TELEMATICS SERVICES AGREEMENT

Exhibit 10.18

EXECUTION VERSION

TELEMATICS SERVICES AGREEMENT

DATED AS OF

OCTOBER 31, 2007

BY AND BETWEEN

HUGHES TELEMATICS, INC.

AND

MERCEDES-BENZ USA, LLC

 

 

 

 

“***” denotes language for which HUGHES Telematics, Inc. will request confidential treatment pursuant to the rules and regulations of the Securities Act of 1933, as amended.

TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

(continued)

 

 

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TABLE OF CONTENTS

(continued)

 

 

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TABLE OF CONTENTS

(continued)

 

 

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TABLE OF CONTENTS

(continued)

 

 

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LIST OF EXHIBITS

***

 

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EXECUTION VERSION

TELEMATICS SERVICES AGREEMENT

This Telematics Services Agreement (“Agreement”) is made effective as of October 31, 2007 (the “Effective Date”) by and between Hughes Telematics Inc., a Delaware corporation with a principal address at 41 Perimeter Center East, Suite 400, Atlanta, Georgia 30346 (“HTI”) and Mercedes-Benz USA, LLC, a Delaware limited liability company with a principal address at One Mercedes Drive, Montvale, New Jersey 07645 (“MBUSA”).

RECITALS

(A) HTI is in the business of, among other things, providing telematics equipment and services.

(B) MBUSA is in the business of, among other things, manufacturing (by and through its Affiliates), distributing, marketing and selling automobiles throughout the United States of America and Puerto Rico.

(C) HTI desires to provide certain telematics services for MCG Vehicles and LCT Enabled Vehicles (each as defined below) that have factory-installed equipment capable of receiving those services.

(D) MBUSA through its vehicle manufacturing Affiliates is willing to factory-install equipment capable of receiving those telematics services in MCG Vehicles, and to let HTI deliver those services to MCG Vehicles and LCT Enabled Vehicles, on the terms and conditions set forth in this Agreement.

AGREEMENT

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, HTI and MBUSA hereby agree as follows:

 

1.

DEFINITIONS

(a) Defined Terms . In addition to the terms defined elsewhere in this Agreement, the defined terms set forth below and used in this Agreement will have the meanings set forth below. The definitions in this Agreement apply equally to the singular and plural forms of the defined terms.

“AAA” means the American Arbitration Association.

“Additional Excluded Telematics Agreement” has the meaning set forth in Section 2(i)(iii) of this Agreement.

“Additional Service” means any telematics service, other than the PASS Services and the MBTA Services, that (i) consists (or would upon the initiation thereof consist) of *** and (ii) is (or would upon the initiation thereof be) provided using an Embedded Cellular Technology Device installed as original equipment by MBUSA through its vehicle manufacturing Affiliates.

“Affiliate” of a Person means a Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. As used in this definition, the term “control,” including the correlative terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or any partnership or other ownership interest, by contract or otherwise) of a Person.

“Agreement” means this agreement, including all exhibits attached hereto, as such agreement may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof.

“Ancillary Fees” means any and all fees or costs assessed by any Governmental Entity, including pass-throughs of taxes or other charges imposed by such Governmental Entities (including Surcharges), that are charged by HTI to a Subscriber, in each case, in a manner consistent with the practices of other telematics services providers or telecommunications companies, other than through the inclusion of such costs in the applicable Subscription Fee.

“Approved Additional Service” means those Additional Services which HTI is permitted or selected to provide in the manner set forth in Sections 2(h)(i) through 2(h)(iii).

“Approved Other Telematics Service” has the meaning set forth in Section 8 of this Agreement.

“Approved WiMax Service” means those WiMax Services, which HTI is permitted or selected to provide in the manner set forth in Sections 2(h)(i) through 2(h)(iii).

“ATX” means ATX Technologies, Inc., a Texas corporation.

“ATX Telematics Services Agreement” has the meaning set forth in Exhibit O.

“Authorized Manufacturer” means a manufacturer approved by MBUSA or its Affiliate to manufacture HTI Telematics Communicators for installation in MCG Vehicles.

