosing Party. For the avoidance of doubt, any and all information provided by Southwest’s passengers to Row 44 or otherwise collected by Row 44 from Southwest’s customers shall be considered Southwest’s Confidential Information hereunder.

 

Content Control Services ” has the meaning set forth in Section 3.5.2 .

 

Content Control Services ” has the meaning set forth in Section 3.5.2 .

 

Defect ” means any failure of the Deliverables, or components thereof, to operate in accordance with or otherwise conform to the applicable Specifications.

 

Deliverable ” means all work product and other deliverables, and all related written reports, requirements documents (including newly created technical and non-technical data embodied therein), specifications, program materials, flow charts, notes, outlines and the like, and all intermediate and partial versions thereof, that are developed, authored, conceived, originated, prepared, or otherwise created by Row 44 or its employees, agents or subcontractors for or on behalf of Southwest under this Agreement, including the System Software and each System Unit delivered pursuant to a Purchase Order.

 

 

Exhibit A- 2
 

 

Designated Aircraft ” means the aircraft identified by Southwest on which the Broadband System will be installed.

 

Disabling Code ” has the meaning set forth in Section 5.1.5 .

 

Dispute ” has the meaning set forth in Section 9.2.1 .

 

Documentation ” means the Specifications and any other documentation associated with the Broadband System.

 

Effective Date ” has the meaning set forth in the Preamble.

 

Elected Services ” has the meaning set forth in Section 3.5 .

 

Enplanement ” means an enplaned Southwest customer as reported publicly by Southwest to the Department of Transportation and in its earnings releases.

 

Entertainment Portal ” means ***

 

Entertainment Portal Service ” means the services to be provided by Row 44 in connection with the Entertainment Portal as set forth in Section 3.4 .

 

FAA ” means the Federal Aviation Administration.

 

FCC ” means the Federal Communications Commission.

 

Financing Sources ” has the meaning set forth in Section 10.1.3 .

 

First Arbitrator ” has the meaning set forth in Section 9.2.3 .

 

Force Majeure ” has the meaning set forth in Section 11.9 .

 

Indemnified Party ” has the meaning set forth in Section 7.4 .

 

Indemnifying Party ” has the meaning set forth in Section 7.4 .

 

Intellectual Property Rights ” means all inventions, patents, copyrights, trade secrets, trade names, Know-How, intellectual property, software, shop rights, moral rights, licenses, developments, research data, designs, processes, formulas and other intangible proprietary or property rights, whether or not patentable (or otherwise subject to legally enforceable restrictions or protections against unauthorized third party usage), and any and all applications for, and extensions, divisions and reissuances of, any of the foregoing, and rights therein, and whether arising by statute or common law.

 

Know-How ” means any non-public, documented or otherwise recorded or memorialized knowledge, experience, know-how, technology, information, and data, including formulas and formulations, processes, techniques, unpatented inventions, discoveries, ideas, and developments, test procedures, and results, together with all documents and files embodying the foregoing.

 

 

 

 

 *** Confidential treatment requested.

 

Exhibit A- 3
 

 

Knowledge ” means, with respect to either Party, the actual or constructive knowledge of the chief executive officer, the president, any executive vice-president or any vice president of such Party.

 

Landing Page ” has the meaning set forth in Section 4.1.2 .

 

Law ” means all national, intergovernmental, common law, federal, state, provincial, regional, territorial and local laws, statutes, ordinances, regulations, rules, executive orders, orders of a court or governmental agency, supervisory requirements, directives, circulars, opinions, interpretive letters and other official releases of or by any government, or any authority, department or agency thereof.

 

Losses ” means all costs, damages, judgments, penalties, fines, losses and expenses, including reasonable attorneys’ fees, disbursements and court costs.

 

LRU ” shall have the meaning set forth in Section 2.3.4 .

 

MDU ” has the meaning set forth in Section 3.7.3 .

 

MTBUR ” means ***

 

Net Revenue ” means ***

 

Net Revenue Split ” means ***

 

Normal Operations ” has the meaning set forth in Exhibit E .

 

Occurrence ” has the meaning set forth in Section 7.6.1 .

 

Operational Data Service ” has the meaning set forth in Section 3.6 .

 

Party ” or “ Parties ” has the meaning set forth in the Preamble.

 

Petitioner ” has the meaning set forth in Section 9.2.3 .

 

Portal Features ” has the meaning set forth in Exhibit D .

 

Portal Platform ” has the meaning set forth in Exhibit D .

 

Products Hazard ” has the meaning set forth in Section 7.6.1 .

 

Proprietary Information ” means all regulatory filings, or information or data, whether disclosed in oral, written, graphic or electronic form, which is provided by, or on behalf of, one Party to the other Party in connection with this Agreement, whether or not specifically marked as confidential or proprietary, and whether or not it is Confidential Information.

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit A- 4
 

 

Purchase Order ” has the meaning set forth in Section 2.3 .

 

Regulatory Activities ” has the meaning set forth in Section 2.2 .

 

Regulatory Approvals ” means any approval, product and establishment license, registration or authorization of any Regulatory Authority required for the use of the Broadband System.

 

Regulatory Authority ” means any government regulatory authority, including any applicable government regulatory authority involved in granting approvals for the manufacture, commercialization, use, reimbursement and/or pricing of the Services and the Broadband System or that otherwise has regulatory authority with respect to the Services and the Broadband System or aircraft. “Regulatory Authority” includes the FAA and the Federal Communications Commission.

 

Regulatory Filings ” means any filings that may be required for any Regulatory Approval or otherwise filed or submitted to a Regulatory Authority in an effort to comply with applicable Laws.

 

Remaining Party ” has the meaning set forth in Section 11.1 .

 

Respondent ” has the meaning set forth in Section 9.2.3 .

 

Responding Party ” has the meaning set forth in Section 4.3.3.1 .

 

Row 44 ” has the meaning set forth in the Preamble.

 

Row 44 Materials ” has the meaning set forth in Section 4.3.2.2 .

 

Second Arbitrator ” has the meaning set forth in Section 9.2.3 .

 

Section 1441 ” has the meaning set forth in Section 6.4.4 .

 

Senior Officers ” has the meaning set forth in Section 9.1.1 .

