<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1996.
REGISTRATION NO. 333-07161
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
GENERAL WIRELESS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 4812 75-2550006
(PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NUMBER)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION)
----------------
6688 N. CENTRAL EXPRESSWAY
DALLAS, TEXAS 75206
(214) 373-0494
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
ROGER D. LINQUIST
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GENERAL WIRELESS, INC.
6688 N. CENTRAL EXPRESSWAY
DALLAS, TEXAS 75206
(214) 373-0494
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
COPIES TO:
EDWARD M. LEONARD, ESQ. JOHN D. WATSON, JR., ESQ.
BROBECK, PHLEGER & HARRISON LLP LATHAM & WATKINS
TWO EMBARCADERO PLACE 1001 PENNSYLVANIA AVE., N.W.
2200 GENG ROAD SUITE 1300
PALO ALTO, CALIFORNIA 94303 WASHINGTON, D.C. 20004-2505
(415) 424-0160 (202) 637-2200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SUCH SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
The information required in this Part I is contained in Part I of the
Registrant's Registration Statement on Form S-1 (Registration No. 333-07161),
as filed with the Securities and Exchange Commission on June 28, 1996, which
is incorporated herein by reference.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of Class C Common Stock being registered. All amounts are
estimates except the SEC registration fee and the NASD filing fees.
<TABLE>
<S> <C>
SEC Registration fee............................................. $65,432
NASD fee......................................................... *
Printing and engraving........................................... *
Legal fees and expenses of the Company........................... *
Accounting fees and expenses..................................... *
Blue sky fees and expenses....................................... *
Transfer agent fees.............................................. *
Miscellaneous.................................................... *
-------
Total.......................................................... $
=======
</TABLE>
- --------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, as amended ("Delaware
Law"), provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding,
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Section 145 further provides that a corporation similarly may
indemnify any such person serving in any such capacity who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor, against expenses actually and reasonably incurred in connection
with the defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Delaware Court of Chancery or such other court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 102(b)(7) of Delaware Law permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for
II-1
<PAGE>
monetary damages for breach of fiduciary duty as a director, provided that
such provision shall not eliminate or limit the liability of a director (i)
for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of Delaware Law (relating to unlawful payment of dividends and unlawful stock
purchase and redemption) or (iv) for any transaction from which the director
derived an improper personal benefit.
The Registrant's Restated Certificate of Incorporation provides that the
Registrant's directors shall not be liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent that exculpation from liabilities is not permitted under
Delaware Law as in effect at the time such liability is determined. The
Registrant has entered into indemnification agreements with all of its
officers and directors, as permitted by Delaware Law. Reference is also made
to Section 6 of the Underwriting Agreement contained in Exhibit 1.1 hereto,
indemnifying officers and directors of the Registrant against certain
liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) Since inception, the Registrant has issued and sold the following
securities (as adjusted to reflect the stock conversions and exchanges
effected to date, as well as the proposed 20-for-1 split to be effected prior
to the effectiveness of this Registration Statement):
1. On July 18, 1994, September 30, 1994 and June 2, 1995, the Registrant
issued and sold an aggregate of 2,077,420 shares of Class B Common Stock
at a price of $1.37 per share to its founding members consisting of
Messrs. Roger Linquist, Malcolm Lorang, entities affiliated with Accel
Partners and Battery Ventures III, L.P. (387,980 of which were
repurchased by the Company in December 1995). In addition, on December
1, 1995, entities affiliated with Accel Partners received warrants to
purchase 1,149,980 shares of Class C Common Stock at an exercise price
of $5.00 per share in connection with the exchange of securities
effected in November 1995.
2. On December 1, 1995, December 28, 1995 and May 20, 1996, the Registrant
issued and sold to several private placement investors the following:
(a) 420,000 shares of Class B Common Stock and warrants to purchase
210,000 shares of Class B Common Stock with an exercise price of
$2.50 per share for an aggregate price of $1,050,000 ($5.00 for
each unit consisting of two shares of Class B Common Stock and a
warrant to purchase one share of Class B Common Stock);
(b) 10,047,040 shares of Class C Common Stock and warrants to purchase
5,023,520 shares of Class C Common Stock with an exercise price of
$5.00 per share for an aggregate purchase price of $50,235,200
($10.00 for each unit consisting of two shares of Class C Common
Stock and warrant to purchase one share of Class C Common Stock);
(c) 2,000,000 shares of Class C Common Stock and warrants to purchase
100,000 shares of Class C Common Stock with an exercise price of
$5.00 per share for an aggregate price of $10,000,000 ($10.00 for
each unit consisting of two shares of Class C Common Stock and a
warrant to purchase 0.1 shares of Class C Common Stock);
(d) Warrants to purchase 400,000 shares of Class C Common Stock at an
exercise price of $5.00 per share and warrants to purchase 800,000
shares of Class C Common Stock at an exercise price of $0.0005 per
share for an aggregate price of $3,999,600 ($9.999 for each unit
consisting of one warrant to purchase one share with an exercise
price of $5.00 per share and one warrant to purchase two shares
with an exercise price of $0.0005 per share);
In addition, on February 20, 1996, the Registrant issued 137,740 shares of
Class C Common Stock to its placement agent in connection with the placements
effected in December 1995, pursuant to the terms of the Registrant's
Engagement Letter with the agent. See Exhibit 10.2.
3. On December 1, 1995, the Company issued warrants to purchase 100,000
shares of Class C Common Stock with an exercise price of $5.00 per share
to an advisor to the Company for advisory services rendered.
II-2
<PAGE>
a4. On March 15, 1996, the Registrant and Hyundai entered into a Stock
Purchase Agreement (Exhibit 10.8) under which the Registrant is
obligated to purchase and Hyundai is obligated to purchase up to
10,000,000 units at a price of $5 per unit, each unit consisting of one
share of Class C Common Stock and one warrant to purchase 0.05 shares
of Class C Common Stock with an exercise price of $5 per share. This
transaction is conditioned upon and subject to (a) governmental
approval (including approval by the Republic of Korea), (b) the
Registrant obtaining certain number of PCS licenses and (c)
restrictions under the rules and regulations promulgated by the Federal
Communications Commission and under telecommunications laws, in
particular, regarding the amount of foreign investment in the
Registrant.
5. The Registrant granted stock options to purchase 2,759,480 shares of
Class B Common Stock with an exercise price of $2.50 per share to
employees, directors and consultants under its 1995 Stock Option Plan.
The issuances described in Item 15(a)(1) were deemed exempt from
registration under the Securities Act in reliance upon Rule 701 promulgated
under the Securities Act. The issuances of the securities described in item
15(a)(2) were deemed to be exempt from registration under the Act in reliance
on Section 4(2) of the Act as transactions by an issuer not involving any
public offering. In addition, the recipients of securities in each such
transaction represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the share
certificates issued in such transactions. All recipients had adequate access,
through their relationships with the Registrant, to information about the
Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1.1** Form of Underwriting Agreement (preliminary form).
3.1* Certificate of Incorporation of the Registrant, as amended to
date.
3.2* Bylaws of the Registrant, as amended.
4.1* Reference is made to Exhibits 3.1 and 3.2.
4.2** Specimen Class C Common Stock certificate.
4.3* Registration Rights Agreement dated December 1, 1995, among the
Registrant and the investors named therein, as amended.
4.4* Stockholders Agreement dated December 1, 1995, among the
Registrant and the stockholders named therein, as amended.
4.5* Form of Subscription Agreements entered into between the
Registrant and its existing Class B and Class C Common Stock
investors.
4.6* Form of Class B Common Stock Warrant.
4.7* Form of Class C Common Stock Warrant.
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.1 Form of Indemnification Agreement entered into between the
Registrant and its directors and officers.
10.2* Engagement Letter dated December 9, 1994, Agency Agreement, dated
November 20, 1995, Placement Certificate, dated December 1, 1995,
by and between the Registrant and Bear, Stearns & Co. Inc.
10.3 Procurement Agreement, effective December 1, 1995, among the
Registrant, Mitsui Comtek Corp. and Mitsui & Co. (U.S.A.), Inc.
10.4 Loan Agreement, dated March 15, 1996, among the Registrant and
Hyundai Electronics America ("Hyundai"), including form of
promissory note.
10.5 Stock Purchase Agreement, dated March 15, 1996, among the
Registrant and Hyundai.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.6+ Equipment Purchase Agreement, dated March 15, 1996, among the Registrant and
Hyundai Electronics Industries Co., Ltd. ("HEI").
10.7* Employee Training Agreement, dated March 15, 1996, among the Registrant and HEI.
11.1 Computation of Earnings/(Loss) Per Share.
21.1* Subsidiaries of the Registrant.
23.1* Consent of Arthur Andersen LLP, Independent Public Accountants (see page II-7).
23.2 Consent of Counsel. Reference is made to Exhibit 5.1.
24.1* Power of Attorney (see page II-5).
27.1* Financial Data Schedule.
</TABLE>
- --------
* Previously filed.
** To be supplied by amendment.
+ Certain portions of this Exhibit, for which confidential treatment has been
requested, have been omitted and filed separately with the Securities and
Exchange Commission.
(B) FINANCIAL STATEMENT SCHEDULES -- All required information is set forth
in the consolidated financial statements included in the Prospectus
constituting part of this Registration Statement.
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Delaware Corporations Law, the Certificate of
Incorporation or the Bylaws of the Registrant, Indemnification Agreements
entered into between the Registrant and its officers and directors, the
Underwriting Agreement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered hereunder, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF DALLAS, STATE OF TEXAS, ON THIS 26TH DAY OF AUGUST, 1996.
General Wireless, Inc.
By:
/s/ Roger D. Linquist
----------------------------------
Roger D. Linquist
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
SIGNATURE TITLE DATE
President and Chief
/s/ Roger D. Linquist Executive Officer August 26, 1996
- ------------------------------------- (Principal
(ROGER D. LINQUIST) Executive Officer),
Chairman of the
Board of Directors
and Secretary
Vice President of
* Corporate August 26, 1996
- ------------------------------------- Development and
(ROBERT FUGATE) Chief Financial
Officer (Principal
Financial and
Accounting Officer)
Director
* August 26, 1996
- -------------------------------------
(ROBERT G. BARRETT)
II-5
<PAGE>
SIGNATURE TITLE DATE
Director
* August 26, 1996
- -------------------------------------
(RALPH M. BARUCH)
Director
* August 26, 1996
- -------------------------------------
(FREDERIC C. HAMILTON)
Director
* August 26, 1996
- -------------------------------------
(JOSEPH T. MCCULLEN, JR.)
Director
* August 26, 1996
- -------------------------------------
(ARTHUR PATTERSON)
Director
* August 26, 1996
- -------------------------------------
(JOHN SCULLEY)
Director
* August 26, 1996
- -------------------------------------
(TOSHIHIRO SOEJIMA)
/s/ Roger D. Linquist
*By_____________________________
(ROGER D. LINQUIST)
ATTORNEY-IN-FACT
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
<C> <S> <C>
1.1** Form of Underwriting Agreement (preliminary form).
3.1* Certificate of Incorporation of the Registrant, as
amended to date.
3.2* Bylaws of the Registrant, as amended.
4.1* Reference is made to Exhibits 3.1 and 3.2.
4.2** Specimen Class C Common Stock certificate.
4.3* Registration Rights Agreement dated December 1, 1995,
among the Registrant and the investors named therein,
as amended.
4.4* Stockholders Agreement dated December 1, 1995, among
the Registrant and the stockholders named therein, as
amended.
4.5* Form of Subscription Agreements entered into between
the Registrant and its existing Class B and Class C
Common Stock investors.
4.6* Form of Class B Common Stock Warrant.
4.7* Form of Class C Common Stock Warrant.
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.1 Form of Indemnification Agreement entered into between
the Registrant and its directors and officers.
10.2* Engagement Letter dated December 9, 1994, Agency
Agreement, dated November 20, 1995, Placement
Certificate, dated December 1, 1995, by and between
the Registrant and Bear, Stearns & Co. Inc.
10.3 Procurement Agreement, effective December 1, 1995,
among the Registrant, Mitsui Comtek Corp. and Mitsui &
Co. (U.S.A.), Inc.
10.4 Loan Agreement, dated March 15, 1996, among the
Registrant and Hyundai Electronics America
("Hyundai"), including form of promissory note.
10.5 Stock Purchase Agreement, dated March 15, 1996, among
the Registrant and Hyundai.
10.6+ Equipment Purchase Agreement, dated March 15, 1996,
among the Registrant and Hyundai Electronics
Industries Co., Ltd. ("HEI").
10.7* Employee Training Agreement, dated March 15, 1996,
among the Registrant and HEI.
11.1 Computation of Earnings/(Loss) Per Share.
21.1* Subsidiaries of the Registrant.
23.1* Consent of Arthur Andersen LLP, Independent Public
Accountants (see page II-7).
23.2 Consent of Counsel. Reference is made to Exhibit 5.1.
24.1* Power of Attorney (see page II-5).
27.1* Financial Data Schedule.
</TABLE>
- --------
*Previously filed.
**To be supplied by amendment.
+ Certain portions of this Exhibit, for which confidential treatment has been
requested, have been omitted and filed separately with the Securities and
Exchange Commission.
<PAGE>
[BROBECK LETTERHEAD]
July , 1996
General Wireless, Inc.
6688 N. Central Expressway
Dallas, Texas 75206
Re: Registration Statement on Form S-1
----------------------------------
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 originally filed by
General Wireless, Inc. (the "Company") with the Securities and Exchange
Commission (the "Commission") on June 28, 1996, as thereafter amended or
supplemented (the "Registration Statement"), in connection with the registration
under the Securities Act of 1933, as amended, of shares of the Company's Common
Stock (the "Shares"). The Shares include an over-allotment option to the
Underwriters to purchase additional shares of the Company's Common Stock and are
to be sold to the Underwriters as described in the Registration Statement for
resale to the public. As your counsel in connection with this transaction, we
have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the sale and issuance of the
Shares.
It is our opinion that, upon conclusion of the proceedings being taken or
contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares, and upon completion of the proceedings being taken in order to permit
such transactions to be carried out in accordance with the securities laws of
the various states where required, the Shares, when issued and sold in the
manner described in the Registration Statement, will be validly issued, fully
paid and nonassessable.
We consent to the use of this opinion as an exhibit to said Registration
Statement, and further consent to the use of our name wherever appearing in
said Registration Statement, including the prospectus constituting a part
thereof, and in any amendment thereto.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
Exhibit 10.1
GENERAL WIRELESS, INC.
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered
into this ______ day of ________________, 199__ between General Wireless, Inc.,
a Delaware corporation (the "Company"), and __________ ("Indemnitee").
WHEREAS, Indemnitee, a member of the Board of Directors or an officer,
employee or agent of the Company, performs a valuable service in such capacity
for the Company;
WHEREAS, the stockholders of the Company have adopted Bylaws (the
"Bylaws") providing for the indemnification of the officers, directors,
employees and agents of the Company to the maximum extent authorized by Section
145 of the Delaware General Corporation Law, as amended (the "Code");
WHEREAS, the Bylaws and the Code, by their non-exclusive nature,
permit contracts between the Company and the members of its Board of Directors,
officers, employees or agents with respect to indemnification of such directors,
officers, employees or agents;
WHEREAS, in accordance with the authorization as provided by the Code,
the Company either has purchased and presently maintains or intends to purchase
and maintain a policy or policies of Directors and Officers Liability Insurance
("D & O Insurance") covering certain liabilities which may be incurred by its
directors and officers in the performance of their duties as directors and
officers of the Company;
WHEREAS, as a result of developments affecting the terms, scope and
availability of D & O Insurance there exists general uncertainty as to the
extent of protection afforded members of the Board of Directors or officers,
employees or agents by such D & O Insurance and by statutory and bylaw
indemnification provisions; and
WHEREAS, in order to induce Indemnitee to continue to serve as a
member of the Board of Directors, officer, employee or agent of the Company, the
Company has determined and agreed to enter into this contract with Indemnitee.
NOW, THEREFORE, in consideration of Indemnitee's continued service as
a director, officer, employee or agent after the date hereof, and for other good
and valid consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
1. Indemnification of Indemnitee. The Company hereby agrees to hold
-----------------------------
harmless and indemnify Indemnitee to the fullest extent authorized or permitted
by the provisions of the Code, as may be amended from time to time.
2. Additional Indemnity. Subject only to the exclusions set forth in
--------------------
Sections 3 and 6(c) hereof, the Company hereby further agrees to hold harmless
and indemnify Indemnitee:
(a) against any and all expenses (including attorneys' fees),
witness fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the Company) to which
Indemnitee is, was or at any time becomes a party, or is threatened to be made a
party, by reason of the fact that Indemnitee is, was or at any time becomes a
director, officer, employee or agent of the Company or any subsidiary of the
Company, or is or was serving or at any time serves at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise;
and
(b) otherwise to the fullest extent as may be provided to
Indemnitee by the Company under the non-exclusivity provisions of Article VII,
Section 6 of the Bylaws of the Company and the Code.
3. Limitations on Additional Indemnity.
-----------------------------------
(a) No indemnity pursuant to Section 2 hereof shall be paid by the
Company:
i) in respect to remuneration paid to Indemnitee if it
shall be determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
ii) on account of any suit in which judgment is rendered
against Indemnitee for an accounting of profits made from the purchase or sale
by Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
iii) on account of Indemnitee's conduct which is finally
adjudged to have been knowingly fraudulent or deliberately dishonest or to
constitute willful misconduct;
2.
<PAGE>
iv) on account of Indemnitee's conduct which is the subject
of an action, suit or proceeding described in Section 6(c)(ii) hereof;
v) on account of any action, claim or proceeding (other
than a proceeding referred to in Section 7(b) hereof) initiated by the
Indemnitee unless such action, claim or proceeding was authorized in the
specific case by action of the Board of Directors;
vi) if a final decision by a Court having jurisdiction in
the matter shall determine that such indemnification is not lawful (and, in this
respect, both the Company and Indemnitee have been advised that the Securities
and Exchange Commission believes that indemnification for liabilities arising
under the federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); and
vii) except to the extent the aggregate of losses to be
indemnified thereunder exceeds the sum of (a) such losses for which the
Indemnitee is indemnified pursuant to Section 1 hereof and (b) any additional
amount paid to the Indemnitee pursuant to any D & O Insurance purchased and
maintained by the Company.
(b) No indemnity pursuant to Section 1 or 2 hereof shall be paid
by the Company if the action, suit or proceeding with respect to which a claim
for indemnity hereunder is made arose from or is based upon any of the
following:
i) Any solicitation of proxies by Indemnitee, or by a
group of which he was or became a member consisting of two or more persons that
had agreed (whether formally or informally and whether or not in writing) to act
together for the purpose of soliciting proxies, in opposition to any
solicitation of proxies approved by the Board of Directors.
ii) Any activities by Indemnitee that constitute a breach
of or default under any agreement between Indemnitee and the Company.
4. Contribution. If the indemnification provided in Sections 1 and
------------
2 hereof is unavailable by reason of a Court decision described in Section
3(a)(vi) hereof based on grounds other than any of those set forth in paragraphs
(i) through (v) of Section 3 (a) hereof, then in respect of any threatened,
pending or completed action, suit or proceeding in which the Company is jointly
liable with Indemnitee (or would be if joined in such action, suit or
proceeding), the Company shall contribute to the amount of expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by Indemnitee in such proportion as is
appropriate to reflect (i) the relative benefits received by the Company on the
one hand and Indemnitee on the other hand from the transaction from which such
action,
3.
<PAGE>
suit or proceeding arose, and (ii) the relative fault of the Company on the one
hand and of Indemnitee on the other in connection with the events which resulted
in such expenses, judgments, fines or settlement amounts, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of Indemnitee on the other shall be determined by reference to, among
other things, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such expenses,
judgments, fines or settlement amounts. The Company agrees that it would not be
just and equitable if contribution pursuant to this Section 4 were determined by
pro rata allocation or any other method of allocation which does not take
account of the foregoing equitable considerations.
