EXHIBIT 10.17 LONG TERM AGREEMENT This long term agreement (hereinafter "Agreement") is entered into by and between Boeing Satellite Systems International, Inc. (hereinafter "Buyer", "BSSI" or "Boeing") and CopyTele, Inc. (hereinafter "Seller"). Buyer and Seller agree that this Agreement shall be effective for a period of three (3) years commencing on April 2, 2004. Subject to the terms and conditions specified herein, Buyer hereby agrees to purchase and Seller agrees to sell the parts identified in Exhibit A (hereinafter "Parts"). The following Exhibits are an integral part of this Agreement and are incorporated herein by this reference: EXHIBITS: TITLE: -------- ------ Exhibit A Parts List Exhibit B Purchase Order Attachments Exhibit C Technical Documents In consideration of the promises set forth herein, the parties hereto mutually agree as follows: 1.0 IMPLEMENTATION OF AGREEMENT 1.1 Whenever Buyer elects to procure Parts priced pursuant to the terms of this Agreement, Buyer shall issue firm fixed price Purchase Orders on Buyer's standard purchase order forms incorporating such attachments and documents set forth in Exhibits B and C hereto as are deemed by Buyer to be applicable under the circumstances. Each such Purchase Order shall set forth the items being ordered, the quantities to be furnished, the negotiated prices, and such information or instructions as Buyer may deem necessary. Each purchase order shall be subject to seller's acceptance. Seller agrees to comply with each such Buyer's Purchase Order issued hereunder subject to the requirements set forth in each such Purchase Order and this Agreement. Buyer's sole representative authorized to issue Purchase Orders hereunder is Ali Asgharzadeh or any substitute representative designated in writing by Buyer (hereinafter "Buyer's Authorized Purchasing Representative"). 1.2 Buyer's Purchase Orders will be identified by number, and Seller shall reference this number on packing sheets, invoices, and other documents as required. A separate invoice shall be submitted for each Purchase Order unless otherwise specified. 2.0 DELIVERY 2.1 All items ordered hereunder shall be delivered in accordance with the delivery requirements set forth on each Purchase Order. 3.0 QUANTITY AND PRICE 3.1 Buyer agrees that it will procure a minimum quantity as identified in Exhibit A from Seller during the term of this Agreement. Notwithstanding the foregoing, Buyer's obligation to procure Parts from Seller is conditioned upon Seller's ability to design, qualify, fabricate, manufacture, assemble, test and in all respects satisfy Buyer's Purchase Order requirements regarding timely delivery of conforming Parts. Buyer is in no way obligated to purchase any inventories (residual or otherwise) that Seller may establish under this Agreement. 3.2 It is understood and agreed that any estimates contained in this Agreement or furnished by Buyer are not minimums, maximums or guarantees, and authorization of any work shall only be upon the issuance of Purchase Orders by Buyer's Authorized Purchasing Representative. Buyer shall have no responsibility for the accuracy of any estimate and any reliance by Seller shall be at Seller's sole risk and expense. Any estimate shall be subject to adjustment from time to time and such estimate shall not constitute a change in accordance with the changes clause contained in the terms and conditions of this Agreement. 3.3 Unit prices for items covered by this Agreement are as set forth in a letter from Seller. 3.4 Boeing shall not be obligated to pay Seller any amount in excess of the authorized Purchase Orders. 3.5 Payment Terms shall be Net 45. 3.6 Buyer's California Resale Permit Number is SB AB 99-930684. 3.7 Seller agrees that all deliveries shall be FOB origin except with Buyer requested priority freight shipments to support unplanned demands and/or emergencies as instructed and authorized in a Purchase Order. 4.0 QUALITY ASSURANCE 4.1 Purchase Orders issued under this Agreement shall be performed in accordance with best commercial practices. 5.0 ACCEPTANCE 5.1 All goods delivered under Purchase Orders issued under this Agreement shall be subject to inspection by Buyer prior to acceptance at such times and places as directed by Buyer. Except as regards to latent defects, fraud or such gross mistakes as amount to fraud, the goods delivered under Purchase Orders issued under this Agreement shall be considered accepted by Buyer upon the occurrence of any of the following conditions: (a) Buyer makes final inspection of and gives written notice of final acceptance, (b) The termination of a ninety (90) day inspection period following delivery of the goods to Buyer, provided that no nonconformance with any requirements of this Agreement or the Purchase Order is found, (c) Buyer's written approval of Seller's correction of defects or deviations from requirements discovered by Buyer during the inspection process. 5.2 Upon receipt of notice from Buyer, Seller shall promptly correct all defects discovered during the inspection process. If Seller fails to promptly correct such defects, Buyer may, among other things, (a) have any or all such defects corrected through other means at Seller's expense, or (b) return the goods to Seller for the full invoice price plus any applicable transportation charges. 5.3 The term "latent defects," for purposes of this Article, are conditions resulting in noncompliance of goods with one or more requirements of this Agreement or the Purchase Order which noncompliance was not discovered during the inspection process. 