 

Service Level ” means the benchmarks or levels against which the quality, completeness, availability or accuracy of the Services will be measured as set forth in Exhibit F .

  

Services ” has the meaning set forth in Section 3.1 .

 

Services Agreement ” has the meaning set forth in the Recitals.

 

Southwest ” has the meaning set forth in the Preamble.

 

Exhibit A- 5
 

 

Southwest Materials ” has the meaning set forth in Section 4.3.2.1 .

 

Special Television Content ” has the meaning set forth in Section 3.7.4.2 .

 

Specifications ” means the specifications set forth in the applicable STC, as it may be amended from time to time.

 

STC ” means a supplemental type certificate as issued by the FAA.

 

Supply Agreement ” has the meaning set forth in the Recitals.

 

Supplemental Television Hardware ” has the meaning set forth in Section 3.7.3 .

 

System Hardware ” means the hardware described in Exhibit B .

 

System Software ” means the software described in Exhibit B .

 

System Unit ” has the meaning set forth in the Recitals.

 

Television Normal Operations ” has the meaning set forth in Exhibit E .

 

Television Service ” has the meaning set forth in Section 3.7.2 .

 

Television Service Availability ” has the meaning set forth in Exhibit E .

 

Term ” has the meaning set forth in Section 8.1 .

 

Third Arbitrator ” has the meaning set forth in Section 9.2.4 .

 

third party action ” has the meaning set forth in Section 7.4 .

 

TV Authentication ” has the meaning set forth in Section 3.7.4.1 .

 

TV VOD ” has the meaning set forth in Exhibit E .

 

Vendor ” means those third parties supplying Row 44 with components for the System Units.

 

Vendor Warranties ” has the meaning set forth in Section 5.1.2 .

 

VOD ” means video-on-demand.

 

VOD Authentication ” has the meaning set forth in Section 3.8.4 .

 

VOD Only Solution ” has the meaning set forth in Section 3.8.1 .

 

 

Exhibit A- 6
 

 

VOD Technical Service Fee ” has the meaning set forth in Section 3.8.3 .

 

Warranty Period ” has the meaning set forth in Section 5.1.2 .

 

Wi-Fi Authentication ” has the meaning set forth in Section 3.2.1.1 .

 

Wi-Fi Fee ” has the meaning set forth in Section 3.2.1.1 .

 

Wi-Fi Service ” means the Wi-Fi-based Internet services described in Exhibit F .

 

Wi-Fi Subsidy ” has the meaning set forth in Section 3.2.1.3 .

 

Exhibit A- 7
 

 

EXHIBIT B

 

HARDWARE AGREEMENT EXHIBIT ITEMS

 

EXHIBIT B-1

 

Documentation

 

***

 

 

 

 

 

 *** Confidential treatment requested.

 

Exhibit B- 1
 

 

EXHIBIT B-2

 

System Unit Pricing

 

New Equipment Sales per Full Up Aircraft            
             
***              
               

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit B- 2
 

 

EXHIBIT B-3

 

System Unit Warranty Information

 

***

 

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit B- 3
 

 

EXHIBIT B-4

 

System Software

 

***

 

 

 

 

 *** Confidential treatment requested.

   

Exhibit B- 4
 

 

EXHIBIT B-5

 

System Hardware

 

***

 

 

 

 

 *** Confidential treatment requested.

   

Exhibit B- 5
 

 

EXHIBIT C

 

Commissioning Procedure

 

 

 

The commissioning procedure shall be the applicable installer taking the steps set forth in the *** On Aircraft Test Plan *** or the *** On Aircraft Test Plan *** to verify the system is connected to the Service.

 

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit C- 1
 

 

EXHIBIT D

 

Entertainment Portal Service

 

The Entertainment Portal Service shall consist of (i) Row 44’s standard web-based portal software platform, including a framework for an initial “landing page” for customers connecting to the Wi-Fi Service, Television Service and Entertainment Portal Service and related navigation pages to individual features offered by the Entertainment Portal Service (the “ Portal Platform ”) and (ii) a variety of features and services to be incorporated into such software platform as mutually, agreed by the parties (the “ Portal Features ”).

 

General Entertainment Portal Service Management

 

Row 44 will private label the Entertainment Portal Service for Southwest; provided, that, Row 44 will manage the portal, content, and associated updates and changes. Southwest will have the right to approve the selection of content, the look and feel of the portal and its pages, and the initiation of new portal services and capabilities. The Parties acknowledge and agree that the Entertainment Portal Service is dependent on mutual agreement and cooperation regarding the specific services and features to be made available on the Entertainment Portal Service and the business arrangements with third party providers that support such features. The Parties agree to exercise their reasonable discretion in approval and selection of specific features, advertising partners (subject to the Southwest restriction list described in item 2 below) (including all advertising and naming rights transactions) and business arrangements with respect to the Entertainment Portal Service.

 

Row 44’s portal management will include, as applicable depending on the Portal Features operating at any given time, the acquisition of content and the management, delivery, and updating of content aboard all Southwest aircraft.

 

As part of the Program Schedule, the parties will jointly establish a portal management team to operate the Entertainment Portal Service and engage with third parties to be included in the same; provided, that, Row 44’s engineering team shall initially have sole responsibility for management of the Portal Platform and implementation of Portal Features. Row 44 will provide design considerations to Southwest for review and approval for deployment. ***

 

Basic Design/Customization

 

Row 44 will customize the “look and feel” of the Portal Platform to Southwest’s look, feel, livery, and languages, all in accordance with the capabilities of the Portal Platform and as reasonably requested by Southwest.

 

Row 44 will be responsible for maintaining the Portal Platform, but will support additional reasonable customization of the look and feel of the Portal Platform as Southwest’s brand changes over time.

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit D- 1
 

 

Row 44 will diligently seek options for improving user experience and performance throughout the Term, and promptly communicate such options to Southwest.

 

Every *** the parties will review and “refresh” the look and feel of the Portal Platform.

 

Portal Features

 

The Entertainment Portal Service is expected to consist of advertising, sponsorship and fee supported entertainment and services, such as media content on demand free entertainment such as games, destination deals and shopping. Subject to all rights assigned to Southwest outlined in this Agreement, Row 44 will be responsible for 3rd party relationships and contracts associated with portal content and services, ***. Unless otherwise agreed by the parties, Southwest acknowledges and agrees that all activities and dialog with 3rd parties related to the portal development should be done in cooperation with Row 44 to ensure consistency of communications, branding, messaging, and maximization of network efficiencies.