5. Notification and Defense of Claim. Not later than thirty (30)
---------------------------------
days after receipt by Indemnitee of notice of the commencement of any action,
suit or proceeding, Indemnitee shall, if a claim in respect thereof is to be
made against the Company under this Agreement, notify the Company of the
commencement thereof; but Indemnitee's omission so to notify the Company will
not relieve the Company from any liability which it may have to Indemnitee
otherwise than under this Agreement. With respect to any such action, suit or
proceeding as to which Indemnitee notifies the Company of the commencement
thereof:
(a) The Company will be entitled to participate therein at its
own expense.
(b) Except as otherwise provided below, to the extent that it may
wish, the Company shall, jointly with any other indemnifying party similarly
notified, be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Indemnitee. After notice from the Company to Indemnitee of its
election to assume the defense thereof, the Company will not be liable to
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof, other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
shall have the right to employ its own counsel in such action, suit or
proceeding, but the fees and expenses of such counsel incurred after notice from
the Company of the Company's assumption of the defense thereof shall be at the
expense of Indemnitee unless (i) the employment of counsel by Indemnitee has
been authorized by the Company; (ii) Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and Indemnitee in
the conduct of the defense of such action; or (iii) the Company shall not in
fact have employed counsel to assume the defense of such action; in each of
which cases the fees and expenses of Indemnitee's separate counsel shall be paid
by the Company. The Company shall not be entitled to assume the defense of any
action, suit or proceeding brought by or on behalf of the Company or as to which
Indemnitee shall have made the conclusion provided for in (ii) above.
4.
<PAGE>
(c) The Company shall not be liable to indemnify Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall be permitted to settle
any action except that it shall not settle any action or claim in any manner
which would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent. Neither the Company nor Indemnitee will unreasonably withhold
its consent to any proposed settlement.
6. Advancement and Repayment of Expenses.
-------------------------------------
(a) In the event that Indemnitee employs his or her own counsel
pursuant to Sections 5(b)(i) through (iii) above, the Company shall advance to
Indemnitee, prior to any final disposition of any threatened or pending action,
suit or proceeding, whether civil, criminal, administrative or investigative,
any and all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding within ten (10)
days after receiving from Indemnitee copies of invoices presented to Indemnitee
for such expenses.
(b) Indemnitee agrees that Indemnitee will reimburse the Company
for all reasonable expenses paid by the Company in investigating or defending
any civil or criminal action, suit or proceeding against Indemnitee in the event
and only to the extent it shall be ultimately determined by a final judicial
decision (from which there is no right of appeal) that Indemnitee is not
entitled, under the provisions of the Code, the Bylaws, this Agreement or
otherwise, to be indemnified by the Company for such expenses.
(c) Notwithstanding the foregoing, the Company shall not be
required to advance such expenses to Indemnitee in respect of any action arising
from or based upon any of the matters set forth in subsection (b) of Section 3
or if Indemnitee (i) commences any action, suit or proceeding as a plaintiff
unless such advance is specifically approved by a majority of the Board of
Directors or (ii) is a party to an action, suit or proceeding brought by the
Company and approved by a majority of the Board which alleges willful
misappropriation of corporate assets by Indemnitee, disclosure of confidential
information in violation of Indemnitee's fiduciary or contractual obligations to
the Company, or any other willful and deliberate breach in bad faith of
Indemnitee's duty to the Company or its shareholders.
7. Enforcement.
-----------
(a) The Company expressly confirms and agrees that it has entered
into this Agreement and assumed the obligations imposed on the Company hereby in
order to induce Indemnitee to continue as a director, officer, employee or other
agent of the Company, and acknowledges that Indemnitee is relying upon this
Agreement in continuing in such capacity.
5.
<PAGE>
(b) In the event Indemnitee is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, the Company shall reimburse Indemnitee for all Indemnitee's
reasonable fees and expenses, including attorney's fees, in bringing and
pursuing such action.
8. Subrogation. In the event of payment under this agreement, the
-----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
9. Continuation of Obligations. All agreements and obligations of
---------------------------
the Company contained herein shall commence upon the date that Indemnitee first
became a member of the Board of Directors or an officer, employee or agent of
the Company, as the case may be, and shall continue during the period Indemnitee
is a director, officer, employee or agent of the Company (or is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise) and shall continue thereafter so long as Indemnitee shall be
subject to any possible claim or threatened, pending or completed action, suit
or proceeding, whether civil, criminal or investigative, by reason of the fact
that Indemnitee was a director, officer, employee or agent of the Company or
serving in any other capacity referred to herein.
10. Survival of Rights. The rights conferred on Indemnitee by this
------------------
Agreement shall continue after Indemnitee has ceased to be a director, officer,
employee or other agent of the Company and shall inure to the benefit of
Indemnitee's heirs, executors and administrators.
11. Non-Exclusivity of Rights. The rights conferred on Indemnitee by
-------------------------
this Agreement shall not be exclusive of any other right which Indemnitee may
have or hereafter acquire under any statute, provision of the Company's
Certificate of Incorporation or Bylaws, agreement, vote of stockholders or
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office; provided, however, that this
Agreement shall supersede and replace any prior indemnification agreements
entered into by and between the Company and Indemnitee and that any such prior
indemnification agreement shall be terminated upon the execution of this
Agreement.
12. Separability. Each of the provisions of this Agreement is a
------------
separate and distinct agreement and independent of the others, so that if any or
all of the provisions hereof shall be held to be invalid or unenforceable for
any reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof or the obligation of the Company
to indemnify the Indemnitee to the full extent provided by the Bylaws or the
Code.
6.
<PAGE>
13. Governing Law. This Agreement shall be interpreted and enforced
-------------
in accordance with the laws of the State of Delaware.
14. Binding Effect. This Agreement shall be binding upon Indemnitee
--------------
and upon the Company, its successors and assigns, and shall inure to the benefit
of Indemnitee, his or her heirs, personal representatives and assigns and to the
benefit of the Company, its successors and assigns.
15. Amendment and Termination. No amendment, modification,
-------------------------
termination or cancellation of this Agreement shall be effective unless it is in
writing and is signed by both parties hereto.
7.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
GENERAL WIRELESS, INC.
a Delaware corporation
By:
---------------------------------
Roger D. Linquist
President
INDEMNITEE
------------------------------------
Address:
___________________________
___________________________
___________________________
8.
<PAGE>
EXHIBIT 10.3
PROCUREMENT AGREEMENT
This Procurement Agreement ("Agreement") is entered by and among
General Wireless, Inc., a Delaware corporation (hereinafter called "GWI") with
its principal place of business at 6688 N. Central Expressway, Suite 1170,
Dallas, Texas, 75206, Mitsui & Co. (U.S.A.), Inc. ("Mitsui USA") and Mitsui
Comtek Corp. ("Comtek") (all of which are collectively referred to herein as
"Mitsui").
WITNESSETH:
WHEREAS, GWI is in the process of raising up to seventy-five million
dollars ($75,000,000) in a private placement (the "Private Placement") the net
proceeds of which shall be used, among other things, to obtain broadband PCS
(Block C) licenses from the Federal Communications Commission and to provide new
mobile communication services; and
WHEREAS, Mitsui has agreed to participate in the Private Placement by
purchasing (or arranging for the purchase, together with Mitsui & Co., Ltd. and
another Japanese corporation) of a total of ten million ($10,000,000) of Class C
Common Stock of GWI pursuant to the terms of certain shareholder and
subscription agreements by and among the parties (collectively referred to
herein as the "Stock Agreement") subject to the consent of the board of
directors of each of Mitsui & Co., Mitsui USA and Comtek, and the execution of
this Agreement; and
WHEREAS, subject to the terms and conditions contained herein, GWI
wishes to enlist the assistance of Mitsui to act as a procurement consultant to
secure proposals for the supply of certain equipment for GWI and Mitsui wishes
to assist GWI in performing such services as further described herein.
NOW, THEREFORE, the parties agree as follows:
I. Procurement Services.
A. Subject to all the terms and conditions of this Agreement, GWI hereby
appoints Mitsui for the term of this Agreement as, and Mitsui hereby agrees to
act for GWI as a procurement consultant to search for and obtain agreements with
vendors, including those vendors set forth on Exhibit A ("Exclusive Vendors")
for the supply of certain network equipment, handsets, and other products and
materials that GWI may authorize Mitsui to procure from time to time
("Equipment"). Mitsui shall be the exclusive procurement consultant with
respect to the Exclusive Vendors and, subject to the provisions of paragraph D
hereof, a non-exclusive procurement consultant with respect to vendors not
listed on Exhibit A who have their headquarters in Asia ("Non-Listed Vendors";
Non-Listed Vendors and Exclusive Vendors, collectively, "Vendors").
B. The parties agree that six months after the closing date of the Stock
Agreement, and thereafter from time to time, the parties shall discuss whether
to make any substitutions to the list of vendors set forth on Exhibit A. All
substitutions shall be mutually agreed by the parties in writing.
<PAGE>
C. Mitsui agrees to use its best efforts to provide the services
described below (all of which are collectively referred to herein as the
"Services") for the term of this Agreement. Such services may be amended from
time by the agreement of the parties in writing.
1. Find, contact and secure proposals from Vendors to supply
Equipment to GWI in favorable terms;
2. Obtain price quotations for Equipment from Vendors at GWI's
request and present such quotations to GWI;
3. Discuss and negotiate with Vendors to obtain the most favorable
prices and terms for GWI;
4. Arrange for insurance and delivery of Equipment to the final
destination requested by GWI;
5. Discuss with Vendors the terms for providing other services in
connection with the Equipment, such as installation, maintenance and support;
6. Contact and negotiate with financial institutions and entities
and individuals to provide financing for purchases of Equipment to GWI; and
7. Provide advice as to the most favorable financing terms from such
financial institutions.
D. GWI shall from time to time submit to Mitsui a request for proposal
("RFP") for proposals GWI wishes to receive in writing from vendors including
the equipment, quantity, price, payment, financing proposals, delivery terms and
such other information as GWI may reasonably require ("Proposals"). Mitsui may
solicit Proposals from Exclusive Vendors set forth in Exhibit A with respect to
the Equipment set forth therein and Non-Listed Vendors, provided Mitsui gives
prior written notice to GWI of the Non-Listed Vendors from which Mitsui wishes
to solicit Proposals. Mitsui shall act as exclusive procurement consultant with
respect to the Exclusive Vendors, and for a period of six months from the date
Mitsui receives any RFP, shall act, at GWI's sole discretion and direction,
provided GWI shall discuss with Mitsui any decision not to appoint Mitsui as
exclusive procurement consultant for a Non-Listed Vendor, as exclusive
procurement consultant with respect to Non-Listed Vendors for such RFP. Such
Non-Listed Vendors may be added to Exhibit A in accordance with the provisions
of paragraph B above.
E. All Proposals will be promptly forwarded to GWI for acceptance or
rejection. GWI's decisions regarding the Proposals will be promptly
communicated to Mitsui. Mitsui is not authorized to and will not purport to
accept any Proposal or to otherwise bind or make any representation, warranty or
commitment (whether on price, delivery terms or any other matter whatsoever) on
behalf of GWI and will indemnify GWI from any damages, settlements, expenses,
costs and attorneys' fees incurred as the result of any breach of this sentence.
Mitsui understands that GWI is not bound to any term with respect to any
Proposal until it has accepted such Proposal and Mitsui will not imply or
represent anything to the contrary to any person or entity.
F. GWI shall have the right in its sole discretion to determine whether
to accept or
2.
<PAGE>
reject any Proposal submitted by Mitsui. GWI shall notify Mitsui in writing
within a reasonable timeframe of its decision. Except as expressly stated in
this Agreement, nothing in this Agreement shall be construed as limiting in any
manner GWI's activities or its appointment of other dealers, agent or
representatives of any kind. The parties agree that all Equipment shall be
purchased from vendors directly by GWI, and that unless otherwise agreed to in
writing by Mitsui and GWI, Mitsui shall (i) not be a party to any agreements
("Purchase Agreements") with respect to such purchases, (ii) not have any
obligation to provide any financing for the purchase of Equipment, or to pay any
costs which may be incurred by GWI in purchasing or financing the purchase of
the Equipment, and (iii) not have any responsibilities to GWI or the vendors in
connection with any such purchases or otherwise with respect to the Equipment.
GWI agrees it shall promptly indemnify, defend and hold harmless Mitsui against
any damages, losses, liabilities, costs and expenses, including reasonable
attorneys' fees, which may be suffered, sustained, incurred or required to be
paid by Mitsui by reason of any claims which may be brought against Mitsui, by a
vendor or by any other party, in connection with GWI's purchase, use or sale of
the Equipment; provided GWI shall have no indemnity obligation under this
sentence with respect to claims which arise due to acts or omissions of Mitsui
not authorized under this Agreement, or otherwise authorized in writing by GWI.
II. Procurement Manager.
A. Mitsui shall appoint one Mitsui employee to work at GWI's facilities
during the term of this Agreement as the designated "Procurement Manager" who
shall assist Mitsui in providing the Services under this Agreement. With prior
written notice to GWI, Mitsui shall have the right to send trainees and/or
engineers to assist the activities of the Procurement Manager subject to written
approval by GWI. Such Procurement Manager (and any trainee and/or engineer)
shall be considered solely an employee of Mitsui and not a GWI employee or
agent. The Procurement Manager (and any trainee and/or engineer) is an
independent contractor to GWI in the performance of this Agreement. Mitsui shall
be responsible for compliance with all laws, rules and regulations including,
but not limited to, salary, payment of taxes, workers' compensation insurance,
disability benefits, unemployment, social security and other payroll taxes.
Mitsui agrees to defend, indemnify and hold GWI harmless from any and all claims
made by any entity on account of an alleged failure by Mitsui to satisfy all
such obligations.
B. GWI shall provide the Procurement Manager reasonable access to its
facilities and access to all GWI vendor information and shall allow the
Procurement Manager to be involved in GWI's decision-making process by reporting
to GWI Proposals and making recommendations regarding the most qualified vendor,
all subject to any applicable law. The Procurement Manager is not authorized to
and will not purport to accept any Proposal or otherwise bind or make any
representation, warranty or commitment (whether on price, delivery terms or any
other matter whatsoever) on behalf of GWI.
C. Upon the request of either party, Mitsui agrees to immediately replace
the Procurement Manager with an individual who is acceptable to GWI.
D. The Procurement Manager shall have the right to attend Mitsui
meetings, on a reasonable basis and at Mitsui's sole cost and expense.
E. Mitsui agrees that the Procurement Manager shall comply with all of
GWI's
3.
<PAGE>
internal rules and regulations made known to the Procurement Manager, as well as
where required, any federal, state or local government regulations while working
on the premises of GWI. Mitsui agrees to indemnify and hold GWI harmless from
and against any losses, damages, claims, demands, suits, liabilities, expenses
(including reasonable attorneys' fees) incurred by GWI that arise out of the
alleged failure of the Procurement Manager to abide by such rules and
regulations.
III. Compensation
A. As partial consideration for the covenants of Mitsui contained herein,
during the term of this Agreement, GWI will pay Mitsui:
1. A retainer fee equal to three hundred and fifty thousand dollars
($350,000) per year to be paid quarterly within thirty (30) days after the end
of each calendar quarter; and
2. A personnel fee equal to one hundred fifty thousand dollars
($150,000) per year for expenses incurred by the Procurement Manager, such fee
to be paid monthly within thirty (30) days of the end of each calendar month.
B. In the event that Mitsui reduces the $10 million equity investment in
GWI provided for in the Stock Agreement (other than a reduction (i) resulting
from any sale(s) or transfer(s) by Mitsui to any parent, subsidiary or
affiliate, or to Kenwood Corporation, or (ii) required by any rules or
regulations of the Federal Communications Commission) then the retainer and
personnel fee payable to Mitsui as set forth in clauses (1) and (2) above shall
be reduced by a proportional amount calculated by taking the reduced investment
and dividing it by the initial $10 million. In no event shall the retainer and
personnel fee increase without the mutual written consent of both parties.
C. As compensation for the Services rendered by Mitsui, GWI will pay
Mitsui a commission as set forth below on the total purchase price paid for any
Equipment purchased and accepted by GWI or any subsidiary or affiliate of GWI
(net for shipping, insurance, taxes, duties or other similar amounts) (the
"Purchase Price") in respect of Proposals procured by and forwarded to GWI by
Mitsui. Mitsui shall be entitled to such commission even if GWI is directly or
indirectly involved in discussions or negotiations with the Vendors. In the
event GWI requests Mitsui to provide services for the purchase of Equipment from
any vendor other than the Vendors, GWI agrees to pay Mitsui a commission as set
forth below.
1. The commission shall equal four percent (4%) of the Purchase
Price where Mitsui is involved in arranging or negotiating the purchase of the
Equipment; and
2. The commission shall equal six percent (6%) of the Purchase Price
where Mitsui is involved in arranging and actually secures favorable financing
terms for the purchase of the Equipment.
D. In the event that Mitsui is involved in negotiating the final purchase
contract and securing financing for the particular Equipment, Mitsui is entitled
to only one commission equal to six percent (6%) of the Purchase Price with
respect to such Equipment.
E. Notwithstanding the foregoing, GWI shall pay no commissions to Mitsui
with
4.
<PAGE>
respect to proposals solicited or procured other than in compliance with this
Agreement.
F. GWI will pay commissions to Mitsui as follows net thirty (30) days
following the date the Equipment that is subject to commissions is delivered;
provided, however, that in each year of this Agreement, payments to Mitsui on
account of the first one hundred and fifty thousand ($150,000) of commissions
owed to Mitsui shall be reduced by one half.
G. Notwithstanding the foregoing, GWI shall pay no commissions to Mitsui
with respect to (1) purchase from any vendor that offers GWI unsolicited
proposals in respect of product line discontinuation, excess inventory
reductions or special product close-outs, (2) deals for Equipment that are
negotiated after the expiration or termination of this Agreement, or (3)
proposals solicited or procured other than in compliance with this Agreement.
IV. Responsibilities of Mitsui
A. Mitsui shall comply with good business practices and all applicable
laws and regulations and shall diligently perform all other duties as mutually
agreed upon herein. Mitsui will keep GWI informed as to all complaints or
problems (and the resolution thereof) regarding GWI.
B. Mitsui shall employ sufficient qualified employees and agents to
assist in diligently performing all of its duties as mutually agreed upon herein
and shall take advantage of technical training programs offered by GWI for such
persons at Mitsui's expense. Mitsui is responsible for all reasonable and
necessary expenses incurred by Mitsui in connection with rendering the Services
under this Agreement.
C. Mitsui agrees to comply with all export laws and restrictions and
regulations of the Department of Commerce or other United States of foreign
agency or authority, and not to knowingly export, or knowingly allow the export
or re-export of any Proprietary Information (as defined below) or Equipment in
violation of any such restrictions, laws or regulations, or, without all
required licenses and authorizations, to Afghanistan, the People's Republic of
China or any Group Q, S, W, Y or Z country specified in the then current
Supplement No. 1 to Section 770 of the U.S. Export Administration Regulations
(or any successor supplement or regulations). Without limitation of the
foregoing, Mitsui agrees to commit no act which, directly or indirectly, would
violate any United States law, regulation, or treaty or any other international
treaty agreement, relating to the export or re-export of any Equipment or
associated technical data or products thereof to which the United States
adheres. Mitsui will bear all expenses and costs related to its compliance with
such laws, regulations or treaties, whether incurred by it or GWI. Mitsui
agrees to indemnify GWI against any claim, demand action, proceeding,
investigation, loss, liability, cost and expense (including attorney's fees)
suffered or incurred by GWI and arising out of or related to any violation
(whether intentional or unintentional) by Mitsui of any of the warranties or
covenants in this section.
V. Term and Termination
A. Unless terminated earlier as provided herein, this Agreement shall
have a term of five (5) years commencing on the date hereof. This Agreement
shall be automatically renewed for additional period(s) of one year each unless
either party gives the other party written notice of its intention not to renew
at least ninety (90) days prior to the expiration of this Agreement or any
renewal thereof.
5.