5.4 Buyer's inspection and acceptance of goods or approval of data and documentation submitted by Seller shall not constitute a waiver of any of Buyer's rights provided in this Agreement or the Purchase Order and shall not excuse Seller from full compliance with all requirements of this Agreement and the Purchase Order. 6.0 RESERVED 7.0 RESERVED 8.0 RESERVED 9.0 CREDIT OFFICE VISIBILITY 9.1 If requested, Seller shall provide financial data, on a quarterly basis, or as requested to the Boeing Corporate Credit Office for credit and financial condition reviews. Said data shall include but not be limited to balance sheets, schedule of accounts payable and receivable, major lines of credit, creditors, income statements (profit and loss), cash flow statements, firm backlog, and headcount. Copies of such data are to be made available within 72 hours of any written request by Boeing's Corporate Credit Office. 10.0 RESERVED 11.0 LIQUIDATED DAMAGES 11.1 Seller acknowledges that Buyer may require liquidated damages for late delivery under any Purchase Order issued under this Agreement. In the event Buyer requires liquidated damages, the following clause shall be included in the Purchase Order. Seller agrees to negotiate in good faith the liquidated damages amount and the maximum liability for liquidated damages applicable to the Purchase Order. "Seller agrees to be subject to liquidated damages for late delivery, as set forth below, and further agrees that such liquidated damages are intended to be compensatory and do not constitute a penalty for late delivery. The parties acknowledge and agree that the losses that would be suffered by reason of any late delivery would be difficult or impossible to ascertain and that the liquidated damages set forth below represent a reasonable estimate of those losses. The liquidated damages set forth below are specifically applicable to late delivery only. Buyer's rights and remedies for other than late delivery are as set forth in this Purchase Order and as are available at law or in equity. For purposes of this provision, the term "delivery" shall mean receipt of conforming items at Buyer's receiving dock. If Seller fails to deliver items in accordance with the delivery schedule set forth in this Purchase Order, Seller shall immediately pay to Buyer the following liquidated damages: $TBD per Part for every calendar day that the Part is delivered after the scheduled delivery date up to a maximum of $TBD under this Purchase Order." 12.0 RESERVED 13.0 PERIODIC REVIEW OF AGREEMENT 13.1 In the interest of maintaining a good-faith, long-term relationship between Buyer and Seller as contemplated by this Agreement, Buyer and Seller shall convene no less than an annual review each calendar year to discuss the agenda items suggested below: 1. Seller's and Buyer's past performance 2. Buyer's business projections 3. Possible opportunities for cost savings to both parties 4. Potential for the extension of the Agreement 5. Other matters as deemed applicable and appropriate by the parties. 14.0 EXPORT COMPLIANCE 14.1 Information furnished to Seller under this Agreement may contain technical data as defined in the International Traffic in Arms Regulation ("ITAR") at 22 CFR 120.10. Seller is advised and hereby acknowledges that such technical data may not be exported, disclosed or transferred to any foreign person, as defined in the ITAR at 22 CFR 120.16, without first complying with all requirements of the ITAR (22 CFR 120-130) including requirements for obtaining any required export authority. Seller shall indemnify and hold Buyer harmless from and against any and all claims, liabilities and expenses resulting from Seller's failure to comply with the export laws and regulations of the United States. 15.0 ADMINISTRATIVE AUTHORITY 15.1 Changes to this Agreement shall not be binding upon Buyer except when specifically confirmed in writing by Buyer's Authorized Purchasing Representative. Information, advice, approvals, or instructions by Buyer's technical personnel or other representatives shall be deemed expressions of personal opinion only and shall not affect Buyer's or Seller's rights and obligations hereunder unless set forth in a writing which is signed by Buyer's Authorized Purchasing Representative and which expressly states that it constitutes a change to this Agreement. 15.2 Whenever there is a requirement in this Agreement or its Purchase Orders for Buyer's approval of plans, drawings, specifications or similar documents or for Buyer to participate in any meetings, conferences or design reviews, such approvals or participations shall not be deemed or construed to waive any of Seller's obligations to meet all the requirements of this Agreement or its Purchase Orders. 16.0 ASSIGNMENT AND SUBCONTRACTING 16.1 Neither this Agreement, nor any interest herein, nor claim hereunder may be assigned or delegated by Seller, nor may this Agreement be further subcontracted by Seller without prior written consent of Buyer. 16.2 Notwithstanding the foregoing, Seller may, without Buyer's consent, assign monies due or to become due hereunder provided Buyer shall continue to have the right to exercise any and all of its rights hereunder, settle any and all claims arising out of, and enter into amendments to this Agreement, without notice to or consent of the assignee. Buyer shall be given written notice of any assignment and all invoices shall refer to the assignment. 17.0 CHOICE OF LAWS AND DISPUTES 17.1 This Agreement shall be construed and the relations between the parties determined in accordance with the laws of the State of California without giving effect to California's Conflict of Law rules. 