 

The Parties hereby acknowledge and agree that it is the intent and an essential purpose of this Agreement that Row 44 have the ability to implement additional features throughout the Term in order to maximize revenue generation of the Entertainment Portal Service. Southwest shall have the right to veto additional Portal Features from being implemented, but only in the case where such additional Portal Feature will conflict with Southwest’s brand and policies, all to be determined in the reasonable discretion of Southwest. Row 44 will propose such new Portal Features to Southwest prior to implementation and Southwest shall have thirty (30) days to exercise the foregoing veto.

 

While additional Portal Features are expected to be under the terms of the *** set forth in this Agreement, Row 44 and/or Southwest may from time to time propose specific a Portal Feature with a specific business model associated with such feature because of the unique nature of such Portal Feature.

 

If Row 44 agrees to include a portal feature sourced exclusively by Southwest and subject to an exclusivity clause for Southwest’s fleet, then such feature will be designated as exclusive to Southwest and Row 44 may not utilize the sourced feature on any other customer’s aircraft. For the avoidance of doubt, the foregoing shall not restrict Row 44 from implementing a similar feature on other Row 44 customers fleet using a different third party source and/or custom development.

 

***

 

 

 

 *** Confidential treatment requested.

  

Exhibit D- 2
 

 

Advertising

 

Generally

 

Row 44 and Customer will coordinate the sale and presentation of advertising for the Entertainment Portal Service (and the Television Service). Advertising may be local, national, or international, and likely a mix of all. With respect to live and stored media content, Row 44 will use commercially reasonable efforts to implement advertising in a reasonable set of scenarios so as not to hinder the portal experience, including advertising to be inserted before the showing of stored content (movies and TV shows) and within the live streams of live TV channels made available on the Television Service, all in accordance with the Entertainment Platform Service’s capabilities and the applicable license restrictions for such content. Row 44 will be restricted from selling advertising space in violation of Southwest’s policies, which include sales in the following categories of advertisements; provided, that Southwest may reasonably update the following restricted categories from time to time:

 

***

 

Approval Process

 

Southwest and Row 44 agree to the following approval processes for approving acceptable advertisers and advertisements that may potentially appear on the Entertainment Portal Service (and/or the Television Service):

 

***

 

Internal Southwest Promotion Space

 

Row 44 agrees to provide, and Southwest will have the right to use a reasonable amount of space on the Entertainment Portal Service for the promotion of Southwest provided such use does not unreasonably interfere with pre-existing advertising space committed to third parties.

 

Rapid Rewards Partners

 

The Parties acknowledge and agree that sales and partnerships with Southwest’s current Rapid Rewards partners for the Entertainment Portal Service may require special terms for such Parties. Southwest and Row 44 agree to continue to explore in good faith appropriate terms and economics for supporting Rapid Rewards partners participation in the Entertainment Portal Service.

 

Portal Reporting Attributes

 

 

The Entertainment Portal Service shall be designed to support the following reporting attributes for information to be collected regarding use of the Entertainment Portal Service:

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit D- 3
 

 

Context

 

Flight number

Tail number

City pair

On/Off time

Flight minutes

Logs from onboard devices

MDU stats

Skew stats

Plot flight

Outages

Length of outages

Reason for outage

Availability of the system

Ability to graph diagnostics

Access to tickets

 

Traffic

 

Visits

Unique visitors

URLs hit/blocked

Authenticated users

Total possible users (number of devices that have associated to the wireless)

Number of user sessions

Average amount of time for sessions

Time on page

Average time on page

Time on site

Average time on site

Top discussions

Page views

Protocols in use

 

Identify passengers on direct and connecting flights to the extent possible

 

User Info

 

MAC address

IP address

Laptop or handheld by device type

Operating system

Browser

Timestamp of customer usage

Amount of data upload/download

Credit card information if paid for service

from 3rd party provider other than

Southwest, if available

Promo Code for paid Internet service

   

Exhibit D- 4
 

 

Reporting

 

Following the Effective Date, the Parties will work in good faith to establish a best practices guide for reporting Entertainment Portal Service metrics, and further agree to update such reporting on an as needed basis as new Portal Features are added to the Entertainment Portal Service.

 

Entertainment Portal Support Metrics

 

Row 44 will support the Entertainment Portal Service using the following error/response time terms:

 

 

Priority Workaround Target
P1 4 hours if the problem occurs during Business Hours*; 8 hours if the problem occurs outside Business Hours*
P2 24 Business Hours
P3 8 Business Days
P4 4 Production Cycles

 

*Business Hours are Monday – Friday 9am Central to 6pm Central.

 

Response and resolution times are measured from the moment Southwest opens a support ticket with the Row 44 network operations center.  

 

Priority Definitions

 

 

P1 - Priority 1 : Critical Problem.  Use of Entertainment Portal Service or key function thereof is stopped or so severely impacted and no known, viable workaround exists. No useful work can be done. Most common operations fail consistently. P1 Problems have one or more of the following characteristics:

 

· System hangs. The process hangs indefinitely or there is severe performance degradation, causing unreasonable waits for resources or response, as if the system is hanging.

 

· System crashes repeatedly and continues to fail after re-login attempts.

 

· Critical functionality is not available. The Entertainment Portal Service cannot continue because a vital feature is inoperable, data cannot be secured, etc.

 

Exhibit D- 5
 

 

Note: A Southwest contact (direct phone, cell phone and email) must be available in Priority 1 situations to provide information required for problem diagnosis and to test/confirm the resolution.

  

P2 - Priority 2: Significant Business Impact. Use of the Entertainment Portal Service is continuing but there is a serious impact on usefulness. Important features are unavailable. Certain common operations fail consistently. Services crash readily. P2 Problems have one or more of the following characteristics:

 

· Software error causing the Entertainment Portal Service to fail, but restart or recovery is possible.

 

· Severely degraded performance due to software error. 

 

· Some important functionality is unavailable but the Entertainment Portal Service continues to operate in restricted fashion.

