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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 19, 1997
REGISTRATION NO. 333-5829
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NEXTWAVE TELECOM INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 4812 33-0663509
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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6256 GREENWICH DRIVE, SUITE 500
SAN DIEGO, CALIFORNIA 92122
(619) 453-2828
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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NEXTWAVE WIRELESS INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 4812 33-0717550
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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6256 GREENWICH DRIVE, SUITE 500
SAN DIEGO, CALIFORNIA 92122
(619) 453-2828
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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Allen B. Salmasi
Chairman, President and Chief Executive Officer
NextWAVE TELECOM INC. AND NEXTWAVE Wireless Inc.
6256 Greenwich Drive, Suite 500
San Diego, California 92122
(619) 453-2828
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
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SCOTT N. WOLFE, ESQ. FRANK A. CASSOU, ESQ. MATTHEW J. MALLOW, ESQ.
LATHAM & WATKINS SENIOR VICE PRESIDENT AND GENERAL COUNSEL MARK C. SMITH, ESQ.
701 "B" STREET, SUITE 2100 NEXTWAVE TELECOM INC. SKADDEN, ARPS, SLATE,
SAN DIEGO, CALIFORNIA 92101 6256 GREENWICH DRIVE, SUITE 500 MEAGHER & FLOM LLP
(619) 236-1234 SAN DIEGO, CALIFORNIA 92122 919 THIRD AVENUE
(619) 453-2828 NEW YORK, NEW YORK 10022
(212) 735-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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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, check the following box: [X]
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. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE REGISTRATION FEE(9)
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Senior Note Units(1)......................................................
Senior Notes due 2007(2)..................................................
Guarantee of Senior Notes due 2007(2)(3)
Warrants to purchase shares of Series B Common Stock, par value $.0001 per
share(2)................................................................
Series B Common Stock, par value $.0001 per share(4)......................
Senior Discount Note Units(5).............................................
Senior Discount Notes due 2007(6).........................................
Guarantee of Senior Discount Notes due 2007(6)(7)
Warrants to purchase shares of Series B Common Stock, par value $.0001 per
share(6)................................................................
Series B Common Stock, par value $.0001 per share(8)......................
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(1) Each consisting of $1,000 principal amount of % Senior Notes due 2007
and Warrants to purchase one share of Series B Common Stock, par value
$.0001 per share.
(2) Included in Senior Note Units.
(3) The Senior Notes issued by NextWaveTelecom Inc. will be guaranteed by
NextWave Wireless Inc.
(4) This registration statement covers such presently indeterminable number of
shares of Series B Common Stock, par value $.0001 per share, as may be
issued upon exercise of the Warrants.
(5) Each consisting of $1,000 principal amount at maturity of % Senior
Discount Notes due 2007 and Warrants to purchase one share of Series B
Common Stock, par value $.0001 per share.
(6) Included in Senior Discount Note Units.
(7) The Senior Discount Notes issued by NextWave Telecom Inc. will be guaranteed
by NextWave Wireless Inc.
(8) This registration statement covers such presently indeterminable number of
shares of Series B Common Stock, par value $.0001 per share, as may be
issued upon exercise of the Warrants.
(9) $137,932 has been previously paid.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized statement of expenses incurred in connection
with this Registration Statement. All such expenses will be paid by the Company.
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Securities and Exchange Commission registration fee....................... $137,932
NASD fee.................................................................. 30,500
Legal fees and expenses................................................... *
Accounting fees and expenses.............................................. *
Printing and engraving expenses........................................... *
Blue Sky fees and expenses................................................ *
Miscellaneous expenses.................................................... *
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TOTAL........................................................... *
=======
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* To be filed by amendment.
All of the above items are estimates except the Securities and Exchange
Commission registration fee and the NASD filing fee.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the Delaware General Corporation Law, each of the
Company Wireless have broad powers to indemnify its directors and officers
against liabilities they may incur in such capacities, including liabilities
under the Securities Act of 1933, as amended.
The Company's Amended and Restated Certificate of Incorporation and Bylaws
and Wireless' Certificate of Incorporation and Bylaws (the "Indemnification
Provisions") provide for the indemnification of present or former directors and
officers of the Company and Wireless and persons serving as present or former
directors, officers, employees, agents, or trustees of another corporation or
entity at the request of the Company and Wireless (each, an "Indemnified
Party"). The Indemnification Provisions specifically indemnify to the fullest
extent permitted by Delaware law the Indemnified Parties against all expenses,
including counsel fees, incurred in connection with any action, suit, or
proceeding, whether civil, criminal, administrative or investigative. The
Indemnification Provisions require the Company and Wireless to pay for or
reimburse any expenses incurred by an Indemnified Party in reasonable intervals
and in advance of the final disposition of such proceeding provided that the
Indemnified Party undertakes to repay such amount should it be determined
ultimately that he or she is not entitled to indemnification by the Company or
Wireless.
The Indemnification Provisions further provide that the Indemnified Party
may seek a judicial determination of his or her right to indemnification should
the Company or Wireless fail to pay a claim in full within 90 days of its
submission to the Company or Wireless. The Indemnified Party is entitled to
indemnification for all expenses of prosecuting such a claim against the Company
or Wireless if the claim is successful in whole or in part.
The Indemnification Provisions permit the Company and Wireless to present
as a defense to any claim initiated by a director or officer seeking
indemnification that the claimant has not met the standards of conduct which
make it permissible under the Delaware General Corporation Law (or other
applicable law) to indemnify the director or officer for such amount claimed.
Such defense is inapplicable where the claim in question is yet to be
adjudicated and for which the director or officer has entered into the required
undertaking.
In addition, the Company's Amended and Restated Certificate of
Incorporation and Wireless' Certificate of Incorporation provide that, pursuant
to the Delaware General Corporation Law, their directors shall not be
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liable for monetary damages for conduct as a director. These provisions do not
eliminate the duty of care, and in appropriate circumstances equitable remedies
such as injunctive or other forms of nonmonetary relief will remain available
under Delaware law. Furthermore, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company or
Wireless for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, for payment of dividends or approval of stock
repurchases or redemptions that are unlawful under Delaware law. In addition,
each director and officer shall continue to be subject to liability for any act
or omission for which such elimination of liability is not permitted under the
Delaware General Corporation Law.
The Company has entered or will enter into indemnification agreements with
its directors and certain executive officers (each, an "Indemnified Party"). An
Indemnified Party is specifically indemnified and held harmless under such
indemnification agreements for costs and expenses, including without limitation,
damages, judgments, fines, penalties, settlements and costs, attorneys' fees and
disbursements, costs of attachment or similar bonds, and costs of investigation
reasonably incurred in connection with a threatened, pending or completed claim,
action, suit or proceeding by reason of the fact that the Indemnified Party (i)
is or was a director, or officer of the Company; or (ii) is or was serving as a
director, trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise at the request of the
Company. The Company shall not be liable under the indemnification agreements
for any claim to the extent that: (i) the Indemnified Party receives payment
under a valid, enforceable and collectible insurance policy; (ii) the
Indemnified Party is indemnified and actually paid otherwise than pursuant to an
indemnification agreement; (iii) the Indemnified Party is adjudged to be liable
for negligence or misconduct in the performance of his or her duty; (iv) the
Indemnified Party gains in fact any personal profit or advantage to which he or
she is not legally entitled to; (v) the Indemnified Party is required to
disgorge profits from the purchase or sale of securities pursuant to Section
16(b) of the Securities Exchange Act of 1934, as amended; or (vi) the
Indemnified Party brought about or contributed to the claim by his or her
dishonesty so long as it is judicially determined that he or she (a) committed
acts of active and deliberate dishonesty, (b) with actual dishonest purpose and
intent, (c) which acts were material to the claim against the Indemnified Party.
In the event of payment under an indemnification agreement, the Company is
to be subrogated to the extent of such payment to all of the rights of recovery
of the Indemnified Party. The indemnification agreements provide that the
Company will advance the costs and expenses incurred by the Indemnified Party in
advance of final disposition of an action, suit, or proceeding if he or she
undertakes to repay amounts advanced should it be ultimately determined that he
or she is not entitled to be indemnified by the Company. Under the
indemnification agreements, no expenses other than actual judgments or verdicts
may be indemnified without the prior consent of the Company. The indemnification
agreements further provide that an Indemnified Party may seek a judicial
determination of his or her right to indemnification should the Company fail to
pay his or her claim in full within 30 days of its submission to the Company.
The indemnification agreements and provisions for advancing expenses in
such agreements are expressly not exclusive of any other rights of
indemnification or advancement of expenses pursuant to the Delaware General
Corporation Law and the Company's Amended and Restated Certificate of
Incorporation and Bylaws.
The Company maintains insurance policies covering officers and directors
under which the insurers agree to pay, subject to certain exclusions, including
certain violations of securities laws, for any claim made against the directors
and officers of the Company for a wrongful act that they may become legally
obligated to pay or for which the Company is required to indemnify the officers
or directors. The policies have limits of up to $70,000,000 in the aggregate,
subject to retentions of up to $500,000 in the aggregate. The Company believes
that its Certificate of Incorporation and Bylaw provisions, indemnification
agreements and insurance policies are necessary to attract and retain qualified
persons as directors and officers.
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ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Series A Common Stock. The Company sold 27,880,000 shares of Series A
Common Stock to 28 investors from November 1995 to May 1, 1996, primarily to the
Company's directors, officers and employees or entities controlled by the
Company's directors, employees or officers. The shares of Series A Common Stock
were sold for a purchase price of $0.50 per share, for an aggregate
consideration of $13,940,000, $11,430,000 of which was paid in cash and
$2,510,000 of which was paid in promissory notes issued by the holders of the
Series A Common Stock to the Company. In connection with the sales of Series A
Common Stock, the Company has relied on an exemption from registration under
Rule 506 promulgated under Regulation D of the Securities Act. The sales of
Series A Common Stock were effected through a private placement solely to a
limited number of the Company's founders, without general solicitation or
advertising and without brokers or placement agents.
Series B Common Stock. On May 6, 1996, the Company consummated the sale of
39,266,918 shares of Series B Common Stock in a private placement to
institutional investors, venture capital firms and a limited number of
individual investors. The shares of Series B Common Stock were sold for $6.00
per share, for an aggregate consideration of $235,601,562, which was paid in
cash, retirement of $15,000,000 and $20,000,000 of indebtedness payable to
QUALCOMM and PECO, respectively, as described below, and satisfaction of certain
commission obligations payable by the Company. Subscriptions were placed in
escrow and released upon the announcement of the winning bidders in the C-Block
Auction. In connection with the private placement of the Series B Common Stock,
the Company also issued an aggregate of 6,487,567 warrants to purchase shares of
Series B Common Stock at an exercise price of $6.00 per share (the "Series B
Warrants"). In addition, the Company also issued $38,912,478 aggregate principal
amount of convertible promissory notes to certain foreign investors, which will
convert automatically into shares of Series B Common Stock at a conversion price
of $6.00 per share upon additional issuances of equity interests by the Company
to domestic investors, thereby permitting additional foreign ownership of the
Company's equity interests under the FCC's rules. The Company has paid
approximately $9,500,000 in fees to placement agents, including principally ING
Barings (U.S.) Incorporated, in connection with the sale of such shares of
Series B Common Stock. In connection with the sales of Series B Common Stock,
Series B Warrants and convertible promissory notes, the Company has relied on an
exemption from registration under Rule 506 promulgated under Regulation D of the
Securities Act. The sales of Series B Common Stock, Series B Warrants and
Convertible Promissory Notes were effected through a private placement to a
limited number of institutional investors, venture capital firms, strategic
investors and other investors without any general solicitation or advertising,
and otherwise in the manner contemplated by Regulation D.
Pursuant to subscription agreements dated as of May 31, 1996, the Company
sold an additional 2,310,150 shares of Series B Common Stock in a private
placement to five investors with close personal ties to the President of the
Company, without any general solicitation or advertising and without brokers or
placement agents. The shares of Series B Common Stock were sold for $10.00 per
share, for an aggregate consideration of $23,101,500. In connection with these
sales of Series B Common Stock, the Company has relied on an exemption from
registration under Rule 506 promulgated under Regulation D of the Securities
Act.
Between November 13, 1996 and January 10, 1997, the Company issued an
aggregate of 1,885,000 shares of Series B Common Stock to two vendors and three
consultants in connection with the execution of network equipment contracts and
the performance of consulting services. In addition, the Company has executed
Subscription Agreements in the aggregate amount of $27 million with one
consultant and one telecommunications vendor. The Company relied upon an
exemption from registration under Section 4(2) of the Securities Act in
connection with these transactions.
Other Convertible Debt. In November 1995, the Company entered into a
convertible loan agreement with QUALCOMM to borrow $25,000,000, of which
$398,000 was convertible into a promissory note which is convertible at $0.78
per share into 509,722 shares of Series C Common Stock (which shall become
rights to acquire Series B Common Stock after the Equity Offering). QUALCOMM
exercised its right to convert the portion of the loan into a convertible
promissory note convertible into Series C Common Stock in May 1996, and the
Company issued such note. The Company relied upon an exemption from registration
under Section 4(2) of the Securities Act in connection with the November 1995
issuance of the convertible note,
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and the Company relied upon an exemption from registration under Section 3(a)(9)
of the Securities Act in connection with the issuance of the second convertible
promissory note and the retirement of $15 million of indebtedness in exchange
for Series B Common Stock.
Between October 29, 1996 and January 29, 1996, the Company issued
convertible promissory notes convertible into an aggregate of 8,160,727 shares
of Series B Common Stock to three vendors and their affiliates and one
consultant in connection with the execution of network equipment contracts and
the performance of consulting services. The conversion prices for the shares in
such transactions ranged from $10.00 to $11.00. The Company relied upon an
exemption from registration under Section 4(2) of the Securities Act in
connection with these transactions.
Between November 26, 1996 and January 28, 1997, the Company issued
convertible promissory notes convertible into an aggregate of 900,000 shares of
Series B Common Stock at a conversion price of $10.00 per share to three foreign
entities for an aggregate purchase price of $9 million in connection with the
execution of telecommunications services agreements. The Company relied upon an
exemption from registration under Regulation S of the Securities Act in
connection with these transactions.
PECO Note and Warrants. On November 20, 1995, the Company and PECO Energy
Co. ("PECO") entered into a loan agreement pursuant to which the Company
borrowed $20 million and issued 250,000 warrants to purchase shares of Series B
Common Stock at an exercise price of $6.00 per share. The Company relied upon an
exemption from registration under Section 4(2) of the Securities Act in
connection with this transaction. The Company retired $20 million of
indebtedness in exchange for 3,333,333 shares of Series B Common Stock and
warrants to purchase 240,278 shares of Series B Common Stock at an exercise
price of $6.00 per share in May 1996, and relied upon an exemption from
registration under Section 3(a)(9) of the Securities Act in connection with this
transaction.
Bridge Notes. On April 8, 1996, and on subsequent closing dates through
May 22, 1996, the Company issued $130,348,000 aggregate principal amount of
Convertible Senior Subordinated Notes due 2002 (the "Bridge Notes") to a limited
number of institutional investors, venture capital firms and individual
investors, without any general solicitation or advertising. The Company will pay
approximately $2 million in placement agent fees to CIBC/Wood Gundy Securities
Corp. in connection with the placement of the Bridge Notes. In connection with
the sale of the Bridge Notes, the Company has relied on an exemption from
registration under Rule 506 promulgated under Regulation D of the Securities
Act.
Stock Options; Warrants. The Company has granted stock options under the
Amended and Restated Stock Option Plan since its inception. For a description of
these options to employees of the Company, see "Management." The Company relied
upon an exemption from registration under Rule 701 promulgated under Regulation
E of the Securities Act in connection with such transactions. In addition, the
Company issued warrants to purchase 64,113 shares of Series B Common Stock at
$8.00 per share to two parties in connection with financial advisory services
rendered in May, 1996. Between August 22, 1996 and November 1, 1996, the Company
issued warrants to purchase an aggregate of 12,636,642 shares of Series B Common
Stock to one vendor and one reseller customer in connection with the execution
of network equipment contracts and a reseller contract and the performance of
consulting services. In addition, the Company issued a warrant to a vendor the
number of exercisable shares of which is equal to $10 million divided by an
exercise price equal to the Equity Offering price. The Company relied upon an
exemption from registration under Section 4(2) of the Securities Act in
connection with these transactions.
Common Stock of Wireless. On August 1, 1996, Wireless sold 500 shares of
Common Stock, par value $.0001 per share, to the Company, for a purchase price
of $2,000 per share. The aggregate consideration paid to Wireless for such
shares was $1,000. Wireless relied upon an exemption from registration under
Section 4(2) of the Securities Act in connection with this transaction.