“Authorized Supplier” means, for any component (including the HTI Telematics Communicator) to be installed in an MCG Vehicle, a supplier approved by MBUSA or its Affiliate with respect to the applicable component. For the avoidance of doubt, Hughes Network Systems, LLC, a Delaware limited liability company, is hereby deemed to be an Authorized Supplier of HTI with respect to the HTI Telematics Communicators, provided, however, that any entities which Hughes Network Systems, LLC acquires or to which Hughes Network Systems, LLC subcontracts shall not be deemed to be Authorized Suppliers without MBUSA’s prior written approval in each instance, which approval shall not be unreasonably withheld, conditioned or delayed.

 

2

“Base Warranty” has the meaning set forth in Section 4(c) of this Agreement.

“Business Day” means any day other than a Saturday, Sunday or a day on which banks in New York City, New York are authorized or regulated to close.

“CDMA” means Code Division Multiple Access.

“Change in Control Event” means any event or sequence of events that results in an *** not an Affiliate of DAG acquiring either (x) more than *** of the outstanding capital stock of HTI on a fully diluted basis or (y) securities representing more than *** of the voting power of HTI.

“Commencement Date” means ***.

“Confidential Information” has the meaning set forth in Section 16(a) of this Agreement.

“Current Subscriber” means a Subscriber who, as of any relevant point in time, has a then-current subscription for any Telematics Service or any Approved Other Telematics Service in each case which service is provided by HTI.

“DAG” means Daimler AG, a German stock corporation.

***

“Dealer” means any dealer or dealer group authorized by MBUSA that markets, sells or leases any new or pre-owned MCG Vehicle or LCT Enabled Vehicle.

“Deposit” has the meaning set forth in Section 14(e) of this Agreement.

“Dispute” has the meaning set forth in Section 28(a) of this Agreement.

“DSRC” means Dedicated Short Range Communications.

“Effective Date” has the meaning set forth in the introductory paragraph of this Agreement.

“Embedded Cellular Technology” means transmission and reception via a device installed as original equipment by MBUSA or its vehicle manufacturing Affiliates in an MCG Vehicle or an LCT Enabled Vehicle of wireless signals using communication networks that are based on ***, and shall expressly exclude ***.

 

3

“Embedded Cellular Technology Device” means a device via which transmission and reception of wireless signals take place using communication networks that are based on ***, but expressly excluding ***.

“Enabled Vehicle” means any MCG Vehicle which, at the time of such MCG Vehicle’s production, contains a factory-installed HTI Telematics Communicator or Other Telematics Communicator. An LCT Enabled Vehicle shall be deemed to be an Enabled Vehicle in the event that the LCT Communicator installed in such vehicle is replaced with an HTI Telematics Communicator or an Other Telematics Communicator.

***

***

“ESD” means Electro Static Discharge.

“Excessive Use Charges” has the meaning set forth in Section 3(c) of this Agreement.

“Excluded Telematics Agreements and Programs” means the Existing Telematics Agreements and Programs and any Additional Excluded Telematics Agreements, in each case, as listed on Exhibit I from time to time.

“Executive Steering Committee” has the meaning set forth in Section 21(a) of this Agreement.

“Existing Telematics Agreements and Programs” has the meaning set forth in Section 2(i)(iii) of this Agreement.

“Force Majeure Event” has the meaning set forth in Section 37(a) of this Agreement.

“Governmental Entity” means any federal, state or local government or any regulatory body or political subdivision thereof.

“GSM” means Global System for Mobile Communications.

“HNS” means Hughes Network Systems, LLC.

“HTI” has the meaning set forth in the introductory paragraph of this Agreement.

“HTI Europe” has the meaning set forth in Section 4(b).

“HTI Indemnitees” has the meaning set forth in Section 15(a)(ii) of this Agreement.

“HTI Operational System” means all *** required, in conjunction with the HTI Telematics Communicators or the Other Telematics Communicators, to create a full service offering of the Telematics Services and Approved Other Telematics Services to Subscribers ***.

 

4

“HTI System” includes the HTI Telematics Communicator and the HTI Operational System.