 

P3 - Priority 3: Some Business Impact. A fundamental function is experiencing an intermittent problem, or a common operation sometimes fails. A less common operation fails consistently. P3 Problems have one or more of the following characteristics:

 

· A software error for which there is an acceptable workaround.

 

· A software error with minor impact to the operation of the system.

 

· A software error requiring manual editing of configuration or script files to work around a problem.

  

P4 - Priority 4: Minimal Business Impact. All problems not covered above. Southwest requests information, an enhancement, or documentation clarification but there is no impact on operation. Southwest's use of the Entertainment Portal Service is continuing.

 

Exhibit D- 6
 

 

EXHIBIT E

 

Television Service & VOD

 

General Description

 

Row 44 will develop and make available the Television Service consisting of *** on Commissioned Aircraft. For the avoidance of doubt, subject to mutual agreement, *** . Row 44 will secure the relevant content as agreed by the Parties, and new release content and the digital rights management therefor in order for the content to be offered in a non-app based format, except where digital rights management and related security requirements require use of an application or application plug-in for viewing such content. Notwithstanding the foregoing, the Parties agree to launch the Television Service under the terms of this Agreement as follows:

 

***

   

Deployment of Supplemental Television Hardware

 

From the Effective Date and until ***, the Television Service will consist of the currently available linear television channels and the expected deployment of additional television show and movie video on demand content. During this period, Row 44 shall establish and implement a road map for the deployment ***.

 

The Supplemental Television Hardware will be delivered by Row 44 and installed by Southwest pursuant to the following milestones:

 

***

  

Business Model

 

The Parties acknowledge the current business model set forth in the Agreement describes the sale of a single package of live television channels and a selection of video-on-demand television content. Additional items offered are expected to include “pay-per-view” access to movies and special subject content and separately offered access to special live television channels. Southwest acknowledges and agrees that Row 44’s current content agreements are licensed contemplating implementation of product offering outlined above and that any changes to the business model could have a material impact on licensing costs. Row 44 and Southwest must both agree in writing to any proposed changes to the business model for the Television Service; provided, however that the “free TV model” set forth herein is not subject to re-negotiation.

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit E- 1
 

 

Content Selection and Updating

 

All live channels and on demand content deployed on the Television Service shall be provided as set forth in this Exhibit, and otherwise subject to the mutual agreement of the Parties; provided, that, Row 44 shall be responsible for establishing and maintaining all licensing agreements for content.

 

Row 44 shall ensure that the content it will make available for selection and deployment on the Television Services represents a current selection representing a leading offering when compared to similar offerings on for use on commercial aircraft using similar in-flight entertainment systems and technology. Row 44 shall immediately notify Southwest if Row 44 becomes aware of any events or issues that may result in certain content becoming unavailable for any reason, including, without limitation content license contract disputes or long term service outages. In addition, due to the varying storage capacity of installed server management units on board Commissioned Aircraft, the following descriptions of content loading and available content may vary depending on the available capacity of a particular Commissioned Aircraft.

 

TV Video-On-Demand

 

TV Video-On-Demand (“ TV VOD ”) content will be procured on an ongoing basis by Row 44. Row 44 will program and provide a list of all proposed TV VOD content it would like to include in the Television Service to Southwest for approval. Southwest agrees to review and approve all content prior to inclusion in the offering. Row 44 will not be liable or responsible for any approved content that may be deemed objectionable by any Southwest passenger.

 

TV VOD Content for the Television Service will generally consist of the following format. TV episodes include episodes from 30 minute and 60 minutes TV series.  While the overall content mix may fluctuate, the approximate distribution and amount of VOD content available to passengers would be distributed as follows (shaded areas) based on current aircraft server size as of the Effective Date:

 

Content Type # of Movies / # of TV Series # of Episodes Total # of video files
       
*** *** *** ***
*** *** *** ***
*** *** *** ***

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit E- 2
 

 

The onboard TV VOD content will be refreshed *** with more recent movies and TV episodes being added, replacing some of the content currently onboard.  Approximate *** updates would be distributed as follows based on *** as of the Effective Date:

 

Content Type # of Movies / # of TV Series # of Episodes Total # of video files
       
*** *** *** ***
*** *** *** ***
*** *** *** ***

 

Along with each video file, Row 44 will provide the content metadata associated with each TV episode.  The content metadata is then displayed within the portal to describe and promote each VOD title.  For TV episodes, metadata consists of: TV Series Title, TV Episode Title, TV Episode Synopsis, Season #, Episode #, Rating and Genre(s).  

 

Live Television

 

The Television Service will include a live television product consisting of at least ***. The channels will include *** by Row 44 on behalf of Southwest Airlines. The current channels include:

 

1. WNYW ***

2. MLB.com Channel ***

3. NFL Network

4. NFL RedZone ***

5. NBC Sports

6. CNBC

7. MSNBC

8. Fox Business

9. Fox News

 

Row 44 will work with Southwest on channel programming. The Channel line-ups will consist of the following:

 

***

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit E- 3
 

 

Southwest shall have the right to determine it its reasonable discretion whether the channels actually provided by Row 44 meet the criteria set forth above. Notwithstanding the foregoing channel line-up category requirements, if, during the course of good faith negotiations with content providers, ***.

 

Row 44 will ensure that all channels are licensed for ***.

 

Row 44 will ensure it secures all rights associated with any content licensed that is procured on behalf of the live Television Service offering.

 

Movie Video-On Demand

 

Row 44 shall make movie content available on all Southwest airplanes equipped with the Row 44 WiFi equipment. Access to movies will be available to passengers on a “pay-per-view” basis. Pricing for each movie title will be subject to the terms previously outlined in this Agreement.

 

Row 44 will provide access to an assortment of movies. Southwest acknowledges and agrees that there are certain video storage limitations associated with the Row 44 WiFi server solution and that these limitations vary and apply to the various types of equipment installed on Southwest airplanes. The variations in storage capacity and equipment may require different movie VOD libraries aboard Southwest planes.

 

Movies will be procured on an ongoing basis through either direct relationship with content providers, or by utilizing content service providers (CSPs). Row 44 will make a commercially reasonable effort to adhere to security requirements associated with such agreements, but can make no guarantees that Row 44’s security architecture implemented in it’s video streaming solution will be accepted by all content providers.