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
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EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
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1.1 Form of Underwriting Agreement.(2)
3.1 Amended and Restated Certificate of Incorporation of the Company.(2)
3.2 Restated Bylaws of the Company, as currently in effect.(2)
3.3 Form of Certificate of Amendment to Restated Certificate of Incorporation relating
to reverse stock split.(2)
3.4 Form of Amended and Restated Certificate of Incorporation to be filed prior to
closing of the Offerings.(2)
3.5 Certificate of Incorporation of Wireless.(2)
3.6 Bylaws of Wireless, as currently in effect.(2)
4.1 Form of Installment Plan Note by the Company in favor of the FCC relating to the
C-Block PCS licenses.(2)
4.2 Form of Security Agreement between the Company and the FCC relating to the C-Block
PCS Licenses.(2)
4.3 Form of Senior Note Indenture, together with form of Senior Note.(2)
4.4 Form of Senior Discount Note Indenture, together with form of Senior Discount
Note.(2)
4.5 Form of Common Stock Certificate.(2)
4.6 Securities Purchase Agreement dated as of April 9, 1996 between the Company and
purchasers of the Bridge Notes, together with form of Bridge Notes, Warrants and
Registration Rights.(4)
4.7 Form of Consent by the holders of the Bridge Notes.(2)
5.1 Opinion of Latham & Watkins re: securities offered.(2)
8.1 Opinion of Latham & Watkins re: tax matters.(2)
10.1 Amended and Restated Stock Option Plan.(4)
10.2 Form of Incentive Stock Option under the Plan.(4)
10.3 1997 Equity Incentive Plan.(2)
10.4 Form of Nonstatutory Stock Option Agreement.(2)
10.5 1997 Employee Stock Purchase Plan of the Company.(2)
10.6 1997 Non-Employee Director Stock Option Plan.(2)
10.7 Promissory Note, together with Stock Pledge Agreement, from Navation, Inc.(4)
10.8 Promissory Note, together with Stock Pledge Agreement, from Freedom Mobility Inc.(4)
10.9 Amended and Restated Series A Shareholders Agreement between the Company and the
holders of Series A Common Stock dated as of November 15, 1995.(4)
10.10 Form of Convertible Promissory Note issued to foreign investors convertible into
Series B Common Stock.(4)
10.11 Form of Warrants to Purchase Series B Common Stock.(4)
10.12 Registration Rights with purchasers of Series B Common Stock, Warrants and
Convertible Promissory Notes.(4)
10.13 Amended and Restated Shareholders' Rights Agreement among the Company and its
shareholders dated as of November 30, 1996, but effective as of May 8, 1996,
together with form of Registration Rights.(2)
10.14 Amended and Restated Stockholders' Voting Agreement dated as of April 9, 1996, but
effective as of November 30, 1995, among the Company and its Shareholders.(4)
10.15 Airtime Sale Agreement dated as of August 22, 1996 between the Company and
MCI.(1)(5)
10.16 Warrant Agreement dated as of August 22, 1996 between the Company and MCI.(2)
10.17 Warrant dated August 29, 1996 by the Company in favor of MCI.(2)
10.18 Registration Rights Agreement dated as of August 22, 1996 between the Company and
MCI.(2)
10.19 Strategic Supply and Development Agreement dated as of October 29, 1996 by and
between the Company and Hughes.(1)(5)
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EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
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10.20 Registration Rights Agreement dated as of October 29, 1996 between the Company and
Hughes.(4)
10.21 Special Voting Agreement dated as of October 29, 1996 between the Company, Hughes
and the Stockholders listed therein.(4)
10.22 Convertible Promissory Note dated as of November 1, 1996 by the Company in favor of
Hughes.(2)
10.23 Escrow Agreement dated as of October 29, 1996, as amended, between the Company,
Hughes and The Chase Manhattan Bank.(2)
10.24 Purchase and Supply Agreement dated as of November 8, 1996 between the Company and
The Allen Group.(1)(5)
10.25 Registration Rights Agreement dated as of November 8, 1996 between the Company and
The Allen Group.(4)
10.26 Master Lease Agreement dated October 28, 1996 between the Company and Comdisco.(2)
10.27 Strategic Supply Agreement dated as of October 30, 1996 between the Company and
LGIC.(2)
10.28 CDMA Technical and Market Trial Agreement dated as of October 23, 1996 between the
Company and LGIC.(2)
10.29 Loan Agreement dated as of February 23, 1996 between the Company and LG.(4)
10.30 Loan Agreement and Promissory Note dated as of January 6, 1997 between the Company
and LG.(2)
10.31 Stock Pledge Agreement dated January 6, 1997 between the Company and LG.(2)
10.32 Agreement for Procurement of Personal Communications Services Products, Licensed
Materials and Services dated as of November 15, 1996 between NextWave Wireless and
Lucent.(1)(5)
10.33 Warrant Purchase Agreement dated as of November 15, 1996 between the Company and
Lucent.(2)
10.34 Warrant dated as of November 15, 1996 by the Company in favor of Lucent.(2)
10.35 Equipment Requirements Agreement dated as of November 30, 1995 between the Company
and QUALCOMM.(1)(5)
10.36 PCS Resale Agreement dated as of September 19, 1996, as amended, between NextWave
Wireless and Cellexis.(1)(5)
10.37 PCS Resale Agreement dated as of September 19, 1996 between NextWave Wireless and
UCN.(1)(5)
10.38 PCS Resale Agreement dated as of October 29, 1996 between NextWave Wireless and
PCN.(1)(5)
10.39 PCS Resale Agreement dated as of December 2, 1996 between NextWave Wireless and
Flagship.(1)(5)
10.40 PCS Resale Agreement dated as of November 4, 1996 between NextWave Wireless and One
Stop.(1)(5)
10.41 PCS Infrastructure Deployment Services Master Agreement dated as of July 30, 1996
between the Company and LCC, L.L.C.(2)
10.42 Agreement dated as of March 12, 1996 between the Company and LCC, LLC.(4)
10.43 Form of Indemnification Agreement between the Company and each of its officers and
directors.(4)
10.44 Form of Warrant Agreement relating to the Company's public warrants, together with
form of Warrant.(2)
11.1 Calculation of Pro Forma Net Loss Per Share (Unaudited).(2)
12.1 Calculation of Ratio of Earnings to Fixed Charges.(2)
21.1 Subsidiaries of the Company.(3)
23.1 Consent of Price Waterhouse LLP, Independent Accountants.(3)
23.2 Consent of Latham & Watkins (to be contained in Exhibit 5.1 and Exhibit 8.1).
23.3 Consent of Business Valuation Services Inc.(2)
23.4 Consent of Ha-Young Aum.(3)
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EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
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23.5 Consent of Jang-Ho Chung.(3)
23.6 Consent of Gregory A. Cucchi.(3)
23.7 Consent of Jung-Boo Kim.(3)
23.8 Consent of Manjin J. Kim.(3)
23.9 Consent of Muhit U. Rahman.(3)
23.10 Consent of Yutaka Sato.(3)
24.1 Power of Attorney (contained on signature page).
25.1 Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act
of 1939 of Senior Notes Trustee (to be bound separately from other exhibits).(2)
25.2 Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act
of 1939 of Senior Discount Notes Trustee (to be bound separately from other
exhibits).(2)
27.1 Financial Data Schedule.(2)
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(1) Filed herewith.
(2) To be filed by amendment.
(3) Previously filed.
(4) Filed or to be filed by amendment as an exhibit to Registration Statement
No. 333-5577.
(5) Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions have been filed separately with
the 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.
ITEM 17. UNDERTAKINGS
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereto) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total value
of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price range represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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-7
<PAGE> 9
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, 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 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, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to the court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the act and will be governed by the final adjudication of
such issue.
The undersigned Registrants hereby further undertake 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.
The undersigned Registrants hereby undertake 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-8
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, registrant
NextWave Telecom Inc. has duly caused this Amendment No. 2 to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on March 19, 1997.
NEXTWAVE TELECOM INC.
By: /s/ ALLEN B. SALMASI
------------------------------------
Allen B. Salmasi
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ --------------------------- ------------------
<S> <C> <C>
/s/ ALLEN B. SALMASI President, Chief Executive March 19, 1997
- ------------------------------------------ Officer and Director
Allen B. Salmasi
/*/ GENE M. WELSH Senior Vice President, March 19, 1997
- ------------------------------------------ Finance and Chief Financial
Gene M. Welsh Officer (Chief Financial
and Accounting Officer)
/*/ JANICE I. OBUCHOWSKI Vice Chairman, Executive March 19, 1997
- ------------------------------------------ Vice President and Director
Janice I. Obuchowski
/*/ KEVIN M. FINN Senior Vice President, March 19, 1997
- ------------------------------------------ Business Operations -- West
Kevin M. Finn and Director
/*/ NICOLE N. SALMASI Director March 19, 1997
- ------------------------------------------
Nicole N. Salmasi
*By: /s/ ALLEN B. SALMASI
-------------------------------------
Allen B. Salmasi
Attorney-in-Fact
</TABLE>
II-9
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, registrant
NextWave Wireless Inc. has duly caused this Amendment No. 2 to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on March 19, 1997.
NEXTWAVE WIRELESS INC.
By: /s/ ALLEN B. SALMASI
------------------------------------
Allen B. Salmasi
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ --------------------------- ------------------
<S> <C> <C>
/s/ ALLEN B. SALMASI President, Chief Executive March 19, 1997
- ------------------------------------------ Officer and Director
Allen B. Salmasi
/*/ GENE M. WELSH Treasurer (Chief Financial March 19, 1997
- ------------------------------------------ and Accounting Officer)
Gene M. Welsh
/*/ JANICE I. OBUCHOWSKI Executive Vice President March 19, 1997
- ------------------------------------------ and Director
Janice I. Obuchowski
/*/ KEVIN M. FINN Senior Vice President and March 19, 1997
- ------------------------------------------ Director
Kevin M. Finn
/*/ NICOLE N. SALMASI Director March 19, 1997
- ------------------------------------------
Nicole N. Salmasi
*By: /s/ ALLEN B. SALMASI
---------------------------
Allen B. Salmasi
Attorney-in-Fact
</TABLE>
II-10
<PAGE> 12
EXHIBIT INDEX
The following exhibits are filed as part of this Form S-1 Registration
Statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- ------- ------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.(2)
3.1 Amended and Restated Certificate of Incorporation of the Company.(2)
3.2 Restated Bylaws of the Company, as currently in effect.(2)
3.3 Form of Certificate of Amendment to Restated Certificate of Incorporation relating
to reverse stock split.(2)
3.4 Form of Amended and Restated Certificate of Incorporation to be filed prior to
closing of the Offerings.(2)
3.5 Certificate of Incorporation of Wireless.(2)
3.6 Bylaws of Wireless, as currently in effect.(2)
4.1 Form of Installment Plan Note by the Company in favor of the FCC relating to the
C-Block PCS licenses.(2)
4.2 Form of Security Agreement between the Company and the FCC relating to the C-Block
PCS Licenses.(2)
4.3 Form of Senior Note Indenture, together with form of Senior Note.(2)
4.4 Form of Senior Discount Note Indenture, together with form of Senior Discount
Note.(2)
4.5 Form of Common Stock Certificate.(2)
4.6 Securities Purchase Agreement dated as of April 9, 1996 between the Company and
purchasers of the Bridge Notes, together with form of Bridge Notes, Warrants and
Registration Rights.(4)
4.7 Form of Consent by the holders of the Bridge Notes.(2)
5.1 Opinion of Latham & Watkins re: securities offered.(2)
8.1 Opinion of Latham & Watkins re: tax matters.(2)
10.1 Amended and Restated Stock Option Plan.(4)
10.2 Form of Incentive Stock Option under the Plan.(4)
10.3 1997 Equity Incentive Plan.(2)
10.4 Form of Nonstatutory Stock Option Agreement.(2)
10.5 1997 Employee Stock Purchase Plan of the Company.(2)
10.6 1997 Non-Employee Director Stock Option Plan.(2)
10.7 Promissory Note, together with Stock Pledge Agreement, from Navation, Inc.(4)
10.8 Promissory Note, together with Stock Pledge Agreement, from Freedom Mobility Inc.(4)
10.9 Amended and Restated Series A Shareholders Agreement between the Company and the
holders of Series A Common Stock dated as of November 15, 1995.(4)
10.10 Form of Convertible Promissory Note issued to foreign investors convertible into
Series B Common Stock.(4)
10.11 Form of Warrants to Purchase Series B Common Stock.(4)
10.12 Registration Rights with purchasers of Series B Common Stock, Warrants and
Convertible Promissory Notes.(4)
10.13 Amended and Restated Shareholders' Rights Agreement among the Company and its
shareholders dated as of November 30, 1996, but effective as of May 8, 1996,
together with form of Registration Rights.(2)
10.14 Amended and Restated Stockholders' Voting Agreement dated as of April 9, 1996, but
effective as of November 30, 1995, among the Company and its Shareholders.(4)
10.15 Airtime Sale Agreement dated as of August 22, 1996 between the Company and
MCI.(1)(5)
10.16 Warrant Agreement dated as of August 22, 1996 between the Company and MCI.(2)
10.17 Warrant dated August 29, 1996 by the Company in favor of MCI.(2)
10.18 Registration Rights Agreement dated as of August 22, 1996 between the Company and
MCI.(2)
10.19 Strategic Supply and Development Agreement dated as of October 29, 1996 by and
between the Company and Hughes.(1)(5)
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- ------- ------------------------------------------------------------------------------------
<C> <S>
10.20 Registration Rights Agreement dated as of October 29, 1996 between the Company and
Hughes.(4)
10.21 Special Voting Agreement dated as of October 29, 1996 between the Company, Hughes
and the Stockholders listed therein.(4)
10.22 Convertible Promissory Note dated as of November 1, 1996 by the Company in favor of
Hughes.(2)
10.23 Escrow Agreement dated as of October 29, 1996, as amended, between the Company,
Hughes and The Chase Manhattan Bank.(2)
10.24 Purchase and Supply Agreement dated as of November 8, 1996 between the Company and
The Allen Group.(1)(5)
10.25 Registration Rights Agreement dated as of November 8, 1996 between the Company and
The Allen Group.(4)
10.26 Master Lease Agreement dated October 28, 1996 between the Company and Comdisco.(2)
10.27 Strategic Supply Agreement dated as of October 30, 1996 between the Company and
LGIC.(2)
10.28 CDMA Technical and Market Trial Agreement dated as of October 23, 1996 between the
Company and LGIC.(2)
10.29 Loan Agreement dated as of February 23, 1996 between the Company and LG.(4)
10.30 Loan Agreement and Promissory Note dated as of January 6, 1997 between the Company
and LG.(2)
10.31 Stock Pledge Agreement dated January 6, 1997 between the Company and LG.(2)
10.32 Agreement for Procurement of Personal Communications Services Products, Licensed
Materials and Services dated as of November 15, 1996 between NextWave Wireless and
Lucent.(1)(5)
10.33 Warrant Purchase Agreement dated as of November 15, 1996 between the Company and
Lucent.(2)
10.34 Warrant dated as of November 15, 1996 by the Company in favor of Lucent.(2)
10.35 Equipment Requirements Agreement dated as of November 30, 1995 between the Company
and QUALCOMM.(1)(5)
10.36 PCS Resale Agreement dated as of September 19, 1996, as amended, between NextWave
Wireless and Cellexis.(1)(5)
10.37 PCS Resale Agreement dated as of September 19, 1996 between NextWave Wireless and
UCN.(1)(5)
10.38 PCS Resale Agreement dated as of October 29, 1996 between NextWave Wireless and
PCN.(1)(5)
10.39 PCS Resale Agreement dated as of December 2, 1996 between NextWave Wireless and
Flagship.(1)(5)
10.40 PCS Resale Agreement dated as of November 4, 1996 between NextWave Wireless and One
Stop.(1)(5)
10.41 PCS Infrastructure Deployment Services Master Agreement dated as of July 30, 1996
between the Company and LCC, L.L.C.(2)
10.42 Agreement dated as of March 12, 1996 between the Company and LCC, LLC.(4)
10.43 Form of Indemnification Agreement between the Company and each of its officers and
directors.(4)
10.44 Form of Warrant Agreement relating to the Company's public warrants, together with
form of Warrant.(2)
11.1 Calculation of Pro Forma Net Loss Per Share (Unaudited).(2)
12.1 Calculation of Ratio of Earnings to Fixed Charges.(2)
21.1 Subsidiaries of the Company.(3)
23.1 Consent of Price Waterhouse LLP, Independent Accountants.(3)
23.2 Consent of Latham & Watkins (to be contained in Exhibit 5.1 and Exhibit 8.1).
23.3 Consent of Business Valuation Services Inc.(2)
23.4 Consent of Ha-Young Aum.(3)
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- ------- ------------------------------------------------------------------------------------
<C> <S>
23.5 Consent of Jang-Ho Chung.(3)
23.6 Consent of Gregory A. Cucchi.(3)
23.7 Consent of Jung-Boo Kim.(3)
23.8 Consent of Manjin J. Kim.(3)
23.9 Consent of Muhit U. Rahman.(3)
23.10 Consent of Yutaka Sato.(3)
24.1 Power of Attorney (contained on signature page).
25.1 Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act
of 1939 of Senior Notes Trustee (to be bound separately from other exhibits).(2)
25.2 Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act
of 1939 of Senior Discount Notes Trustee (to be bound separately from other
exhibits).(2)
27.1 Financial Data Schedule.(2)
</TABLE>
- ---------------
(1) Filed herewith.
(2) To be filed by amendment.
(3) Previously filed.
(4) Filed or to be filed by amendment as an exhibit to Registration Statement
No. 333-5577.
(5) Portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions have been filed separately with
the Commission.
<PAGE> 1
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.15
AIRTIME SALE AGREEMENT
BETWEEN
MCI TELECOMMUNICATIONS CORPORATION
AND
NEXTWAVE PERSONAL COMMUNICATIONS, INC.
AUGUST 22, 1996
i
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE 1 -- DEFINITIONS......................................................1
<S> <C> <C>
1.1 Affiliate...................................................1
1.2 Agreement...................................................1
1.3 Airtime. ..................................................2
1.4 Allocated Area-Based Service Capacity. ....................2
1.5 Area-Based Service..........................................2
1.6 Area-Based Service Agreement................................2
1.7 Average Retail Price........................................2
1.8 BTA.........................................................2
1.9 Comparable Local Exchange Carrier Rate. ...................2
1.10 Confidential Information....................................2
1.11 Credit Reserve..............................................2
1.12 Default. ..................................................2
1.13 Defaulting Party............................................2
1.14 Endispute Rules. ..........................................2
1.15 Exclusive Services Agreement................................2
1.16 FCC.........................................................2
1.17 Force Majeure...............................................3
1.18 Full Mobility Service.......................................3
1.19 Identically Situated Purchaser..............................3
1.20 Increased Purchase Commitment...............................3
1.21 Initial Licenses............................................3
1.22 Initial Purchase Commitment.................................3
1.23 Invoice.....................................................3
1.24 Licenses....................................................3
1.25 Local Wireless Operator.....................................3
1.26 Lowest Effective Full Mobility Price........................3
1.27 Lowest Effective Retail Price. ............................3
1.28 Market......................................................4
1.29 MCI.........................................................4
1.30 MCI Point of Interconnection. .............................4
1.31 MOU. ......................................................4
1.32 MSC. ......................................................4
1.33 MTA.........................................................4
1.34 NANPA. ....................................................4
1.35 Network.....................................................4
1.36 Network Outage..............................................4
1.37 NextWave....................................................4
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1.38 Non-Defaulting Party........................................4
1.39 Notice of Election to Acquire...............................4
1.40 Notice of Sale. ...........................................4
1.41 Numbers. ..................................................4
1.42 Party.......................................................5
1.43 PCS.........................................................5
1.44 Person......................................................5
1.45 POPs........................................................5
1.46 Price Floors. .............................................5
1.47 Pricing Schedule. .........................................5
1.48 Problem BTA.................................................5
1.49 Purchase Commitment. ......................................5
1.50 Qualified Entity. .........................................5
1.51 Reciprocal Agreements.......................................5
1.52 Registration Rights Agreement. ............................5
1.53 Reinstatement Date..........................................5
1.54 Resale Terms. .............................................6
1.55 Retail Purchaser. .........................................6
1.56 Service Credit Percentage...................................6
1.57 Service Zone................................................6
1.58 Services....................................................6
1.59 Subscriber. ...............................................6
1.60 Subsequent Licenses. ......................................6
1.61 Technical Specifications....................................6
1.62 Term........................................................6
1.63 Third-Party Terms...........................................6
1.64 Traffic Growth Incentive....................................6
1.65 USAA........................................................6
1.66 Warrant Agreement...........................................6
1.67 WESP........................................................6
ARTICLE 2 -- PROVISION OF AIRTIME.............................................7
2.1 Scope of Agreement..........................................7
2.2 Network Feature Functionality...............................8
2.3 MCI Forecast................................................8
2.4 Network Allocation..........................................9
2.5 Capacity Planning...........................................9
2.6 Network Management..........................................9
2.7 Service Identification.....................................10
2.8 Area-Based Service Agreement...............................10
2.9 Promotion of MCI Services..................................12
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2.10 E911 Service...............................................12
2.11 Switchless Resale..........................................12
2.12 Nonrecognition of CMRS Status..............................13
2.13 Additional Capacity........................................13
2.14 Interconnection Development................................14
ARTICLE 3 -- PURCHASE COMMITMENT.............................................14
3.1 Purchase Commitment........................................14
3.2 Increased Purchase Commitment..............................14
3.3 Reduction and Cancellation of Purchase Commitment. ........14
3.4 Conditions to Purchase ....................................18
ARTICLE 4 -- INTELLIGENT NETWORK.............................................19
4.1 Intelligent Network........................................19
4.2 Most Favored Customer. ...................................19
4.3 Fraud Detection and Management.............................19
4.4 Provision of Billing Data..................................19
ARTICLE 5 -- PRICING.........................................................20
5.1 Full Mobility Pricing......................................20
5.2 Lowest Effective Retail Price..............................20
5.3 Traffic Growth Incentives..................................22
5.4 Resale to Facilities-Based Carriers........................22
5.5 Area-Based Service Pricing.................................23
5.6 Transition Pricing.........................................24
5.7 Reciprocal Agreements......................................25
5.8 Taxes......................................................25
5.9 Invoices. ................................................25
5.10 Disputed Charges. ........................................25
5.11 Service Increments.........................................26
5.12 Credit Reserve. ..........................................26
5.13 Other Service Pricing......................................26
5.14 MSC Support Services.......................................26
5.15 Fraud......................................................27
ARTICLE 6 -- AUDITS..........................................................27
ARTICLE 7 -- INDEPENDENT CONTRACTOR STATUS...................................27
ARTICLE 8 -- PERSONNEL.......................................................28
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C> <C>
8.1 Account Managers. ........................................28
8.2 Replacement Personnel. ...................................28
ARTICLE 9 -- CONFIDENTIAL INFORMATION........................................28
9.1 Confidential Information...................................28
9.2 Restrictions on Disclosure and Use.........................29
9.3 Exceptions. ...............................................30
9.4 Disclosure Pursuant to Legal Requirement. ................30
9.5 Publicity..................................................31
9.6 Proprietary Notices........................................31
9.7 Return of Confidential Information. .......................31
9.8 Cooperation................................................31
9.9 Confidentiality Period.....................................32
ARTICLE 10 -- LIMITED LIABILITY..............................................33
ARTICLE 11 -- INDEMNITIES....................................................33
11.1 Indemnification of MCI.....................................33
11.2 Indemnification by MCI.....................................34
11.3 Indemnification Procedures.................................34
ARTICLE 12 -- TERM AND TERMINATION...........................................35
12.1 Term.......................................................35
12.2 Renewal and Expiration.....................................35
12.3 Termination................................................35
12.4 Continuing Obligations.....................................37
12.5 Default....................................................37
ARTICLE 13 -- *___*..........................................................37
ARTICLE 14 -- INTELLECTUAL PROPERTY RIGHTS...................................38
14.1 Joint Development..........................................38
14.2 No Use of MCI Intellectual Property Rights. ..............38
14.3 No Use of NextWave Intellectual Property Rights............38
ARTICLE 15 -- RIGHT OF FIRST REFUSAL.........................................39
15.1 Transfer of Licenses.......................................39
15.2 Notice of Sale.............................................39
15.3 Continuation of Service....................................40
15.4 Sale of NextWave...........................................40
</TABLE>
iv
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 16 -- TRANSFER ASSISTANCE............................................40
ARTICLE 17 -- NON-SOLICITATION...............................................40
17.1 NextWave Non-Solicitation..................................40
17.2 MCI Non-Solicitation. ....................................41
ARTICLE 18 -- NONINFRINGEMENT................................................41
ARTICLE 19 -- INSURANCE......................................................41
ARTICLE 20 -- DISPUTE RESOLUTION/ARBITRATION.................................41
20.1 Dispute Resolution.........................................41
20.2 Arbitration................................................42
ARTICLE 21 -- MISCELLANEOUS..................................................42
21.1 General Provisions.........................................42
21.2 Warranty...................................................42
21.3 Governing Law and Choice of Forum..........................42
21.4 Authorization and Enforceability. ........................42
21.5 Notices....................................................43
21.6 Assignment.................................................44
21.7 Severability...............................................44
21.8 Survival...................................................45
21.9 Entire Agreement...........................................45
21.10 Counterparts...............................................45
21.11 Captions for Convenience Only..............................45
21.12 Amendment..................................................45
21.13 No Third-Party Beneficiary.................................45
21.14 Expenses...................................................45
21.15 Waiver.....................................................46
21.16 Binding....................................................46
21.17 Specific Performance.......................................46
21.18 Surcharge Exemption........................................46
21.19 Regulatory Compliance......................................46
21.20 Expiration of Term.........................................46
21.21 Cooperation................................................46
</TABLE>
v
<PAGE> 7
AIRTIME SALE AGREEMENT
This AIRTIME SALE AGREEMENT, (the "Agreement") made as of the 22nd day
of August 1996, between MCI Telecommunications Corporation, a corporation
organized and existing under the laws of the State of Delaware and headquartered
in Washington, D.C., and NextWave Personal Communications, Inc., a corporation
organized and existing under the laws of the State of Delaware and headquartered
in San Diego, California.