“HTI Telematics Communicator” means a device capable of receiving the PASS Services and the MBTA Services within the Territory and provided by HTI through an Authorized Manufacturer and, at HTI’s option, through one or more Authorized Suppliers (it being understood that the HTI Telematics Communicators may be capable of receiving services in addition to the PASS Services and the MBTA Services).

“Indemnified Party” has the meaning set forth in Section 15(c) of this Agreement.

“Indemnifying Party” has the meaning set forth in Section 15(c) of this Agreement.

***

“Intellectual Property” means ***.

“JTP” means ***.

“Law” means any federal, state or local law, statute, code or ordinance, or any rule or regulation promulgated pursuant thereto.

“LCT Communicator” means the “Low Cost Tele Aid” telematics device of the type installed as of the Effective Date by MBUSA or its Affiliate for the purpose of receiving the telematics services ***, or successor devices thereto installed by MBUSA or its Affiliate.

“LCT Enabled Vehicle” means a vehicle sold or leased by or through MBUSA in the Territory which is equipped with an LCT Communicator.

“Marks” has the meaning set forth in Section 19 of this Agreement.

“Material Milestone Obligations” means those milestones *** reflected on Exhibit N to this Agreement.

“MBTA Services” means the telematics services described in Exhibit A-2 to this Agreement.

“MBUSA” has the meaning set forth in the introductory paragraph of this Agreement.

“MBUSA Customer Assistance Center” means the call center owned or operated by MBUSA or its third party agent.

“MBUSA Indemnitees” has the meaning set forth in Section 15(a)(i) of this Agreement.

 

5

“MBUSA Interface Intellectual Property” has the meaning set forth in Section 14(a) of this Agreement.

“MBUSA Interface Specifications” means the written specifications (whether in one document or multiple documents) provided by MBUSA for: (a) the interface between the HTI Telematics Communicators or Other Telematics Communicators and the MCG Vehicles, and between the LCT Communicators and the LCT Enabled Vehicles, including without limitation, data structures, protocols, message formats and communications matrices, except not including the controller area network (CAN) protocols; and (b) the means specified by MBUSA by which MCG Vehicle and LCT Enabled Vehicle diagnostic data will be transmitted by HTI to MBUSA or DAG and by which configuration and control information will be transmitted by MBUSA or DAG to HTI, for example, (i) the identification of, definitions for, and form of, the vehicle diagnostic data elements that are to be transmitted, (ii) the processing of such diagnostic data prior to transmission, (iii) the frequencies at which such diagnostic data elements are to be transmitted, (iv) the message flow and additional information (e.g., tags, internal case IDs, time stamps, messages) to be included with such diagnostic data when transmitted, (v) the data exchange mechanisms and data configuration and control information with regard to diagnostic data, (vi) quality of service requirements, (vii) security requirements, (viii) the infrastructure for the data exchange protocol, and (ix) the identification of technologies or applications to be used to perform such data processing and transmission.

“MBUSA Property” means any software, source code, libraries, specifications, data, content, documentation, equipment or other materials provided by MBUSA or its Affiliates to HTI hereunder, and any Intellectual Property relating thereto.

“MBUSA Specifications” means any and all requirements and specifications of MBUSA or its manufacturing Affiliates (including, without limitation, MBUSA’s environmental specifications, interface specifications, any other functionality specifications and including, for avoidance of doubt, the MBUSA Interface Specifications), which are set forth or referred to in Exhibit G.

***

“MCG” means Mercedes Car Group.

“MCG Vehicle” means a vehicle that is (i) manufactured by or for MBUSA or its Affiliates during calendar year 2010 or thereafter for sale or lease within the Territory, and (ii) of a Model Line listed on Exhibit D-1; provided that vehicles produced prior to the calendar year listed opposite such vehicle’s Vehicle Model on Exhibit D-1 shall not constitute MCG Vehicles.

“Milestone Requirements” has the meaning set forth in Section 13(a) of this Agreement.

“Model Line” means any of ***, and any similar class or category of vehicles added to Exhibit D-2 during the Term.

 

6

“Multiple Cause Action” means a demand, action, cause of action, lawsuit or claim that alleges loss or damage directly caused by both HTI and MBUSA.

“Non-Disclosure Agreement” means the Confidentiality and Non-Disclosure Agreement by and between the Parties, dated ***.