 

Row 44 will program and provide a list of all proposed movie content it would like to offer to passengers aboard Southwest airlines for approval. Southwest agrees to review and approve all movie content prior to Row 44 pushing the content to airplanes. Row 44 will not be liable or responsible for any approved content that may be deemed objectionable by any Southwest passenger.

 

Movie content for the TV Product will generally consist of the following format.

While the overall movie content mix may fluctuate, the approximate distribution and amount of movie content available to Passengers would be distributed as follows (shaded areas) based on aircraft server size as of the Effective Date:

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit E- 4
 

 

Content Type # of Movies / # of TV Series # of Episodes Total # of video files
*** *** *** ***
       
       
       

 

The onboard VOD content will be refreshed *** with more recent movies replacing some of the content currently onboard.  Approximate *** would be distributed as follows based on aircraft server size as of the Effective Date:

 

Content Type # of Movies / # of TV Series # of Episodes Total # of video files
*** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***

 

Along with each video file, Row 44 will provide the content metadata associated with each Movie or TV episode.  The content metadata is then displayed within the portal to describe and promote each VOD title.  For movies, metadata consists of: Movie Title, Synopsis, Director, Cast, Rating and Genre(s).  

 

For aircraft that have ***.  The approximate distribution and amount of the VOD content would be distributed as follows based ***:

 

Content Type # of Movies / # of TV Series # of Episodes Total # of video files
*** *** *** ***
*** *** *** ***
*** *** *** ***
*** *** *** ***

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit E- 5
 

 

Passenger Pricing

 

***

 

Content Licensing Acknowledgement .

 

Southwest acknowledges and understands that content licensing agreements with content providers and third party distributors may require certain commitments and security requirements associated with such licensing agreements. Row 44 will provide the applicable licensing and security commitments for an item of content (or package of content from the same source) at the time such content is offered for selection by Southwest. Without limiting the generality of the foregoing, and unless permitted in a separate agreement between Southwest and a third party, under no circumstance may Southwest utilize the content provided by Row 44 except for distribution utilizing the Entertainment Portal Service under the management and control of Row 44.

 

If the trademarks, trade names, logos and other marks of content providers are provided by Row 44 to Southwest for use in the distribution and promotion of the content or Entertainment Portal Services, Southwest acknowledges that all right, title and interest in such marks shall remain with the applicable content provider, except as expressly permitted by the applicable content provider, which shall be included in the delivery of such marks by Row 44 to Southwest.

 

Upon termination or expiration of this Agreement for any reason, Southwest shall provide Row 44 with reasonable assistance to enable Row 44 to ensure removal or destruction of all third party licensed content utilized in conjunction with the Entertainment Portal Service and stored on any portion of the Systems Units, with the intent that all such Content be removed no later than one month from termination or expiration.

 

Customer Support

 

Southwest will be responsible for all first line customer service requests associated with the Television Service. Row 44 will be responsible for providing second line support to Southwest’s customer service organization. Row 44 will provide access to customer care tools which will identify service level parameters for the video product such that Southwest’s Customer Care department can make refund determinations as part of their normal support operations. These tools will be made available in the current Row 44 Billing Provider customer care solution.

 

Service Level ***

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit E- 6
 

 

EXHIBIT F

 

Wi-Fi Service and Operational Data Service

 

 

Service Features :

 

Wi-Fi Service and Operational Data Service

 

The Wi-Fi Service and Operational Data Service, as applicable, shall deliver broadband Internet access, including ground-based backhaul Internet connectivity, satellite-based data connectivity to each aircraft and Wi-Fi-based Internet access availability within the cabin. Row 44 will work to provision ***.

 

Service Availability :

 

The Wi-Fi Service and Operational Data Services shall be *** on Southwest’s Commissioned Aircraft for *** based on an average of all Commissioned Aircraft.

 

***

 

Service Failures

 

***

 

Restrictions

 

Use of the Services shall be subject to all rules and regulations established by applicable Regulatory Authorities, including the FAA and FCC, including Row 44’s FCC license.

 

 

 

 

 

 *** Confidential treatment requested.

  

Exhibit F- 1
 

 

EXHIBIT G

Content Filtering and Procedures

 

Row 44’s content filtering service can be utilized to filter (i) entire categories of websites based on the classifications set forth below and (ii) specific, customer-selected URLs. To enable or disable a filter, Southwest must notify Row 44’s network operation center of the classification of website(s) and/or specific URLs it would like to be filtered from customer availability, and Row 44 will enable such filter as soon as possible but no later than 48 hours after receipt of notice from Southwest. Notwithstanding the foregoing, the Parties acknowledge that all content filtering implemented on the Services is subject to compliance with applicable FCC rules and regulations.

 

Categories of Content Based Filters:

 

Abortion
Sites with neutral or balanced presentation of the issue.

Pro-Choice - Sites that provide information about or are sponsored by organizations that support legal abortion or that offer support or encouragement to those seeking the procedure.
Pro-Life - Sites that provide information about or are sponsored by organizations that oppose legal abortion or that seek increased restriction of abortion.

 

Adult Material
Parent category that contains the categories:

Adult Content - Sites that display full or partial nudity in a sexual context, but not sexual activity; erotica; sexual paraphernalia; sex-oriented businesses as clubs, nightclubs, escort services; and sites supporting the online purchase of such goods and services.
Lingerie and Swimsuit - Sites that offer images of models in suggestive but not lewd costume, with semi nudity permitted. Includes classic 'cheese-cake,' calendar, and pinup art and photography. Includes also sites offering lingerie or swimwear for sale.
Nudity - Sites that offer depictions of nude or seminude human forms, singly or in groups, not overtly sexual in intent or effect.
Sex - Sites that depict or graphically describe sexual acts or activity, including exhibitionism; also, sites offering direct links to such sites.
Sex Education - Sites that offer information about sex and sexuality, with no pornographic intent.

 

Advocacy Groups

Sites that promote change or reform in public policy, public opinion, social practice, economic activities, and relationships.

 

Business and Economy

Sites sponsored by or devoted to business firms, business associations, industry groups, or business in general.