W I T N E S S E T H:
WHEREAS, in May 1996 the FCC announced that NextWave was the final high
bidder in the FCC C-Block auction of certain PCS Licenses representing half of
the top fifty BTAs and approximately 94 million POPs; and,
WHEREAS, NextWave intends to develop, construct and operate a national
PCS wireless communications network for the purpose, of among other things,
providing bulk PCS airtime on a wholesale basis to others, including MCI.
NOW, THEREFORE, in consideration of the covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties hereto agree as follows:
ARTICLE 1 -- DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the definitions set forth below unless otherwise indicated in this Agreement:
1.1 Affiliate. "Affiliate" shall mean, with respect to any Person,
any other Person which controls, is controlled by, or is under common control
with such Person. For purposes hereof, the term "control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of any such Person whether through the
ownership of voting securities, by contract, or otherwise.
1.2 Agreement. "Agreement" shall mean this agreement, the Technical
Specifications, the Pricing Schedule and the exhibits attached hereto and
incorporated herein.
<PAGE> 8
1.3 Airtime. "Airtime" shall mean the transmission and switching of
signals for PCS, including voice, data, image and/or video, via the Network in
accordance with the Technical Specifications.
1.4 Allocated Area-Based Service Capacity. "Allocated Area-Based
Service Capacity" shall mean that portion of the capacity of the engineered and
equipped Network, on a cell site basis, that is allocated by NextWave for the
provision of Area-Base Service by MCI.
1.5 Area-Based Service. "Area-Based Service" shall mean the
provision of Airtime for the period of time a terminal device is located within
the Service Zone.
1.6 Area-Based Service Agreement. "Area-Based Service Agreement"
shall have the meaning set forth in Article 2.8.
1.7 Average Retail Price. "Average Retail Price" shall have the
meaning set forth in Article 5.5.
1.8 BTA. "BTA" shall mean a Basic Trading Area, as set forth in the
Rand McNally Atlas & Marketing Guide (123rd ed. 1992), and as modified by the
FCC for broadband PCS licensing through the date hereof.
1.9 Comparable Local Exchange Carrier Rate. "Comparable Local
Exchange Carrier Rate" shall have the meaning set forth in Article 5.5(A)(1).
1.10 Confidential Information. "Confidential Information" shall have
the meaning set forth in Article 9.1.
1.11 Credit Reserve. "Credit Reserve" shall have the meaning set
forth in Article 5.9.
1.12 Default. "Default" shall have the meaning set forth in
Article 12.5.
1.13 Defaulting Party. "Defaulting Party" shall have the meaning set
forth in Article 12.5.
1.14 Endispute Rules. "Endispute Rules" shall have the meaning set
forth in Article 20.2.
1.15 Exclusive Services Agreement. "Exclusive Services Agreement"
shall mean the definitive written agreement to be entered into between the
Parties for the provision by MCI to NextWave and its Affiliates of connectivity
services, including backhaul, long distance and signaling.
1.16 FCC. "FCC" shall mean the Federal Communications Commission or
any successor agency thereto.
2
<PAGE> 9
1.17 Force Majeure. "Force Majeure" shall mean acts of God (which are
not reasonably foreseeable in the geographic locations in which they occur and
which result in similar disruptions to the Local Wireless Operators in the
affected market), acts of the public enemy, acts of civil or military authority,
embargos and riots, but only to the extent the Party whose failure to perform
hereunder as a result thereof, takes immediate action and uses commercially
reasonable efforts to remedy the effect of such event.
1.18 Full Mobility Service. "Full Mobility Service" shall mean the
provision of Airtime, other than Area-Based Service, with capability and
coverage comparable to competing PCS and cellular offerings in each Market and
as further provided in the Technical Specifications.
1.19 Identically Situated Purchaser. "Identically Situated Purchaser"
shall mean purchasers of Airtime who commit to purchase equal or greater
quantities of Airtime on similar terms, including technical specifications,
interconnection and support.
1.20 Increased Purchase Commitment. "Increased Purchase Commitment"
shall have the meaning set forth in Article 3.2.
1.21 Initial Licenses. "Initial Licenses" shall mean the PCS licenses
representing 94 million POPs for which NextWave was announced the final high
bidder in the initial FCC "C Block" auction completed on May 6, 1996.
1.22 Initial Purchase Commitment. "Initial Purchase Commitment" shall
have the meaning set forth in Article 3.1.
1.23 Invoice. "Invoice" shall have the meaning set forth in
Article 5.9.
1.24 Licenses. "Licenses" shall mean Initial Licenses and/or
Subsequent Licenses.
1.25 Local Wireless Operator. "Local Wireless Operator" shall mean any
Person, including but not limited to NextWave, providing any wireless two-way
telephone service for voice, data, image and/or video, including, but not
limited to, cellular radio telephone service, PCS, specialized mobile radio
service and enhanced specialized mobile radio service.
1.26 Lowest Effective Full Mobility Price. "Lowest Effective Full
Mobility Price" shall mean *___* of the Lowest Effective Retail Price.
1.27 Lowest Effective Retail Price. "Lowest Effective Retail Price"
shall have the meaning set forth in Article 5.2.
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1.28 Market. "Market" shall mean any discrete BTA, MTA, portion of an
MTA or geographically contiguous BTAs or MTAs, as the case may be, covered by a
License or Licenses.
1.29 MCI. "MCI" shall mean MCI Telecommunications Corporation.
1.30 MCI Point of Interconnection. "MCI Point of Interconnection"
shall mean the feasible demarcation point at the MSCs deployed in the Network
which connect to the MCI network for the purpose of providing Airtime.
1.31 MOU. "MOU" shall have the meaning set forth in Article 5.2(A)
1.32 MSC. "MSC" shall mean a mobile switching center.
1.33 MTA. "MTA" shall mean a Major Trading Area, as set forth in the
Rand McNally Atlas & Marketing Guide (123rd ed. 1992), and as modified by the
FCC for broad band PCS licensing through the date hereof.
1.34 NANPA. "NANPA" shall mean the North American Numbering Plan
Administrator which administers and coordinates the telecommunications numbering
and dialing plans in North America.
1.35 Network. "Network" means all wireless, local exchange and other
equipment, systems and facilities owned, leased or operated by NextWave and its
Affiliates used in the provision of PCS, including facilities utilized for
interconnection, backhaul and longhaul.
1.36 Network Outage. "Network Outage" shall mean the loss of a
portion or all of the call- carrying capacity on the Network or portion thereof,
as measured in erlangs.
1.37 NextWave. "NextWave" shall mean NextWave Personal
Communications, Inc. and its Affiliates.
1.38 Non-Defaulting Party. "Non-Defaulting Party" shall have the
meaning set forth in Article 12.5.
1.39 Notice of Election to Acquire. "Notice of Election to Acquire"
shall have the meaning set forth in Article 15.2.
1.40 Notice of Sale. "Notice of Sale" shall have the meaning set
forth in Article 15.2.
1.41 Numbers. "Numbers" shall have the meaning set forth in
Article 2.1(C).
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1.42 Party. "Party" shall mean NextWave or MCI; "Parties" shall mean
NextWave and MCI.
1.43 PCS. "PCS" shall mean personal communications services as
defined in 47 C.F.R. 24.5 and any successor provision thereto.
1.44 Person. "Person" shall mean any individual, partnership,
corporation, joint venture, limited liability company, trust, business trust,
governmental agency or other entity and the heirs, executors, administrators,
legal representatives, successors and assigns of such Person, as the context may
require.
1.45 POPs. "POPs" means the aggregate number of persons within a BTA
or MTA as determined by the 1990 census figures for the counties contained
therein.
1.46 Price Floors. "Price Floors" shall have the meaning set forth in
Article 3.3(B).
1.47 Pricing Schedule. "Pricing Schedule" shall mean the pricing
schedule set forth in Schedule 2 containing the charges and certain other
necessary information.
1.48 Problem BTA. "Problem BTA" shall have the meaning set forth in
Article 3.3(E).
1.49 Purchase Commitment. "Purchase Commitment" shall mean the
Initial Purchase Commitment or the Increased Purchased Commitment, as
applicable, as adjusted in accordance with Article 3.3.
1.50 Qualified Entity. "Qualified Entity" shall mean: (i) for
licenses for PCS frequency blocks C and F, any Person meeting the eligibility
criteria as set forth in 47 C.F.R. 24.709 and any successor provision thereto;
and (ii) for any other license, any person meeting those licensee eligibility
requirements set forth in those provisions of the FCC's rules applicable to a
license for the service and frequency block.
1.51 Reciprocal Agreements. "Reciprocal Agreements" shall mean any
agreement whereby NextWave or its Affiliates has the ability to purchase Airtime
from, interconnect with and/or use the wireless network facilities of another
Local Wireless Operator.
1.52 Registration Rights Agreement. "Registration Rights Agreement"
shall mean that certain Registration Rights Agreement between NextWave Telecom
Inc. and MCI entered into as of the date hereof.
1.53 Reinstatement Date. "Reinstatement Date" shall have the meaning
set forth in Article 3.3(B).
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1.54 Resale Terms. "Resale Terms" shall have the meaning set forth in
Article 2.11(A).
1.55 Retail Purchaser. "Retail Purchaser" shall have the meaning set
forth in Article 5.1(D).
1.56 *___*
1.57 Service Zone. "Service Zone" shall have the meaning set forth in
Section 2.8(A).
1.58 Services. "Services" shall mean Full Mobility Service and
Area-Based Service.
1.59 Subscriber. "Subscriber" shall mean an end-user, or an end-user
of a customer, as the case may be, of MCI or an MCI Affiliate purchasing
Services furnished pursuant to this Agreement.
1.60 Subsequent Licenses. "Subsequent Licenses" shall mean a PCS
license acquired by NextWave or its Affiliates other than the Initial Licenses.
1.61 Technical Specifications. "Technical Specifications" shall mean
the technical specifications set forth in Schedule 1 which will be updated to
reflect advancements implemented pursuant to Article 2.1(D).
1.62 Term. "Term" shall have the meaning set forth in Article 12.1.
1.63 Third-Party Terms. "Third-Party Terms" shall have the meaning
set forth in Article 3.3(C).
1.64 Traffic Growth Incentive. "Traffic Growth Incentive" shall have
the meaning set forth in Section 5.3(A).
1.65 USAA. "USAA" shall have the meaning set forth in Article 20.2.
1.66 Warrant Agreement. "Warrant Agreement" shall mean that certain
Warrant Agreement between NextWave Telecom Inc. and MCI entered into as of the
date hereof.
1.67 WESP. "WESP" shall have the meaning set forth in the Technical
Specification.
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ARTICLE 2 -- PROVISION OF AIRTIME
2.1 Scope of Agreement
(A) Provision of Service. NextWave and its Affiliates shall sell
Services to MCI and its Affiliates in each and every Market for which NextWave
or any of its Affiliates is awarded or otherwise obtains a License, or enters
into a Reciprocal Agreement. In the event NextWave makes services available on a
commercial wholesale basis, which services are not Full Mobility Service or
Area-Based Service, NextWave shall make available such services to MCI. MCI
shall be responsible for obtaining or providing facilities to the MCI Point of
Interconnection. NextWave shall, *___*, interconnect the Network to the MCI
network at the MCI Point of Interconnection in accordance with the Technical
Specifications. NextWave shall use commercially reasonable efforts to enter into
Reciprocal Agreements with Local Wireless Operators, including those seeking to
purchase airtime from NextWave and those identified by MCI, with suitable
interconnection substantially in accordance with the Technical Specifications,
in those BTAs and MTAs where NextWave or its Affiliates do not hold a License.
(B) Service Description. Services shall involve the establishment
and maintenance of wireless circuits for the continuous transmission of signals
(i) for Airtime originating from a Subscriber, from the originating terminal
device to the MCI Point of Interconnection designated by MCI or its Affiliates,
and (ii) for Airtime terminating to a Subscriber, from the MCI Point of
Interconnection designated by MCI or its Affiliates to the terminating terminal
device. Airtime shall be routed between the Network and the MCI network as
provided in the Technical Specification or such other routing plan as may be
mutually agreed upon by the Parties.
(C) Numbering and Dialing Plans. MCI shall obtain numbers
("Numbers") from the local NANPA for activation by NextWave on the Network. In
the event MCI is not authorized or is otherwise unable to obtain Numbers,
NextWave shall obtain Numbers, for the use by MCI, on a pass-through cost basis.
In the event there is a shortage of Numbers and an allocation of Numbers is
required in any market, NextWave may allocate Numbers pro rata among its Airtime
customers based on the relative number of subscribers across all markets.
NextWave shall provide to MCI, at no additional cost, direct datalink interfaces
to NextWave's service management platform to permit MCI to perform on-line
subscriber activations, suspensions, de-activations, and other subscriber
feature and service changes. NextWave shall establish standard interfaces for
connection to the service management platform and shall provide specifications
therefor to MCI at MCI's request. NextWave's service management platform will
direct on a real time basis MCI service orders and changes to NextWave's
switches and appropriate subsystems. MCI shall be responsible for providing and
maintaining its own on-line computer terminals and modem/datalink connections.
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(D) Technical Specification. While the Parties intend and agree
that the terms contained in this Agreement shall apply to the provision of
Services, to the extent that the terms of this Agreement are inconsistent with
the terms of the Technical Specifications, the terms and conditions of this
Agreement shall prevail over the terms of such Technical Specifications.
2.2 Network Feature Functionality. NextWave shall acquire and
maintain on its Network the most recent commercial releases of vendor software
(including all available upgrades, fixes, patches and the like) available, and
shall seek to acquire, develop and maintain commercially available
state-of-the-art feature functionality in the Network. In the event MCI believes
that the Service, Network or associated feature functionality is not
state-of-the-art, MCI shall provide a written explanation to NextWave of those
areas where MCI believes that the Service, Network or associated feature
functionality is deficient compared to available competitive offerings. NextWave
shall, within thirty (30) days of receipt of MCI's notice, provide a written
response to MCI detailing the plans or actions (including service descriptions,
technical specifications and scheduling, as applicable) that NextWave will
undertake to improve the Service, Network or associated feature functionality to
state-of-the-art. MCI shall have fifteen (15) days to identify in writing any
issues associated with NextWave's plans. The Parties shall cooperate to address
any such issues as expeditiously as practicable and agree on the appropriate
technical solution and implementation schedule. If the Parties are unable to
agree within sixty (60) days of MCI's initial notice, MCI may terminate this
Agreement under Article 12.3. In the event MCI does not provide written notice
identifying issues with the proposed plans of NextWave or upon resolution of any
issues identified by MCI, NextWave shall commence and diligently implement the
plan in accordance with the schedule. NextWave shall provide monthly reports
addressing the status, any issues encountered in the implementation and the then
current schedule. If implementation of any technological advancements or other
modifications of the Network, Service or feature functionality could have an
adverse impact on the Technical Specifications or otherwise disrupt the
provision of Service, NextWave will review the proposed advancement or
modification and its implementation with MCI. The Parties shall work together to
arrive at a mutually acceptable technical solution and implementation schedule
and cooperate to minimize any disruption of Service that may result from the
implementation of the advancement or modification. NextWave will then proceed
with implementation of the mutually acceptable technical solution and
implementation schedule.
2.3 MCI Forecast. Ninety (90) days prior to the offering of
commercial Service in any Market, as communicated to MCI by NextWave at least
one hundred and twenty-days (120) prior to the offering of such commercial
Service, MCI will provide NextWave with a forecast of anticipated Services
requirements, on a quarterly basis, for that Market for the remainder of the
calendar year and for each year thereafter. MCI will provide NextWave with
quarterly updates to its initial and annual forecasts. The Parties will work
cooperatively to ensure that NextWave can provide the quality and coverage
required by MCI and the Subscribers. NEXTWAVE AGREES THAT THESE FORECASTS
REPRESENT MCI'S ESTIMATE OF EXPECTED PURCHASE OF FULL MOBILITY SERVICE AND
AREA-BASED SERVICE, AND ARE NEITHER A COMMITMENT
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<PAGE> 15
NOR LIMIT ON MCI'S RIGHTS TO PURCHASE FULL MOBILITY SERVICE AND AREA-BASED
SERVICE.