<PAGE>
B. This Agreement may be terminated by either party for cause immediately
upon the occurrence of any of the following events:
1. If the other party ceases to do business, or otherwise terminates
its business operations or if there is a material change in control of the other
party (excluding transfers in ownership to affiliates); or
2. If the other party breaches any provision of this Agreement and
(except in the case of a material compromise of Proprietary Information where
termination shall be effective immediately upon notice) fails to fully cure such
breach within thirty (30) days or such longer time as is provided herein of
written notice from the non-defaulting party describing the breach; or
3. If the other party shall seek protection under any bankruptcy,
receivership, trust deed, creditors arrangement, composition or comparable
proceeding, or if any such proceeding is instituted against the other party.
4. If Mitsui reduces its aggregate equity investment to less than $3
million. For purposes of this Article V.B.4, Mitsui's equity investment shall
include the investment in GWI of any parent, subsidiary or affiliate of Mitsui
as well as of Kenwood Corporation.
C. Neither party shall incur any liability whatsoever for any damage,
loss or expenses of any kind suffered or incurred by the other arising from or
incident to any termination of this Agreement which complies with the terms of
the Agreement whether or not such party is aware of any such damage, loss or
expenses.
D. Upon termination or expiration of this Agreement for any reason
whatsoever, Mitsui (i) shall immediately discontinue all representations or
statements from which it might be inferred that any relationship exists between
GWI and Mitsui and (ii) will cease to solicit or procure Proposals (but will not
act in any way to damage the reputation of GWI).
E. Upon termination of this Agreement by either party or naturally at the
end of the term:
1. Except as otherwise provided herein, all rights and licenses of
Mitsui and all obligations of GWI hereunder shall terminate (other than with
respect to obligations incurred prior to termination). Mitsui shall have no
rights to receive any commissions or other fees after termination or expiration
of this Agreement, except to the extent GWI received a Proposal prior to
expiration or termination and received delivery of Equipment in respect of such
Proposal after termination or expiration of the Agreement.
2. Each party will immediately return to the other all Proprietary
Information of the other party in each party's possession, custody or control
(including copies thereof).
3. Except as provided herein, the provisions of this Agreement shall
remain in effect after termination (including, without limitation, the natural
expiration hereof).
VI. Proprietary Information
6.
<PAGE>
A. Each party acknowledges that, in the course of performing under this
Agreement, each party may obtain from the other certain business, technical and
financial information which is of a confidential and proprietary nature
("Proprietary Information"). Such Proprietary Information may include, without
limitation, computer codes, trade secrets, know-how, inventions, techniques,
processes, programs, algorithms, schematics, data, customer lists, financial
information and sales and marketing plans. The receiving party shall, at all
times, both during the term of this Agreement and for the three (3) year period
after its termination, keep in trust and confidence all Proprietary Information
of the disclosing party, and shall not use such Proprietary Information other
than in the course of its duties as expressly provided in this Agreement, nor
shall the receiving party disclose any such Proprietary Information to any
person without the disclosing party's prior written consent. Each party
acknowledges that any such Proprietary Information received by it shall be
received as a fiduciary of the other. Notwithstanding the foregoing, GWI
recognizes that it may be necessary for Mitsui to disclose Proprietary
Information of GWI to Vendors. GWI will permit such disclosure to the extent
necessary, provided the Vendor executes an appropriate non-disclosure agreement
reasonably satisfactory to GWI.
B. The receiving party shall not be bound by this Section VI. with
respect to information the receiving party can document (i) at the date hereof
has entered or later enters the public domain as a result of no act or omission
of the receiving party or its employees, or agents or (ii) is lawfully received
by the receiving party from third parties without restriction and without breach
of any duty of nondisclosure by any such third party or (iii) was rightfully in
the possession of the receiving party without restriction prior to its
disclosure by the disclosing party, (iv) is independently developed by the
receiving party by employees without access to the other party's similar
Proprietary Information, or (v) it is required by law to disclose.
VII. Relationship of Parties.
The parties hereto expressly understand and agree that Mitsui is an
independent contractor in the performance of each and every part of this
Agreement and (except for actions permitted to be taken by the Procurement
Manager pursuant to Article II hereof) is solely responsible for all of its
employees and agents and its labor costs and expenses arising in connection
therewith and for any and all claims, liabilities or damages or debts of any
type whatsoever that may arise on account of Mitsui's activities, or those of,
its employees or agents in the performance of this Agreement. Mitsui has no
authority, right or ability to bind or commit GWI in any way (including, without
limitation, by accepting orders) or sell any Products and will not attempt to do
so or imply that it may do so. GWI is in no manner associated with or otherwise
connected with the actual performance of this Agreement on the part of Mitsui,
nor with Mitsui's employment of other persons or incurring of other expenses.
Except as expressly provided herein, GWI shall have no right to exercise any
control whatsoever over the activities or operations of Mitsui.
VIII. Miscellaneous
A. Neither this Agreement nor any right or obligation hereunder is
capable of being assigned by Mitsui or GWI without the prior written consent of
the other and any purported transfer or assignment will be void. Except as
otherwise provided herein, this Agreement shall be binding upon and inure to the
benefit of the successors and assigns
7.
<PAGE>
(whether by operations of law, merger, change of control or otherwise) of the
parties.
B. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one in the same instrument.
C. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provisions shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provisions were so excluded and shall be enforceable in accordance with its
terms.
D. Except as otherwise expressly provided herein, any provision of this
Agreement may be amended and the observance of any provision.of this Agreement
may be waived (either generally or any particularly instance and either
retroactively or prospectively) only with the written consent of GWI and Mitsui.
E. This Agreement shall be governed by and construed under the laws of
the State of New York and the United States as applied to agreements among
California residents entered into and to be performed entirely within New York.
The parties shall use their best efforts to resolve any disputes among them by
mutual accord. Any dispute or controversy arising out of or relating to this
Agreement or a breach hereof that cannot be settled by mutual accord of the
parties shall be settled by arbitration in New York, New York in accordance with
the Commercial Arbitration Rules of the American Arbitration Association then in
effect. Each party to the dispute shall select one arbitrator, and the two
arbitrators shall select the third arbitrator. All decisions and awards
rendered by the arbitrators shall be binding and final as to all questions
submitted to the arbitrators and judgment upon the award may be entered in any
court having jurisdiction over the parties to the dispute. The arbitrators shall
have the authority to award expenses (including fees of counsel and any experts)
in such manner as the arbitrators determine is just and equitable.
F. Any notice required or permitted under this Agreement shall be given
in writing and shall be deemed effectively given upon personal delivery to the
parties to be notified or upon deposit with the United States Postal Service, by
registered or certified mail, postage prepaid and addressed to the party to be
notified (i.e., President) as the address indicated for such party on the
signature page hereof, or at such other address as the party may designate by
ten (10) days advanced written notice to the other party.
G. This Agreement is the sole agreement between the parties with respect
to the subject matter hereof. This Agreement supersedes all prior agreements or
discussions between the parties with respect to the subject matter hereof.
H. Termination of this Agreement shall not be an exhaustive remedy for
breach of this Agreement and, whether or not termination is effected, all other
remedies will remain available.
I. Mitsui shall only furnish Proprietary Information obtained from GWI to
those of its employees (or those employees of its parent, subsidiaries or
affiliates) with a need to know the same for purposes of enabling Mitsui to
exercise its rights and carry out its responsibilities under this Agreement, and
Mitsui shall inform all such recipients of and take reasonable measures to
insure that such recipients comply with Mitsui's confidentiality obligations
8.
<PAGE>
hereunder.
9.
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement effective
as of the Closing Date.
GENERAL WIRELESS, INC.
By
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Address:
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MITSUI & CO. (U.S.A.) INC.
By
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Address:
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MITSUI COMTEK CORP.
By
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Address:
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10.
<PAGE>
EXHIBIT A
VENDORS
1. Vendors for Network Equipment
(a) Nokia
(b) NEC
(c) Innova
(d) Digital Microwave
(e) Anritsu
2. Vendors for Handsets
(a) Kenwood
(b) Toshiba
(c) Casio
(d) NEC
(e) Nokia
(f) Oki
11.
<PAGE>
EXHIBIT 10.4
LOAN AGREEMENT
THIS LOAN AGREEMENT dated March 15, 1996 is entered into between General
Wireless, Inc., a Delaware corporation (the "Company"), and Hyundai Electronics
America, a California corporation (the "Lender").
A. The Company desires to obtain a loan up to the aggregate principal
amount of $30,000,000 (the "Loan") for the purpose of paying a portion of the
purchase price of entrepreneur's licenses ("Entrepreneur's Licenses") in the C
block of broadband PCS spectrum issued by the Federal Communications Commission
(the "FCC").
B. The Lender is willing to make a loan on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions set forth below, and in reliance on the representations and
warranties herein provided, the parties intending to be legally bound agree as
follows:
1. LOAN.
(a) CLOSING. Subject to the terms and conditions set forth in this
Agreement, the Lender agrees to make the Loan, and the Company agrees to accept
the Loan, at a closing (the "Closing") to be held promptly after the Company
receives notice that it is a high bidder on Entrepreneur's Licenses and no later
than 3 business days prior to the due date of the second 5% down payment to the
U.S. Treasury for Entrepreneur's Licenses awarded or to be awarded to the
Company. The Loan will be represented by the Company's Senior Promissory Note
(the "Note") in the form of Exhibit A. The terms of the Loan are as stated
herein and in the Note.
(b) INSTRUMENTS DELIVERED AT CLOSING. At the Closing, the Company shall
deliver to the Lender the Note, properly completed and duly executed, against
delivery to the Company by the Lender of a check or wire transfer disbursing the
Loan to the Company's order.
2. CONDITIONS TO OBLIGATIONS.
(a) CONDITIONS TO THE LENDER'S OBLIGATIONS. The obligation of the Lender
to make the Loan at the Closing shall be subject to the satisfaction of each of
the following conditions precedent, any one or more of which may be waived by
the Lender.
(i) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company set forth in Section 3 of this Agreement shall be true and correct
in all material respects on and as of the date of the Closing with the same
effect as though made on and as of the date of the Closing.
(ii) PERFORMANCE. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
(iii) QUALIFICATIONS. All authorizations, approvals, or permits of and
notices and filings with, if any, of any governmental authority or regulatory
body of the United States, the Republic of Korea, or any state within the United
States that are required in connection with the lawful advancement and
performance of the Loan, and the equity investment to be made in accordance with
the Stock Purchase Agreement of even date herewith between the Company and the
Lender (the "Stock Purchase Agreement"), shall have been duly obtained or made
and shall be effective on and as of the Closing, and any waiting period required
in connection therewith shall have expired.
(iv) LEGAL OPINION. The Lender shall have received from Brobeck,
<PAGE>
Phleger & Harrison, counsel for the Company, an opinion, dated the date of the
Closing, in substantially the form attached hereto as Exhibit B, and in
substance satisfactory to the Lender.
(v) FCC OPINION. The Lender shall have received from Skadden, Arps,
Slate, Meagher & Flom, special FCC counsel for the Company, an opinion, dated
the date of the Closing, in substantially the form attached hereto as Exhibit C,
and in substance satisfactory to the Lender.
(vi) LICENSES. Consistent with the Company's long-standing business plan
described in its Confidential Private Placement Memorandum dated November 1995,
as amended, the Company shall be the winning bidder for either (y) any
Entrepreneur's Licenses which collectively cover not less than 10,000,000 POPs
within the top 50 BTA's or (z) any 2 Entrepreneur's Licenses within the top 10
BTA's, with BTA's and POPs determined in each case as stated in the terms of the
FCC's auction (the "Auction") for such licenses, and the issuance thereof in the
normal course shall be reasonably assured or be completed.
(vii) COMPLIANCE CERTIFICATE. The President of the Company shall deliver
to the Lender at the Closing a certificate dated the date of the Closing
certifying that the conditions specified in Sections 2(a)(i), (ii), (iii) (with
the exception of those authorizations, approvals or permits dependent upon
foreign government action) and (vi) have been fulfilled.
(viii) PROCEEDINGS SATISFACTORY. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all document
incident thereto shall be reasonably satisfactory in form and substance to the
Lender, which shall have received all such counterpart original and certified or
other copies of such documents as it may reasonably request.
(b) CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the
Company to accept the Loan at the Closing is subject to the satisfaction of each
of the following conditions precedent, any one or more of which may be waived by
the Company.
(i) PAYMENT OF PURCHASE PRICE. The Lender shall have delivered payment of
the purchase price of the Note.
(ii) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Lender set forth in Section 4 shall be true and correct in all material
respects on and as of the date of the Closing with the same effect as though
made on and as of the date of the Closing.
(iii) PERFORMANCE. The Lender shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
(iv) QUALIFICATIONS. All authorizations, approvals, or permits of and
notices and filings with, if any, of any governmental authority or regulatory
body of the United States or any state within the United States that are
required on the part of the Company in connection with the Loan and the lawful
issuance of the Note, shall have been duly obtained or made and shall be
effective on and as of the Closing, and any waiting period required in
connection therewith shall have expired.
(c) FAILURE TO CLOSE. If the Closing has not occurred by the due date of
the second down payment to the U.S. Treasury for Entrepreneur's Licenses awarded
or to be awarded to the Company, then neither the Company nor the Lender shall
have any further obligations under this Agreement. Notwithstanding the
foregoing, the obligations of the parties under Sections 6(g) and 6(l) shall
survive and all obligations of the parties under this Agreement shall continue
in effect so long as any obligation is outstanding under the Note.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Lender that, except as set forth on the Schedule
of Exceptions provided
<PAGE>
to the Lender, which exceptions will be deemed to be representations and
warranties as if made hereunder:
(a) ATTACHED REPRESENTATIONS AND WARRANTIES. The Company hereby makes all
the representations and warranties attached hereto as Exhibit D. All
capitalized terms used in Exhibit D shall have the meanings set forth in the
Company's existing Subscription Agreement. As used in Exhibit D, the term
"Company" includes both the Company and its direct and indirect subsidiaries
("Subsidiaries").
(b) CHARTER DOCUMENTS, MINUTE BOOKS. The Company has delivered to the
Lender complete and accurate copies of its corrected amended and restated
certificate of incorporation filed November 30, 1995 (the "Restated
Certificate") and its Amended and Restated Bylaws ("Restated Bylaws"), each as
currently in effect. The copy of the minute books of the Company provided to
the Lender's special counsel contains minutes of all meetings of directors and
stockholders and all actions by written consent without a meeting by the
directors and stockholders since the time of incorporation and reflect all
actions by the directors (and any committee of directors) and stockholders with
respect to all transactions referred to in such minutes accurately in all
material respects.
(c) GOVERNMENTAL CONSENTS. No consent, approval, qualification, order or
authorization of, or filing with, any court, administrative or governmental
authority is required on the part of the Company or any Subsidiary in connection
with the Company's valid execution, delivery or performance of this Agreement or
the Loan or the Company's issuance of the Note except (i) such as have been made
or obtained prior to the date of this Agreement and (ii) such filings under
federal and state securities laws or any statutory requirement or related
administrative agency rule or policy including, without limitation, those
promulgated by the FCC or any provisions of the Communications Act of 1934, as
amended, or any statutory requirement which would otherwise cause the Company to
place in trust, divest or cede control of any of the Company's Entrepreneur's
Licenses (collectively, the "FCC Compliance Rules") as may be required to be
made following the Closing which will be timely filed within the applicable
periods therefor.
(d) AUTHORIZATION. The Company has full power to execute, deliver and
perform this Agreement and the Note, and this Agreement has been duly executed
and delivered by the Company and is, and the Note, when duly executed and
delivered by the Company will be, the legal, valid and binding obligations of
the Company, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally, and to general equitable principles. The
execution, delivery and performance of this Agreement and the Note have been
duly authorized by all necessary corporate action of the Company.
(e) COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance by the Company of this Agreement and the Note and the consummation
of the transactions contemplated hereby and thereby will not result in any
violation of or be in material conflict with or constitute, with or without the
passage of time or giving of notice, a default under, its Restated Certificate
or Restated Bylaws or, in any material respect, any provision of any mortgage,
indenture, agreement, instrument or contract to which it or any Subsidiary is a
party or by which it or any Subsidiary is bound, or, to the best of its
knowledge, any federal or state judgment, order, writ, decree, statute, law,
rule regulation or ordinance applicable to the Company or any Subsidiary or an
event that results or will result in the creation of any material lien, charge
or encumbrance upon any assets or properties of the Company or any Subsidiary or
the suspension, revocation, impairment, forfeiture, or nonrenewal of any
material permit, license, authorization, or approval applicable to the Company
or any Subsidiary, or the business or operations of the Company or any
Subsidiary, or any of the assets or properties of the Company or any Subsidiary.
(f) FCC COMPLIANCE. Neither the Company nor any Subsidiary is presently
and will not, by virtue of the execution and delivery of this Agreement, the
Company's acceptance of the Loan or the issuance of the Note or the completion
of the transactions contemplated hereby and thereby, be in violation or default
of any FCC Compliance Rules. The representations and warranties
<PAGE>
stated in this Section 3(f) are made in reliance, in material part, on the
Lender's representations, warranties and covenants in this Agreement.
(g) SUBSIDIARIES, ETC. The Company does not own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
(h) OFFERING. Subject in part to the truth and accuracy of the Lender's
representations set forth in this Agreement, the making of the Loan and the
issuance of the Note as contemplated by this Agreement are exempt from the
registration requirements of the 1933 Act, and neither the Company nor any
authorized agent acting on its behalf will take any action hereafter that would
cause the loss of such exemption.
(i) BALANCE SHEET. The Company has delivered to the Lender its unaudited
consolidated balance sheet at December 31, 1995 (the "Balance Sheet"). The
Company hereby makes, with respect to the Balance Sheet, the representations and
warranties made in the last two sentences of Section 3.10 of Exhibit D.
(j) DELIVERY OF AGREEMENTS. The Company has heretofore delivered to the
Lender a full and complete set of the material agreements between the Company
and any holder of any equity interest in the Company or any Subsidiary or of any
options, warrants, conversion rights or other rights to acquire any such equity
interests.
(k) RESERVES. The Company has adopted and followed the plan to use its
best efforts to secure in the Auction Entrepreneur's Licenses for the maximum
POPs feasible with the funds available to it, including not setting aside
reserves for other purposes exceeding its out-of-pocket expenses incurred in
connection therewith and 6 months' interest owing under the U.S. government
financing available for Entrepreneur's Licenses, except in order to respond to
the requirements of financial markets as determined by the Company pursuant to
the advice and recommendations of its investment bankers of national standing.
(l) ADDITIONAL FINANCING. The Company will use its best efforts to obtain
additional financing to apply towards payments for Entrepreneur's Licenses.
(m) CDMA TECHNOLOGY. The Company will use CDMA technology in its and its
Subsidiaries' PCS systems and will recommend CDMA technology for use by all PCS
systems managed by it and its Subsidiaries. However, the Company reserves the
right to select another technology if it reasonably and in good faith
determines, on the basis of objective facts in the PCS industry, that CDMA
technology is commercially or technically impracticable in the PCS industry in
the U.S.
4. REPRESENTATIONS AND WARRANTIES OF THE LENDER. The Lender hereby
represents and warrants to the Company as follows:
(a) AUTHORIZATION. The Lender has full power and authority to enter into
this Agreement and to perform its covenants, agreements and obligations
hereunder and thereunder. This Agreement is the legal, valid and binding
obligation of the Lender, enforceable against the Lender in accordance with its
terms except as limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting creditors' rights generally, and to
general equitable principles.
(b) EXPERIENCE. The Lender is an "accredited investor" within the meaning
of Rule 501 under the 1933 Act and was not organized for the specific purpose of
making the Loan or acquiring the Note. The Lender has sufficient knowledge and
experience in lending to companies similar to the Company in terms of the
Company's stage of development so as to be able to evaluate the risks and merits
of the Loan and it is able financially to bear the risks thereof.
(c) PURCHASE FOR OWN ACCOUNT. The Lender is making the Loan and
<PAGE>
acquiring the Note for its own account and not with the view to, or for resale
in connection with, any distribution thereof. The Lender has no present
intention of selling, granting any participation in, or otherwise distributing
the same. Such Lender does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person, with respect to the Loan or the Note.