Financial Data and Services - Sites that offer news and quotations on stocks, bonds, and other investment vehicles, investment advice, but not online trading. Includes banks, credit unions, credit cards, and insurance.
Hosted Business Applications - Sites that provide access to business-oriented web applications and allow storage of sensitive data, excluding those for web collaboration.

 

Drugs
Parent category that contains the categories:

Abused Drugs - Sites that promote or provide information about the use of prohibited drugs, except marijuana, or the abuse or unsanctioned use of controlled or regulated drugs; also, paraphernalia associated with such use or abuse.
Marijuana - Sites that provide information about or promote the cultivation, preparation, or use of marijuana.
Prescribed Medications - Sites that provide information about approved drugs and their medical use.
Supplements and Unregulated Compounds - Sites that provide information about or promote the sale or use of chemicals not regulated by the FDA (such as naturally occurring compounds).

 

 

Exhibit G- 1
 

 

Education
Parent category that contains the categories:

Cultural Institutions - Sites sponsored by museums, galleries, theatres (but not movie theatres), libraries, and similar institutions; also, sites whose purpose is the display of artworks.
Educational Institutions - Sites sponsored by schools and other educational facilities, by non-academic research institutions, or that relate to educational events and activities.
Educational Materials - Sites that provide information about or that sell or provide curriculum materials or direct instruction; also, learned journals and similar publications.
Reference Materials - Sites that offer reference-shelf content such as atlases, dictionaries, encyclopedias, formularies, white and yellow pages, and public statistical data.

 

Entertainment
Sites that provide information about or promote motion pictures, non-news radio and television, books, humor, and magazines.

MP3 and Audio Download Services - Sites that support downloading of MP3 or other sound files or that serve as directories of such sites.

 

 

Gambling - Sites that provide information about or promote gambling or support online gambling, involving a risk of losing money.

 

Games - Sites that provide information about or promote electronic games, video games, computer games, role-playing games, or online games. Includes sweepstakes and giveaways.

  

Government
Sites sponsored by branches, bureaus, or agencies of any level of government, except for the armed forces.

Military - Sites sponsored by branches or agencies of the armed services.
Political Organizations - Sites sponsored by or providing information about political parties and interest groups focused on elections or legislation.

 

Health - Sites that provide information or advice on personal health or medical services, procedures, or devices, but not drugs. Includes self-help groups.

 

Illegal or Questionable - Sites that provide instruction in or promote nonviolent crime or unethical or dishonest behavior or the avoidance of prosecution.

 

Information Technology

Sites sponsored by or providing information about computers, software, the Internet, and related business firms, including sites supporting the sale of hardware, software, peripherals, and services.

Computer Security - Sites that provide information about or free downloadable tools for computer security.
Hacking - Sites that provide information about or promote illegal or questionable access to or use of computer or communication equipment, software, or databases.
Proxy Avoidance - Sites that provide information about how to bypass proxy server features or to gain access to URLs in any way that bypasses the proxy server.
Search Engines and Portals - Sites that support searching the Web, news groups, or indices or directories thereof.
URL Translation Sites - Sites that offer online translation of URLs. These sites access the URL to be translated in a way that bypasses the proxy server, potentially allowing unauthorized access.
Web & Email Spam - Sites whose links are sent in unsolicited commercial email, either as part of campaigns to promote products or services, or to entice readers to click through to surveys or similar sites. Also included are sites that display comment spam.
Web Collaboration - Sites that provide virtual workspace for purposes of collaboration and conferencing, which may include sites that enable authorized access to a computer or network from a remote location
Web Hosting - Sites of organizations that provide hosting services, or top-level domain pages of Web communities.

 

 

Exhibit G- 2
 

 

Internet Communication

Parent category that contains the categories:

Web Chat - Sites that host Web chat services or that support or provide information about chat via HTTP or IRC.
General Email - Sites that provide email services open to general use.
Organizational Email - login sites for corporate or institutional email systems.
Text and Media Messaging - Sites that enable the sending of messages and other content via SMS, EMS, MMS, or similar protocols.

 

 

Job Search - Sites that offer information about or support the seeking of employment or employees.

 

Militancy and Extremist - Sites that offer information about or promote or are sponsored by groups advocating antigovernment beliefs or action.

 

Miscellaneous
Parent category that contains the categories:

Content Delivery Networks - Commercial hosts that deliver content to subscribing Web sites.
Dynamic Content - URLs that are generated dynamically by a Web server.
File Download Servers - Web servers whose primary function is to deliver files for download.
Image Servers - Web servers whose primary function is to deliver images.
Images (Media) - URLs ending with image filenames.
Network Errors - URLs with hosts that do not resolve to IP addresses.
Private IP Addresses - IP addresses defined in RFC 1918, 'Address Allocation for Private Intranets.'

 

News and Media

Sites that offer current news and opinion, including those sponsored by newspapers, general-circulation magazines, or other media.

Alternative Journals - Online equivalents to supermarket tabloids and other fringe publications.

 

Parked Domain - Sites that are expired, offered for sale, or known to display targeted links, advertisements.

  

Racism and Hate - Sites that promote the identification of racial groups, the denigration or subjection of groups, or the superiority of any group.

 

Religion
Parent category that contains the categories:

Non-Traditional Religions and Occult and Folklore - Sites that provide information about or promote religions not specified in Traditional Religions or other unconventional, cultic, or folkloric beliefs and practices.
Traditional Religions - Sites that provide information about or promote Bahai, Buddhism, Christian Science, Christianity, Hinduism, Islam, Judaism, Mormonism, Shinto, and Sikhism, as well as atheism.

 

Shopping
Sites that support the online purchase of consumer goods and services except: sexual materials, lingerie, swimwear, investments, medications, educational materials, computer software or hardware, alcohol, tobacco, travel, vehicles and parts, weapons.

Internet Auctions - Sites that support the offering and purchasing of goods between individuals.
Real Estate - Sites that provide information about renting, buying, selling, or financing residential real estate.

 

 

Exhibit G- 3
 

 

Social Organizations

Parent category that contains the categories:

Professional and Worker Organizations - Sites sponsored by or that support or offer information about organizations devoted to professional advancement or workers' interests.
Service and Philanthropic Organizations - Sites sponsored by or that support or offer information about organizations devoted to doing good as their primary activity.
Social and Affiliation Organizations - Sites sponsored by or that support or offer information about organizations devoted chiefly to socializing or common interests other than philanthropy or professional advancement.