2.4 Network Allocation. NextWave shall make Services available to MCI
and its Affiliates at such time as Service is made commercially available to any
customer of NextWave. As NextWave builds-out the Network, NextWave shall
prioritize its build-out to fulfill the forecast of MCI delivered pursuant to
Article 2.3. Subscribers of Full Mobility Service and Area-Based Service shall
have equal priority in terms of access to and capacity on the Network; provided
that Area- Based Service capacity requirements do not exceed the Allocated
Area-Based Service Capacity and that NextWave has provided MCI with at least
ninety (90) days advanced notice thereof. In no event shall NextWave (i) block,
limit or otherwise restrict the activation of Subscribers unless it has
implemented such restrictions equally upon all its other customers, or (ii) take
any action the result of which would be to create a call blockage probability
for Subscribers greater than that for any other customer of NextWave; provided
that, with respect to Area-Based Service, Area-Based Service capacity
requirements do not exceed the Allocated Area-Based Service Capacity and that
NextWave has provided MCI with at least ninety (90) days advanced notice
thereof. NextWave shall manage the Network to meet its customers' aggregate
requirements.
2.5 Capacity Planning. NextWave shall perform capacity planning and
performance analysis for the Network on a cell site basis. NextWave shall
provide to MCI, on a quarterly basis, a capacity report specifying, on a cell
site basis, (i) in those Markets where MCI is offering, or planning to offer
within sixty (60) days, Area-Based Service, Area-Based Service usage and
aggregate Network capacity, (ii) forecasted aggregate usage, including MCI's
forecasted aggregate usage, (iii) call blockage and dropped call reports, and
(iv) planned capacity increases, if any. MCI agrees that these forecasts
represent NextWave's estimate of expected usage and are not a commitment. In
addition, NextWave shall provide to MCI a quarterly report setting forth actual
aggregate airtime usage for all NextWave customers, including MCI aggregate
Airtime usage, on a monthly basis per cell site in those Markets where MCI is
offering, or planning to offer within sixty (60), days Area-Based Service.
2.6 Network Management. NextWave shall implement controls to
effectively manage the Network environments, including change and problem
management systems in accordance with the operational documentation. NextWave
shall confer with MCI on the development of, and deliver to MCI written network
management practices and updates thereto as such practices are implemented and
updated. MCI, through its Affiliates, employees and designated third-parties
(which third-parties are reasonably acceptable to NextWave) shall have the right
to inspect the Network during normal business hours and with reasonable
frequency, upon reasonable notice, to ensure compliance with such network
management practices. NextWave shall provide MCI remote access to the Network to
enable MCI to monitor Network performance, faults and Network Outages.
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<PAGE> 16
2.7 Service Identification. NextWave shall provide MCI-branded
customer voice announcements and other customary service-related voice messages
and/or identifiers in connection with the provision of Services from the time
that NextWave commences the provision of Services. In addition, upon MCI's
written request, NextWave shall provide generic, specific and/or private label
voice announcements and identifiers (i.e., not identified with either MCI or
NextWave) for Subscribers. In no event shall NextWave issue any NextWave or
third-party branded announcements or other service messages and/or identifiers
to Subscribers without MCI's prior written consent, except as required by law or
regulation. Only upon MCI's written request and under no other circumstances,
except as required by law or regulation, shall NextWave deliver broadcast
messages over the Network, including customer solicitations and other
advertisements, to Subscribers.
2.8 Area-Based Service Agreement. The Parties intend to negotiate
and enter into a definitive written supplement to this Agreement based on the
principles set forth below regarding the provision of Area-Based Service (the
"Area-Based Service Agreement"). NEXTWAVE ACKNOWLEDGES AND AGREES THAT THE
PROVISION OF AREA-BASED SERVICE IS CRITICAL TO THE BUSINESS OF MCI AND THAT THE
FAILURE TO ENTER INTO THE AREA-BASED SERVICE AGREEMENT WITH VIABLE AND ECONOMIC
AREA-BASED SERVICE SHALL MATERIALLY IMPAIR MCI'S ABILITY TO FULLY COMPETE IN THE
LOCAL SERVICES MARKET AND SHALL VOID THE PURCHASE COMMITMENT AS SET FORTH IN
SECTION 3.4(E) HEREOF.
(A) Area-Based Service Description. NextWave shall engineer and
equip the Network, on a cell site basis, to provide at least *___* capacity for
the Area-Based Service. Area-Based Service shall be designed to provide
in-building and perimeter service for a terminal device located within the
surrounding area of a pre-designated location or locations (the "Service Zone")
similar in application to local exchange service offerings as of the date
hereof. The Service will not require (i) connection of the Subscriber's terminal
device or associated devices to local exchange service at or in the
pre-designated Service Zone, (ii) professional installation or maintenance of
any required premise equipment for mass market residential or commercial
applications, or (iii) premise equipment on a per Subscriber basis. Service will
not be dropped or interrupted when the terminal device transitions into or out
of a Service Zone. Area-Based Service will support multiple Service Zones per
Subscriber, enable the origination and termination of Services from within a
Service Zone and meet the same availability, capacity and service standards as
Full Mobility Service.
(B) Area-Based Service Quality. Area-Based Service will, subject
to Article 2.8(E), initially be offered within the Network configuration
engineered to meet the Full Mobility Service requirements and will be available
as a stand alone service as the Network is implemented, prior to the
availability of Full Mobility Service. NextWave will provide MCI reasonable
prior notice and prompt identification of geographic areas where Area-Based
Service is available. Such identification will be based on theoretical
availability and applicable testing criteria as more
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specifically set forth in the Area-Based Service Agreement. Area-Based Service
will continue to be offered in all coverage areas where Full Mobility Service is
offered. Upon request, NextWave will provide MCI coverage maps that depict
geographic areas with acceptable in-building penetration levels. In those
coverage areas where Area-Based Service has been identified by NextWave as
available, Area-Based Service will meet the quality of service standards
provided in the Technical Specifications. Area-Based Service will be made
available in an area or areas within a BTA no later than the time that the BTA
for which the area or areas are located is considered built-out. Once Area-Based
Service is made available in an area or areas such Area-Based Service will be
made available during the Term or any renewal thereof.
(C) Area-Based Service Development. NextWave and MCI shall seek
to implement one or more Area-Based Service trials to test, among other things,
infrastructure, cost and performance assumptions and customer
acceptance/satisfaction levels with the Area-Based Service value proposition.
NextWave shall, as requested by MCI, support MCI's efforts to develop Area-
Based Service Applications, such as campuses and office complexes.
(D) Area-Based Allocation. MCI shall be entitled to Allocated
Area-Based Service Capacity of at least *___* of the Network, on a cell site
basis. MCI shall have the right to utilize additional capacity on the Network,
on a cell site basis, in excess of the *___* Allocated Area-Based Service
Capacity to the extent such capacity is available. NextWave shall provide MCI
prompt written notice at any time a cell site is reaching its capacity and the
reasons therefor. If at any time MCI is not utilizing its full *___* Allocated
Area-Based Service Capacity and the cell site capacity utilized is approaching
full capacity, NextWave shall, at MCI's request, and at NextWave's option either
afford MCI at least *___* Allocated Area-Based Service Capacity or, within the
timeframes specified in the Area-Based Service Agreement, increase the capacity
at the cell site at NextWave's sole cost and expense.
(E) Area-Based Service Capacity Build-Out. If at any time MCI or
its Affiliates require or otherwise desire an increase in the amount of capacity
for Area-Based Service beyond *___* and such additional capacity is not
otherwise available, NextWave shall upon MCI's request commence the build-out of
that portion of the Network designated by MCI. MCI shall contribute the direct
incremental capital costs of the build-out requested by MCI at existing or new
cell sites on the Network and shall receive a price adjustment for Area-Based
Service in accordance with Article 5.5(A). In the event of such contribution,
one hundred percent (100%) of the additional capacity relating to such build-out
shall be Allocated Area-Based Service Capacity until MCI shall have recouped its
capital contribution pursuant to Article 5.5(A); provided that NextWave shall
have access to any unused capacity resulting from the build-out and MCI shall
not be required to finance any further capacity expansion at the cell site until
it shall have recouped its investment. With respect to any request for build-out
by MCI, NextWave shall design, engineer and construct such build-out as soon as
practicable and within the specific timeframes to be set forth in the Area-Based
Service Agreement; provided that NextWave may elect not to proceed with
installation involving a new cell
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site if it reasonably determines that such installation would interfere with the
build-out or adversely affect the quality of the Service.
2.9 Promotion of MCI Services. NextWave shall use commercially
reasonable efforts to promote the use of MCI's other services by other Local
Wireless Operators, equipment manufacturers or other partners with whom NextWave
or its Affiliates has or may have an affiliation or other business relationship.
NextWave shall use reasonable efforts to promote the use of MCI services,
including long distance and network signaling, to NextWave's customers, subject
to regulatory limitations. MCI will use reasonable efforts to make available to
NextWave preferred pricing and terms that are available to MCI under MCI's
existing relationships with vendors and service providers.
2.10 E911 Service. Emergency (911 and E911) and lawful intercept calls
will be handled by NextWave, unless otherwise required by regulatory
authorities. Each Invoice shall include a reasonable monthly charge (calculated
on a per Subscriber basis in an amount not to exceed the minimum amount allowed
by applicable regulatory authority or charged by other Local Wireless Operators
that are subject to E911, 911 or lawful intercept requirements) for the
provision of emergency and lawful intercept services. MCI shall pay such charges
within the timeframe specified for payment of Services. If regulatory
authorities shall subsequently change the requirements for emergency or lawful
intercept calls or mandate the provision of other services, the parties shall
cooperate in the provision of such services with associated fees and charges to
be handled in a similar manner to the emergency and lawful intercept services.
2.11 Switchless Resale. In the event that NextWave completes Network
construction and commences offering Services or any other PCS in a Market where
MCI has no WESP, NextWave shall provide MCI with the opportunity to resell the
Service or any other PCS as a switchless reseller at prices and on terms and
conditions no less favorable than those offered to any other customer of
NextWave, including an Affiliate of NextWave. MCI shall have the opportunity to
resell Services and any other PCS offered by NextWave under the terms set forth
herein. As a reseller of Services and any other PCS offered by NextWave, MCI
shall be entitled to have its Subscribers receive the benefit of any and all
roaming agreements to which NextWave or its Affiliates may be a party. *___*
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*___* During any period in which MCI operates as a switchless reseller in any
NextWave Market, (i) MCI shall be responsible, on a pass-through basis, for all
access and interconnection costs incurred by NextWave in the exchange of traffic
between the Network and the networks of all local exchange carriers, Local
Wireless Operators or other telecommunications carriers which are allocable to
Services purchased by MCI, and (ii) MCI shall be entitled to the economic
benefit of any Reciprocal Agreement, or any reciprocal compensation agreement
covering such traffic; and (iii) NextWave shall be responsible for fraud under
the terms set forth under Article 4.3.
2.12 Nonrecognition of CMRS Status. *___*
2.13 Additional Capacity. Whenever NextWave intends to acquire
capacity interconnecting the Network with the facilities of a local exchange
carrier or any Local Wireless Operator in any Market, NextWave shall provide MCI
with adequate prior notice of its intent to acquire such capacity and, upon
MCI's request, shall acquire, to the maximum extent possible under applicable
law and regulations, such additional capacity as MCI may request to augment the
capacity between the Network and the facilities of the local exchange carrier or
Local Wireless Operator to accommodate traffic routed via the Network to or from
MCI's WESP, under the terms, conditions, rates and benefits of any arrangement
NextWave shall enter into for the purchase, lease or utilization of said
interconnection capacity. MCI shall reimburse NextWave for the reasonable and
direct expenses incurred by NextWave relating to such augmented capacity,
including switching and/or establishing and maintaining network connections, if
any. MCI will provide such supporting information as necessary to fulfill
obligations under such arrangements.
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2.14 Interconnection Development. *___________________________________
________________________________________________________________________________
______________________________________________________________________________.*
ARTICLE 3 -- PURCHASE COMMITMENT
3.1 Purchase Commitment. Subject to the terms and conditions hereof,
MCI and its Affiliates shall purchase during the Term a total of Ten Billion
(10,000,000,000) minutes, in aggregate, of Full Mobility Service in all of the
Markets in which NextWave has a License (the "Initial Purchase Commitment").
3.2 Increased Purchase Commitment. The Initial Purchase Commitment
will be increased to an amount equal to one hundred twenty-percent (120%) of the
Purchase Commitment then in effect (the "Increased Purchase Commitment") if, by
the fifth anniversary of the date of commencement of provision of Full Mobility
Service (i) the number of POPs represented by the Initial Licenses and
Subsequent Licenses in the top fifty (50) BTAs (as measured by POPs) acquired by
NextWave plus (ii) the number of POPs represented by BTAs or MTAs, or portions
thereof, with respect to which NextWave has entered into Reciprocal Agreements
with other holders of 30 megahertz licenses, exceeds, in the aggregate, one
hundred eighty-million (180,000,000) POPs; provided, further, that each of the
Reciprocal Agreements (a) provide MCI with suitable interconnection
substantially in accordance with the Technical Specifications and (b) have been
approved by MCI prior to NextWave's entering into the Reciprocal Agreement. The
Increased Purchase Commitment shall be deemed satisfied once amounts paid for
Full Mobility Service purchased by MCI and its Affiliates equals One Billion
Dollars ($1,000,000,000) during the Term.
3.3 Reduction and Cancellation of Purchase Commitment.
(A) Transfer of Licenses. If at any time NextWave sells,
transfers or otherwise loses control or ownership of any License or Licenses
and, after giving effect to such sale, transfer or loss of control or ownership,
the number of POPs represented by Licenses held by NextWave is less than
ninety-nine percent (99%) of the total POPs represented by Initial Licenses,
then upon each such sale, transfer or loss of control or ownership, the Purchase
Commitment then in effect will be
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<PAGE> 21
reduced by an amount equal to the product of (a) the Initial Purchase
Commitment, or the initial Increased Purchase Commitment if the Initial Purchase
Commitment has been increased under Article 3.2, and (b) the percentage equal to
the greater of (i) the percentage equal to the cumulative Full Mobility Service
purchased by MCI and its Affiliates through the period covered by the last
Invoice received by MCI in the BTAs covered by such Licenses that have been
sold, transferred or over which NextWave has lost control or ownership, divided
by the cumulative Full Mobility Service purchased by MCI and its Affiliates
through the period covered by the last Invoice received by MCI in the BTAs
covered by the Licenses held by NextWave immediately prior to such sale,
transfer or loss of control or ownership, and (ii) the percentage equal to the
number of POPs represented by such Licenses that have been sold, transferred or
over which NextWave has lost control or ownership, divided by the aggregate
number of POPs represented by the Licenses held by NextWave immediately prior to
such sale, transfer or loss of control or ownership. Notwithstanding the
foregoing, if NextWave sells, transfers or otherwise loses control or ownership
of Licenses that reduce the number of POPs represented by the Licenses to below
seventy-zmillion (70,000,000) POPs, then the Purchase Commitment will be null
and void.
(B) Price Floors. If at any time the Lowest Effective Full
Mobility Price is below the Price Floors in Markets which comprise more than
five percent (5%) of the POPs represented by the Initial Licenses, then the
Purchase Commitment then in effect will be reduced by an amount equal to the
product of (a) the Initial Purchase Commitment, or the initial Increased
Purchase Commitment if the Initial Purchase Commitment has been increased under
Article 3.2, and (b) a percentage equal to the greater of (i) the percentage
equal to the cumulative Full Mobility Service purchased by MCI and its
Affiliates through the period covered by the last Invoice received by MCI
relating to such Markets, divided by the cumulative Full Mobility Service
purchased by MCI and its Affiliates through the period covered by the last
Invoice received by MCI relating to all of NextWave's Markets; or (ii) the
percentage equal to the number of POPs represented by the Licenses in such
Markets, divided by the aggregate number of POPs represented by the Licenses
then held by NextWave. If within one hundred twenty-days (120) days after the
reduction of the Purchase Commitment pursuant to this Article 3.3(B) (i) the
Lowest Effective Full Mobility Price rises above the then current Full Mobility
Service price set forth in the Pricing Schedule, or (ii) NextWave agrees to
provide Full Mobility Service in such Markets at the Lowest Effective Full
Mobility Price (the "Reinstatement Date"), then a percentage of the amount by
which the Purchase Commitment was reduced shall be reinstated in accordance with
the following:
<TABLE>
<CAPTION>
Reinstatement Date Reinstatement Percentage
<S> <C>
Prior to the first anniversary of the Term *___*
First anniversary of the Term through the day *___*
prior to the third anniversary of the Term
</TABLE>
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<TABLE>
<S> <C>
Third anniversary of the Term through the day *___*
prior to the sixth anniversary of the Term
Sixth anniversary of the Term through the day *___*
prior to the seventh anniversary of the Term
Seventh anniversary of the Term through the *___*
end of the Term
</TABLE>
provided, however, if the Lowest Effective Full Mobility Price drops below the
Price Floors in Markets for which there has been a Purchase Commitment reduction
and a subsequent reinstatement, the Purchase Commitment shall be reduced and not
be subject to any further reinstatement.
(C) Competitive Pricing. If MCI or its Affiliates receives a bona
fide offer from a Local Wireless Operator to sell PCS or cellular radio
telephone service under terms and conditions that MCI or its Affiliates desires
to accept, prior to acceptance thereof, MCI may offer NextWave the right to
provide Full Mobility Service on the same terms and conditions ("Third-Party
Terms") offered by such third-party. In the event NextWave declines to offer
Full Mobility Service under the Third-Party Terms, then the Purchase Commitment
then in effect will be reduced by one minute for each minute of Full Mobility
Service purchased and used by MCI or its Affiliates pursuant to the Third-Party
Terms; provided, however, that the Purchase Commitment shall not be reduced by
an amount in excess of the greater of (i) the percentage equal to the cumulative
Full Mobility Service purchased by MCI and its Affiliates in the areas covered
by the Third-Party Terms, divided by the cumulative Full Mobility Service
purchased by MCI and its Affiliates in all of NextWave's Markets; or (ii) the
percentage equal to the number of POPs in the areas covered by the Third-Party
Terms, divided by the aggregate number of POPs represented by the Licenses held
by NextWave at such time. In no event shall the foregoing obligate MCI or its
Affiliates to offer a right of first refusal to NextWave or otherwise restrict
MCI or its Affiliates from purchasing services from any Local Wireless Operator.
(D) Build-Out. In the event NextWave has not offered Full
Mobility Service for a period of at least six (6) consecutive months in
accordance with the Technical Specifications, including those for availability,
capacity, coverage and service quality, in BTAs covering at least *___* million
POPs represented by the Initial Licenses by December 31, 1998, the Purchase
Commitment then in effect will be reduced by an amount equal to ten percent
(10%) of the Initial Purchase Commitment, or the initial Increased Purchase
Commitment if the Initial Purchase Commitment has been increased under Article
3.2, and the Purchase Commitment then in effect shall be further reduced by an
amount equal to ten percent (10%) of the Initial Purchase Commitment, or the
initial Increased Purchase Commitment if the Initial Purchase Commitment has
been increased under Article 3.2, for each subsequent year or portion thereof
that Full Mobility Service is not offered in BTAs covering at least *___*
million POPs represented by the Initial Licenses. In the event NextWave does
not offer
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Full Mobility Service for a period of at least six (6) consecutive months in
BTAs, covering at least *___* million POPs represented by the Initial Licenses
by December 31, 2001, then the Purchase Commitment then in effect, will be
reduced by an amount equal to the product of (i) *___* million minus the number
of POPs for which Full Mobility Service is available by December 31, 2001,
divided by *___* million, and (ii) the Initial Purchase Commitment; and the
Purchase Commitment then in effect shall be further reduced by an amount equal
to five percent (5%) of the Initial Purchase Commitment, or the initial
Increased Purchase Commitment if the Initial Purchase Commitment has been
increased under Article 3.2, for each subsequent year that Full Mobility Service
is not offered in BTAs represented by the Initial Licenses covering at least
*___* million POPs.