17.2 Buyer and Seller agree to make a good faith attempt to settle any dispute arising under or related to this Agreement without resort to legal action. If such good faith efforts fail, the parties may litigate such dispute before any court of competent jurisdiction in the county of Los Angeles, California. Pending resolution of any such dispute, Seller shall proceed diligently with the performance of this Agreement in accordance with Buyer's direction concerning the subject matter of the dispute. 18.0 GENERAL 18.1 The invalidity of any provision of this Agreement shall not affect the validity of the other provisions of this Agreement which can be given effect without the invalid provision. Either party's failure to insist, in any one or more instances, upon the performance of any term of this Agreement shall not be construed as a waiver or relinquishment of that party's right to such performance or to future performance of such a term or terms, and the other party's obligation in respect thereto shall continue in full force and effect. The headings in this Agreement are included for the convenience of the parties only and shall not be considered or relied upon in the interpretation of this Agreement. 19.0 ORDER OF PRECEDENCE 19.1 Conflicting or inconsistent provisions of this Agreement, if any, shall prevail in the following descending order of precedence: 1. Buyer's Purchase Order implementing this Agreement, 2. This Agreement, 3. Buyer's Purchase Order Attachments incorporated by reference into this Agreement, 4. Technical Documents incorporated by reference into this Agreement 20.0 DISTRIBUTORSHIP 20.1 Seller hereby appoints Buyer, subject to the terms set forth herein, as sole distributor for the direct and indirect sale of the Parts during the term of this Agreement. Buyer hereby accepts such appointment on behalf of itself and its resellers. 20.2 Buyer has no obligation under this Agreement to promote the sale or stimulate interest in the Parts or to sell any minimum quantity of Parts under this Agreement. 21.0 PROPRIETARY RIGHTS AND DISCLOSURE 21.1 Seller shall not use or disclose, without Buyer's prior written consent, any tools or other items or drawings, specifications, technical information, computer software, or other data which have been specially designed for Buyer in connection with this Agreement or furnished by Buyer. 22.0 MODIFICATION TO GP-1 22.1 Article 8, Warranty, in GP-1, The Boeing Company General Provisions Fixed Price Contract, is deleted and replaced with the following: "Seller warrants that all Goods shall meet the specifications set forth in Exhibit C hereto and shall be free from defects in materials and workmanship for a period of twelve (12) months from the date of delivery. In the event that any nonconformance or defects shall appear during such twelve (12) month period, Seller shall evaluate the deficiency and, at its option, shall either make the required repairs, replace the Goods, or have the repairs made by Buyer at Seller's expense. Upon receipt of any shipment, Buyer shall perform inspection procedures and shall notify Seller promptly, but in no event later than sixty days after the date of delivery, of any nonconformance, defect or damage to any of the Goods received which a reasonable inspection would disclose. EXCEPT AS EXPRESSLY SET FORTH IN THE PRECEDING PARAGRAPH, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE PRODUCTS, EXPRESSED OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOST PROFITS OR FOR SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES. Notwithstanding the above, claims by Buyer against Seller for contribution toward third party injury, damage or loss are not limited, waived, released or disclaimed." 23.0 INTEGRATION 23.1 This Agreement constitutes the complete and exclusive statement of the terms of this agreement between Buyer and Seller and supersedes all prior representations, understandings, and communications relating hereto. IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of the last date shown below. BOEING SATELLITE SYSTEMS, INC. By: /s/ Ali Asghrzadeh ------------------------------ Ali Asghrzadeh Title: Program Manager Date: September 16, 2004 COPYTELE, INC. By: /s/ Denis A. Krusos ---------------------------------- Denis A. Krusos Title: Chairman of the Board and Chief Executive Officer Date: September 16, 2005 EXHIBIT A PARTS LIST Buyer agrees that it will procure a minimum of ten (10) of each Part identified in Exhibit A from Seller during the term of this Agreement. PART NO. DESCRIPTION DCS-1400-D Docker Encryption Device USS-900T Satellite Fax Encryption USS-900TL Landline to Satellite Fax encryption USS-900WF Satellite and Cellular Fax encryption USS-900WFL Landline to Satellite and Celluar Fax encryption EXHIBIT B PURCHASE ORDER ATTACHMENTS Buyer shall incorporate in Purchase Orders issued under this Agreement such Purchase Orders set forth below as are deemed by Buyer to be applicable under the circumstances. Buyer may incorporate such additional provisions as Buyer may reasonably deem necessary in order to comply with the provisions of the contract or higher-tier subcontract between Buyer and its customer. ATTACHMENT TITLE DATE ---------- ----- ---- GP-1 The Boeing Company General Provisions 5/1/02 Fixed Price Contract 4007 Additional General Provisions 6/1/03 EXHIBIT C TECHNICAL DOCUMENTS TITLE DATE ----- ---- Technical Specification DCS-1400-D 4/01/2004 Technical Specification USS-900T 9/15/2004 Technical Specification USS-900TL 9/15/2004 Technical Specification USS-900WF 9/15/2004 Technical Specification USS-900WFL 9/15/2004