 

Society and Lifestyles

Sites that provide information about matters of daily life, excluding entertainment, health, hobbies, jobs, sex, and sports.

Alcohol and Tobacco - Sites that provide information about, promote, or support the sale of alcoholic beverages or tobacco products or associated paraphernalia.
Blogs and Personal Sites - Sites that host blogs and personal sites.
Gay or Lesbian or Bisexual Interest - Sites that provide information about or cater to gay, lesbian, or bisexual lifestyles, but excluding those that are sexually or issue-oriented.
Hobbies - Sites that provide information about or promote private and largely sedentary pastimes, but not electronic, video, or online games.
Personals and Dating - Sites that assist users in establishing interpersonal relationships, excluding those intended to arrange for sexual encounters.
Restaurants and Dining - Sites that list, review, advertise, or promote food, dining, or catering services.
Social Networking - Sites of web communities that provide users with means for expression and interaction.
Social Networking and Personal Sites - Sites chiefly devoted to personal expression by individuals (as in diaries or personal blogs) or small groups, often but not necessarily involving multiple links to similar sites.

 

Special Events - Sites devoted to a current event that requires separate categorization.

 

Sports
Sites that provide information about or promote sports, active games, and recreation.

Sport Hunting and Gun Clubs - Sites that provide information about or directories of gun clubs and similar groups, including war-game and paintball facilities.

 

Tasteless - Sites with content that is gratuitously offensive or shocking, but not violent or frightening. Includes sites devoted in part or whole to scatology and similar topics or to improper language, humor, or behavior.

 

Travel - Sites that provide information about or promote travel-related services and destinations.

 

Vehicles - Sites that provide information about or promote vehicles, including those that support online purchase of vehicles or parts.

  

Violence - Sites that feature or promote violence or bodily harm, including self-inflicted harm; or that gratuitously display images of death, gore, or injury; or that feature images or descriptions that are grotesque or frightening and of no redeeming value.

 

Weapons - Sites that provide information about, promote, or support the sale of weapons and related items.

 

In addition to the foregoing, as part of Row 44’s network monitoring service, Row 44 will utilize additional filtering of websites that contain the following security hazards:

 

Botnets - sites that host the command-and-control centers for networks of bots that have been infiltrated into users' computers. Excludes Web crawlers.

 

Exhibit G- 4
 

 

Keyloggers - Sites or pages that download programs that run in the background recording all keystrokes, and which may also send those keystrokes (potentially including passwords or confidential information) to an external party.

  

Malicious Embedded Link - Sites that are infected with a malicious link.

 

Malicious Embedded iFrame - Sites that are infected with a malicious iframe.

 

Malicious Web sites - Sites that contain code that may intentionally modify end-user systems without their consent and cause harm.

 

Phishing and Other Frauds - Sites that counterfeit legitimate business sites for the purpose of eliciting financial or other private information from users.

 

Potentially Unwanted Software - Sites that use technologies that alter the operation of the user's hardware, software, or network in ways that diminish control over the user experience, privacy, or the collection and distribution of personal information.

 

Spyware - Sites or pages that download software that, without the user's knowledge, generate HTTP traffic (other than simple user identification and validation).

 

Suspicious Embedded Link - Sites suspected of being infected with a malicious link.

 

 

Exhibit G- 5
 

 

EXHIBIT H

 

Network Description

 

 

 

***

 

 

 

 

 

 *** Confidential treatment requested.

 

Exhibit H- 1
 

  

EXHIBIT I

 

VOD Only Solution Product

 

 

Description

RF Cables

 

Flight Deck Control Panel
 
SMU (Server Management Unit)
2.2 GHz CPU - 8GB RAM – 1.6TB
SSD Storage
 
Wireless Access Point, "n" capable
 
nWAP antennae and nWAP cables
 
Installation Kit for Internal LRUs
(Provisions)
 

PCS (GSM) Antenna

 

Row 44 Portal Platform Software

 

 

Exhibit I- 1
 

 

EXHIBIT J

 

Security Provisions

 

 

 

I. GENERALLY APPLICABLE SECURITY PROVISIONS

 

Security Best Practices. Row 44 shall provide a secure environment for Confidential Information and any hardware and software, including servers, network and data components, to be provided or supported by the Row 44 as part of its performance under this Agreement. Row 44 represents that the security measures it takes in performance of its obligations under this Agreement do, and will at all times, remain at the higher of (1) applicable security and privacy laws and regulations, (2) applicable privacy and security rules imposed by industry groups, such as the PCI Standards Council, (3) Privacy & IT Security Best Practices (as defined by ISO 27002), and (4) (i) all security requirements, obligations, specifications and event reporting procedures as required in any applicable exhibit or schedule hereof and (ii) at Southwest’s cost and expense, with any new security requirement after receiving thirty days advance notification from Southwest of such new security requirement, specification or event reporting procedure; collectively referred to as “Security Best Practices”. Failure by Row 44 to comply with Security Best Practices in fulfilling its security obligations shall constitute a material breach of this Agreement and no limitation on Row 44’s liability to Southwest as set forth in Section 7 of the Agreement shall apply to any losses resulting from or relating to such a breach, including, without limitation, any limitation on consequential and/or incidental damages.

  

Southwest System Access. To the extent that Row 44 will be accessing Southwest systems, Row 44 will access Southwest systems and use Southwest data in a manner consistent with the then-current Southwest Airlines Information Security Policy which will be provided to Row 44 upon request.

 

SOC 2 Audits and Reports. Row 44 will provide Southwest with a copy of each applicable audit report (a “SOC 2 Report”) resulting from a SOC 2 audit of the Row 44’s control standards in use at the Row 44 facility where the services under this Agreement are performed (each such audit is called a “SOC 2 Audit”). If no SOC 2 Audits have been conducted, and Row 44 is unable to provide any SOC 2 Reports, then at Southwest’s request and expense, Row 44 will appoint a qualified firm to conduct a SOC 2 Audit, and shall provide Southwest with a copy of each applicable SOC 2 Report. To the extent that the SOC 2 Reports provided to Southwest do not satisfy Southwest’s reporting or audit requirements, Southwest may conduct its own audits.