(E) Service, Quality and Capacity. A BTA shall be classified as a
"Problem BTA" if, in respect to Full Mobility Service and Area-Based Service,
any one of the following conditions shall occur any time after six (6) months
after the date Full Mobility Service becomes available on a commercial basis in
such BTA:
*__________________________________________________
__________________________________________________
__________________________________________________*
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*____________________________________________________________
____________________________________________________________*
In the event a BTA shall become a Problem BTA, the Purchase Commitment
then in effect will be reduced by an amount equal to the product of (a) the
Initial Purchase Commitment, or the initial Increased Purchase Commitment if the
Initial Purchase Commitment has been increased under Article 3.2, and (b) the
percentage equal to the greater of (i) the percentage equal to the cumulative
Full Mobility Service purchased by MCI and its Affiliates through the period
covered by the last Invoice received by MCI in the Problem BTA divided by the
cumulative Full Mobility Service purchased by MCI and its Affiliates through the
period covered by the last Invoice received by MCI in the BTAs represented by
the Licenses held by NextWave, and (ii) the percentage equal to the number of
POPs represented by the Problem BTA, divided by the aggregate number of POPs
represented by the Licenses held by NextWave.
3.4 Conditions to Purchase Commitment. The obligation of MCI to
fulfill the Purchase Commitment at any time is also subject to each and every
one of the following conditions having been satisfied:
(A) NextWave shall not have been in material breach of any of its
obligations under this Agreement, the Warrant Agreement, the Exclusive Services
Agreement, or the Registration Rights Agreement, which breach was not cured
within sixty (60) days after written notice thereof;
(B) NextWave shall be providing Full Mobility Service to at least
seventy (70) million POPs covered by the Initial Licenses by December 31, 2001;
(C) NextWave shall be providing Full Mobility Service that are
fully compatible with MCI's network as provided in the Technical Specifications;
(D) NextWave shall have used best efforts, on MCI's request and
behalf, to make available a wireless SID and Number blocks for exclusive use by
MCI and/or its Affiliates from appropriate government agencies or granting
organizations; and
(E) within ninety (90) days from the date hereof, MCI and
NextWave shall have entered into the Area-Based Service Agreement that provides
for viable and economic Area-Based Service, and within one hundred twenty (120)
days from the date hereof, MCI and NextWave shall have entered into the
Exclusive Services Agreement that provides for NextWave to purchase from MCI
connectivity services including backhaul, long distance and signaling subject to
terms that are substantially similar to a bona fide proposal of a third-party,
it being understood that with respect to backhaul services, costs relating to
site location, including site acquisition, leasing and permits, shall be taken
into account when considering the pricing of any such third-party proposal.
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ARTICLE 4 -- INTELLIGENT NETWORK
4.1 Intelligent Network. Intelligent Network ("IN") capabilities
designed and developed by NextWave shall be compatible with and shall not
adversely affect the provision of Services or otherwise degrade the quality of
the Services to below the levels provided in the Technical Specifications.
4.2 Most Favored Customer. MCI may purchase and NextWave shall
provide IN capabilities and enhanced services offered to other NextWave
customers, at prices less than or equal to the prices NextWave charges to any
other customers and upon terms and conditions no less favorable than those
offered to any customers.
4.3 Fraud Detection and Management. To the extent NextWave provides
IN services, which includes, among other services, home location register,
authentication and fraud detection control services, to MCI or its Affiliates,
NextWave shall be responsible for the detection and management of fraud on the
Network, other than subscription fraud, and any and all charges and fees
incurred in respect of such fraud by MCI, its Subscribers, MCI's Affiliates and
MCI's Affiliate's Subscribers; provided, however, if NextWave notifies MCI that
it suspects fraud on MCI's account and MCI fails to provide NextWave with
instructions to suspend or terminate the Service associated with the Subscriber
number within *_________* after receipt of such notice, then MCI shall be liable
for charges incurred from the time of such notification; provided, further that
if NextWave notifies MCI that the suspected fraud involves international long
distance services and MCI fails to provide NextWave with instructions to suspend
or terminate the Services associated with the Subscriber number within *______*,
MCI shall be liable for any international long distance service charges and fees
incurred from the time of such notification. If MCI subsequently notifies
NextWave to suspend or terminate the Service associated with the Subscriber
number suspected of fraud or if the suspension or termination of such number is
prohibited by law, MCI shall not be liable for charges incurred subsequent to
the time of such notification. In no event shall NextWave suspend or terminate
the Service associated with the Subscriber number without instructions from MCI
to take such action, unless otherwise required by law. In the event NextWave,
without MCI's consent takes any action to suspend or terminate Service in its
Markets which will affect a group of Subscribers (e.g., suspension of Service by
NPA), NextWave shall immediately notify MCI of its intended action, cooperate
with MCI to minimize the disruption of Service resulting from such action and
indemnify and hold MCI and its Affiliates harmless against any liability for any
claim or demand arising from the suspension or termination of Service to any
Subscriber not associated with fraudulent activity, including reimbursement of
any reasonable credits MCI or its Affiliates may grant to the affected
Subscribers. NextWave shall have the opportunity to audit fraud claims in
accordance with Article 6.
4.4 Provision of Billing Data. In the event MCI purchases billing
support services, NextWave shall provide electronically, in a format to be
specified by MCI, *___*,
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<PAGE> 26
detailed billing data not to be older than *___*, in accordance with protocols
and specifications in formats customary for the industry and to be mutually
agreed upon. MCI agrees to notify NextWave immediately if it does not receive
the billing data, and MCI shall promptly notify NextWave of any discrepancies in
billing data.
ARTICLE 5 -- PRICING
5.1 Full Mobility Pricing. Pricing for Full Mobility Service,
measured in *___*, for each Market will be the lesser of:
(A) the rates set forth for Full Mobility Service in Schedule 2;
(B) *___*
(C) the "Lowest Effective Full Mobility Price", provided such
price will not be less than *___* from the date hereof through December, 2001,
or *___* from January, 2002 through the end of the Term (the "Price Floors");
or
(D) in the event NextWave or its Affiliates sells Full Mobility
Service, directly or indirectly through affinity, third-party marketing or other
business relationships (excluding reseller transactions), *___* of the lowest
effective rate offered to any Retail Purchaser for such services. For the
purpose of Article 5.1(D), Article 5.5(A) and Article 5.13 only, "Retail
Purchaser" shall include any business, consumer or other end-users but shall not
include employees of NextWave or purchasers of Airtime for which the offering
and duration of the service is not greater than seven (7) days.
5.2 Lowest Effective Retail Price.
(A) Calculation. The lowest effective retail price for a Minute
Of Use ("MOU") of airtime is intended to reflect the lowest retail price
available in the marketplace, as perceived by any customer, taking into account
not only stated, tariffed, published or contract prices, but also discounts,
rebates and all other terms and conditions which affect the stated, tariffed,
published or contract price for the provision of Full Mobility Service (the
"Lowest Effective Retail Price"). The Lowest Effective Retail Price for any
market shall be the average, applying equal weighting, of the lowest effective
rate offering of each of the four largest (in terms of market share) Local
Wireless Operators (excluding MCI and its Affiliates) offering cellular radio
telephone service or PCS in the market. In calculating the lowest effective rate
for a MOU of airtime for each of the Local Wireless
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Operator's offerings comparable to, or competitive with, Full Mobility Service
(i) the monthly Full Mobility MOU statistics of MCI on the Network will be
averaged during the most recent *___* month period for Subscribers by market
segment and shall be applied to each of the Local Wireless Operator's offerings
in accordance with their time period conventions (i.e., peak, off-peak, weekend,
evening and other time period and volume convention prices) and Subscriber call
rounding conventions; and (ii) shall take into account but not be limited to the
following, in any combination as they may appear or be available to any
end-user:
*___________________________________________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________*
(B) Review. Either Party (the "Requesting Party") may request
review of the Lowest Effective Retail Price in any market by providing the other
Party (the "Receiving Party") with a written report detailing its calculation of
the Lowest Effective Retail Price for such market. Such request for review in
any market shall not be made more frequently than once within any ninety (90)
day period. The written report will provide all details and assumptions used in
the calculation. If the Receiving Party fails to respond within a thirty (30)
day period after receipt of the written report from the Requesting Party, the
Lowest Effective Retail Price shall be the amount specified in the report
delivered by the Requesting Party. If the Receiving Party disagrees with the
Lowest Effective Retail Price calculated by the Requesting Party, the Receiving
Party shall have thirty (30) days from its receipt of the report to provide the
Requesting Party with a written response, specifying the Receiving Party's
calculation of the Lowest Effective Retail Price, which response shall include
all details and assumptions used in the calculation.
(C) Effective Date. The revised Lowest Effective Retail Price, as
calculated in this Article 5.2, shall take effect as of the first day of the
following calendar month after a written report has been submitted by the
Requesting Party and shall remain in effect until the first day of the following
calendar month after the date of a subsequent written report that determines a
revised Lowest Effective Retail Price recalculated pursuant to Article 5.2(B)
above; provided that during the pendency of any disagreement regarding the rate
calculation, the price rate in effect immediately prior to the submission of the
report shall continue to apply. If is it subsequently determined that a new
price rate should have applied, then a payment or credit, calculated
retroactively to the date of the report, shall be paid or applied immediately.
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<PAGE> 28
(D) Dispute. If either party disagrees with the calculation of
the Lowest Effective Retail Price for any market then the account managers for
the Parties shall have fifteen (15) days to resolve any disagreement, after
which, if not resolved, the matter shall be submitted to senior management for
resolution within fifteen (15) days thereafter. If such dispute remains
unresolved, then either Party may submit the dispute to binding arbitration
pursuant to Article 20 hereof.
5.3 Traffic Growth Incentives.
(A) At any time after MCI and its Affiliates shall have purchased
thirty (30) billion minutes of Full Mobility Service, the pricing for Full
Mobility Service set forth in the Pricing Schedule may be reduced by an amount
*___* based on the percentage of PCS purchased by MCI and its Affiliates from
NextWave and its Affiliates as compared to PCS purchased by MCI and its
Affiliates from Local Wireless Operators, calculated in accordance with the
Pricing Schedule ("Traffic Growth Incentive"). In the event MCI determines that
it qualifies for a Traffic Growth Incentive, MCI shall provide NextWave written
notice stating the *___* Traffic Growth Incentive for which it is eligible. MCI
shall, upon written request of NextWave, provide documentation in reasonable
detail supporting MCI's determination of the Traffic Growth Incentive.
(B) Review. If NextWave disagrees with the Traffic Growth
Incentive calculated by MCI, NextWave shall have thirty (30) days from its
receipt of the supporting documentation to provide MCI with a written response,
specifying NextWave's calculation of the Traffic Growth Incentive and/or any
other issue it may have with MCI's calculation including all details and
assumptions used in the calculation.
(C) Effective Date. The Traffic Growth Incentive, as calculated
in this Article 5.3, shall take effect as of the first day of the following
calendar month after written notice has been submitted to NextWave and shall
remain in effect until the first day of the following calendar month after the
date of a subsequent written notice from MCI results in a determination of a
Revised Traffic Growth Incentive; provided that during the pendency of any
disagreement regarding the rate calculation, the price rate in effect
immediately prior to the submission of the report shall continue to apply. If is
it subsequently determined that a new price rate should have applied, then a
payment or credit, calculated retroactively to the date of the report, shall be
paid or applied immediately.
(D) Dispute. If the Parties are unable to reach agreement on the
eligibility for a Traffic Growth Incentive then the account managers for the
Parties shall have fifteen (15) days to resolve any disagreement, after which,
if not resolved, the matter shall be submitted to senior management for
resolution within fifteen (15) days thereafter. If such dispute remains
unresolved, then either Party may submit the dispute to binding arbitration
pursuant to Article 20 hereof.
5.4 Resale to Facilities-Based Carriers. If MCI resells Full Mobility
Service to facilities- based carriers and in connection therewith requires
NextWave to implement a PIC/CIC code, then
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<PAGE> 29
MCI shall pay NextWave an additional fee of *___* of Full Mobility Service sold
to each such carrier for management of PIC/CIC and associated databases.
5.5 Area-Based Service Pricing.
(A) Calculation. For each Invoice billing period, MCI shall pay
an amount for Area-Based Service in each market (the "Area-Based Price") equal
to the lesser of:
(1) aggregate number of lines, adjusted on a weighted
average basis to take into account partial period Subscribers,
utilized for Area-Based Service during the Invoice billing period
multiplied by the lesser of (a) *___* of the comparable local
exchange carrier rate or averaged of the two largest local
exchange carriers, which shall be equal to the per-line average
of the most appropriate local exchange carrier's offering for
each of consumer, small business and large business customers in
that market weighted by the relative percentage of MCI's
Area-Based Service consumer, small business and large business
customers (the "Comparable Local Exchange Carrier Rate"); and (b)
in the event NextWave or its Affiliates sells Area-Based Service
in the retail market, directly or indirectly through affinity,
third-party marketing or other business relationships (excluding
reseller transactions), *___* of the lowest effective average per
line rate offered to Retail Purchasers for such Services. The
Comparable Local Exchange Carrier Rate and the NextWave retail
rate shall include either unlimited local usage, where available,
or average local usage charges, where unlimited local usage is
not offered. The Comparable Local Exchange Carrier Rate and the
NextWave retail rate shall include federal and state subscriber
mandated line charges, and shall exclude, without limitation, (i)
connection and installation charges, (ii) inside wiring and
maintenance charges, (iii) customer premise equipment charges,
surcharges, taxes and 911/E911 fees, i(v) call waiting, call
forwarding, caller ID and other optional services, whether or not
designated as CLASS services, (v) yellow pages or other directory
listing or directory service charges, (vi) local operator
assistance or other information services charges, and (vii)
optional extended area service charges; and
(2) aggregate number of *___* of Airtime for Area-
Based Service in such market times the lesser of: (i) *___* and
(ii) in the event NextWave or its Affiliates sells Area-Based
Service in the retail market, directly or indirectly through
affinity, third-party marketing or other business relationships
(excluding reseller transactions), *___* of the lowest effective
rate (measured in *___* increments) offered to any Retail
Purchaser for such Services, which Service is charged on a usage
per time increment;
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provided, however, that in the event MCI contributes to NextWave amounts for
build-out to increase capacity pursuant to the Area-Based Service Agreement, the
Area-Based Price relating to Airtime from the cell site or sites built-out shall
be reduced by *___* (the "Reduced Area- Based Price") until such time that the
savings to MCI generated from the difference between the Area-Based Price and
the Reduced Area-Based Price equals the amount of any such contribution plus
rate of return on such contribution equal to the "prime rate" as announced by
Citibank, N.A., from time to time plus *___* basis points; provided, further,
that if MCI terminated Service in any market under Article 12.3 for which MCI
has contributed to the build-out of a cell site, MCI shall be entitled to
set-off against any Invoice, the amount equal to the unrealized return to MCI
for any such build-out.
(B) Review. Either Party (the "Requesting Party") may request
review of the Average Retail Price in any market by providing the other Party
(the "Receiving Party") with a written report detailing its calculation of such
price in the market. Such request for review in any market shall not be made
more frequently than once within any ninety (90) day period. The written report
will provide all details and assumptions used in the calculation. If the
Receiving Party fails to respond within a thirty (30) day period after receipt
of the written report from the Requesting Party, such Average Retail Price shall
be the amount specified in the report delivered by the Requesting Party. If the
Receiving Party disagrees with the Average Retail Price calculated by the
Requesting Party, the Receiving Party shall have thirty (30) days to provide the
Requesting Party with a written response, specifying the Receiving Party's
calculation of the Average Retail Price, which response shall include all
details and assumptions used in the calculation.
(C) Effective Date. The Average Retail Price shall take effect as
of the first day of the following calendar month after a written report has been
submitted by the Requesting Party and shall remain in effect until the first day
of the following calendar month after the date of a subsequent written report
that determines a revised Average Retail Price is recalculated pursuant to
Article 5.5(B) above; provided that during the pendency of any disagreement
regarding the rate calculation, the price rate in effect immediately prior to
the submission of the report shall continue to apply. If is it subsequently
determined that a new price rate should have applied, then a payment or credit,
calculated retroactively to the date of the report, shall be paid or applied
immediately.
(D) Dispute. If either party disagrees with the calculation of
the Average Retail Price for any Market then the account managers for the
Parties shall have fifteen (15) days to resolve any disagreement, after which,
if not resolved, the matter shall be submitted to senior management for
resolution within (15) days thereafter. If such dispute remains unresolved, then
either Party may submit the dispute to binding arbitration pursuant to Article
20 hereof.
5.6 Transition Pricing. In the event that a Subscriber transitions
between Area-Based Service and Full Mobility Service during the duration of a
continuous transmission of Airtime, the
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<PAGE> 31
pricing for such Airtime shall be calculated based on that portion of the
Airtime utilized for Area- Based Service and Full Mobility Service,
respectively.
5.7 Reciprocal Agreements. Pricing for Full Mobility Service provided
pursuant to a Reciprocal Agreement will be the greater of (i) the Full Mobility
Service price set forth in the Pricing Schedule or (ii) NextWave's incremental
cost of actual usage under the Reciprocal Agreement (calculated in accordance
with the billing convention set forth in the Reciprocal Agreement) plus *___*.
5.8 Taxes. The prices paid by MCI for Services are exclusive of any
applicable sales, use, personal property or other taxes attributable to periods
during the Term based upon or measured by the Services and any associated
services provided or used by NextWave in performing its obligations under this
Agreement. MCI shall reimburse NextWave on a pass-through basis for those taxes
paid by NextWave that are attributable to MCI pursuant to this Section 5.8. Each
Party shall provide and make available to the other any resale certificates,
information regarding out-of-state sales or use of equipment, materials or
services, and other exemption certificates or information reasonably requested
by the other Party. The Parties will also work together to segregate into
separate payment streams, any taxable, nontaxable or items for which a sales,
use or similar tax has already been paid by NextWave.
5.9 Invoices. NextWave shall submit an invoice ("Invoice") to MCI, on
a monthly basis, for Airtime furnished. The Invoice shall specify call level
detail for *___* of Airtime used by MCI during the Invoice period. In
addition, with each Invoice NextWave will also provide a report specifying the
aggregate minutes and dollar amount of Airtime purchased hereunder through the
date of the particular invoice. MCI shall pay all Invoices, except for (i)
disputed amounts, (ii) Service Credits, (iii) amounts relating to fraud on the
Network in which MCI is not responsible for fraud under Article 4.3 and 5.15,
(iv) available amounts under the Credit Reserve; and (v) amounts for which MCI
has a right to offset hereunder, within thirty (30) days of the date of MCI's
receipt of such Invoices and related reports. In the event payment is not sent
within this time period, MCI will pay a late fee equal to interest at a rate
which is two (2) percentage points above the prime rate measured as of the due
date. For purposes of this Agreement, the Prime Rate shall be the interest rate
publicly announced by Citibank, N.A. in New York, New York as its prime lending
rate on the date when payment is due. MCI shall have the right to offset any
amounts due under any Invoice for any amounts owed to MCI hereunder.