“Open Source Code” has the meaning set forth in Section 14(g) of this Agreement.

“Operating Committee” has the meaning set forth in Section 21(b) of this Agreement.

“Other Telematics Communicators” has the meaning set forth in Section 4(b) of this Agreement.

“Other Telematics Service” has the meaning set forth in Section 8 of this Agreement.

“Party” means HTI or MBUSA; and “Parties” means HTI and MBUSA.

“PASS Services” means the personal assistance safety services described in Exhibit A-1 to this Agreement.

“Person” means any natural person, organization, partnership, limited liability company, holding company, corporation, other legal entity or Governmental Entity.

“Personal Information” has the meaning set forth in Exhibit AA.

“Post-Termination Transition Assistance” has the meaning set forth in Section 27(b) of this Agreement.

“Post-Termination Transition Assistance Period” has the meaning set forth in Section 27(b) of this Agreement.

“Reasonable Competitiveness” has the meaning set forth in Section 2(d) of this Agreement.

“Release Condition” has the meaning set forth in Section 14(e) of this Agreement.

“Separate Intellectual Property” has the meaning set forth in Section 14(a) of this Agreement.

“Service or Recall Campaign” means a systematic effort by MBUSA or its Affiliates or Dealers to locate or cause to be accessed by a Dealer an Enabled Vehicle or an LCT Enabled Vehicle for the purpose of addressing a safety, legal or other issue that impacts such vehicle.

***

 

7

“Subscriber” means any Person who has subscribed, via a Subscriber Agreement, for any Telematics Services or any Approved Other Telematics Services, in each case, for an Enabled Vehicle or an LCT Enabled Vehicle, whether or not such Person is the original owner or lessee of such Enabled Vehicle or LCT Enabled Vehicle.

“Subscriber Agreement” means the agreement between HTI and a Subscriber pursuant to which the Subscriber subscribes for Telematics Services or Approved Other Telematics Services to be provided by HTI.

“Subscriber Vehicle” means any Enabled Vehicle or LCT Enabled Vehicle owned by, or leased to, a Current Subscriber.

“Subscription Fee” means the fees (other than Ancillary Fees and Excessive Use Charges) charged by HTI to a Subscriber for Telematics Services and Approved Other Telematics Services.

“Supplemental Use” means the use of data for purposes above and beyond the uses necessary to provide the Telematics Services or Approved Other Telematics Services which have been subscribed to by each Subscriber, including, without limitation, the sale or other transfer of such data to third parties for purposes above and beyond the uses necessary to provide the Telematics Services or Approved Other Telematics Services which have been subscribed to by each Subscriber.

“Surcharges” means ***.

“TCU” means the telematics communication unit which is synonymous with the HTI Telematics Communicator or an Other Telematics Communicator.

“Technical Specifications” has the meaning set forth in Section 4(e) of this Agreement.

“Telematics Package” means a specific bundle of Telematics Services (and, at HTI’s option, Approved Other Telematics Services) to be offered to purchasers and lessees of MCG Vehicles and LCT Enabled Vehicles.

“Telematics Services” means (a) the PASS Services, (b) the MBTA Services, (c) any Approved Additional Services and Approved WiMax Services and (d) all related infrastructure and support services as outlined by MBUSA and contained in the Technical Specifications listed in Exhibit G and in Exhibit B; but shall not include any service described in clauses (a) through (d) above when used for testing, demonstration, development or research or for data collection, recording or transmission in connection with testing, demonstration, development or research or for any other purpose incidental thereto.

“Term” has the meaning set forth in Section 25 of this Agreement.

“Termination Date,” as used in Section 14(f), has the meaning set forth in Section 14(f) of this Agreement.

 

8

“Territory” means the fifty (50) states of the United States of America together with the District of Columbia and Puerto Rico.

“Testing Protocols” has the meaning set forth in Section 7(a) of this Agreement.

“Transition Customers” means ***.

“Transition Services” means the telematics services to be provided by HTI to Transition Customers, as further described in Exhibit O.

“Transition Services Commencement Date” has the meaning set forth in Exhibit O.

“UWB” means Ultra-WideBand.

“Vehicle and Subscriber Data” means any information regarding an