(d) RELIANCE UPON LENDER'S REPRESENTATIONS. The Lender understands that
the Note is not registered under the 1933 Act pursuant to the exemption
contemplated in Section 4(2) thereof, and that the Company's reliance on such
exemption is predicated on the Lender's representations set forth herein.
(e) RESTRICTED SECURITIES. The Lender understands that the Note, if it is
considered a "security" under the 1933 Act, may not be sold, transferred, or
otherwise disposed of without registration under the 1933 Act, or an exemption
therefrom, and that in the absence of an effective registration statement
covering the Note or an available exemption from registration under the 1933
Act, the Note must be held indefinitely. In the absence of an effective
registration statement, or an available exemption from registration under 1933
Act, covering the sale of the Note, the Lender will sell, transfer, or otherwise
dispose of the Note only in a manner consistent with its representations and
agreements set forth herein.
5. ADDITIONAL AGREEMENTS.
(a) INCREASE IN AMOUNT OF LOAN. (i) Notwithstanding anything to the
contrary herein, the Company may, at any time prior to the Closing, request the
Lender to increase the amount of the Loan (on the same terms as described
herein) by an additional amount of up to $20,000,000 if, at any time prior to
the Closing, the Company receives firm commitments from substantial domestic
investors to invest on the same terms as those described in the Company's
Private Placement Memorandum (including any exhibits, amendments or supplements
thereto) for the Class C Common Stock offering or other terms satisfactory to
the Lender. In this event, the increase of the amount of the Loan will be
calculated in a ratio of 1 additional dollar of the Loan amount for every 2
additional dollars which the Company receives from such substantial domestic
investors.
(ii) In addition, the Company may, at any time prior to the Closing,
request the Lender to increase the amount of the Loan (on the same terms as
described herein) by an additional amount of up to $20,000,000 if, at any time
prior to the Closing, the Company needs funding: (x) to pay more than
$70,000,000 for the 10% down payment to the U.S. Treasury for Entrepreneur's
Licenses, (y) for corporate consolidation after being awarded Entrepreneur's
Licenses which satisfy the conditions set forth in Section 2(a)(vi) or (z) to
respond to the requirements of financial markets pursuant to the advice of the
Company's investment bankers after the Auction but prior to the Closing. Any
increase in the amount of the Loan will be the minimum amount the Company
reasonably needs to satisfy the conditions stated under this Section 5(a)(ii).
(iii) The sum of all Loan increases provided by the Lender pursuant to
Sections 5(a)(i) and 5(a)(ii) shall not exceed an aggregate amount of
$20,000,000. If the amount of the Loan increases, the amount of Authorized
Securities purchasable by the Lender under the Stock Purchase Agreement will
also increase at the same time and in the same amounts as any increase to the
Loan made pursuant to this Section 5(a).
(b) DECREASE IN AMOUNT OF LOAN. The amount of the Loan will be $30,000,000
less the dollar amount of Authorized Securities purchased by the Lender at the
first Closing under the Stock Purchase Agreement. The Company has the right, by
written notice given to the Lender prior to the Closing under the Loan
Agreement, to decrease the amount of the Loan provided by the Lender under this
Agreement and such reduction may bring the amount of the Loan down to zero;
provided that the Company shall reduce the amount of Authorized Securities
purchasable by the Lender under the Stock Purchase Agreement at the same time
and in the same amounts as any reduction to the Loan made pursuant to this
Section 5(b) to which the Lender hereby agrees. However, subject to the FCC
Compliance Rules, in no event shall the dollar amount of
<PAGE>
Authorized Securities purchasable under the Stock Purchase Agreement be
decreased below $5,000,000.
(c) NOTE. So long as there is principal and interest outstanding under
the Note, the Lender shall tender principal and accrued unpaid interest, rather
than cash, to the Company in payment of the purchase price (the "Purchase
Price") for Authorized Securities under the Stock Purchase Agreement. In any
such tender, the Lender shall tender to the Company, for each dollar of Purchase
Price, one dollar of principal together with interest thereunder at the rate of
6.5% per annum starting from the date of the Note to the date of payment of the
Purchase Price. To the extent the Lender elects to extend the term of the Stock
Purchase Agreement pursuant to Section 6(c) thereof, the Lender will consent to
an extension of the term of the Note for the same period.
(d) BOARD REPRESENTATION. At any time when $10,000,000 in principal
amount of the Loan is outstanding, the Lender shall have the right, in lieu of
any other board representation rights which may be available to the Lender, to
designate one director to the Company's board of directors who shall have the
right to one vote out of the three available to directors who are not part of
the Company's FCC "control group." At any time when the outstanding principal
amount of the Loan is less than $10,000,000, the Lender shall have no rights
under this Section 5(d), and shall have such board representation rights, if
any, as are otherwise available to it.
(e) KOREAN GOVERNMENT APPROVAL. In the event that the first Closing could
not occur due to the Lender's failure to obtain the approval of the government
of the Republic of Korea as required under Section 2(a)(iii), notwithstanding
the satisfaction of all other conditions in Section 2(a), then the Lender shall
reimburse the Company up to $1,000,000 for all expenses and interest incurred by
the Company due to the Lender's failure to close the transactions contemplated
hereunder. Notwithstanding anything to the contrary in this Agreement or any
other agreements, the Company acknowledges that any amount paid by the Lender
under this Section 5(e) shall be credited towards any reimbursement obligation
of the Lender under Section 5(e) of the Stock Purchase Agreement and vice versa.
In no event shall the Lender be obligated to reimburse an aggregate amount of
more than $1,000,000 to the Company.
(f) REPAYMENT OF LOAN. At any time within 90 days prior to the scheduled
due date of any payment of principal, or within 5 days after any notice of
prepayment by the Company pursuant to the Note, the Lender will have the right,
at its sole option by notice to the Company, to require the Company to pay the
amount in question not in cash but in the form of warrants for Class C Stock of
the Company having a fair market value (as determined by an investment banking
firm selected by the Company and satisfactory to the Lender) equal to the
principal amount to be paid or prepaid, subject to any applicable limit imposed
by the FCC Compliance Rules. In the event the Lender gives such notice, the
Company may nonetheless pay such amount in full in cash on the due date or
prepayment date, as the case may be, but if such cash payment is not so made on
the due date or prepayment date, the Lender's election to receive it in the form
of warrants as aforesaid will be binding on the Company, subject to any
applicable limit imposed by the FCC Compliance Rules.
(g) BIDS AND BIDDING STRATEGY. (i) The parties understand that under the
FCC Compliance Rules, the Lender will not be considered an "attributable
interest holder" or the holder of any stock interest amounting to 5 percent or
more in the Company on account of the transactions contemplated hereby.
Accordingly, the parties do not believe that the limitations of Section 5(g)(ii)
are required by the FCC Compliance Rule, and intend them solely as a cautionary
matter in light of the Lender's prior communications with U.S. AirWaves, Inc.
("USAW"), a former bidder for Entrepreneur's Licenses which became ineligible
for any further bidding, concerning such former bidder's bids and/or bidding
strategy.
(ii) The Lender and the Company mutually represent and warrant to one
another that the Lender has not communicated with the Company or (in the case of
the Company, to the Company's knowledge) any other party (other than its prior
communications with USAW) concerning the Company's or such other party's bids or
bidding strategy (as such terms are used under
<PAGE>
the FCC Compliance Rules) in the Auction or other matters proscribed by the
FCC's PCS anticollusion rules. The Lender and the Company agree that neither
will so communicate with the other.
(iii) If, notwithstanding Section 5(g)(i), the Company so requests, the
Lender will issue its certificate in the form contemplated by 47 C.F.R.
1.2105(c)(4)(i).
(h) STANDSTILL AGREEMENT. From March 11, 1996 to the last date of the
Auction, the Lender agrees that it will not, except through the Company and
USAW, directly or indirectly, through any partner, affiliate, agent or
representative (including, without limitation, investment bankers, attorneys
and accountants), (i) solicit or initiate offers for investment (debt or equity)
in any participant in the Auction or (ii) participate in any discussions or
otherwise cooperate in any way with any other person to do or seek the
foregoing; provided that this Section 5(h) shall terminate immediately if the
Company becomes ineligible to bid in the Auction or if the Lender reasonably
determines that the Company will not be the winning bidder for Entrepreneur's
Licenses as specified in Section 2(a)(vi). Nothing in this Section 5(h) shall
restrict the Lender with respect to USAW.
(i) EQUIPMENT PURCHASE AND EMPLOYEE TRAINING. The Company and Hyundai
Electronics Industries Co., Ltd., the parent of the Lender, have entered into an
equipment purchase agreement (the "Equipment Purchase Agreement") and an
employee training agreement (the "Employee Training Agreement"), both of even
date herewith. The obligations and rights of the parties thereunder shall not
become effective unless either (y) the Closing has occurred hereunder or (z) the
Lender has delivered a written statement to the Company that it waives all
unsatisfied conditions under Section 2(a) of this Agreement, whether or not any
Note is in fact issued on such date. No conditions to the effectiveness of the
Equipment Purchase Agreement or the Employee Training Agreement exist other than
those stated in Section 5(g) of the Stock Purchase Agreement and those stated
under this Section 5(i).
6. MISCELLANEOUS.
(a) NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of
the Lender or the Company in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
(b) AMENDMENTS. WAIVERS AND CONSENTS. Except as otherwise expressly
provided in this Agreement, changes in or additions to this Agreement may be
made, and compliance with any covenant or provision hereof may be omitted or
waived, only if the Company and the Lender so agree in writing. Any waiver or
consent may be given subject to satisfaction of conditions stated therein and
any waiver or consent shall be effective only to the extent expressly set forth
therein.
(c) ADDRESSES FOR NOTICES. All notices, requests, demands and other
communications provided for hereunder to be sent to the Lender and the Company
shall be in writing (including facsimile) and mailed or transmitted or delivered
If to the Lender to:
Hyundai Electronics America
510 Cottonwood Drive
Milpitas, California 95035
Attn: Mr. Y. H. Kim, President & CEO
facsimile: (408) 232-8101
<PAGE>
with a copy to:
Hyundai Electronics America
510 Cottonwood Drive
Milpitas, California 95035
Attn: S. K Park
facsimile: (408) 232-8116
If to the Company to:
General Wireless, Inc.
6688 North Central Expressway, Suite 1170
Dallas, Texas 75206
Attn: Roger D. Linquist, President and CEO
facsimile: (214) 373-8584
with a copy to:
Brobeck, Phleger & Harrison
2200 Geng Road
Palo Alto, CA 94303
Attn: Franklin P. Huang
facsimile: (415) 496-2920
Either party to this Agreement may change its address by written notice to the
other party complying as to delivery with the terms of this Section. All such
notices, requests, demands and other communications shall, when mailed,
transmitted or delivered., be effective when deposited in the mails, sent or
delivered, respectively, addressed as aforesaid.
(d) BINDING EFFECT; ASSIGNMENT. Except as otherwise specifically provided
for herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
(e) PRIOR AGREEMENTS. This Agreement supersedes all other negotiations or
agreements between the parties concerning the subject matter hereof.
(f) SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
(g) PUBLIC DISCLOSURE. Neither party shall make any public disclosure
concerning the transactions contemplated hereby without prior consultation with
the other party; provided, however, that nothing herein shall preclude either
party from making such disclosure as is required by applicable laws binding on
it as long as the disclosing party has exercised good faith efforts under the
circumstances to consult with the other party as provided in this Section 6(g).
(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with, the laws of the State of New York without giving effect to
principles of conflict of laws.
(i) HEADINGS, REFERENCES, DATE. Section and subsection headings in this
Agreement are included herein for convenience only and shall be ignored in
interpreting this Agreement. Unless expressly stated to the contrary,
references herein to Sections, Exhibits, Schedules and similar elements refer to
the designated element of this Agreement. Words like "herein" and "hereby" refer
to this Agreement as a whole, including all exhibits and schedules to this
<PAGE>
Agreement and the Schedule of Exceptions. The date of this Agreement is for
convenience only, and is not necessarily the date on which it was entered into.
(j) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
(k) ATTORNEYS FEES. Except as otherwise provided under Section 6(l), if
any action at law or in equity is brought for a breach of representation or
warranty made herein or to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
(l) ARBITRATION. Any dispute between the parties relating to this
Agreement or the interpretation, enforcement, arbitrability or breach hereof
shall be determined exclusively by arbitration before three arbitrators
conducted under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce. Each party will designate one party arbitrator, and the
third, neutral arbitrator will be designated by agreement of the two party
arbitrators. The place of arbitration shall be determined by mutual agreement
within 30 days of either party's demand for arbitration, but if the parties are
unable to agree on the place of arbitration within such period, it will be New
York City. Each party will bear its own costs and expenses, including without
limitation the fees and expenses of its own counsel.
<PAGE>
IN WITNESS WHEREOF, the Company and the Lender have caused this Loan
Agreement to be executed by their respective officers thereunto duly authorized.
GENERAL WIRELESS, INC.
By:
Name:
Title:
HYUNDAI ELECTRONICS AMERICA
By:
Name:
Title:
<PAGE>
EXHIBIT 10.5
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated March 15, 1996 is entered into between
General Wireless, Inc., a Delaware corporation (the "Company"), and Hyundai
Electronics America, a California corporation (the "Purchaser").
A. The Company desires to secure equity financing for the purchase of
licenses ("Entrepreneur's Licenses") to be issued pursuant to the auction (the
"Auction") currently being conducted by the Federal Communications Commission
(the "FCC") for the C frequency block of PCS broadband spectrum and for its
business plan, all as described in its Confidential Private Placement Memorandum
dated November 1995 (together with any exhibits, amendments or supplements
thereto, the "PPM"), and, in furtherance of its business plan, to enter into a
supply and training relationship with the Purchaser.
B. The Company desires to issue to the Purchaser shares of its Class C
Common Stock, par value $0.0001 per share ("Class C Common Stock") and warrants
("Warrants"), the terms of which are as described in the PPM, and to enter into
an equipment purchase agreement (the "Equipment Purchase Agreement") relating to
infrastructure equipment and handsets and an employee training agreement (the
"Employee Training Agreement").
C. The Purchaser is willing to purchase such securities and enter into
such agreements, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions set forth below, and in reliance on the representations and
warranties herein provided, the parties intending to be legally bound agree as
follows:
1. PURCHASE AND SALE.
(a) PURCHASE OF SECURITIES. Subject to the terms and conditions set forth
in this Agreement, the Company agrees to sell and issue to the Purchaser, and
the Purchaser agrees to purchase from the Company, up to 300,000 units, each
consisting of 1 share of Class C Common Stock and a Warrant for 0.05 share of
Class C Common Stock, for a purchase price per unit of $100.00 (the "Authorized
Securities"). Purchaser shall pay the purchase price for Authorized Securities
in cash or other consideration mutually agreed upon by the parties.
Notwithstanding anything stated herein, in no event will the amount of
Authorized Securities purchased and sold under this Agreement exceed the Maximum
Equity Ownership in effect from time to time. "Maximum Equity Ownership" means
the maximum number of shares of Class C Common Stock that the Purchaser could
own, assuming the Company held Entrepreneur's Licenses, without causing the
Company to violate any rules and regulations (giving effect to any waivers
thereof) of the Federal Communications Commission ("FCC") or any provisions of
the Communications Act of 1934, as amended, or otherwise causing the Company to
place in trust, divest or cede control of any of the Company's Entrepreneur's
Licenses (collectively, the "FCC Compliance Rules").
(b) CLOSINGS. At each closing held from time to time under this Agreement
(a "Closing"), an amount of Authorized Securities equal to the Maximum Equity
Ownership as of the date of the Closing will be purchased and sold. The first
Closing shall be held promptly after the Company receives notice that it is a
high bidder on Entrepreneur's Licenses and no later than 3 business days prior
to the due date of the second 5% down payment to the U.S. Treasury for
Entrepreneur's Licenses awarded or to be awarded to the Company. When and if
the Maximum Equity Ownership increases or is expected to increase and until the
total number of Authorized Securities is purchased and sold hereunder, unless
the parties mutually agree to defer such Closing, the Company will provide the
Purchaser with notice of the Maximum Equity Ownership number and shall include
the basis on which the Company has made such determination, which basis shall be
substantiated to the reasonable satisfaction of the Holder. Within 10 business
days after the delivery of such notice a Closing shall be held for the number of
Authorized Securities corresponding to the
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increase.
(c) INSTRUMENTS DELIVERED PRIOR TO OR AT CLOSINGS. Simultaneously with
entering into this Agreement, the Purchaser and the Company are entering into
the Equipment Purchase Agreement and the Employee Training Agreement,
substantially in the forms attached hereto as Exhibits A and B, respectively.
In addition, at the first Closing, the Purchaser and the Company will enter into
a registration rights agreement (the "Registration Rights Agreement"), an
amendment to the Company's existing Stockholders Agreement and an amendment to
the Company's existing Subscription Agreement substantially in the forms
attached hereto as Exhibits C, D and E, respectively (together with the
Equipment Purchase Agreement and the Employee Training Agreement, the "Purchaser
Documents"). At each Closing, the Company shall deliver to the Purchaser a
certificate representing the Class C Common Stock which the Purchaser is
purchasing at such Closing and a warrant agreement in the form of Exhibit F for
the number of Warrants the Purchaser is purchasing at such Closing, against
delivery to the Company by the Purchaser of a check or wire transfer for the
aggregate purchase price thereof payable to the Company's order.
(d) STOCK SPLIT, ETC. The descriptions of the shares of Class C Common
Stock referred to herein are effective as of the date of this Agreement and do
not give effect to any stock split which may be made to any outstanding shares
in the future. All references to shares herein will be appropriately adjusted
in the event a stock split, reverse stock split, stock dividend or other similar
change becomes effective, on or prior to the Closing in question.
2. CONDITIONS TO OBLIGATIONS.
(a) CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The obligation of the
Purchaser to purchase and pay for the Authorized Securities contemplated by
Section 1 at each Closing shall be subject to the satisfaction of each of the
following conditions precedent, any one or more of which may be waived by the
Purchaser.
(i) PURCHASER DOCUMENTS. Each of the Purchaser Documents described in
Section 1(c) shall have been executed by all parties thereto other than the
Purchaser and shall be in full force and effect.
(ii) REPRESENTATIONS AND WARRANTIES. At the first Closing, the
representations and warranties of the Company set forth in Section 3 of this
Agreement shall be true and correct in all material respects on and as of the
date of such Closing with the same effect as though made on and as of the date
of the Closing. Thereafter, the representations and warranties of the Company
set forth in the second and fourth sentences of Sections 3(b), Sections 3(d)-(g)
and Sections 3(j)-(k) of this Agreement shall be true and correct in all
material respects on and as of the date of each Closing with the same effect as
though made on and as of the date of the Closing.
(iii) PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement and in
the Purchaser Documents that are required to be performed or complied with by it
on or before the Closing.
(iv) APPOINTMENT OF DIRECTOR. The Company shall have performed all
necessary action and acquired any necessary approval in order for Purchaser to
appoint one person to the Company's Board of Directors.
(v) QUALIFICATIONS. All authorizations, approvals, or permits of and
notices and filings with, if any, of any governmental authority or regulatory
body of the United States, the Republic of Korea, or any state within the United
States that are required in connection with the lawful issuance and sale of the
Authorized Securities, and all Class C Common Stock and other stock issuable
upon the exercise thereof, shall have been duly obtained and shall be effective
on and as of the Closing, and any waiting period required in connection
therewith shall have expired.
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<PAGE>
(vi) LEGAL OPINION. The Purchaser shall have received from Brobeck,
Phleger & Harrison, counsel for the Company, an opinion, dated the date of the
Closing, in substantially the form attached hereto as Exhibit G, and in
substance satisfactory to the Purchaser.