5.10 Disputed Charges. MCI shall provide NextWave with written notice
of any disputed Service charges within a reasonable period of time after the
mailing date of the Invoice containing such charges, with such notice setting
forth in reasonable detail such dispute. This disputed charge will be handled
under the dispute resolution process described in Article 20 herein.
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5.11 Service Increments. Notwithstanding anything herein to the
contrary, if at any time during the Term, the Network, as configured, is fully
capable of billing Airtime in increments of less than *________*, the prices for
Services set forth herein shall be adjusted based on the new increment of
measurement and NextWave shall measure and bill Services based on such
increments without rounding.
5.12 Credit Reserve. If at any time during the Term, MCI or an
Affiliate of MCI is entitled to a credit, adjustment or incentive which is not
immediately applied to amounts due for the provision of Services due to (i) the
applicability of regulatory restrictions or limitations, or (ii) the termination
of services in a BTA prior to MCI realizing the return of any contributions for
build-out under Article 5.5, the difference between the price for the Service
and the price for Service had the limitation or termination, as the case may be,
not occurred shall be reserved for future usage (the "Credit Reserve"). If at
any time after the establishment of the Credit Reserve the applicable price for
Services is in excess of such limitations or MCI or its Affiliates are otherwise
obligated to make payments hereunder, amounts under the Credit Reserve shall
first be used to offset any amounts due hereunder, including amounts due by MCI
for the build-out of the Network to increase capacity for Area-Based Service.
5.13 Other Service Pricing. In the event that NextWave or its
Affiliates sell services on a wholesale basis, to any customers, other than a
Retail Purchaser, which services are not comparable to, or competitive with,
either Full Mobility Service or Area-Based Service, MCI shall have the right to
buy the Airtime component for that service under pricing and on terms and
conditions that are no less favorable than those offered to any such customers.
In the event NextWave or its Affiliates sells services in the retail market,
directly or indirectly through affinity, third-party marketing or other business
relationships (excluding reseller transactions), which services are not
comparable to, or competitive with, either Full Mobility Service or Area-Based
Service, MCI shall have the right to buy the Airtime component for that service
at (i) *___* of the lowest effective rate offered by NextWave to any Retail
Purchaser, if such service is bundled or sold with Full Mobility Service or
Area-Based Service or if the Retailer Purchaser is also purchasing Full Mobility
Service or Area-Based Service from NextWave, or (ii) the greater of (a) *___* of
the lowest effective rate offered by NextWave to any Retail Purchaser or (b) at
a discount to the prevailing rate sufficient to allow MCI to offer a comparable
service with *___*, but in no event shall the price determined pursuant to (i)
or (ii) be less than *___*.
5.14 MSC Support Services. MCI shall not pay NextWave for any software
utilized by the MSC to support services provided by MCI's WESP. For features and
functionality provided by MCI's WESP that require or utilize hardware or
tangible resources of NextWave in addition to software, pricing shall be
competitive and based on NextWave's reasonable, direct and allocable expenses,
relating to such hardware or tangible resources utilization. If MCI requests
features and
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functionality that are not based on the then-current Technical Specification,
MCI and NextWave agree to negotiate the pricing for such development as
described in Article 14.
5.15 Fraud. In the event NextWave is not providing IN services which
include home location register, authentication and fraud detection, MCI shall be
responsible for fraud on the Network; provided that if NextWave is better able
to detect or prevent such fraud based on the Network as then configured,
NextWave shall be responsible for the Airtime relating to such fraud; provided,
further that if NextWave notifies MCI that it suspects fraud on MCI's account
and MCI fails to suspend or terminate the Service associated with the Subscriber
number within *___* after receipt of such notice, then MCI shall be responsible
for such fraud from the time of such notification.
ARTICLE 6 -- AUDITS
Each Party will provide reasonable access to its facilities, records and
personnel to enable the other Party and its auditors and examiners to conduct
appropriate audits and examinations of the operations of such other Party
relating to the provision of Services to verify (i) the accuracy of claims and
charges hereunder, (ii) that Services are being provided in accordance with the
Technical Specifications, and (iii) compliance with the terms and conditions of
this Agreement. If any audit or examination reveals that NextWave's invoices for
the audited period are not correct for such periods, NextWave shall promptly
reimburse MCI for the amount of overcharges in excess of one percent (1%), or
MCI shall promptly pay NextWave for the amount of undercharges in excess of one
percent (1%) of the Invoice amount. NextWave shall also reimburse MCI for all
reasonable costs incurred by MCI in connection with the performance of such
audit if there have been overcharges in excess of one percent (1%) of the
Invoice amount. In the event that it is determined that NextWave's invoices for
an audited period are not correct, then NextWave shall (x) take immediate
corrective action to remedy any deficiencies uncovered by the audit which led to
the inaccuracy and (y) furnish a report specifying the corrective steps taken.
Such audit shall be conducted during normal business hours upon reasonable
notice and be not more often than once in any ninety (90) day period.
ARTICLE 7 -- INDEPENDENT CONTRACTOR STATUS
It is the intention of the Parties that MCI be an independent contractor
and not an employee, agent, joint venturer or partner of NextWave in connection
with the provision of Services hereunder. Nothing in this Agreement shall be
interpreted or construed as creating or establishing the relationship of
employer and employee between NextWave and either MCI or any employee or agent
of MCI. NextWave shall not take any action or provide MCI personnel with any
benefits or commitments inconsistent with such personnel's status as employees
of MCI and not of NextWave. Neither Party shall hold itself out as being part of
the other Party or as an agent or partner of the other Party. Each
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Party agrees that it has no authority or power to bind or contract or negotiate
in the name of or to incur any debt or other obligation on behalf of or create
any liability against the other Party in any way or for any purpose.
ARTICLE 8 -- PERSONNEL
8.1 Account Managers. Upon execution of this Agreement, each of the
Parties agrees to designate a senior account manager who will manage and
coordinate interaction between the Parties, and to whom all communications may
be addressed in connection with all aspects of this Agreement. NextWave shall
cause the person assigned to the position of account manager to act as lead
executive and devote substantial time and effort to ensure the prompt
performance of NextWave under this Agreement. Before assigning an individual to
the position of account manager, whether the individual is initially assigned or
is subsequently assigned, NextWave shall:
1. Notify MCI of the proposed assignment;
2. Introduce the individual to appropriate MCI representatives;
and
3. Provide MCI with any other information about the individual
reasonably requested by MCI.
MCI will discuss any objections that MCI may have to such assignment
with NextWave and MCI will attempt to resolve such concerns on a mutually
agreeable basis. If these concerns cannot be addressed to MCI's satisfaction,
MCI will have the right to reject the assignment of the account manager.
NextWave will give MCI at least thirty (30) days advance notice of any proposed
change of its account manager and will address any objections MCI may have to
such change.
8.2 Replacement Personnel. In the event that MCI determines, for any
reason, that it is not in the best interests of MCI for the NextWave account
manager to continue performing any service under this Agreement, MCI will give
NextWave written notice of its objection which shall include MCI's request that
the account manager be replaced. Promptly after its receipt of such notice, or
if for any reason NextWave decides to remove or reassign such employee from the
MCI account, NextWave shall promptly remove such employee from the account and
ensure that (i) such employee no longer have access to any MCI Confidential
Information and (ii) such employee immediately return to NextWave or destroy all
such Confidential Information.
ARTICLE 9 -- CONFIDENTIAL INFORMATION
9.1 Confidential Information. By virtue of this Agreement, the
Parties may have access to, or exchange, information that is confidential to one
another. As used in this Agreement, the term "Confidential Information" shall
mean only such information of the other Party that may be reasonably
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understood from legends, the nature of such information itself and/or the
circumstances of such information's disclosure, to be confidential and/or
proprietary to the other Party or to third- parties to which the other Party
owes a duty of non-disclosure. Notwithstanding the foregoing, NextWave agrees
that all of the following information which NextWave may receive or otherwise
obtain in the course of its performance under this Agreement, including without
limitation in the course of providing the Service, shall be deemed the
Confidential Information of MCI for purposes of this Agreement: *___*.
Notwithstanding the foregoing, MCI agrees that all of the following information
which MCI may receive or otherwise obtain in the course of its performance under
this Agreement shall be deemed Confidential Information of NextWave for purposes
of this Agreement: *___*.
9.2 Restrictions on Disclosure and Use. Each of the Parties agrees
that as to any Confidential Information relating to one Party ("Discloser")
obtained in any manner by the other Party ("Recipient") hereunder:
(A) to use such Confidential Information only in the performance of this
Agreement or as otherwise expressly permitted by this Agreement or by the
Discloser;
(B) not to make copies of any such Confidential Information or any part
thereof except to the extent required to fulfill the Party's obligations under
this Agreement;
(C) not to disclose any such Confidential Information to any
third-party, using the same degree of care used to protect Recipient's own
confidential or proprietary information of like importance, but in any case
using no less than a reasonable degree of care; provided, however, that
Recipient may disclose Confidential Information received hereunder to (i) its
Affiliates who are bound to protect the received Confidential Information from
unauthorized use and disclosure under the terms of a written agreement
(including without limitation a pre-existing written agreement), and (ii) to its
employees, consultants and agents, and its Affiliates' employees, consultants
and agents, who have a need to know to perform or exercise rights under this
Agreement, and who are bound to protect the received Confidential Information
from unauthorized use and disclosure under the terms of a written agreement
(including without limitation a pre-existing written agreement). NextWave
expressly agrees that MCI shall further be entitled to disclose the Technical
Specifications, coverage
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maps and related Service and feature descriptions, but again subject to a
written agreement protecting such Confidential Information from unauthorized use
and disclosure (including without limitation a pre-existing written agreement)
to: (x) to present and prospective Subscribers and other customers and their
respective employees, consultants and agents, who have a need to know such
Confidential Information in connection with the use or prospective use of the
Service, and (y) such other third-parties as reasonably necessary or appropriate
in order for MCI to exercise its rights under this Agreement. MCI will provide
written notification to NextWave of any such disclosure. Confidential
Information shall not otherwise be disclosed to any third-party without the
prior written consent of the Discloser; and
(D) to return to the other Party, or destroy, all of such Party's
Confidential Information received hereunder, whether in any tangible medium of
expression or electronic or other form or format, promptly upon the expiration
or termination of this Agreement.
9.3 Exceptions. The restrictions set forth in this Article 9 on the use
and disclosure of Confidential Information shall not apply to information that:
(A) was publicly known at the time of Discloser's
communication thereof to Recipient;
(B) becomes publicly known through no fault of Recipient
subsequent to the time of Discloser's communication
thereof to Recipient;
(C) is in Recipient's possession free of any obligation of
confidence at the time of Discloser's communication
thereof to Recipient;
(D) is developed by Recipient independently of and without use
of any of Discloser's Confidential Information or other
information that Discloser disclosed in confidence to any
third-party;
(E) is rightfully obtained by Recipient without restriction
from third-parties authorized to make such disclosure; or
(F) is identified by Discloser in writing as no longer
proprietary or confidential.
9.4 Disclosure Pursuant to Legal Requirement. In the event Recipient
is required by law, regulation or court order to disclose any of Discloser's
Confidential Information, Recipient will promptly notify Discloser in writing
prior to making any such disclosure in order to facilitate Discloser seeking a
protective order or other appropriate remedy from the proper authority.
Recipient agrees to cooperate with Discloser in seeking such order or other
remedy. Recipient further agrees that if Discloser is not successful in
precluding the requesting legal body from requiring
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<PAGE> 37
the disclosure of the Confidential Information, it will furnish only that
portion of the Confidential Information which is legally required and will
exercise all reasonable efforts to obtain reliable assurances that confidential
treatment will be accorded the Confidential Information.
9.5 Publicity. The Parties expressly agree that the terms and
conditions of this Agreement, and any activities contemplated hereby or
performed hereunder, are the Confidential Information of the Parties and shall
not be disclosed by NextWave in any manner (including without limitation by way
of news articles, public announcements or disclosures, advertising, marketing
brochures or other similar materials, speeches or any other information
releases) without the prior written approval of the other Party (which shall not
be unreasonably withheld); provided, however, that (i) MCI and NextWave agree
that NextWave shall have the right to issue a news release in the form attached
hereto as Exhibit A to announce the transaction contemplated herein and (ii)
that the Parties acknowledge that NextWave has filed a registration statement
with the Securities and Exchange Commission and will be required to disclose the
existence of this Agreement and describe the material terms contained herein.
NextWave will afford MCI reasonable advance time for review of any proposed
disclosures. To the extent any information has been disclosed to the public
pursuant to this Section 9.5, such information shall not be deemed Confidential
Information of MCI. Notwithstanding the foregoing, each Party agrees that the
Airtime pricing terms contained in Schedule 2 and the Technical Specifications
are confidential and shall not be disclosed, except as may be required by law or
pursuant to any legal proceeding, in which case the provisions of Article 9.4
shall apply. The Parties acknowledge that NextWave will be required to file this
Agreement with the Securities and Exchange Commission as an exhibit to its
registration statement. NextWave shall seek confidential treatment of the
Airtime pricing terms. At no time shall NextWave characterize MCI or its
Affiliates in any material, release or other announcement or utterance as a
"Reseller", nor characterize MCI as engaging or planning to engage in "resale"
or "reselling" of NextWave Services.
9.6 Proprietary Notices. Each Party shall reproduce and maintain on
any copies of the other Party's Confidential Information received or made
hereunder such proprietary legends or notices (whether of the Party providing
the Confidential Information or of a third-party) as are contained in or on the
original.
9.7 Return of Confidential Information. Each Party agrees to return
to the other Party or destroy all of such other Party's Confidential Information
promptly upon the termination of this Agreement. Neither Party shall thereafter
retain any such Confidential Information or any copies thereof fixed in any
tangible medium of expression in whatever form or format.
9.8 Cooperation. In the event either Party becomes aware that any
Person (including, without limitation, any employee or agent of a Party) is
taking or threatens to take any action which would violate any of the foregoing
provisions, such Party shall promptly and fully advise the other Party (with
written confirmation as soon as practicable thereafter) of all facts known to it
concerning such action or threatened action. Neither Party shall in any way aid,
abet or encourage any such
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action or threatened action. Each Party agrees to cooperate in all reasonable
ways to prevent such action or threatened action, including, without limitation,
assigning any cause of action it may have, related to the violation of the
foregoing provisions, to the other Party, and each Party agrees to do all
reasonable things and cooperate in all reasonable ways as may be requested by
the other Party to protect the trade secret and proprietary rights of such other
Party in and to the Confidential Information. A Party shall also be liable for
any breach of the terms of this Article 9 in the event that Confidential
Information received from the other Party is disclosed by an employee, agent or
consultant of such Party or a third-party to whom such Party has disclosed such
information and such disclosure would violate the terms of this Article 9 were
such employee, agent, consultant or third-party a party hereto.
9.9 Confidentiality Period. Confidential Information continues to be
subject to this Agreement for five (5) years following termination or expiration
of this Agreement.
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ARTICLE 10 -- LIMITED LIABILITY
IN NO EVENT WILL EITHER PARTY AND/OR ANY OF ITS AFFILIATES BE LIABLE TO
OR THROUGH THE OTHER PARTY FOR ANY OF THE FOLLOWING:
(A) DAMAGES CAUSED BY OTHER PARTY'S AND/OR ANY OF ITS AFFILIATES'
FAILURE TO PERFORM THEIR OBLIGATIONS AND RESPONSIBILITIES;
(B) CLAIMS OR DEMANDS BROUGHT AGAINST THE OTHER PARTY BY
THIRD-PARTIES OTHER THAN THOSE THIRD-PARTY CLAIMS IN RESPECT OF WHICH SUCH PARTY
IS EXPRESSLY OBLIGATED TO INDEMNIFY THE OTHER PARTY PURSUANT TO A PROVISION OF
THIS AGREEMENT; OR
(C) EXCEPT AS OTHERWISE SET FORTH HEREIN, ANY LOST PROFITS, LOSS OF
BUSINESS, LOSS OF USE (OR INTERRUPTIONS OF BUSINESS), LOST SAVINGS, LOST
OPPORTUNITIES OR OTHER CONSEQUENTIAL, SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY
OR PUNITIVE DAMAGES;
ANY OR ALL OF WHICH ARISE FROM OR IN CONNECTION WITH THE DELIVERY, USE,
OR PERFORMANCE OF SERVICE GOVERNED BY THIS AGREEMENT, AND EVEN IF A PARTY AND/OR
ANY OF ITS AFFILIATES HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
ARTICLE 11 -- INDEMNITIES
11.1 Indemnification of MCI. NextWave agrees to indemnify, defend and
hold MCI harmless against any liability for any claim or demands arising from or
in connection with:
(A) any claims of infringement of any patent, copyright, trade
secret, trademark, service mark or other intellectual property right alleged to
have occurred because of service, equipment or other resources provided by
NextWave hereunder;
(B) the inaccuracy or untruthfulness of any representation or
warranty made by NextWave under this Agreement;
(C) any amounts, including but not limited to taxes, interest and
penalties, assessed against MCI which are obligations of NextWave pursuant to
Article 5.8;
(D) any claims that are the result of NextWave's negligent or willful
act or failure to act, including but not limited to claims for bodily injury or
damage to property; and
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<PAGE> 40
(E) any claims that are a result of NextWave or its Affiliates
failure to comply with all applicable laws, regulations and orders in the
performance of its obligations under this Agreement.
11.2 Indemnification by MCI. MCI agrees to indemnify, defend and hold
NextWave harmless against any liability for any claim or demands arising from or
in connection with:
(A) any claims of infringement of any patent, copyright, trade
secret, trademark, service mark or other intellectual property right alleged to
have occurred because of service, equipment or other resources provided by MCI
hereunder;
(B) the inaccuracy or untruthfulness of any representation or
warranty made by MCI under this Agreement;
(C) any amounts, including but not limited to taxes, interest and
penalties, assessed against NextWave which are obligations of MCI pursuant to
Article 5.8;
(D) any claims that are the result of MCI's negligent or willful act
or failure to act, including but not limited to claims for bodily injury or
damage to property; and
(E) any claims that are the result of MCI or its Affiliates' failure
to comply with all applicable laws, regulations and orders in the performance of
its obligations under this Agreement.
11.3 Indemnification Procedures. All indemnities created in this
Agreement shall include indemnification of the indemnified Party's Affiliates,
and their respective directors, officers, employees, agents, customers
successors and assigns and their heirs, legal representatives, and assigns
thereof. The indemnification shall be for all claims arising out of the specific
event referred to in this Agreement which is covered by the indemnification,
including all costs reasonably incurred in the defense of any claim, including
without limitation reasonable accountant's, attorneys' (including allocated
in-house expenses), and expert witness fees, costs of investigation and proof of
facts, court costs, and other reasonable litigation expenses, including, but not
limited to, travel and living expenses. Written notice of claim shall be
forwarded promptly by the Indemnitee to the Indemnitor and there shall be no
settlement of the claim without the consent of the Indemnitee, which consent
shall not be unreasonably withheld. Indemnitee shall have the right to
participate in the defense of any such claim in which it is named as a defendant
at its own cost and expense. The indemnities created by this Agreement shall
continue in full force and effect subsequent to and notwithstanding the
expiration or termination of this Agreement. Provisions for indemnification in
this Agreement are not in lieu of and do not supplant insurance coverage
required in the Agreement, and are not intended to act as insurance.