 

 
 

 

Southwest Audit of Row 44 Systems. Southwest, or its designated representatives (at Southwest’s sole cost and expense, upon at least thirty (30) days notice to Row 44, shall have the right to conduct an audit of the Row 44’s operations, in order to verify that the Row 44 is operating in accordance with Security Best Practices in performance of its obligations under this Agreement. As between the parties, Southwest’s or its designated representatives’ costs related to such audit shall be borne solely by Southwest. Such an audit may consist of assessing all aspects of services delivered under the Agreement, and may include, but is not limited to: (i) software development practices and procedures, (ii) network, operating system, database, and application configuration controls, (iii) general controls and security practices and procedures, (iv) disaster recovery and back-up procedures, (v) change and problem management processes and procedures (vi) invoice processing, (vii) service level compliance, (viii) network and system vulnerability and risk analysis and (ix) resource consumption. Row 44 will allow reasonable access, during normal business hours and upon reasonable notice, to all pertinent records, documentation, computer systems, data, personnel, and processing areas as Southwest deems necessary to accurately and effectively complete their audit engagement. Southwest will take all reasonable steps to ensure that its audit will not materially adversely impact Row 44’s business or operations.

  

Security Breaches. Row 44 shall notify Southwest within 24 hours in the event of any breach or suspected breach in the security of its network, computing systems, or facilities providing access to Southwest data. For all breaches, Row 44 will conduct an audit to determine the cause of such breach and provide Southwest with a detailed report indicating the cause of the breach and the plan to address the issue. In the event of any breach of Confidential Information, Row 44 will immediately notify Southwest in writing, and fully indemnify and hold Southwest harmless from any and all third party claims and damages incurred by Southwest as a result of any such breach of security caused by Row 44’s breach of this Agreement without regard to any limitation on Row 44’s liability in this Agreement. If a breach or suspected breach involves cardholder data, Row 44 agrees that a Payment Card Industry representative, or a Payment Card Industry approved third party, will be provided with full cooperation and access to conduct a thorough security review after a security breach. The review will validate compliance with Payment Card Industry Data Security Standards for protecting cardholder data.

  

System Free of Security Vulnerabilities. To Row 44’s knowledge or to knowledge Row 44 should have, any software provided or used by Row 44 in connection with this Agreement does not contain any malicious code, program, or other internal component (e.g., computer virus, computer worm, computer time bomb, or similar component), which could damage, destroy, alter or disrupt any computer program, firmware, or hardware or which could, in any manner, reveal, damage, destroy, alter or disrupt any data or other information accessed through or processed by such software in any manner (a “Computer Virus”). Row 44 shall immediately advise Southwest, in writing, upon reasonable suspicion or actual knowledge that any such software may contain a Computer Virus. In the event a Computer Virus is found to have been introduced into Southwest's systems by the software, Row 44 shall use commercially reasonable efforts, at no additional charge, to assist Southwest in reducing the effects of the computer virus and, if the computer virus causes a loss of operational efficiency or loss of data, to assist Southwest to the same extent to mitigate and restore such losses. In addition, Row 44 shall indemnify, defend and hold Southwest and its customers harmless from any damage resulting from the harm described above without regard to any limitation on Row 44’s liability in this Agreement.

 

 
 

 

II. SECURITY PROVISIONS SPECIFIC TO CARD-HOLDER DATA

 

PCI-DSS, PA-DSS, and PTS Responsibilities. Row 44 shall provide and maintain the equipment, software services and testing necessary to effectively and reliably protect credit card information (card-holder data) in accordance with the Security Best Practices section of this Agreement. Row 44 acknowledges that card-holder data can ONLY be used in fulfillment of Row 44’s obligations under this Agreement for completing a transaction, supporting a loyalty program, providing fraud control services, or for uses specifically required by law.

  

PCI-DSS Compliance. Row 44 acknowledges it must comply with the requirements of the most current published version of the Payment Card Industry Data Security Standard (PCI-DSS) when processing, storing, or transmitting card-holder data. The PCI-DSS is available from the PCI Security Standards Council (currently located at https://www.pcisecuritystandards.org). Row 44 shall indemnify Southwest for any expenses incurred by Southwest attributable to a breach of security occurring while data is under the control of the Row 44. Row 44 will provide Southwest an annual letter of attestation from its Qualified Security Assessor confirming compliance with PCI-DSS.  

 

PA-DSS Compliance. Row 44 acknowledges it must comply with the requirements of the most current published version of the Payment Application Data Security Standard (PA-DSS) for all applications it develops that process, store, or transmit card-holder data that are sold, distributed or licensed to third parties, including Southwest. The PA-DSS is available from the PCI Security Standards Council (currently located at https://www.pcisecuritystandards.org). Row 44 shall indemnify Southwest for any expenses or incurred by a breach of security while data is under the control of the Row 44. Row 44 will maintain the status of its application as a PCI Security Standards Counsel Validated Payment Application for current versions of payment applications provided to Southwest.

 

PTS / PED Compliance. Row 44 acknowledges it must comply with the requirements of the most current published version of the PIN Transaction Security standard (PTS) for PIN transaction devices including PIN Pad Devices, Point of Sale Devices, Hardware Security Modules, or Unattended Payment Terminals it provides that process, store, or transmit card-holder data. The PTS security requirements and testing and approval programs are available from the PCI Security Standards Council (currently located at https://www.pcisecuritystandards.org). Row 44 shall indemnify Southwest for any expenses incurred by Southwest attributable to a breach of security occurring through a non-certified PTS device provided by the Row 44. Row 44 will maintain its status as a PCI Security Standards Counsel Approved PIN Transaction Security Device for current versions of PTS devices provided to Southwest.

 

 
 

 

III. SECURITY PROVISIONS SPECIFIC TO WEB-BASED SYSTEMS

 

Secure Code Training of Developers. All developers of systems and software being delivered to Southwest will have the expertise, knowledge and training to develop systems that meet secure coding standards, as defined by such industry leaders as the OWASP Top Ten, SANS and NIST. Row 44 will supply evidence reasonably satisfactory to Southwest of such training upon request.