(vii) FCC OPINION. The Purchaser shall have received from Skadden, Arps,
Slate, Meagher & Flom, special FCC counsel for the Company, an opinion, dated
the date of the first Closing, in substantially the form attached hereto as
Exhibit H, and in substance satisfactory to the Purchaser. For any subsequent
Closing, the Purchaser shall have received from Skadden, Arps, Slate, Meagher &
Flom, special FCC counsel for the Company, an opinion, dated the date of such
Closing, in substance satisfactory to the Purchaser and stating that no changes
in FCC Compliance Rules have occurred since the previous Closing which
materially affect the transactions contemplated hereby.
(viii) LICENSES. Consistent with the Company's long-standing business
plan described in its PPM, the Company shall be the winning bidder for either
(y) any Entrepreneur's Licenses which collectively cover not less than
10,000,000 POPs within the top 50 BTA's or (z) any 2 Entrepreneur's Licenses
within the top 10 BTA's, with BTA's and POPs determined in each case as stated
in the terms of the Auction, and the issuance thereof in the normal course shall
be reasonably assured or be completed.
(ix) COMPLIANCE CERTIFICATE. The President of the Company shall deliver to
the Purchaser at the Closing a certificate dated the date of the Closing
certifying that the conditions specified in Sections 2(a)(ii), (a)(iii),
(a)(iv), (a)(v) (with the exception of those authorizations, approvals or
permits dependent upon foreign government action) and (a)(viii) have been
fulfilled.
(x) PROCEEDINGS SATISFACTORY. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all document
incident thereto shall be reasonably satisfactory in form and substance to the
Purchaser, which shall have received all such counterpart original and certified
or other copies of such documents as it may reasonably request.
(b) CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligations of the
Company to the Purchaser under this Agreement are subject to the satisfaction of
each of the following conditions precedent, any one or more of which may be
waived by the Company.
(i) PURCHASER DOCUMENTS. Each of the Purchaser Documents described in
Section 1(c) shall have been executed by all parties thereto other than the
Company and shall be in full force and effect.
(ii) PAYMENT OF PURCHASE PRICE. The Purchaser shall have delivered
payment of the purchase price of the Authorized Securities purchased and sold at
the Closing.
(iii) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Purchaser set forth in Section 4 shall be true and correct in all
material respects on and as of the date of the Closing with the same effect as
though made on and as of the date of the Closing.
(iv) PERFORMANCE. The Purchaser shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement and the
Purchaser Documents that are required to be performed or complied with by it on
or before such Closing.
(v) GOVERNMENT APPROVALS, FILINGS, ETC. The Company shall have received
all approvals and other action by governmental agencies required to be obtained
by it under applicable law, and all waiting period following notices to
governmental agencies required to be observed by it under applicable law shall
have expired.
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<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchaser that, except as set forth on the
Schedule of Exceptions provided to the Purchaser, which exceptions will be
deemed to be representations and warranties as if made hereunder:
(a) ATTACHED REPRESENTATIONS AND WARRANTIES. The Company hereby makes all
the representations and warranties attached hereto as Exhibit I. All
capitalized terms used in Exhibit I shall have the meanings set forth in the
Company's existing Subscription Agreement. As used in Exhibit I, the term
"Company" includes both the Company and its direct and indirect subsidiaries
("Subsidiaries").
(b) CAPITALIZATION AND VOTING RIGHTS. The Company has the authorized and
issued equity capitalization as set forth on Schedule 3(b) attached hereto and
will have the adjusted equity capitalization described on Schedule 3(b) at the
first Closing. The outstanding shares of each class of the Company's capital
stock are, and at the Closing the shares of Class B Common Stock or Class C
Common Stock to be purchased by the Purchaser will be, validly issued, fully
paid and non-assessable and were not issued in violation of or subject to any
preemptive or other similar rights. Except for (A) the rights provided in the
Purchaser Documents, and (B) the rights granted in warrants and options listed
in Schedule 3(b), there are no existing plans or obligations to issue equity
securities (or options, rights, warrants or other securities or indebtedness
convertible into equity securities). The relative rights, privileges and
preferences of the Company's Common Stock will be as stated in the corrected
amended and restated certificate of incorporation of the Company filed November
30, 1995 (the "Restated Certificate"), a copy of which the Company has
previously furnished to Purchaser, and the PPM.
(c) CHARTER DOCUMENTS, MINUTE BOOKS. The Company has delivered to the
Purchaser complete and accurate copies of its Restated Certificate and Amended
and Restated Bylaws ("Restated Bylaws"), each as currently in effect. The copy
of the minute books of the Company provided to the Purchaser's special counsel
contains minutes of all meetings of directors and stockholders and all actions
by written consent without a meeting by the directors and stockholders since the
time of incorporation and reflect all actions by the directors (and any
committee of directors) and stockholders with respect to all transactions
referred to in such minutes accurately in all material respects.
(d) GOVERNMENTAL CONSENTS. No consent, approval, qualification, order or
authorization of, or filing with, any court, administrative or governmental
authority is required on the part of the Company or any Subsidiaries in
connection with the Company's valid execution, delivery or performance of this
Agreement or the Purchaser Documents or the Company's offer, sale or issuance of
the Authorized Securities or the shares of stock issuable upon the exercise
thereof except (i) such as have been made or obtained prior to the date of this
Agreement and (ii) such filings under federal and state securities laws or the
FCC Compliance Rules as may be required to be made following the Closing which
will be timely filed within the applicable periods therefor.
(e) AUTHORIZATION. The Company has all requisite corporate power and
authority to (i) enter into this Agreement and all Purchaser Documents and to
issue and perform the Warrants, (ii) issue and sell the Authorized Securities as
contemplated hereby and (iii) effect the Use of Proceeds as described in the
PPM. The Authorized Securities, this Agreement and the Purchaser Documents have
been duly and validly authorized by all necessary corporate action on the part
of the Company and have been duly executed and delivered by the Company and
constitute legal, valid and binding agreements of the Company, enforceable in
accordance with their respective terms, except to the extent that enforcement
hereof or thereof may be limited by (i) applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws now or hereafter in effect relating
to creditors' rights generally, (ii) the availability of equitable remedies
which remain subject to the discretion of a court (regardless of whether
enforceability is considered in a proceeding of law or in equity) and (iii) the
unenforceability under certain circumstances under law or court decisions of
provisions providing for the indemnification of or contribution to a party,
where such indemnification or contribution is contrary to public policy.
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(f) COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance by the Company of this Agreement and the Purchaser Documents and the
consummation of the transactions contemplated hereby and thereby will not result
in any violation or default in any material respect of any provision of the
Restated Certificate or Restated Bylaws or in any material respect of any
provision of any mortgage, indenture, agreement, instrument or contract to which
the Company or any Subsidiary is a party or by which it or any Subsidiary is
bound or, to the best of the Company's knowledge, of any federal or state
judgment, order, writ, decree, statute, law, rule, regulation or ordinance
applicable to it or be in material conflict with or constitute, with or without
the passage of time or giving of notice, either a material default under any
such provision or an event that results in the creation of any material lien,
charge or encumbrance upon any assets of the Company or any Subsidiary or the
suspension, revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization, or approval applicable to the Company or any
Subsidiary, its business or operations, or any of its assets or properties.
(g) FCC COMPLIANCE. Neither the Company nor any Subsidiary is presently or
will, by virtue of the execution and delivery of this Agreement or the Purchaser
Documents or the completion of the transactions contemplated hereby and thereby,
be in violation or default of any statutory requirement or related
administrative agency rule or policy (including, without limitation, the FCC
Compliance Rules) governing eligibility (i) to bid for and hold Entrepreneur's
Licenses and (ii) for installment payment and bidding credit preferences
provided to "small businesses" as defined in Section 24.720(b) of the FCC
Compliance Rules. The Company represents that it, together with its affiliates
(subject to the exception set forth in 47 C.F.R. 24.709(b)), considered on a
cumulative basis and aggregated, has had average annual gross revenues that are
not more than $40 million for the preceding three years and has total assets of
less than $500 million. The representations and warranties stated in this
Section 3(g) are made in reliance, in material part, on the Purchaser's
representations, warranties and covenants contained herein.
(h) SUBSIDIARIES, ETC. The Company does not own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
(i) REGISTRATION RIGHTS. Except as provided in the Registration Rights
Agreement, the Company is not obligated to register under the 1933 Act any of
its outstanding securities or any of its securities that may subsequently be
issued.
(j) OFFERING. Subject in part to the truth and accuracy of the
Purchaser's representations set forth in this Agreement, the offer, sale and
issuance of the Authorized Securities as contemplated by this Agreement are
exempt from the registration requirements of the 1933 Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
(k) BALANCE SHEET. The Company has delivered to the Purchaser its
unaudited consolidated balance sheet at December 31, 1995 (the "Balance Sheet").
The Company's Balance Sheet, together with any notes thereto, are complete and
correct in all material respects, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the period indicated, except as disclosed therein, and present fairly
the consolidated financial condition of the Company as of the date of such
Balance Sheet.
(l) DELIVERY OF AGREEMENTS. The Company has heretofore delivered to the
Purchaser a full and complete set of the material agreements between the Company
or any Subsidiary and each of its holders of stock or stock rights and other
investors.
(m) RESERVES. The Company has adopted and followed the plan to use its
best efforts to secure in the Auction Entrepreneur's Licenses for the maximum
POPs feasible with the funds available to it, including not setting aside
reserves for other purposes exceeding its out-of-pocket expenses incurred in
connection therewith and 6 months' interest owing under the U.S. government
financing available for Entrepreneur's Licenses, except in order to respond to
the requirements of financial markets as determined by the Company pursuant to
the advice and recommendations of its
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investment bankers of national standing.
(n) CDMA TECHNOLOGY. The Company will use CDMA technology in its and its
Subsidiaries' PCS systems and will recommend CDMA technology for use by all PCS
systems managed by it and its Subsidiaries. However, the Company reserves the
right to select another technology if it reasonably and in good faith
determines, on the basis of objective facts in the PCS industry, that CDMA
technology is commercially or technically impracticable in the PCS industry in
the U.S.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to the Company as follows:
(a) AUTHORIZATION. The Purchaser has full power and authority to enter
into this Agreement and the Purchaser Documents and to perform its covenants,
agreements and obligations hereunder and thereunder. This Agreement is, and the
Purchaser Documents when duly executed and delivered by the Purchaser, will be,
the legal, valid and binding obligations of the Purchaser, enforceable against
the Purchaser in accordance with their respective terms except (i) as limited by
applicable bankruptcy, insolvency, reorganizations, moratorium, and other laws
of general application affecting enforcement of creditors' rights generally and
(ii) the availability of equitable remedies which remain subject to the
discretion of a court (regardless of whether enforceability is considered in a
proceeding of law or in equity).
(b) INVESTMENT EXPERIENCE. The Purchaser is an "accredited investor"
within the meaning of Rule 501 under the 1933 Act and was not organized for the
specific purpose of acquiring the Authorized Securities. Such Purchaser has
sufficient knowledge and experience in investing in companies similar to the
Company in terms of the Company's stage of development so as to be able to
evaluate the risks and merits of its investment in the Company and it is able
financially to bear the risks thereof.
(c) PURCHASE FOR OWN ACCOUNT. The Purchaser is acquiring the Authorized
Securities for investment for its own account and not with the view to, or for
resale in connection with, any distribution thereof. Such Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. Such Purchaser does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer, or grant
participations to such person or to any third person, with respect to the
Authorized Securities. The Purchaser understands that the Authorized Securities
have not been registered under the 1933 Act by reason of an exemption from the
registration provisions of the 1933 Act which depends upon, among other things,
the bona fide nature of its investment intent as expressed herein.
(d) RELIANCE UPON PURCHASER'S REPRESENTATIONS. The Purchaser understands
that the Authorized Securities are not registered under the 1933 Act pursuant to
the exemption contemplated in Section 4(2) thereof, and that the Company's
reliance on such exemption is predicated on the Purchaser's representations set
forth herein.
(e) RESTRICTED SECURITIES. The Purchaser understands that the Authorized
Securities, and any securities issued on exercise of Warrants, may not be sold,
transferred, or otherwise disposed of without registration under the 1933 Act,
or an exemption therefrom, and that in the absence of an effective registration
statement covering such securities or an available exemption from registration
under the 1933 Act, such securities must be held indefinitely. In the absence of
an effective registration statement, or an available exemption from registration
under 1933 Act, covering the sale of such securities, the Purchaser will sell,
transfer, or otherwise dispose of such securities only in a manner consistent
with its representations and agreements set forth herein
(f) FOREIGN OWNERSHIP. The Purchaser is wholly-owned and controlled by a
corporation incorporated outside of the United States (the "Purchaser's
Parent"). The Purchaser's Parent is majority-owned and controlled by persons who
are not U.S. citizens.
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5. ADDITIONAL AGREEMENTS.
(a) INCREASE IN AMOUNT OF PURCHASE. (i) Notwithstanding anything to the
contrary herein, at any time prior to the first Closing, the Company and the
Purchaser may mutually agree for the Purchaser to increase its purchase of
Authorized Securities (on the same terms as described herein) by an additional
amount of up to 200,000 units in order to provide funding, if necessary, (y) to
help the Company's efforts in securing Entrepreneur's Licenses for the maximum
POPs feasible before the Closing with the funds available to it or (z) to help
the Company respond to the requirements of financial markets pursuant to the
advice and recommendations of its investment bankers of national standing after
the Auction but prior to the Closing. Any increase in the Purchaser's purchase
of Authorized Securities will be the minimum amount the Company reasonably needs
to satisfy the conditions stated under this Section 5(a).
(ii) The sum of all increases in the amount of Authorized Securities
purchasable by the Purchaser pursuant to Sections 5(a)(i) shall not exceed an
aggregate amount of $20,000,000.
(b) DECREASE IN AMOUNT OF PURCHASE. The dollar amount of Authorized
Securities purchasable by the Purchaser under this Agreement may be reduced by
mutual agreement to assist the Company in establishing a sound financial base
without unnecessary equity funding; provided that the dollar amount of
Authorized Securities purchasable hereunder (subject to the FCC Compliance
Rules) shall not be decreased below $5,000,000.
(c) FOREIGN PURCHASERS. So long as any portion of the Authorized
Securities have not been purchased and sold hereunder, the Company will not
issue any equity securities to any person or entity which under the FCC
Compliance Rules is considered to be a foreign citizen or to have a foreign
citizenship greater than 10%.
(d) KOREAN GOVERNMENT APPROVAL. In the event that the first Closing could
not occur due to the Purchaser's failure to obtain the approval of the
government of the Republic of Korea as required under Section 2(a)(v),
notwithstanding the satisfaction of all other conditions in Section 2(a), then
the Purchaser shall reimburse the Company up to $1,000,000 for all expenses and
interest incurred by the Company due to the Purchaser's failure to close the
transactions contemplated hereunder.
(e) BIDS AND BIDDING STRATEGY. (i) The parties understand that under the
FCC Compliance Rules, the Purchaser will not be considered an "attributable
interest holder" or the holder of any stock interest amounting to 5 percent or
more in the Company, unless and until one or more Closings have occurred and the
requisite number of Authorized Securities have been issued at such Closing(s).
The parties also understand that no Closing will occur until after the
conclusion of the Auction. Accordingly, the parties do not believe that the
limitations of this Section 5(e)(ii) are required by the FCC Compliance Rule,
and intend them solely as a cautionary matter in light of the Purchaser's prior
communications with U.S. AirWaves, Inc. ("USAW"), a former bidder in the Auction
which became ineligible for any further bidding, concerning such former bidder's
bids and/or bidding strategy.
(ii) The Purchaser and the Company mutually represent and warrant to one
another that the Purchaser has not communicated with the Company or (in the case
of the Company, to the Company's knowledge) any other party (other than its
prior communications with USAW) concerning the Company's or such other party's
bids or bidding strategy (as such terms are used under the FCC Compliance Rules)
in the Auction or other matters proscribed by the FCC's PCS anticollusion rules.
The Purchaser and the Company agree that neither will so communicate with the
other.
(iii) If, notwithstanding Section 5(e)(i), the Company so requests, the
Purchaser will issue its certificate in the form contemplated by 47 C.F.R.
1.2105(c)(4)(i).
(f) STANDSTILL AGREEMENT. From March 11, 1996 to the last date of the
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Auction, the Purchaser agrees that it will not, except through the Company,
directly or indirectly, through any partner, affiliate, agent or representative
(including, without limitation, investment bankers, attorneys and accountants),
(i) solicit or initiate offers for any investment (debt or equity) in any
participant in the Auction or (ii) participate in any discussions or otherwise
cooperate in any way with any other person to do or seek the foregoing; provided
that this Section 5(f) shall terminate immediately if the Company becomes
ineligible to bid in the Auction or if the Purchaser reasonably determines that
the Company will not be the winning bidder for Entrepreneur's Licenses as
specified in Section 2(a)(viii). Nothing in this Section 5(f) shall restrict
the Purchaser with respect to USAW.
(g) EQUIPMENT PURCHASE AND EMPLOYEE TRAINING. Notwithstanding anything to
the contrary in this Agreement, the Equipment Purchase Agreement and the
Employee Training Agreement and the obligations and rights of the parties
thereunder shall not become effective unless either (i) the first Closing has
occurred hereunder or (ii) the Purchaser has delivered a written statement to
the Company that it waives all unsatisfied conditions under Section 2(a), other
than Section 2(a)(i), whether or not any Authorized Securities are in fact
issued on such date.
6. MISCELLANEOUS.
(a) NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of the
Purchaser or the Company in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
(b) AMENDMENTS. WAIVERS AND CONSENTS. Except as otherwise expressly
provided in this Agreement, changes in or additions to this Agreement may be
made, and compliance with any covenant or provision herein or therein set forth
may be omitted or waived, so long as the Company and the Purchaser so agree in
writing. Any waiver or consent may be given subject to satisfaction of
conditions stated therein and any waiver or consent shall be effective only to
the extent expressly set forth therein.
(c) TERM. This Agreement shall expire 1 year from the date first above
written, subject to annual extensions of up to three years at the sole
discretion of the Purchaser.
(d) ADDRESSES FOR NOTICES. All notices, requests, demands and other
communications provided for hereunder to be sent to the Purchaser and the
Company shall be in writing (including facsimile) and mailed or transmitted or
delivered
If to the Purchaser to:
Hyundai Electronics America
510 Cottonwood Drive
Milpitas, California 95035
Attn: Mr. Y. H. Kim, President & CEO
facsimile: (408) 232-8101
with a copy to:
Hyundai Electronics America
510 Cottonwood Drive
Milpitas, California 95035
Attn: S. K. Park
facsimile: (408) 232-8116
8
<PAGE>
If to the Company to:
General Wireless, Inc.
6688 North Central Expressway, Suite 1170
Dallas, Texas 75206
Attn: Roger D. Linquist, President and CEO
facsimile: (214) 373-8584
with a copy to:
Brobeck, Phleger & Harrison
2200 Geng Road
Palo Alto, CA 94303
Attn: Franklin P. Huang
facsimile: (415) 496-2920
Either party to this Agreement may change its address by written notice to the
other party complying as to delivery with the terms of this Section. All such
notices, requests, demands and other communications shall, when mailed or
transmitted, respectively, be effective when deposited in the mails or sent,
respectively, addressed as aforesaid.
(e) BINDING EFFECT; ASSIGNMENT. Except as otherwise specifically provided
for herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties (including transferees of any of the shares sold hereunder). Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(f) PRIOR AGREEMENTS. This Agreement supersedes all other negotiations or
agreements between the parties.
(g) SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
(h) PUBLIC DISCLOSURE. Neither party shall make any public disclosure
concerning the transactions contemplated hereby without prior consultation with
the other party; provided, however, that nothing herein shall preclude either
party from making such disclosure as is required by applicable laws binding on
it as long as the disclosing party has exercised good faith efforts under the
circumstances to consult with the other party as provided in this Section 6(g).
(i) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with, the laws of the State of New York without giving effect to
principles of conflict of laws.
(j) HEADINGS, REFERENCES, DATE. Section and subsection headings in this
Agreement are included herein for convenience only and shall be ignored in
interpreting this Agreement. Unless expressly stated to the contrary,
references herein to Sections, Exhibits, Schedules and similar elements refer to
the designated element of this Agreement. Words like "herein" and "hereby"
refer to this Agreement as a whole, including all exhibits and schedules to this
Agreement and the Exceptions Memorandum. The date of this Agreement is for
convenience only, and is not necessarily the date on which it was entered into.