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ARTICLE 12 -- TERM AND TERMINATION
12.1 Term. This Agreement will continue for a period of ten (10) years
from the date on which Full Mobility Service in NextWave's first BTA becomes
available (the "Term") on a commercial basis, unless earlier terminated or
extended in accordance with this Agreement. MCI shall have the right, subject to
Article 12.2, to renew this Agreement for an additional five (5) year term upon
written notice to NextWave delivered not less than one (1) year prior to the
expiration of the Term.
12.2 Renewal and Expiration. If MCI elects to renew this Agreement,
the Parties shall review and if necessary, adjust the pricing so that rates
provide NextWave *___*. Any new pricing will be adjusted to reflect expected
system usage during such renewal period. If MCI notifies NextWave that it
desires to renew the Agreement, but the Parties are unable to agree upon renewal
prices, terms and conditions as of six (6) months prior to the expiration of the
Term, this Agreement will be extended for two (2) years from the expiration of
the Term at the then current prices, terms and conditions in order for MCI to
transition Subscribers from the Network. If the Parties are unable to reach
agreement on renewal during such transition period, this Agreement will expire
at the end of such transition period.
12.3 Termination.
(A) This Agreement shall terminate upon the occurrence of any of
the following:
(1) the election of a Non-Defaulting Party to terminate this
Agreement, which election must be made within one hundred twenty
(120) days after a Default;
(2) either Party, in its discretion, may terminate this
Agreement by written notice to the other Party if the other Party
makes any assignment for the benefit of creditors or an arrangement
pursuant to any bankruptcy law; or files or has filed against it any
petition under the federal bankruptcy laws or the bankruptcy or
insolvency laws of its jurisdiction (which is not stayed within sixty
(60) days); or shall have or suffer a receiver or trustee to be
appointed for its business or property; or be adjudicated a bankrupt
or an insolvent; or any committee of the creditors, or any class
thereof, is formed for the purpose of monitoring the financial
affairs of the other Party or enforcing such creditors' rights;
(3) the election of MCI to terminate this Agreement in the
event that NextWave shall not have been granted the PCS licenses for
which NextWave was the final high bidder in the initial FCC C block
auction completed on May 6, 1996, representing at least seventy (70)
million POPs;
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(4) the election of MCI to terminate this Agreement in the
event that MCI's obligations to fulfill the Purchase Commitment shall
have been eliminated pursuant to Article 3.3(A), (D) or (E), or
Article 3.4;
(5) the election of MCI to terminate this Agreement in the
event that NextWave shall have failed to (i) have the registration
statement filed with the Securities and Exchange Commission for the
issuance of equity securities by NextWave declared effective by March
31, 1997, or (ii) consummate the transactions contemplated thereunder
by March 31, 1997; or
(6) the election of MCI if NextWave has not acquired,
developed and maintained commercially available state-of-the-art
feature functionality in the Network under Section 2.2 hereof, and
within sixty (60) days of MCI's initial notice thereof the Parties
are unable to reach agreement on a technical solution and
implementation schedule relating thereto.
(B) MCI, may terminate Service in a BTA if that BTA is
classified as a Problem BTA under Article 3.3 (E).
(C) Notwithstanding any provision herein to the contrary,
including Article 10(C), if MCI terminates this Agreement, as specified in this
Article 12.3(A), or terminates Service in a BTA, or portion thereof, under
Article 12.3(B), unless with respect to the termination of Service in a Problem
BTA, such Problem BTA was the immediate, direct result of, and resulted solely
from a Force Majeure, NextWave shall be liable to MCI and its Affiliates for any
and all damages, claims, costs, liabilities and expenses incurred by MCI or its
Affiliates as a result of the termination of this Agreement or of the Service in
a Problem BTA, including, but not limited to, *___*; in each case arising from
or relating to (a) the retention or attempted retention of Subscribers or
(b) the transition or attempted transition to any other provider(s) of wireless
services. The Parties will use reasonable efforts to mitigate any such damages,
claims, costs, liabilities and expenses. The Parties acknowledge and agree that
Subscriber satisfaction and retention is of the utmost importance. In addition
to the foregoing, if MCI terminates this Agreement pursuant to the terms of this
Article 12.3, NextWave shall pay MCI an amount equal to the remaining balance of
the Credit Reserve.
(D) The Parties agree that in the event that either Party
elects to terminate this Agreement, or Service in a BTA is terminated pursuant
to the terms of this Article 12.3, then NextWave shall continue to provide
Services for a period up to *___* (the "Transition
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Period") at the current prices, terms and conditions in order for MCI to
transition its Subscribers from the Network; provided, however, if this
Agreement is terminated as a result of a payment default by MCI under Section
5.9 hereof, then the Transition Period shall expire ninety (90) days after
termination. In no event shall the purchase of Services by MCI or its Affiliates
during Transition Period be deemed to extend any applicable cure period or a
waiver of any rights or remedies of MCI pursuant to this Agreement.
12.4 Continuing Obligations. Termination pursuant to the terms of this
Agreement, regardless of cause or nature, and any remedies set forth herein
shall not be the exclusive remedy, shall be without prejudice to any other
rights or remedies of the Parties and shall not terminate any other obligations
which by their terms or their nature survive or should survive termination of
this Agreement. Termination of this Agreement shall not release either Party
hereto from any liability which at the time of termination has already accrued
to the other Party.
12.5 Default. ("Default") hereunder by a Party (the "Defaulting
Party") shall be deemed to have occurred if, within sixty (60) days of the
Defaulting Party's receipt of written notice from a non-defaulting Party (the
"Non-Defaulting Party") of a breach of its obligations under this Agreement (the
"Cure Period"), the Defaulting Party shall have failed to cure such breach. In
the event of such Default, the Non-Defaulting Party may terminate this
Agreement, without liability to the Non-Defaulting Party.
ARTICLE 13 -- *___*
*_________________________________________________________________
_______________________
_______________________*
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*_________________________________________________________
_________________________________________________________*
ARTICLE 14 -- INTELLECTUAL PROPERTY RIGHTS
14.1 Joint Development. If during the Term the Parties desire to
collaborate in the development of technology for use in connection with the
provision of Service, the Parties shall mutually agree upon the funding and
ownership of such technology.
14.2 No Use of MCI Intellectual Property Rights. Nothing herein shall
be deemed to grant to NextWave any right, license or other interest in or under,
or right to use, and NextWave shall not use, any patents, copyrights, trade
secrets, trademarks, service marks, trade names or other similar designation, or
any other intellectual property rights of MCI or any of its Affiliates.
14.3 No Use of NextWave Intellectual Property Rights. Except as
otherwise contemplated herein, nothing herein shall be deemed to grant to MCI
any right, license or other interest in or under, or right to use, and MCI shall
not use, any patents, copyrights, trade secrets, trademarks, service
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marks, trade names or other similar designation, or any other intellectual
property rights of NextWave or any of its Affiliates.
ARTICLE 15 -- RIGHT OF FIRST REFUSAL
15.1 Transfer of Licenses. If, during the Term, NextWave proposes to
sell or otherwise transfer control or ownership of any License held by NextWave
or its Affiliates, then prior to consummating any such transaction, NextWave or
its Affiliates, as the case may be, shall afford MCI a right of first refusal,
which right of first refusal may be assigned by MCI to any Qualified Entity at
MCI's sole discretion; provided, that in the event such sale or transfer
involves consideration to be paid by a purchaser in a form other than cash, the
consideration to be paid by MCI or its assignee to NextWave shall be an amount
in cash equal to the fair market value of the offeror's consideration; provided,
further that such right of first refusal shall not apply to (i) the acquisition
of all the outstanding shares of NextWave or NextWave Telecom Inc., whether by
sale of stock, merger or otherwise, or (ii) to a transaction involving the
swapping or exchange of Licenses which does not result in a net reduction of
more than one percent (1%) of the POPs represented by Initial Licenses.
15.2 Notice of Sale. In the event that NextWave or any of its
Affiliates proposes to sell or otherwise transfer control or ownership of a
License for which MCI has a right of first refusal under this Article 15.1,
NextWave shall deliver written notice of such proposed sale to MCI stating its
bona fide intention to sell or transfer control of the License, which notice
shall specify the price and material terms upon which NextWave proposes to sell
such License ("Notice of Sale"). MCI, or an assignee of MCI, may within sixty
(60) days after the delivery of the Notice of Sale, elect to purchase, at the
price and on the terms specified in the Notice of Sale (subject to the
provisions contained in Article 15.1 regarding non-cash payment by a
third-party), by delivery of a written notice of such election to NextWave
("Notice of Election to Acquire"). Such Notice of Election to Acquire shall, if
applicable, name any assignee that will be the acquiring party and shall confirm
the acquiring party's eligibility under applicable FCC rules and agreement to
pay the License purchase price in cash. If MCI elects to acquire a License
pursuant to the delivery of the Notice of Election to Acquire, then the purchase
agreement for the acquisition of such License shall be executed within sixty
(60) days of MCI's delivery for the Notice of Election to Acquire, with the
closing of the acquisition to occur on the later of (i) thirty (30) days
thereafter or (ii) such period of time which is five (5) days after any
necessary governmental approvals or consents have been obtained. If MCI does not
elect to acquire such License, then NextWave may proceed to sell or transfer the
License to a third-party on terms no less favorable than those stated in the
Notice of Sale, provided that if the closing of such sale does not occur within
the later of (i) one hundred fifty (150) days after the delivery of the notice
of sale or transfer and (ii) such period of time which is five (5) days after
any necessary governmental approvals or consents have been obtained, NextWave
shall again comply with this Article 15.2 prior to selling or transferring any
License.
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15.3 Continuation of Service. If NextWave sells or otherwise transfers
control or ownership of any License held by NextWave, then MCI may at its option
require that NextWave obligate the transferee or any purchaser to continue, for
a period expiring on the later of (i) the expiration of the Term and (ii) thirty
(30) months after the consummation of such sale or transfer, to provide Service
upon like terms and conditions as set forth in this Agreement.
15.4 Sale of NextWave. In the event of the sale of NextWave Telecom
Inc. or NextWave, whether by sale of stock, merger or otherwise, then MCI may at
its option (i) terminate this Agreement, or (ii) require that NextWave obligate
the transferee or any purchaser to continue, for a period expiring on the later
of (x) the expiration of the Term, and (y) thirty (30) months after the
consummation of such sale or transfer, to provide Service upon like terms and
conditions as those set forth in this Agreement.
ARTICLE 16 -- TRANSFER ASSISTANCE
It is the intent of the Parties that at the expiration or termination of
this Agreement, NextWave will cooperate with MCI to assist with the orderly
transfer of the service, functions and operations provided by NextWave hereunder
to another PCS provider or providers or MCI itself. Prior to expiration or
termination of the Agreement, MCI may request NextWave to perform and, if so
requested, NextWave shall perform (except in the event of a termination due to a
failure by MCI to reasonably pay amounts due and payable under this Agreement)
services upon terms and conditions mutually agreed upon by the Parties in
connection with transferring Subscribers to another Local Wireless Operator or
MCI's network ("Transfer Assistance"). Transfer Assistance shall be provided for
up to thirty (30) months after the effective date of expiration or termination
of this Agreement.
ARTICLE 17 -- NON-SOLICITATION
17.1 NextWave Non-Solicitation. During the Term (and any extension
thereof) and for two (2) years thereafter, in the absence of MCI's prior written
consent, NextWave and its Affiliates will not, directly or indirectly, (i) use
any information generated by MCI or NextWave (relating to any information
generated by NextWave in its performance hereunder) or received from MCI to
solicit, market or otherwise contact current or former Subscribers for any
purpose whatsoever, or (ii) solicit or encourage any employee of MCI or its
Affiliates to leave the employment of MCI or its Affiliates, as the case maybe,
except with respect to subclause (ii) pursuant to a general solicitation of
NextWave not directed at the employees of MCI or its Affiliates or in the event
that an employee of MCI or its Affiliates, in the absence of any action by
NextWave (or its representatives or agents) in violation of the provisions of
this Article 17, independently approaches NextWave regarding employment.
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17.2 MCI Non-Solicitation. During the Term (and any extension thereof)
and for two (2) years thereafter, in the absence of NextWave's prior written
consent, MCI and its Affiliates will not, directly or indirectly, (i) use any
information generated or received from NextWave to solicit, market or otherwise
contact any current or former NextWave customer for any purpose whatsoever, or
(ii) solicit or encourage any employee of NextWave or its Affiliates to leave
the employment of NextWave or its Affiliates, as the case may be, except with
respect to subclause (ii) pursuant to a general solicitation of MCI not directed
at the employees of NextWave or its Affiliates or in the event that an employee
of NextWave or its Affiliates, in the absence of any action by MCI (or its
representatives or agents) in violation of the provisions of this Article 17,
independently approaches MCI regarding employment.
ARTICLE 18 -- NONINFRINGEMENT
The Parties represent and warrant that they will perform their
responsibilities under this Agreement in a manner that does not knowingly
infringe or misappropriate any patent, trade secret, copyright or other
proprietary right of any third-party.
ARTICLE 19 -- INSURANCE
When this Agreement requires performance by employees or subcontractors
of MCI or NextWave on the other Party's premises, the performing Party shall
carry and maintain Worker's Compensation and Employer's Liability Insurance
covering its employees or subcontractors engaged in such performance in amounts
no less than required by law in the applicable location.
ARTICLE 20 -- DISPUTE RESOLUTION/ARBITRATION
20.1 Dispute Resolution. Either Party may identify a dispute that has
arisen in performance of this Agreement by notifying the other Party's account
manager in writing, setting forth the dispute with reasonable specificity. The
account managers shall promptly attempt to resolve such dispute by negotiation.
If within ten (10) calendar days of written notice of a dispute the account
managers have been unable to resolve it, then either Party may escalate
resolution of the dispute to an appropriate senior executive of NextWave or to
an appropriate senior executive of MCI by notifying them in writing, setting
forth the dispute with reasonable specificity. The senior executives shall
attempt to resolve such dispute by negotiation. If within ten (10) calendar days
of such escalation of a dispute the senior executives have been unable to
resolve it, then either Party may seek resolution of the dispute by arbitration
in accordance with Section 20.2.
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<PAGE> 48
20.2 Arbitration. Without prejudice to either Party's right to seek
equitable relief (including, but not limited to, injunction) from a court, any
dispute arising out of or related to this Agreement, which cannot be resolved by
negotiation, shall be settled by binding arbitration in accordance with the
J.A.M.S./ENDISPUTE arbitration rules and procedures ("Endispute Rules") and in
accordance with the terms of this Article 20. The costs of arbitration,
including the fees and expenses of the arbitrator, shall be shared equally by
the Parties unless the arbitration award provides otherwise. Each Party shall
bear the cost of preparing and presenting its case. The Parties agree that this
provision and the Arbitrator's authority to grant relief shall be subject to the
United States Arbitration Act, 9 U.S.C. 1-16 et seq. ("USAA"), the provisions of
this Agreement, and the ABA- AAA Code of Ethics for Arbitrators in Commercial
Disputes. The Parties agree that the arbitrator shall have no power or authority
to make awards or issue orders of any kind except as expressly permitted by this
Agreement, and in no event shall the arbitrator have the authority to make any
award that provides for punitive or exemplary damages. The arbitrator's decision
shall follow the plain meaning of the relevant documents, and shall be final and
binding. The award may be confirmed and enforced in any court of competent
jurisdiction. All post-award proceedings shall be governed by the USAA.
ARTICLE 21 -- MISCELLANEOUS
21.1 General Provisions.
21.2 Warranty. NextWave represents and warrants that all services
rendered in connection with the provision of Services hereunder will be
performed in a workmanlike manner in accordance with industry standards and the
Technical Specifications.
21.3 Governing Law and Choice of Forum. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
other than the laws thereof that would require reference to the laws of any
other jurisdiction. For all purposes for which resort to a court may be had, the
parties irrevocably consent to the exclusive jurisdiction and venue of the
federal and state courts located in the State of New York.
21.4 Authorization and Enforceability. Each Party hereby represents
that:
(A) it has all requisite corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated hereby;
(B) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all requisite corporate action on the part of each Party; and
42
<PAGE> 49
(C) this Agreement has been duly executed and delivered by such Party
and is a valid and binding obligation of such Party, enforceable against it in
accordance with its terms.
21.5 Notices. All notices, demands, requests, or other communications
which may be or are required to be given or made by any Party, to the other
Party pursuant to this Agreement shall be in writing and shall be hand
delivered, mailed first-class registered or certified mail, return receipt
requested, postage pre-paid, delivered by overnight air courier, or transmitted
by telegram, telex, or facsimile transmission addressed as follows:
If to MCI:
MCI Telecommunications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attn: Herman W. Bluestein
Fax: (202) 887-2369
with a copy to:
MCI Telecommunications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attn: General Counsel
Fax: (202) 887-2047
If to NextWave:
NextWave Personal Communications, Inc.
9455 Towne Centre Drive
San Diego, CA 92121
Attn: Allen B. Salmasi
Fax: (619) 597-4041
with a copy to:
NextWave Personal Communications, Inc.
9455 Towne Centre Drive
San Diego, CA 92121
Attn: General Counsel
Fax: (619) 642-1912
43
<PAGE> 50
If to NextWave Telecom Inc.:
NextWave Telecom Inc.
9455 Towne Centre Drive
San Diego, CA 92121
Attn: Allen B. Salmasi
Fax: (619) 597-4041
with a copy to:
NextWave Telecom Inc.
9455 Towne Centre Drive
San Diego, CA 92121
Attn: General Counsel
Fax: (619) 642-1912
Each Party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be given, served or
sent. Each notice, demand, request or communication which shall be mailed,
delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent or received for all purposes as such time as it
is delivered to the addressees (with the return receipt, the delivery receipt or
affidavit of messenger, or the facsimile answerback being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
21.6 Assignment. This Agreement may not be assigned, in whole or in
part, by any Party without the prior written consent of the other Party, except
that MCI may assign this Agreement to any of its Affiliates without the consent
of NextWave. For purposes of this subsection only, the term "Affiliates" shall
mean an entity under common control, controlling or controlled by MCI; provided
that "control" as used herein shall mean the ownership, directly or indirectly,
of at least eighty percent (80%) of the aggregate of all voting interests in
such entity. Any other attempt to assign this Agreement shall be null, void and
of no force or effect.
21.7 Severability. If any provision of this Agreement shall be found
by any court or administrative body of competent jurisdiction to be invalid or
unenforceable, the invalidity or unenforceability of such provision shall not
affect the other provisions of this Agreement and all provisions not affected by
such invalidity or unenforceability shall remain in full force and effect. The
Parties hereby agree to attempt to substitute for any invalid or unenforceable
provision a valid and enforceable provision which achieves to the greatest
extent possible the economic, legal and commercial objectives of the invalid and
unenforceable provision.
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<PAGE> 51
21.8 Survival. The following provisions shall survive the termination
of this Agreement, and shall continue in full force and effect along with any
other provisions of this Agreement which by their nature or in accordance with
their terms, whether or not listed, shall survive such termination: Articles 6,
9, 10, 11, 12, 14, 17, 18, and 20 and Articles 21.3, 21.5, 21.7, 21.8, 21.13,
21.14, 21.16 and 21.17.
21.9 Entire Agreement. This Agreement, which includes the attached
Schedules, constitutes the entire agreement and understanding between the
Parties hereto in connection with the subject matter hereof, and supersedes and
cancels all previous negotiations, commitments and writings with respect thereto
including that certain confidentiality agreement executed by the Parties on
January 10, 1996.
21.10 Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each Party, or the signatures
of all persons required to bind party, appear on each counterpart; but it shall
be sufficient that the signature of, or on behalf of, each Party, or the
signatures of the persons required to binds any Party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement.
21.11 Captions for Convenience Only. The captions used in this
Agreement are included for convenience only and shall not be considered part of
this Agreement for any purpose. Unless expressly stated otherwise, all
references herein to "Articles" are to the relevant portions of this Agreement,
and all references to "Schedules" are to the attachments to this Agreement.