(k) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
(l) ATTORNEYS FEES. Except as otherwise provided under Section 6(m), if
any
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<PAGE>
action at law or in equity is brought for a breach of representation or warranty
made herein or necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled to.
(m) ARBITRATION. Any dispute between the parties relating to this
Agreement or the interpretation, enforcement, arbitrability or breach hereof
shall be determined exclusively by arbitration before three arbitrators
conducted under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce. Each party will designate one party arbitrator, and the
third, neutral arbitrator will be designated by agreement of the two party
arbitrators. The place of arbitration shall be determined by mutual agreement
within 30 days of either party's demand for arbitration, but if the parties are
unable to agree on the place of arbitration within such period, it will be New
York City. Each party will bear its own costs and expenses, including without
limitation the fees and expenses of its own counsel.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be executed by their respective officers thereunto duly authorized.
GENERAL WIRELESS, INC.
By:
Name:
Title:
HYUNDAI ELECTRONICS AMERICA
By:
Name:
Title:
11
<PAGE>
EXHIBIT 10.6
EQUIPMENT PURCHASE AGREEMENT
THIS EQUIPMENT PURCHASE AGREEMENT dated March 15, 1996 (including the
Exhibits hereto, this "AGREEMENT") is entered into between GENERAL WIRELESS,
INC., a Delaware corporation having principal offices at 6688 N. Central
Expressway, Suite 1170, Dallas, TX 75206 ("GENERAL WIRELESS"), and HYUNDAI
ELECTRONICS INDUSTRIES CO., LTD., a corporation organized under the laws of
Korea, having principal offices at 12 Floor Hyundai Jeonja Building, 66
Jeokseon-Dong, Chongro-Ku, Seoul, Korea ("HEI"). This Agreement is being
entered into in connection with a stock purchase agreement (the "STOCK PURCHASE
AGREEMENT") dated March 15, 1996 between HEI's subsidiary Hyundai Electronics
America ("HEA") and General Wireless and will become effective as stated
therein.
1. SALES AND PURCHASES OF PRODUCTS
1.1 SALE OF PRODUCTS. (a) Subject to the terms and conditions of this
Agreement, HEI agrees to sell to General Wireless the quantities of Hyundai
Products which General Wireless may Order from HEI and which HEI may accept, all
as provided in Sections 4.1 and 4.2. "HYUNDAI PRODUCTS" means Products which
HEI, in its discretion, offers for sale to General Wireless under this
Agreement, whether such Products are manufactured by HEI or by a third party.
"PRODUCTS" means (i) PCS infrastructure equipment such as base station
transceivers, encoder boards, base station controllers and switches
("INFRASTRUCTURE EQUIPMENT") and (ii) portable, fixed, mobile, wireless or
transportable handset PCS devices ("HANDSETS"). "PCS" means receiving and
transmitting voice communications as part of personal communications services in
the United States. "QUALIFIED PRODUCTS" are Hyundai Products which meet the
requirements set forth in Exhibit A.
---------
(b) For each Hyundai Product model, HEI shall deliver to General Wireless
a package containing the following (collectively, "PRODUCT INFORMATION
PACKAGE"): (i) the most current detailed specifications (the "SPECIFICATIONS")
for that model, (ii) a checklist showing that the Hyundai Product is a
Qualifying Product, (iii) the then-current delivered price being quoted by HEI,
(iv) the then-current warranty period for the Product warranty and (v) a
reasonable opportunity to inspect the most recent prototype (if not yet in
production) or a current production sample (if in production) of such model.
(In the case of Handsets, the inspection opportunity will be provided by
delivery of the prototype or production sample to General Wireless; in the case
of Infrastructure Equipment, it will be provided at a location and at a time
mutually agreed between the parties.) The Product Information Package for each
Hyundai Product model is subject to change from time to time by HEI in its sole
discretion by notifying General Wireless in writing or, in the case of Handsets,
delivering a revised prototype or production sample.
(c) For purposes of this Agreement, the parties will subdivide General
Wireless' Infrastructure Equipment needs into approximately four (4) mutually
agreed principal categories, and will also subdivide General Wireless' Handset
needs into approximately four (4) mutually agreed principal categories. (If
major technology differences, such as single-mode vs. dual-mode/dual-band, are
associated with major market differences, such as local non-business users vs.
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<PAGE>
roaming business users, then separate principal product categories will be
agreed upon for each major technology/market.) The parties will meet to review
(every 6 months in the case of Handsets and every 12 months in the case of
Infrastructure Equipment) whether any mutually agreed changes to such principal
categories are appropriate to reflect changes in Products and/or markets. The
categories in effect from time to time are herein called the "PRODUCT
CATEGORIES." Product Categories in which HEI offers a Qualified Product under
this Agreement are herein called the "HYUNDAI PRODUCT CATEGORIES."
1.2 PURCHASES. (a) (i) INFRASTRUCTURE EQUIPMENT - ALL HYUNDAI PRODUCT
CATEGORIES. Subject to the terms and conditions of this Agreement, General
Wireless agrees to Order from HEI or its designated affiliate, for use by
General Wireless in its and its Subsidiaries' PCS systems and in PCS systems
managed by it and its Subsidiaries, Infrastructure Equipment which are Qualified
Products in the Hyundai Product Categories equal to not less than * of all
Infrastructure Equipment in all Hyundai Product Categories Procured by General
Wireless and its Subsidiaries for such PCS systems in each calendar year.
(ii) INFRASTRUCTURE EQUIPMENT - EACH HYUNDAI PRODUCT CATEGORY. To
the extent practicable, the * referred to in Section 1.2(a)(i) will be satisfied
in each one of the Hyundai Product Categories. To the extent this is not
practicable in any calendar year, the allocation of Orders among the Hyundai
Product Categories in subsequent calendar years will be adjusted to compensate
for the earlier imbalance, as and to the extent such compensating allocation
becomes practicable. Nothing in this Section 1.2(a)(ii) will, however, affect
the obligation of General Wireless under Section 1.2(a)(i), which is fixed.
(iii) INFRASTRUCTURE EQUIPMENT - COMMENCEMENT-OF-SERVICE BUILDOUT.
Notwithstanding Section 1.2(a)(i) and (ii), the Infrastructure Equipment
reasonably necessary to commence commercial service in a particular BTA (the
"Commencement-of-Service Buildout" for such BTA) may be secured from other
sources on a turnkey basis, in which case General Wireless will Order from HEI
discrete portions of the Infrastructure Equipment included in the Commencement-
of-Service Buildout for each BTA, as reasonably agreed by the parties, in order
to give a HEI a meaningful project management, installation and interfacing
opportunity within each Commencement-of-Service Buildout without materially
adversely affecting the responsibility of the lead turnkey supplier for that BTA
and in a manner that is economically and technically reasonable and avoids
unnecessary potential conflicts between HEI and the lead turnkey supplier.
General Wireless will use its diligent efforts to create a constructive
relationship between HEI and the lead turnkey supplier. General Wireless expects
the total cost (in constant dollars) of its Commencement-of-Service Buildouts
(including but not limited to the discrete portions allocated to HEI) for all
such PCS systems to constitute * of the total cost (in constant dollars) of all
Infrastructure Equipment to be Procured by General Wireless for all such PCS
systems over the term of this Agreement. In the event such * would otherwise be
exceeded, General Wireless will increase its Orders under this Agreement for
Infrastructure Equipment following the Commencement-of-Service Buildout as
necessary so that such Orders would at least equal the amount which would have
been required to be Ordered over the remaining term of this Agreement if such
share were equal to *. "BTA" has the meaning assigned to it by the FCC in its
auction of broadband PCS spectrum in the C frequency block.
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<PAGE>
(iv) HANDSETS - DIRECT CHANNELS. Subject to the terms and conditions
of this Agreement, General Wireless also agrees to Order from HEI or its
designated affiliate, for use by the customers of its and its Subsidiaries' PCS
systems and of PCS systems managed by it and its Subsidiaries, Handsets which
are Qualified Products in the Hyundai Product Categories equal to not less than
* of PCS Handsets in all Hyundai Product Categories Procured by it and its
Subsidiaries for sale by Direct Channels to its or any other person's customers
on such PCS systems in each calendar year. "DIRECT CHANNELS" means all channels
(such as, without limitation, direct sales reps, direct mail, telemarketing and
company-owned stores and sales facilities) in which the person or entity making
the sale to the buyer is General Wireless or an affiliate or is owned or managed
by General Wireless or an affiliate. The month-to-month variation of each
Hyundai Product Category so Ordered shall not materially exceed the amount which
can be reasonably accommodated by customary production scheduling, as mutually
agreed by the parties.
(v) "ORDER" means a binding, irrevocable purchase order given or
deemed given pursuant to Section 4.1 or 4.2. "PROCURE" means to order, or if no
orders are placed, to purchase, take delivery of, or put into use under a
purchase, lease, equipment service agreement or any other arrangement, or to
arrange for the customers to put into use under a purchase, lease, service
agreement or any other arrangement. Subject to the terms and conditions of this
Agreement, General Wireless agrees to purchase, accept and pay for all Products
Ordered by it, and delivered by HEI, under this Agreement. "SUBSIDIARIES" has
the meaning attributed to such term under generally accepted accounting
principles.
(b) MINIMUM ORDER AMOUNTS. For purposes of determining compliance with
the minimum Order requirements of Section 1.2(a):
(i) An Order of Hyundai Products will be credited (if it is otherwise
entitled to be credited) notwithstanding that HEI declines the Order pursuant to
Section 4.1 or fails to supply the Ordered Product in breach of this Agreement,
or that the Ordered Product is rejected (whether or not it is repaired or
replaced).
(ii) Substitute Products actually Procured by General Wireless
pursuant to the second sentence of Section 13 shall be considered Ordered from
HEI.
(iii) Orders pursuant to Section 4.2 will not be credited unless HEI
accepts the Order.
(c) INFRASTRUCTURE EQUIPMENT - FINANCING. To the extent General Wireless
has Ordered the quantity of Infrastructure Equipment specified in Section
1.2(a), General Wireless may request financing arrangements from HEI to apply
towards the payment of the purchase price of such Infrastructure Equipment which
are comparable to those offered to it by its other contracted vendors of similar
Infrastructure Equipment. In connection with any such request, General Wireless
will furnish the specific terms of its other suppliers' financing arrangements
and such other information relating to them as HEI shall reasonably request. To
the extent HEI does not make financing arrangements or alternative funding
arrangements available to General Wireless which are comparable to such other
arrangements offered by other suppliers of Infrastructure Equipment, General
Wireless will not be obligated to purchase the particular Order of
Infrastructure Equipment to which its request for financing arrangements
related. GWI's particular Order will be credited (if it
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<PAGE>
is otherwise entitled to be credited) notwithstanding that GWI terminates that
Order pursuant the immediately preceding sentence.
(d) QUALIFIED PRODUCTS. Promptly after the initial furnishing of a
Product Information Package, representatives of the parties will meet to discuss
the Hyundai Product and its qualification as a Qualified Product. All Hyundai
Products will be conclusively deemed to be Qualified Products (and to meet the
competitiveness, industry-standard and market-standard requirements stated in
this Agreement) unless General Wireless, within the applicable period stated
below, notifies HEI that it believes such a requirement is not satisfied,
specifying in reasonable detail the requirement and the manner in which it is
believed not to be met. The applicable periods are as follows:
<TABLE>
<CAPTION>
APPLICABLE
HYUNDAI PRODUCT PERIOD
<S> <C>
Initial Hyundai Product in a *
Product Category
Other New Hyundai Product - Infrastructure Equipment *
Other New Hyundai Product - Handset *
Change in Existing Hyundai *
Product
</TABLE>
In the case of the competitiveness requirements set forth in Exhibit A only,
---------
such notice may be given subsequently by General Wireless based on changes in
competitive market conditions occurring after such initial 30-day period, but no
sooner than one hundred eighty (180) days after such initial furnishing of a
Handset Product Information Package, or one hundred eighty (180) days after any
subsequent notice given pursuant to this sentence with respect to a Handset, or
one year after such initial furnishing of an Infrastructure Equipment Product
Information Package, or one year after any subsequent notice given pursuant to
this sentence with respect to Infrastructure Equipment. If General Wireless
gives such a notice of nonqualification, Hei and General Wireless shall seek to
resolve such matter within thirty (30) days after such notice, after which
either party may resolve the matter in accordance with Section 16.3.
(e) ORDER SURPLUS. If General Wireless actually Orders from HEI more
Infrastructure Equipment or Handsets than the amount required by Section 1.2(a)
(not including any amount applied to the previous period pursuant to Section
1.2(f)), and actually Orders from HEI less than the amount of Infrastructure
Equipment or Handsets, respectively, required to be purchased in the immediately
following annual period, then the excess from the earlier period, but not more
than * of the amount of Infrastructure Equipment or Handsets, respectively,
actually Ordered in the earlier period (not including any amount applied to the
previous period pursuant to Section 1.2(f)), shall offset (or eliminate, as the
case may be) such shortfall in the later period.
(f) ORDER SHORTFALL. If General Wireless fails to Order the minimum
amount of Infrastructure Equipment or Handsets required by Section 1.2(a)(i) or
(iv) (after giving effect to any
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<PAGE>
offset under Section 1.2(e)) in any annual period, then General Wireless will
pay HEI an amount equal to * of the amount of the year-end shortfall, subject to
the make-up opportunities stated in this Section 1.2(f). General Wireless shall
have the opportunity, at its election made within 45 days after the end of such
annual period, to make up such year-end shortfall by Ordering sufficient
additional amounts expressly designated as shortfall makeup Orders in the next
six (6) month period. If at least * of the year-end shortfall is made up within
such six (6) month period, then General Wireless may pay HEI, as liquidated
damages and not as a penalty, an amount equal to * of the remaining shortfall
not made up (if any). If less than * of the year-end shortfall is made up within
such six (6) month period, or if General Wireless elects against making such
payment, then the makeup period will be extended by five (5) months (for an
eleven (11) month makeup period in total), and if any part of the year-end
shortfall is not made up within such period, then General Wireless will pay HEI,
as liquidated damages and not as a penalty, an amount equal to * of the full
amount of the year-end shortfall. All payments pursuant to this Section 1.2(f)
will be made within thirty (30) days after the end of the relevant six (6) or
eleven (11) month period. The parties agree that actual damages to HEI would be
very difficult to estimate, and that such amount is a reasonable estimate
thereof. Orders which General Wireless designates as shortfall makeup will, for
purposes of the annual minimum purchase requirements of Sections 1.2(a)(i) and
(iv), be included in total Procurement for the calendar year in which the
shortfall originated, rather than for the calendar year in which the shortfall
makeup Order is given. (In other words, shortfall make-up Orders will be
included in the prior year's base amount against which shortfall makeup is
measured, rather than in the base amount for the current year.)
(g) MONITORING. In order to assist HEI's monitoring of General
Wireless' compliance with the requirements of this Section 1.2, General Wireless
shall provide HEI a report showing the total supplier-by-supplier volumes of
each Product Category Procured by it and its Subsidiaries for each annual
period, within sixty (60) days after such period, and such other information as
HEI may reasonably request from time to time.
1.3 INDIRECT HANDSETS. (a) "INDIRECT HANDSETS" means handsets
purchased by subscribers on PCS systems operated or managed by General Wireless
or any of its Subsidiaries which are either not Procured by General Wireless or
any of its Subsidiaries or are Procured by General Wireless or any of its
Subsidiaries for sale in channels other than Direct Channels.
(b) From the Hyundai Product Categories for Handsets, General Wireless
will select Product Categories that constitute at least * of its then-current
volume of Indirect Handsets. Within each Product Category so selected by it,
General Wireless will designate a Hyundai Handset as its "PREFERRED HANDSET" for
that Product Category. The Preferred Handset will be the leading Handset in
Product Category featured in all subsidy, promotion, endorsement and other
programs and activities which promote or facilitate marketing or sales of
Handsets (collectively, "PROMOTION PROGRAMS") which General Wireless sponsors or
initiates with respect to Indirect Handsets for that Product Category, and
General Wireless will not sponsor or initiate any Promotion Program for any
other supplier's Handsets for that category which is superior to that which
applies to the Prime Handset. (For purposes of this Section 1.3, Promotion
Programs which are completely funded by unaffiliated third parties, such as a
manufacturer, will not be considered to be sponsored or initiated by General
Wireless, and General Wireless' participation in a Promotion Program partially
funded by such third parties shall be measured net of such third-party funding.)
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<PAGE>
(c) General Wireless will use its best efforts to assist HEI, as
reasonably requested by HEI, to meet HEI's sales goal of at least a * share of
Indirect Handsets, provided that this sentence shall not require General
Wireless to offer cash-based Promotion Programs for the benefit of HEI's
Indirect Handsets at a rate higher than the rate offered to any other supplier
of Indirect Handsets. There is no minimum purchase requirement for Indirect
Handsets.
(d) General Wireless agrees to make available to HEI, on terms no less
advantageous than those available to any supplier, participation in all
Promotion Programs sponsored or initiated by General Wireless or any of its
Subsidiaries with respect to Indirect Handsets. General Wireless will also (i)
give HEI preferred access to its marketing plans for Handsets and (ii) make its
officers and employees reasonably available to HEI to discuss and advise upon
Promotion Programs, marketing- and sales-related issues and other topics
reasonably requested by HEI.
1.4 GENERAL WIRELESS GENERAL CONTRACTOR AS AGENT. By notifying HEI in
writing, General Wireless may designate its general contractor for
infrastructure installation as its agent to Order, receive invoices and pay for
the Infrastructure Equipment, to coordinate with HEI in the installation of such
Systems, and to execute an Installation Agreement with HEI; provided, however,
that any such designation shall not release General Wireless from, or in any
other way affect, any of General Wireless' obligations under this Agreement.
2. DISTRIBUTION; OWNERSHIP
2.1 DISTRIBUTION. HEI hereby grants General Wireless a nonexclusive
right to promote, market, resell and distribute Handsets purchased hereunder to
channels primarily intended to result in purchase by customers of its and its
Subsidiaries' PCS systems and of the PCS systems it and its Subsidiaries manage.
HEI hereby grants General Wireless a nonexclusive right to promote, market,
resell and distribute Infrastructure Equipment purchased hereunder to its and
its Subsidiaries' PCS systems and of the PCS systems it and its Subsidiaries
manage. No other distribution is authorized by this Agreement.
2.2 OWNERSHIP. As between the parties, HEI retains respect to the
Hyundai all proprietary rights with respect to the Hyundai Products, except as
otherwise expressly provided in Section 6.5.
2.3 MARKETING ASSISTANCE. General Wireless will recommend Hyundai
Products to General Wireless' resellers and any other parties that may have a
potential interest in purchasing Products.
3. PRICES; PAYMENT
3.1 PRICES, SHIPPING. The price for each Hyundai Product shall be the
price stated in the most-recently updated Product Information Package applicable
to such Product and shall include all costs for duties, export or import charges
and the like, as in effect at the time the Hyundai Product is Ordered. The price
shall be competitive, on a U.S.-landed basis, with prices generally offered by
General Wireless' other contracted vendors of competing Products (including, in
the case of competing Products, any procurement commission or similar amount
payable by General Wireless with respect thereto), and shall not be greater than
the price then being offered by HEI for the same Hyundai Product *. If HEI
reduces the announced price for any
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<PAGE>
particular model of a Handset, such price reduction shall apply not only to
units of such model Ordered after its effective date, but also to all units of
such model which were Ordered prior to its effective date but not delivered
prior to its effective date. All prices shall be quoted FOB the applicable
manufacturer's plant. Unless General Wireless opts to make its own arrangements
for shipment, HEI shall arrange for shipment to General Wireless' warehouse in
the United States specified in its confirmation of Order, and the cost of such
HEI shipping arrangements (including without limitation freight and insurance)
shall be paid by General Wireless in the same manner as the purchase price.
Delivery shall occur under this Agreement, and risk of loss shall shift to
General Wireless, at the point to which HEI was responsible for the shipping
arrangements.
3.2 COST REDUCTIONS. HEI will keep itself and its representatives
reasonably available to General Wireless to discuss any suggestions for
achieving cost savings on both materials and processes, and HEI shall have the
right (but not any duty) to use such suggestions on Products sold to General
Wireless or to third parties, without any obligations to General Wireless on
account of such usage.
3.3 TAXES. Prices quoted by HEI shall be in U.S. dollars and will not
include applicable U.S. federal or state sales or use taxes which shall be paid
by General Wireless if separately indicated on the invoice for the applicable
Product shipment, but will include any duties, export or import charges and the
like.
3.4 PAYMENT TERMS. HEI will invoice General Wireless with each shipment.
The payment terms for Handsets will be the full invoiced amount payable to HEI
in cash within * days after delivery. For Infrastructure Equipment, subject to
Section 1.2(c), (i) for the portion of the Commencement-of-Service Buildout
which is allocated to HEI pursuant to Section 1.2(a)(ii) in a BTA, the payment
terms shall be * of the full invoiced amount payable to HEI in cash within *
after delivery of such Infrastructure Equipment, with the remaining balance
becoming due and payable after successful completion of the Acceptance Test (as
defined in Section 5.1(b) below) for such Infrastructure Equipment by General
Wireless; and (ii) for other Infrastructure Equipment, the payment terms shall
be * of the full invoiced amount payable to HEI in cash within * days after
delivery of such Infrastructure Equipment, with the remaining balance becoming
due and payable after successful completion of the Acceptance Test for such
Products by General Wireless. No invoice shall be submitted to General Wireless
until shipment to General Wireless of commercially useful combinations of the
items covered by such invoice.
3.5 LETTER OF CREDIT. Except to the extent Infrastructure Equipment are
financed under Section 1.2(c) and the other suppliers referred to in such
Section do not require letters of credit, General Wireless shall secure its
payment obligations hereunder with a standby letter of credit issued in favor of
HEI by a bank reasonably acceptable to HEI and on terms and conditions
reasonably satisfactory to HEI in an amount sufficient to cover the total unpaid
purchase price of any Hyundai Products shipped from time to time during the term
of this Agreement and received by General Wireless. General Wireless shall
maintain such a standby letter of credit in effect as long as any payment
obligation of General Wireless to HEI arising under or in connection with this
Agreement remains outstanding.
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4. ORDERS
4.1 FORECASTS, ORDERS, ACCEPTANCE. General Wireless will provide HEI with
12-month forecasts of its requirements for delivery of Hyundai Products on a
monthly, model-by-model basis, and update such forecasts on a monthly basis.
Notwithstanding the foregoing, General Wireless' forecasts for Infrastructure
Equipment Products will detail its requirements for such Products on a mutually
acceptable "major component" level. On the first day of the 4th month
immediately preceding the delivery month, the amount shown for each model in the
most recently-furnished forecast will be deemed Ordered by General Wireless.
(Prior to such date, all forecasts will be non-binding.) All such Orders shall
be deemed accepted by HEI unless HEI notifies General Wireless otherwise by the
15th day of such Order month. General Wireless may, however, without penalty,
increase or decrease the volume of such model thus Ordered and accepted, as
follows:
DAYS BEFORE START OF INFRASTRUCTURE
SCHEDULED SHIPMENT MONTH EQUIPMENT HANDSETS
90 or more * *
60-89 * *
less than 60 * *
To the extent other lead-time and order-change terms are customary in the
industry and are available to General Wireless, the parties shall inform one
another of such terms and will enter into a mutually-satisfactory amendment to
this Agreement to incorporate such lead-time and order-change terms into this
Agreement.
4.2 AD HOC ORDERS. General Wireless may also Order Hyundai Products by
notice to HEI outside of Section 4.1. All such Orders shall be deemed accepted
by HEI unless HEI notifies General Wireless otherwise by the 15th day after its
receipt of such Order.
4.3 CONFIRMATIONS; OTHER TERMS. Ten (10) days before the beginning each
month, HEI will supply General Wireless a summary of the Orders that will be in
effect as of the beginning of the coming month, based on the information then
available to it. Such Order summary shall include, as applicable, (i)
identification of Products Ordered or accepted; (ii) quantity Ordered and
accepted; (iii) price of Products Ordered or accepted; (iv) requested or
proposed delivery date; and (v) shipping instructions. Unless General Wireless
notifies HEI of any changes therein (subject to the limitations stated in
Section 4.1 and otherwise in conformity with this Agreement), such Order summary
will be binding and irrevocable on General Wireless. Neither the failure to
issue such confirmation nor any change requested therein or dispute concerning
it will affect the Order or acceptance or its binding nature. In case of any
discrepancy among the confirmations, the Orders and the acceptances made or
deemed made, the acceptances shall be controlling. All Orders and acceptances
of Hyundai Products under this Agreement shall be subject only to the terms and
conditions hereof. All terms of any Order, confirmation, invoice or similar
document shall be disregarded and be deemed superseded in their entirety by this
Agreement except to the extent such terms specifically identify this Agreement
and are expressly stated to supersede this Agreement. This Agreement shall
apply to all PCS Products purchased by General Wireless or its Subsidiaries from
HEI or its subsidiaries, whether or not such purchase or sale is required under
this Agreement, except to the extent a writing signed by
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the parties specifically identifies this Agreement and expressly states that the
transaction is not subject to this Agreement.
4.4 CHANGES AND CANCELLATIONS. Except as provided in Section 4.1 above,
accepted Orders are not subject to change or cancellation by either party except
on terms that may be mutually acceptable to both parties at the time of the
requested change or cancellation.
4.5 RUSH ORDERS. HEI shall use its reasonable efforts to meet General
Wireless' requirements for reasonable rush Orders for Hyundai Products requiring
immediate delivery, subject to the parties' previously reaching agreement on
special prices for such rush Orders.
4.6 DISCONTINUANCE. In the event that HEI intends to discontinue the
manufacture and sale of any Infrastructure Equipment which General Wireless
regularly buys, HEI shall give at least two (2) years prior written notice to
General Wireless.
5. PRODUCT ACCEPTANCE AND QUALITY
5.1 TESTING. Upon written request by General Wireless, HEI shall
demonstrate and document to General Wireless that HEI has met all U.S. industry
standards and Specifications (as defined in Section 6.1). In addition, General
Wireless, at its option, may conduct the following tests at its own expense in
accordance with industry-standard test protocols:
(a) Infrastructure Equipment:
General Wireless may conduct the following testing to determine
the compliance of such Systems with the Specifications:
(i) testing the prototype of new models at the manufacturer's
factory or, if reasonably requested by General Wireless, at
a mutually agreeable General Wireless operating site (to be
conducted within 60 days after HEI notice);
(ii) pre-implementation testing of new features incorporated in
the Infrastructure Equipment (to be conducted within 30 days
after HEI notice); and
(iii) testing of individual components of Infrastructure
Equipment (to be conducted immediately upon completion of
installation).
(b) Acceptance Test for Infrastructure Equipment:
(i) In addition to the testing of Infrastructure Equipment in
(a) above, prior to acceptance by General Wireless of the
Infrastructure Equipment delivered to General Wireless,
General Wireless may perform final on-site acceptance
testing as described below (the "ACCEPTANCE TEST"). The
purpose of the Acceptance Test is to establish whether the
Infrastructure Equipment for the network and/or site in
question, as the case may be, after installation on-site,
complies with all the relevant requirements when operated
and otherwise handled by General Wireless personnel duly
trained by HEI utilizing mutually satisfactory documentation
supplied by HEI. In case any such Infrastructure Equipment
do
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not meet the Specifications, such Infrastructure Equipment
can be rejected in writing by General Wireless, which
rejection shall include a report to HEI describing in detail
the reasons for the rejection.
(ii) The Acceptance Test is divided into three segments:
- Environment test of the Infrastructure Equipment element
or site
- Running the Infrastructure Equipment with load test
traffic
- Running the Infrastructure Equipment with real traffic
scenarios
(iii) The Acceptance Test shall be deemed to have been
successfully performed when it has been demonstrated that
all relevant requirements of this Agreement (including,
without limitation, compliance with Specifications) are met.
Upon successful performance of the Acceptance Test, General
Wireless shall immediately certify its Acceptance of the
Product to HEI in writing.
(iv) The parties agree that the Acceptance Test may commence
notwithstanding that the Products or the documentation
suffers from minor defects or deficiencies that are non-
essential for the proper operation and maintenance of the
Products in question and for the test itself, as determined
by General Wireless in its reasonable judgment. If the
Acceptance Test so commences, the parties shall by written
agreement enter such defects or deficiencies into a list of
defects which shall also include a mutually agreed upon time
schedule for necessary corrective measures to be taken by
HEI. General Wireless may retain an amount equal to 200% of
the estimated cost to complete or cure the listed defects
are cured, until the completion or cure is accomplished.
(c) Handsets:
General Wireless may test the prototype for a new model of the
Handsets for compliance with CDMA Development Group (CDG)
compatibility standards. The tests are to be conducted within 30
days after delivery of the prototype.
Any additional testing which is a condition of acceptance or payment requires
the consent of both parties. For purposes of this Section 5.1, new models or
new features mean models or features which are not theretofore in commercial
use.
5.2 REJECTION. In case any Hyundai Product is defective in material or
workmanship, or otherwise not in conformity with the requirements of the
applicable Specifications, General Wireless will have the right, at its sole
option, by notifying HEI of such defect or nonconformance in reasonable detail,
to require HEI to either repair or replace (as selected by HEI) such Hyundai
Product at HEI's expense (i) in the case of Infrastructure Equipment, within
twenty (20) working days after performance of the Acceptance Test on such
Infrastructure Equipment, and (ii) in the case of Handsets, within twenty (20)
working days after receipt of the Handsets by General Wireless. If, after being
requested by General Wireless, HEI fails to replace or correct any defective or
nonconforming item within the applicable repair/replace period, then,
notwithstanding any other provision of this Agreement, General Wireless shall
have no obligation to accept or pay for such item (to the extent not theretofore
accepted or paid for), and, unless and until HEI makes
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arrangements for recovery or disposal of such item, may store such item or
return it to HEI, in each case as it determines and at the expense of HEI.
Subject to Sections 8 and 9, the remedies stated in this Section 5.2 shall be
the exclusive remedies for any such defect or nonconformance.
5.3 PACKING. HEI will package and pack all goods in a manner which is
(i) in accordance with good commercial practice, (ii) in conformance with all
export and other applicable regulations and with all licenses necessary for
delivery to the named destination and (iii) acceptable to common carriers for
shipment. HEI will mark all containers with necessary lifting, handling and
shipping information and with purchase order numbers, date of shipment, and the
names of the consignee and consignor. An itemized packing list must accompany
each shipment which shall include (i) prominently the purchase order number and
(ii) the description, part number, revision level, and quantity of the Products
so shipped.
6. PRODUCT SPECIFICATIONS; CHANGES; DOCUMENTATION
6.1 SPECIFICATIONS. Hyundai Products shall conform to the
Specifications, as in effect at the time such Product is Ordered.
6.2 QUALITY CONTROL. HEI will inform General Wireless of the quality
control measures applicable to all Hyundai Products Ordered by General Wireless,
which shall comply with customary good manufacturing practices.
6.3 ENGINEERING CHANGES. HEI shall have the sole discretion to make any
changes to any of its production processes, or the controlled process parameters
or sources, types or grade classifications of materials used in its
manufacturing operations, with respect to any Hyundai Product; provided,
however, that HEI shall notify General Wireless promptly and provide General
Wireless a reasonable opportunity to make non-binding suggestions. Each party
will appoint a single engineering manager ("ENGINEERING MANAGER") to act as a
liaison between the parties, to keep the other party informed of the engineering
changes and to communicate the requests for such changes in accordance with this
Section 6.3.
6.4 HANDSET DOCUMENTATION; PRIVATE LABEL. English language end-user
documentation for non-General Wireless-branded Handsets shall be designed and
furnished by HEI at its own expense, and shall be comparable to the
documentation provided with competitive products. Upon written request by
General Wireless, HEI shall furnish end-user Handset documentation for General
Wireless-branded Handsets, with any required variations from HEI's own end-user
Handset documentation being prepared at General Wireless' expense.
Notwithstanding the foregoing, if General Wireless desires (i) additional
documentation for Handsets, or (ii) documentation for Handsets which have been
altered or modified following delivery by HEI or its designated affiliate, such
documentation shall be designed and furnished by General Wireless at its own
expense. If so requested in the Order for any particular Handset with a
reasonable lead time, a reasonably satisfactory General Wireless private label
shall be affixed in addition to or in lieu of the HEI label, with any
incremental costs of such private labeling to be borne by General Wireless.
6.5 OWNERSHIP OF DOCUMENTATION. Each party shall own all right, title
and interest in the end-user documentation (in any format or medium) (the "END-
USER DOCUMENTATION") designed and furnished by it pursuant to Section 6.4. To
the extent that by operation of law ownership of such
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End-User Documentation is deemed to vest otherwise than as set forth above, the
party in whom such ownership is deemed to vest hereby assigns to the other all
right, title and interest to the End-User Documentation and shall execute such
instruments as the other party may reasonably request to effect and record such
assignment. Either party may not distribute the other party's End-User
Documentation in any format or medium or for any purpose, to any third party
without the other party's prior written consent.
6.6 DOCUMENTATION LIFE-CYCLE; REVISIONS. HEI agrees to maintain End-
User Documentation in print on non-General Wireless-branded Handsets until HEI
notifies General Wireless it will cease distributing such Handsets. HEI will
manage the physical documentation inventory. Once documentation is "in-print,"
HEI will revise the printed End-User Documentation on non-General Wireless-
branded Handsets as necessary to accurately support the Hyundai Product.
7. SUPPORT
7.1 INSTALLATION SUPPORT. HEI will provide on-site assistance as needed
to help General Wireless install (including optimization) the Infrastructure
Equipment furnished by HEI under this Agreement. The price, nature, amount and
terms of such on-site installation assistance for the Infrastructure Equipment
shall be as stated in a separate Installation Agreement to be executed by HEI
and General Wireless or its agent designated pursuant to Section 1.4, which
shall be comparable to the market standards applicable to such Systems and
competitive with the terms provided by General Wireless' other contracted
vendors of similar equipment.
7.2 CUSTOMER AND TECHNICAL SUPPORT. General Wireless will provide all
PCS customer support. HEI will supply General Wireless on an on-going basis for
the Products furnished by HEI under this Agreement with: (i) reasonable amounts
of specialized back-up technical assistance in English by telephone and e-mail,
in accordance with industry-wide standards, with reasonably prompt response
times; (ii) English language technical documentation reasonably necessary to
permit General Wireless to perform PCS customer support and troubleshooting or
to analyze the technical benefits and risks of introducing new releases of the
Hyundai Products into General Wireless' customer base; and (iii) all error notes
or other technical documentation (translated into English language) defining
symptoms, solutions or work-arounds for major Hyundai Product problems. During
the term of this Agreement, HEI will provide such support to General Wireless at
no charge. On-site problem support for Products furnished by HEI under this
Agreement shall be as mutually agreed by General Wireless and HEI. General
Wireless will provide HEI feedback on any material errors and potential fixes of
which it becomes aware.
7.3 REPAIR PROCEDURE. After expiration of the applicable warranty
period, HEI will continue to provide repair for Products and Product parts
furnished by HEI under this Agreement at the expense of General Wireless to the
extent and on the terms which are mutually agreed upon by General Wireless and
HEI.
7.4 EMERGENCY PART SHIPMENT PROCEDURE. In cases of emergency, as
reasonably determined by General Wireless, HEI will use its best efforts to ship
(at General Wireless' expense) to General Wireless part(s) for Infrastructure
Equipment furnished by HEI under this Agreement, with overnight delivery to
General Wireless.
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7.5 PRODUCT REPORTS. HEI will keep accurate records of deficiencies and
problems in Products furnished by HEI under this Agreement. Upon written
request by General Wireless, HEI will make such reports available to General
Wireless in a timely manner and on a dial-up electronic database if possible.
7.6 DISCONTINUED PRODUCTS. HEI will continue to provide parts and
maintenance support to General Wireless for each discontinued Infrastructure
Equipment formerly furnished by HEI under this Agreement for a period comparable
to industry-wide standards, but in no case shall such period exceed ten (10)
years after the date of discontinuance.
7.7 TRAINING. HEI will provide General Wireless engineers with on-site
or in-classroom (at a facility furnished by General Wireless) English-language
training in the installation and operation of Infrastructure Equipment furnished
by HEI under this Agreement. The training will be provided in accordance with
industry standards for such training and at a price competitive with those
generally offered by vendors of competing equipment. The terms and conditions
of such training shall be as stated in a separate Training Agreement executed by
HEI and General Wireless.
7.8 HARDWARE AND SOFTWARE MAINTENANCE. The parties agree to enter into
Hardware and Software Maintenance Agreements regarding maintenance of the
Infrastructure Equipment hardware and software, which shall be comparable to the
market-standard terms for competing equipment.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 HEI WARRANTIES AND REPRESENTATIONS. HEI warrants and represents to
General Wireless that (i) General Wireless shall acquire good and clear title to
the Products furnished by HEI under this Agreement, free and clear of all liens
and encumbrances, (ii) all Products sold by HEI under this Agreement will be new
and unused, (iii) HEI has the full power to enter into this Agreement and carry
out its obligations under this Agreement and (iv) HEI's compliance with the
terms and conditions of this Agreement will not violate any Federal, state or
local laws, regulations or ordinances or any third party agreements.
8.2 GENERAL WIRELESS WARRANTIES, REPRESENTATIONS AND COVENANTS. (a)
General Wireless warrants and represents to HEI that (i) General Wireless has
the full power to enter into this Agreement and carry out its obligations under
this Agreement and (ii) General Wireless' compliance with the terms and
conditions of this Agreement will not violate any Federal, state or local laws,
regulations or ordinances or any third party agreements.
(b) General Wireless covenants to HEI that (i) CDMA technology shall
be used by General Wireless in its and its Subsidiaries' PCS systems and (ii)
General Wireless will recommend CDMA technology for use by all PCS systems
managed by it and its Subsidiaries. However, General Wireless reserves the right
to select another technology if it reasonably and in good faith determines, on
the basis of objective facts in the PCS industry, that CDMA technology is
commercially or technically impracticable in the PCS industry in the U.S.
8.3 PRODUCT WARRANTY. (a) If Infrastructure Equipment hardware or a
Handset furnished by HEI under this Agreement fails to conform to the applicable
Specifications or contains defects in materials or workmanship and (i) in the
case of Infrastructure Equipment hardware, notice thereof is
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given to HEI within the applicable warranty period or (ii) in the case of
handsets, the nonconforming or defective items are returned to HEI within the
warranty period:
(1) In the case of Infrastructure Equipment hardware, HEI will
repair or replace (at its option) such defective or nonconforming
hardware reasonably promptly after receipt of written notice from
General Wireless of such defects or non-conformance.
(2) In the case of Handsets, HEI shall designate a place within
the United States to which the defective or nonconforming Handsets may
be returned. HEI will repair or replace (at its option) the returned
Handset and redeliver it to the original location reasonably promptly
after receipt of such returned item. HEI also agrees to make loaner
handsets available to the end-users of the returned Handsets or to
General Wireless for use until HEI redelivers the repaired or replaced
items. To the extent it is customary for other major suppliers of
Handsets in the United States to offer replacement rather than repair
after a given number of repair attempts, HEI will offer a comparable
replacement policy.
Unless HEI reasonably demonstrates that the Infrastructure Equipment hardware or
returned Handset is free from defect, as applicable, HEI shall (i) pay the costs
incurred for the foregoing warranty services, including without limitation
shipping and insurance of the item (including return of the same or replacement
item to the original location), and (ii) assume the risk of loss during
shipping. All replaced parts become the property of HEI. The warranty period
applicable to a particular Product furnished by HEI under this Agreement shall
be as stated in the most-recently updated Product Information Package applicable
to such Product, as in effect at the time it is Ordered under this Agreement,
and such warranty period shall be competitive with the warranty periods offered
by vendors of competing equipment procured by General Wireless.
(b) The foregoing warranty shall apply to Infrastructure Equipment
software only to the same extent as General Wireless' other contracted vendors'
warranties for Infrastructure Equipment software.
(c) This limited warranty does not extend to any Hyundai Products
which have been misused, abused, serviced by anyone other than a representative
or party authorized by HEI, or damaged due to accident or act of God. NO OTHER
WARRANTIES ARE EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
8.4 NON-WARRANTY REPAIR. HEI will use its best efforts, consistent with
PCS industry practice in the United States, to continue to provide repair or
replace the Infrastructure Equipment furnished by HEI under this Agreement and
their parts which are not covered in the foregoing warranty, including
discontinued Products, at the expense of General Wireless to the extent and on
the terms as is mutually agreed by General Wireless and HEI.
8.5 EPIDEMIC HARDWARE FAILURE. For the purposes of this Agreement
epidemic failure will be deemed to have occurred if more than * of the then
current total installed base of any Product furnished by HEI under this
Agreement should fail in substantially the same manner within a time period of
ninety (90) days due to failure to comply with the applicable Specifications or
to a defect in materials or workmanship. In the case of epidemic failure HEI and
General
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Wireless will cooperate to implement the procedure as set forth in Exhibit B.
---------
HEI will provide the services required of it by this Section 8.5 without charge.
9. PROPRIETARY INFORMATION
9.1 INTELLECTUAL PROPERTY INDEMNIFICATION. (a) HEI agrees to
indemnify, defend and hold harmless General Wireless and its officers,
directors, employees, shareholders, customers, agents, successors and assigns
from and against any and all losses, damages, liabilities, settlements costs and
expenses (including attorneys' fees), as reasonably incurred, resulting from or
arising out of any claims which allege that any technology owned by HEI as
incorporated in the Product furnished by HEI under this Agreement or the use or
sale thereof as contemplated by this Agreement infringe upon, misappropriate or
violate any patents, copyrights, or trade secret rights or other proprietary
rights of persons, firms or entities who are not parties to this Agreement;
provided that General Wireless (i) notifies HEI, of any notice or claim of such
alleged infringement or misappropriation involving the Hyundai Products of which
it becomes aware within ten (10) working days after its receipt of such notices
or claims, and (ii) permits HEI to control, in a manner not adverse to General
Wireless, the defense, settlement, adjustment or compromise of any such claim
using counsel reasonably acceptable to General Wireless. General Wireless may
employ counsel, at its own expense (provided that if such counsel is necessary
because of a material conflict of interest applicable to counsel engaged by HEI
or because HEI does not assume control, HEI will bear such expense), to assist
it with respect to any such claim. HEI shall not enter into any settlement that
affects General Wireless' rights or interest without General Wireless' prior
written approval, which shall not be unreasonably withheld. General Wireless
shall have no authority to settle any claim on behalf of HEI. In no event,
however, shall the foregoing indemnification apply to (i) any claim based on
End-User Documentation developed by General Wireless pursuant to Section 6.4 (as
to which General Wireless shall have reciprocal indemnification obligations) or
(ii) any claim brought by a third party relating to the CDMA technology licensed
by QUALCOMM Incorporated to HEI or an applicable affiliate of HEI.
(b) If by reason of such an infringement claim, General Wireless or its
managed PCS systems shall be enjoined from using any Infrastructure Equipment
furnished by HEI under this Agreement, HEI will use its best efforts, at its
expense, to either (as selected by HEI): (i) obtain all rights required to
permit the use of such Products by General Wireless or its managed PCS systems;
or (ii) modify or replace such Products to make them non-infringing (and extend
this indemnity thereto), provided that any such replacement or modified Products
are reasonably satisfactory to General Wireless. If HEI is unable to achieve
one of the options set forth above within a reasonable period of time after the
issuance of the injunction, HEI shall promptly refund to General Wireless the
invoiced purchase price, plus all shipping, storage, and associated costs, of
any Hyundai Products returned freight collect to HEI which is subject to such
injunction.
(c) HEI's total potential liability for indemnification under this
Section 9.1 shall be limited to the total purchase price of the allegedly
infringing Hyundai Products. General Wireless will have no obligation under
this Agreement to Order Hyundai Products which have been finally determined to
infringe the rights of any third party.
9.2 PRODUCT LIABILITY INDEMNIFICATION. HEI agrees to indemnify, defend
and hold harmless General Wireless and its officers, directors, employees,
shareholders, agents, successors and assigns
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from and against all claims, demands, damages, liabilities, losses, settlements,
costs and expenses (including attorneys' fees), as reasonably incurred, arising
in favor of any person, firm or corporation on account of third parties' claims
for personal injury or property damage directly caused by any defect in a
Product furnished by HEI or its designated affiliates to General Wireless under
this Agreement, except to the extent that such claims, demands, damages,
liabilities, losses, settlements, costs and expenses (including attorneys' fees)
(i) arise out of, or result from, directly or indirectly, any failure of General
Wireless End-User Documentation on General Wireless-branded Products to warn of
the risk thereof in terms at least equivalent to the warning, if any, that
appears in HEI's own End-User Documentation; or (ii) impose costs and/or
obligations on HEI which exceed the scope of product liability indemnification
generally provided by vendors of competing equipment; provided that General
Wireless (x) promptly notifies HEI, in writing, of any notice or claim hereunder
of which it becomes aware, and (y) permits HEI to control, in a manner not
adverse to General Wireless, the defense, settlement, adjustment or compromise
of any such claim using counsel reasonably acceptable to General Wireless.
General Wireless may employ counsel, at its own expense (provided that if such
counsel if necessary because of a material conflict of interest applicable to
counsel engaged by HEI or because HEI does not assume control, HEI will bear
such expense), to assist it with respect to any such claim. HEI shall no enter
into any settlement that affects General Wireless' rights or interest without
General Wireless' prior written approval, which shall not be unreasonably
withheld. General Wireless shall have no authority to settle any claim on behalf
of HEI.
10. CONFIDENTIALITY
10.1 PROPRIETARY INFORMATION. Each party agrees that all code,
inventions, algorithms, know-how and ideas and all other business, technical and
financial information marked or otherwise identified as confidential which it
obtains from the other are the confidential property of the disclosing party
("PROPRIETARY INFORMATION" of the disclosing party). Except as expressly allowed
herein, the receiving party will not use any Proprietary Information of the
disclosing party except in connection with this Agreement, and will take
reasonable protective measures to prevent its disclosure to third parties. The
receiving party shall not be obligated under this Section 10 with respect to
information the receiving party can document:
(a) is or has become readily publicly available without
restriction through no fault of the receiving party or
its employees or agents; or
(b) is received without restriction from a third party
lawfully in possession of such information and lawfully
empowered to disclose such information; or
(c) was rightfully in the possession of the receiving party
without restriction prior to its disclosure by the
other party; or
(d) was independently developed by employees or consultants
of the receiving party without access to such
Proprietary Information; or
(e) is required to be disclosed by law.
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10.2 REMEDIES. If either party breaches any of its obligations with
respect to confidentiality, or if such a breach is likely to occur, the other
party shall be entitled to equitable relief, including specific performance or
an injunction, in addition to any other rights or remedies, including money
damages, provided by law.
11. LIMITATION OF LIABILITY
UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER UNDER ANY
CONTRACT, STRICT LIABILITY, NEGLIGENCE OR OTHER LEGAL OR EQUITABLE THEORY,
FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (EXCEPT TO THE EXTENT MATTERS
EXPRESSLY SUBJECT TO INDEMNIFICATION UNDER SECTION 9 CONSTITUTE INCIDENTAL
OR CONSEQUENTIAL DAMAGES) OR LOST PROFITS IN CONNECTION WITH THE SUBJECT
MATTER OF THIS AGREEMENT.
12. TERM AND TERMINATION
12.1 TERM. Unless terminated earlier as provided herein, this Agreement
shall have a term of ten (10) years commencing from the date on which the first
license to provide PCS in the frequency block C established by the Federal
Communications Commission ("FCC") for bidding exclusively by "entrepreneurs"
under Section 24.709 of the rules of the FCC ("LICENSE") is issued to General
Wireless, unless terminated sooner by written notice given by a party pursuant
to this Section 12. Any such expiration or termination shall not, however,
affect (i) the rights and obligations of the parties under Sections 8, 9 and 10
with respect to transactions occurring prior to such expiration or termination
or (ii) General Wireless' obligations to accept and pay for Hyundai Products
(and General Wireless' right to market and distribute such Products under
Section 2.1) for which the Orders and acceptances were made or deemed made
pursuant to Section 4.1 or 4.2 prior to such termination or (iii) General
Wireless' obligation to pay liquidated damages, if any, under Section 1.2(f) for
the period ending on such termination or any prior period or (iv) General
Wireless' obligation to pay interest on overdue amounts, if any, under Section
16.7.
12.2 TERMINATION FOR CAUSE. This Agreement may be terminated by a party
for cause immediately by written notice upon the occurrence of any of the
following events:
(a) If the other ceases to do business, or otherwise
terminates its business operations; or
(b) If the other materially breaches any provision of this
Agreement and fails to cure such breach within thirty
(30) days of written notice describing the breach; or
(c) If the other becomes insolvent or seeks protection
under any bankruptcy, receivership, trust deed,
creditors arrangement, composition or comparable
proceeding, or if any such proceeding is instituted
against the other (and not dismissed within ninety (90)
days).
12.3 EFFECT OF TERMINATION. Each party understands that the rights of
termination hereunder are absolute. Neither party shall incur any liability
whatsoever for any damage, loss or expenses of any kind suffered or incurred by
the other (or for any compensation to the other) arising
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from or incident to any termination of this Agreement by such party which
complies with the terms and conditions of the Agreement whether or not such
party is aware of any such damage, loss or expenses. Termination is not the sole
remedy under this Agreement and, whether or not termination is effected, all
other remedies will remain available.
13. FORCE MAJEURE
Neither party shall be considered in default of performance of its
obligations under this Agreement to the extent that performance of such
obligations is delayed by force majeure or contingencies or causes beyond the
reasonable control of such party. In the event that such nonperformance (i) does
not arise from any QUALCOMM Incorporated delay, and (ii) continues for more than
ninety (90) consecutive working days as to Infrastructure Equipment or more than
sixty (60) consecutive working days as to Handsets and (iii) is materially
prejudicial to General Wireless's business plan, General Wireless may, by prior
written notice to HEI, reduce any obligation to Order or Procure by the specific
units of Hyundai Products affected thereby to the extent (and only to the
extent) it actually Procures substitute Products of the same kind from other
sources. Notwithstanding anything set forth in this Section 13, this Section 13
does not apply to any obligation for the payment of money.
14. ASSIGNMENT
This Agreement shall be binding on the parties hereto and their
successors and assigns; provided, however, that neither shall assign or
transfer, in whole or part, this Agreement or any of its rights or obligations
arising hereunder without the prior written consent of the other party, except
to a person or entity who acquires all or substantially all of the assets or
business of a party, whether by sale, merger or otherwise; provided, however,
that either party shall have the right to assign or transfer, in whole or part,
this Agreement or any of its rights or obligations arising hereunder to any
direct or indirect parent or subsidiary without prior written consent of the
other party. Any purported assignment without any required consent shall be null
and void. Any assignment or purported assignment shall not constitute a novation
or relieve, release, reduce or otherwise affect the liability of the assigning
party hereunder.
15. IMPORT/EXPORT
HEI shall provide all information under its control which is necessary or
useful for General Wireless to obtain any export or import licensees required
for General Wireless to ship or receive Hyundai Products, including but not
limited to, U.S. customs certificates of delivery, affidavits of origin, and
U.S. Federal Communications Commission identifier, if applicable.
16. GENERAL
16.1 NOTICES. All notices shall be sufficient only if personally
delivered, delivered by confirmed facsimile or delivered by a major commercial
rapid delivery courier service to either party at its address set forth above or
such other address as such party may provide by notice pursuant to this Section.
Notices pursuant to this Section 16.1 will be effective upon receipt.
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16.2 ENTIRE AGREEMENT. This Agreement supersedes all proposals, oral or
written, all negotiations, conversations, or discussions between or among
parties relating to the subject matter of this Agreement.
16.3 CONTROLLING LAW AND ARBITRATION. This Agreement shall be governed,
controlled, interpreted and defined by and under the laws of the State of New
York and the United States, without regard to the conflicts of laws provisions
thereof, and without regard to the United Nations Convention on Contracts for
the International Sale of Goods. Any dispute between the parties relating to
this Agreement or the interpretation, enforcement, arbitrability or breach
hereof shall be determined exclusively by arbitration before three arbitrators
conducted under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce. Each party will designate one party arbitrator, and the
third, neutral arbitrator will be designated by agreement of the two party
arbitrators. The place of arbitration shall be determined by mutual agreement
within 30 days of either party's demand for arbitration, but if the parties are
unable to agree on the place of arbitration within such period, it will be New
York City. Each party will bear its own costs and expenses, including without
limitation the fees and expenses of its own counsel.
16.4 WAIVERS AND AMENDMENTS. No failure or delay by either party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial waiver thereof include any other right,
power or privilege. This Agreement may not be amended or waived except by a
written document signed by duly authorized officers of the parties.
16.5 SEVERABILITY. In the event that any provision of this Agreement
shall be unenforceable or invalid under any applicable law or be so held by
applicable court decision, such unenforceability or invalidity shall only apply
to such provision and shall not render this Agreement unenforceable or invalid
as a whole; and, in such event, such provision shall be modified or interpreted
so as to best accomplish the objective of such unenforceable or invalid
provision within the limits of applicable law or applicable court decision and
the manifest intent of the parties hereto.
16.6 RELATIONSHIP OF THE PARTIES. In fulfilling its obligations under
this Agreement, each party shall be acting as an independent contractor. Nothing
contained in this Agreement is intended nor is to be construed so as to
constitute HEI and General Wireless as partners, agents or joint venturers with
respect to this Agreement. Neither party hereto shall have any express or
implied right or authority to assume or create any obligations on behalf of or
in the name of the other party or to bind the other party to any contract,
agreement or undertaking with any third party.
16.7 INTEREST ON OVERDUE AMOUNTS. Any amount owing under this Agreement
which is not paid when due shall bear interest at * per year over the rate
announced from time to time by Bank of America NT&SA as its base or prime rate,
provided that if applicable law limits the amount of interest which the parties
may lawfully be agreed to be paid on such overdue amounts, then such rate of
interest shall in no event exceed the applicable limit.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
persons duly authorized as of the date and year first above written.
General Wireless, Inc.
By /s/ Roger D. Linquist
-------------------------------------------------------
Name Roger D. Linquist
-----------------------------------------------------
Title President & CEO
----------------------------------------------------
Hyundai Electronics Industries Co., Ltd.
By /s/ Y.H. Kim
-------------------------------------------------------
Name Y.H. Kim
-----------------------------------------------------
Title Executive Vice President
----------------------------------------------------
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EXHIBIT A
REQUIREMENTS FOR QUALIFIED PRODUCTS
1 As to the Infrastructure Equipment:
a. Equipment must meet all U.S. industry performance standards, FCC
Standards, and any standards established by any U.S. government agency
relating to human health and/or exposure to radio frequency emissions,
and be totally compatible with products from Motorola, AT&T and other
vendors;
b. Equipment must meet all interoperability standards, including A+
interface, and be interoperable with the Infrastructure Equipment
installed by General Wireless in the Commencement-of-Service Buildout
for each BTA;
c. Equipment must meet General Wireless' standards for operating
reliability and efficiency;
d. Equipment must provide competitive size, weight, and outdoor
cabinetry performance sufficient to meet the needs of General
Wireless' business plan;
e. Equipment must meet price performance targets for both up-front
cost and overall operating cost in the network; and
f. Equipment must meet all requirements for inclusion in the Advanced
Intelligent Network design.
2 As to the Handsets:
a. Handsets must offer full interoperability with equipment
manufactured for U.S. PCS applications and meet all U.S. industry
performance standards, FCC standards and any mandatory, currently-
effective standards established by any U.S. government agency relating
to human health and/or exposure to radio frequency emissions; and
b. Battery life, weight, size, principal electronic performance
specifications must be competitive in its Product Category.
c. U.S. landed price of the units must be competitive in its Product
Category with prices generally offered by General Wireless' other
contracted vendors of competing Products (including any procurement
commission or similar amount payable by General Wireless). If co-
operative advertising or similar allowances are standard in the PCS
industry, price competitiveness will be measured after taking such
allowances into account.
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EXHIBIT B
PROCEDURE OF EPIDEMIC FAILURE TO BE FOLLOWED BY HEI
1. General Wireless will immediately notify HEI upon discovery of the
failure.
2. Within two (2) working days HEI will give an initial response
indicating its preliminary plan for diagnosing the problem.
3. HEI and General Wireless will jointly exert all commercially
reasonable efforts to diagnose the problem and plan a work-around or
more permanent solution.
4. HEI will apply its engineering change order procedure in appropriate
circumstances for hardware problems originating in the manufacturing
process.
5. HEI will prepare and consult with General Wireless regarding an
appropriate recovery plan as well as an appropriate work-around, as an
interim solution, if one is needed.
6. HEI and General Wireless will mutually agree on a recovery plan.
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EXHIBIT 11.1
General Wireless, Inc.
For the Three Months Ended March 31, 1995
-----------------------------------------
Number of Percent Equivalent
Shares Outstanding Shares
----------- ----------- ------------
Class A Common Stock............ 60 100% 60
Class B Common Stock............ 2,109,440 100% 2,109,440
Class C Common Stock............ 11,126,660 100% 11,126,660
Class B Warrants................ 151,667 100% 151,667
Class C Warrants................ 5,309,873 100% 5,309,873
Class B Options................. 1,902,016 100% 1,902,016
----------
Pro forma weighted average shares outstanding 20,599,716
==========
Net Loss $<170,000>
==========
Pro forma net loss per share $ <0.01>
==========
<PAGE>
General Wireless, Inc.
For the Three Months Ended March 31, 1996
-----------------------------------------
Number of Percent Equivalent
Shares Outstanding Shares
----------- ----------- ------------
Class A Common Stock............ 60 100% 60
Class B Common Stock............ 2,109,440 100% 2,109,440
Class C Common Stock............ 11,126,660 100% 11,126,660
Class B Warrants................ 151,667 100% 151,667
Class C Warrants................ 5,309,873 100% 5,309,873
Class B Options................. 1,902,016 100% 1,902,016
----------
Pro forma weighted average shares outstanding 20,599,716
==========
Net Loss $<157,000>
==========
Pro forma net loss per share $ <0.01>
==========
<PAGE>
General Wireless, Inc.
For the period from inception
(June 24, 1994) to December 31, 1994
-----------------------------------------
Number of Percent Equivalent
Shares Outstanding Shares
----------- ----------- ------------
Class A Common Stock............ 60 100% 60
Class B Common Stock............ 2,109,440 100% 2,109,440
Class C Common Stock............ 11,126,660 100% 11,126,660
Class B Warrants................ 151,667 100% 151,667
Class C Warrants................ 5,309,873 100% 5,309,873
Class B Options................. 1,902,016 100% 1,902,016
----------
Pro forma weighted average shares outstanding 20,599,716
==========
Net Loss $<433,000>
==========
Pro forma net loss per share $ <0.02>
==========
<PAGE>
General Wireless, Inc.
For the Year Ended December 31, 1995
-----------------------------------------
Number of Percent Equivalent
Shares Outstanding Shares
----------- ----------- ------------
Class A Common Stock............ 60 100% 60
Class B Common Stock............ 2,109,440 100% 2,109,440
Class C Common Stock............ 11,126,660 100% 11,126,660
Class B Warrants................ 151,667 100% 151,667
Class C Warrants................ 5,309,873 100% 5,309,873
Class B Options................. 1,902,016 100% 1,902,016
----------
Pro forma weighted average shares outstanding 20,599,716
==========
Net Loss $<744,000>
==========
Pro forma net loss per share $ <0.04>
==========