21.12 Amendment. This Agreement shall not be amended, modified or
rescinded in any manner, except by an instrument in writing signed by duly
authorized representatives of each of the Parties hereto.
21.13 No Third-Party Beneficiary. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any Persons other than the Parties and their
respective successors and permitted assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third person
to any Party, nor shall any provision give any third person any right of
subrogation or action against any Party.
21.14 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated hereby are consummated,
each Party will pay its own costs and expenses incurred in connection with the
negotiation and execution of this Agreement and the transactions contemplated
hereby (including executing all such documents and doing such acts and things as
may reasonably be required for the purpose of giving full effect to this
Agreement).
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<PAGE> 52
21.15 Waiver. Any term or condition of this Agreement may be waived at
any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the Party waiving such term or condition. No waiver by any
Party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by law or otherwise afforded, will be cumulative and not
alternative.
21.16 Binding. This Agreement is binding upon, inures to the benefit of
and is enforceable by the Parties hereto and their respective permitted
successors and assigns.
21.17 Specific Performance. The obligations of the Parties under
Article 9 of this Agreement are unique. If any Party should be in Default under
Article 9 of this Agreement, the Defaulting Party acknowledges that it would be
extremely impracticable to measure the resulting damages. Accordingly, in
addition to any other available rights or remedies, the Non-Defaulting Party may
sue in equity for specific performance and the Defaulting Party expressly waives
the defense that a remedy in damages would be adequate.
21.18 Surcharge Exemption. When applicable, NextWave shall certify that
any special access lines used in connection with the provision of Services under
this Agreement terminate in a device not capable of interconnecting MCI's
service with the local exchange carriers and thus are exempt from the special
access surcharge.
21.19 Regulatory Compliance. Notwithstanding any provision in this
Agreement to the contrary, NextWave shall not be obligated to furnish MCI with
Services under rates, charges, terms or conditions, that violate any applicable
provisions of the Communications Act of 1934, as amended, the applicable rules,
regulations or policies of the FCC or any other federal or state agency with
jurisdiction over NextWave's services.
21.20 Expiration of Term. Upon expiration of the Term and any extension
thereof, MCI shall be fully subject to all the terms and conditions, including
standard service rates, set forth in the tariff, if any, for NextWave service
received by MCI after such expiration; provided however, if NextWave is required
to tariff the services provided hereunder, the terms of such tariff shall not be
inconsistent with nor less favorable than the terms of this Agreement.
21.21 Cooperation. NextWave shall cooperate fully with MCI and shall
use all reasonable efforts to take, or cause to be taken, all action necessary,
proper or advisable under applicable laws and regulations, (i) to fulfill its
obligations under this Agreement and to carry out fully the transaction
contemplated hereby; (ii) assist MCI in its effort to be recognized by
governmental agencies, NANPA, and other relevant Persons as a "Commercial Mobile
Radio Service Provider" as such term is defined in the applicable FCC rules; and
(iii) support MCI in its positions with governmental
46
<PAGE> 53
regulatory bodies or other Persons which enable MCI to fully realize the
benefits (economic or otherwise) afforded to MCI hereunder.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
47
<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
NEXTWAVE PERSONAL COMMUNICATIONS, INC.
By: /s/ Allen B. Salmasi
-----------------------------------
Name: Allen B. Salmasi
Title: Chairman, President and CEO
MCI TELECOMMUNICATIONS CORPORATION
By: /s/ Herman W. Bluestein
-----------------------------------
Name: Herman W. Bluestein
Title: Vice President
NextWave Telecom Inc. hereby guarantees the prompt
performance of each and every duty and obligation of
NextWave Personal Communications, Inc. under this Agreement.
NEXTWAVE TELECOM INC.
By: /s/ Allen B. Salmasi
-----------------------------------
Name: Allen B. Salmasi
Title: Chairman, President and CEO
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<PAGE> 55
SCHEDULE 1
TECHNICAL SPECIFICATIONS
All capitalized terms not otherwise defined herein shall have the meaning set
forth in the Agreement.
1. BACKGROUND & DEFINITIONS
This specification defines the interconnection required between the Network and
the MCI intelligent network required to support quality, capacity and coverage
requirements for the purchased Airtime. Figure 1 depicts the interconnection
architecture of NextWave's Mobile Switching Center ("MSC") with the following
MCI intelligent network elements:
- Home Location Register ("HLR") - An intelligent network platform
maintaining Subscriber profile information for MCI Subscribers.
- Authentication Center (AC) - An intelligent network platform supporting
the authentication of MCI Subscribers on NextWave's and other networks.
- Wireless Enhanced Services Platform (WESP) - An intelligent network
platform for providing enhanced wireless services, such as voice
messaging, short message service, trial services, and new advanced
services for select customers. These services are provided at the WESP
directly, or by forwarding the call to MCI's other Intelligent Network
service elements.
- MCI's nationwide SS7 signaling network - This STP network provides
signaling interconnection between the network elements of NextWave, MCI,
other IXC and Local networks, and other local Wireless Operators for
roaming situations.
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<PAGE> 56
SCHEDULE 1
FIGURE 1: NETWORK ELEMENTS INVOLVED IN INTERCONNECTION
[GRAPHIC OMITTED]
2. GENERAL REQUIREMENTS
NextWave and MCI intelligent network interconnection will adhere to the
following general requirements:
*___*
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SCHEDULE 1
- NextWave will route Emergency calls to the proper authority.
- Lawful Intercept activity will be performed by NextWave.
- MCI will obtain numbers for Subscribers, in full NPA-NXX blocks. If
MCI is unable to obtain these numbers directly, NextWave will use best
efforts to obtain the numbers on behalf of MCI.
- *___*
- NextWave will provide points of presence (excluding cell sites and
base station controllers) for interconnection between MSCs and MCI's
WESPs. There may be direct interconnect between MCI WESPs and other
locations in NextWave's Network where technically feasible and mutually
acceptable based on commercially reasonable cost determinations.
3. REQUIREMENTS OF THE MSC
The following requirements will be supported by NextWave's Network for
interfacing with the MCI intelligent network elements. Initial NextWave Network
deployments will support, at a minimum, the following subset of IS-41 Rev. C
features:
*___*
Specific implementation of these features and of any subsequent features will be
defined as part of a separate service level agreement. That agreement will
address, among other aspects, the scope, scheduling, resources, and
responsibilities of the Parties.
NextWave will make all reasonable efforts to support additional features within
nine (9) months after commercially implemented software and hardware is
available per the progression of the IS-41 standard.
- IS-41 Signaling - NextWave will interface with the following MCI
intelligent network elements via the IS-41 protocol:
*___*
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SCHEDULE 1
*___*
- MSC software revision levels will be managed to support consistent
features throughout the markets covered by NextWave's Network.
- Call Origination:
*___*
- Emergency (911/E911) and Lawful Intercept calls will be handled by
NextWave at the MSC, and not forwarded to MCI trunk groups. MCI
and NextWave will cooperate to comply with 911/E911 regulations as
mandated by local/state public agencies and the FCC.
*___*
- The following capabilities will be defined by MCI, in close consultation
with NextWave and implementation specifications will be included as part
of a separate service level agreement. NextWave will work with its
Network equipment provider(s) to secure the required capabilities to
support these features:
*___*
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<PAGE> 59
SCHEDULE 1
4. INTERFACE REQUIREMENTS
The following sections detail the interface requirements between NextWave's
Network and the MCI intelligent network. These interfaces are based on both
published and de facto industry standard interfaces and interconnection
requirements.
4.1 HLR/AC Interface
The MSC will communicate using the most current commercially available
IS-41 protocol with the MCI-provided Home Location
Register/Authentication Center (HLR/AC) when serving MCI Subscribers.
*__________________________________________
__________________________________________
__________________________________________*
4.2 WESP Interface
The MSC and the WESP must be able to route calls to each other for
enhanced voice services call setup. This requires call setup signaling
and voice trunk connectivity. *___*
*__________________________________________
__________________________________________
__________________________________________*
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SCHEDULE 1
*___*
5. QUALITY OF SERVICE
5.1 Coverage Area
*___*
Upon request by MCI, NextWave will provide coverage maps depicting the
geographic area that correspond to the three above coverage areas.
5.2 Air Interface Capacity
NextWave will ensure that co-channel interference and other factors are
mitigated such that sufficient air interface channel capacity is
available to provide Services to the projected number
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*CONFIDENTIAL TREATMENT REQUESTED
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SCHEDULE 1
of Subscribers in each market in accordance with MCI's Forecast,
described in Section 2.3 of the Airtime Agreement and the service
quality defined herein.
5.3 Handset Compatibility
NextWave Network will support handsets of MCI's choice, provided that
the handsets have been certified by recognized standards or
certification bodies as compliant with domestic PCS interface standards
and have been demonstrated to be fully compatible with one other
domestic CDMA network.
5.4 Bearer Service Capability
In addition to voice services, NextWave will support bearer services,
such as Group 3 facsimile and data, that are operating in a commercial,
revenue-bearing environment.
5.5 *___*
5.6 *___*
5.7 *___*
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SCHEDULE 1
5.8. *__________________________________________
__________________________________________
__________________________________________*
8
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<PAGE> 63
SCHEDULE 1
*__________________________________________
__________________________________________
__________________________________________*
6. OPERATIONS INTERFACE REQUIREMENTS
The following areas will be further addressed via more specific Service Level
Agreements, however the basic required interfaces between NextWave and MCI are:
6.1 Traffic/Billing
*__________________________________________
__________________________________________
__________________________________________*
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<PAGE> 64
SCHEDULE 1
6.2 Network/Trouble Management
*___*
6.3 General Service Level Agreement and Operations Support
*___*
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<PAGE> 65
SCHEDULE 1
APPENDIX A
A.1 WIRELESS NETWORK INTERFACE STANDARDS
IS-41-C
EIA/TIA/IS-41.1-C: Cellular Radiotelecommunications Intersystem
Operations: Functional Overview - February, 1996.
EIA/TIA/IS-41.2-C: Cellular Radiotelecommunications Intersystem
Operations: Intersystem Hand-off Information Flows - February, 1996.
EIA/TIA/IS-41.3-C: Cellular Radiotelecommunications Intersystem
Operations: Automatic Roaming Information Flows - February, 1996.
EIA/TIA/IS-41.4-C: Cellular Radiotelecommunications Intersystem
Operations: Operations, Administration, and Maintenance Information
Flows and Procedures - February, 1996.
EIA/TIA/IS-41.5-C: Cellular Radiotelecommunications Intersystem
Operations: Intersystem Signaling Protocols - February, 1996.
EIA/TIA/IS-41.6-C: Cellular Radiotelecommunications Intersystem
Operations: Intersystem Signaling Procedures - February, 1996.
IS-52
EIA/TIA/IS-52: Uniform Dialing Procedures and Call Processing
Treatment for Use in Cellular Radiotelecommunications - November, 1989.
IS-52-A
EIA/TIA/IS-52-A: Uniform Dialing Procedures and Call Processing
Treatment for Use in Cellular Radiotelecommunications - When Published.
IS-53
EIA/TIA/IS-53: Cellular Features Description - August, 1991.
IS-53-A
EIA/TIA/IS-53-A: Cellular Features Description - May, 1995.
IS-93
EIA/TIA/IS-93: Cellular Radiotelecommunications Ai -Di Interface
Standards - October, 1993.
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<PAGE> 66
SCHEDULE 1
A.2 SS7 INTERFACE DOCUMENTS
TR-NWT-000246: Bell Communications Research Specification of Signaling
System Number 7 (SS7), Issue 3 contains the proposed generic
requirements specifying SS7 protocol and architecture.
TR-NWT-000082: Signaling Transfer Point Generic Requirements, Issue 5
provides generic requirements and objectives for the STP.
TR-TSY-000317: Switching System Requirements for Call Control Using the
Integrated Services Digital Network User Part (ISDNUP).
TR-TSY-000394: Switching System Generic Requirements for Interexchange
Carriers using the Integrated Services Digital Network User Part
(ISDNUP).
TR-NWT-000444: Switching System Generic Requirements Supporting ISDN
Access Using the ISDN User Part.
ANSI T1.114: Signaling System Number 7 (SS7)-Transaction Capabilities
Application Part (TCAP).
ANSI T1.112: Signaling System Number 7 (SS7)-Signaling Connection
Control Part (SCCP).
ANSI T1.111: Signaling System Number 7 (SS7)- Message Transfer Part
(MTP).
A.3 AIR INTERFACE STANDARDS
ANSI J-STD-008: Personal Station - Base Station Compatibility
Requirements for 1.8 to 2.0 GHz Code Division Multiple Access (CDMA)
Personal Communications Systems.
A.4 NETWORK MANAGEMENT
ANSI T1.227: Extensions to GNM for Interfaces between Operations
Systems across Jurisdictional Boundaries to support Fault Management -
Trouble Administration.
ANSI T1.228: OAM&P - Services for Interfaces between Operations Systems
across Jurisdictional Boundaries to support Fault Management - Trouble
Administration.
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<PAGE> 67
SCHEDULE 2 -- PRICING SCHEDULE
*___*
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 68
*___*
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 1
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURUSANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.19
STRATEGIC SUPPLY
AND
DEVELOPMENT AGREEMENT
This Strategic Supply and Development Agreement ("Agreement") is entered into
effective as of October 29, 1996 ("Effective Date"), by and between NextWave
Telecom Inc. ("Nextwave") and Hughes Network Systems, Inc. ("HNS") to provide
for the supply and financing by HNS of up to $1 billion of code division
multiple access infrastructure equipment manufactured by or on behalf of HNS
and supplied by HNS as prime contractor *___* meeting NextWave specifications,
together with associated ancillary services ("Equipment") to NextWave or to one
or more of NextWave's majority-owned subsidiaries (where NextWave may act
through such subsidiaries, the term NextWave refers to NextWave and such
subsidiaries).
WHEREAS, NextWave is the winning bidder for (and will secure) licenses, and
intends to establish facilities for the provision of Personal Communications
Services ("PCS Systems") in various markets (each comprising at least one BTA)
of the United States ("Markets");
WHEREAS, concurrently and in connection with this Agreement, HNS and NextWave
are entering into that certain Subscription Agreement (together with the Escrow
Agreement, Convertible Promissory Note and Registration Rights Agreement
executed in accordance therewith, the "Investment Documents") pursuant to which
HNS has committed, in accordance with the terms thereof, to acquire a
convertible promissory note for an aggregate purchase price of $50 million
("Initial Investment").
WHEREAS, pursuant to Section V -- Financing, HNS commits to provide a credit
facility in the amount of $245 million pursuant to that certain Vendor Credit
Facility -- Summary of Terms and Conditions attached hereto as Attachment 1
("Vendor Credit Facility" or "Initial Financing") for the purposes of financing
the provision by HNS of certain equipment ("Initial Equipment") for deployment
by NextWave in the *___*; and
WHEREAS, NextWave desires to purchase from HNS and HNS desires to sell to
NextWave additional Equipment with the support of additional financing
("Financing") to be used in PCS Systems;
NOW THEREFORE, the Parties agree as follows:
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 2
I. EQUIPMENT SUPPLY AND RELATED FINANCING
A. Provided that the Initial Investment is released to NextWave
pursuant to the Escrow Agreement as contemplated in the Investment Documents,
and subject to the terms and conditions of this Agreement, NextWave will
purchase Equipment from HNS, and HNS will provide financing to NextWave, not to
exceed an aggregate total of $1 billion (inclusive of Initial Equipment). In the
event that the Initial Investment is not released from escrow to NextWave, then
the obligations of the Parties, including HNS obligation to provide the Vendor
Credit Facility, shall be null and void.
B. NextWave will take and purchase the Initial Equipment within
sixty (60) months of the first drawdown (start of commercial service for the
*___*) under the Initial Financing Facility. NextWave will take and purchase
other Equipment for which Financing is available within sixty (60) months of the
date of the first drawdown of Financing for such Equipment, provided that
NextWave will offer a Market to HNS which requires such first drawdown (start of
commercial service) not later than nine months after HNS notifies NextWave of
the availability of such Financing). *___*.
C. 1. *___*
2. HNS intends to enter into a subcontract agreement
("Qualcomm Subcontract") with Qualcomm pursuant to which HNS will supply
Initial Equipment to be delivered by Qualcomm to NextWave. The Supply
Percentage (as defined below) as it applies to Equipment manufactured and
delivered by HNS for *___*, will be a
2
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 3
percentage reflecting the amount of Equipment HNS supplies pursuant to the
Qualcomm Subcontract.
D. If the intentions of the Parties expressed in Article I.C.1.,
preceding cannot be realized for the *___*, then:
1. If Qualcomm is not selected as the prime contractor for the
*___*, NextWave will offer HNS the opportunity, at its election,
either:
a. To be the prime contractor for that Market; or,
b. To provision one or more alternative Markets which
NextWave will promptly propose, for which HNS may supply NextWave with Initial
Equipment in amounts totaling $245 million, which proposal will include at
least one Top 20 Market,
2. If Qualcomm is selected as the prime contractor for the *___*
and HNS is not a subcontractor and/or is not providing financing for the Market,
NextWave will offer HNS the opportunity to provision one or more alternative
Markets which NextWave will promptly propose, for which HNS may supply NextWave
with Initial Equipment in amounts totaling $245 million, which proposal will
include at least one Top 20 Market.
3. Terms of supply for HNS provisioning such alternative Market(s)
will be determined as provided in Article IV--Terms of Supply, below.
E. Notwithstanding any other provision of this Agreement, the
terms and conditions (other than financial terms) NextWave requires for the
supply of Initial Equipment will be no less favorable to Qualcomm in the *___*
or to HNS, as the case may be, (except that HNS will not enjoy the benefits of
those terms expressly granted to Qualcomm pursuant to the Qualcomm Agreement;
provided that HNS may enjoy the benefits of future agreements between NextWave
and Qualcomm with terms not expressly set forth in such Qualcomm Agreement) than
the terms and conditions, taken as a whole, granted to other Equipment vendors
within the twelve month period immediately following the date of execution of
the Q-LA Agreement.
F. Notwithstanding any other provision of this Agreement, if
NextWave rightfully terminates the Q-LA Agreement for default, HNS will have no
further right to supply Equipment pursuant to this Agreement.
G. In the event that the Initial Investment is released to
NextWave pursuant to the Escrow Agreement and HNS is not entitled in accordance
with the terms of the Convertible Promissory Note to convert such note into
Series B Common Stock of NextWave as contemplated therein, then, in the event
that HNS makes a demand for
3
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 4
payment under such Convertible Promissory Note, than at NextWave's option to be
exercised within thirty (30) days from the date of demand for payment by HNS,
this Agreement shall be null and void, except that HNS shall provide the
Initial Financing, and NextWave will acquire the Initial Equipment, as provided
herein.
II. FIRST HNS ELECTION
During the period from the Effective Date until the 181st day after the
closing of NextWave's initial public offering of stock ("First Election
Period"), HNS will have the right, at its own election, to supply Equipment to
NextWave for certain Markets as provided in this Article II ("First HNS
Election") in accordance with mutually agreed terms and conditions of
Equipment supply and to the extent of HNS supplied Financing. Upon HNS'
exercise of the First HNS Election as provided in this Agreement, NextWave will
purchase such Equipment from HNS for such Markets as provided herein.
A. FINANCING. During the First Election Period, HNS may (subject
to HE Board approval) offer NextWave an additional $245 million of Financing
(exclusive of the Initial Financing) for Equipment to be purchased pursuant to
the terms of this Agreement.
B. TRIGGER OF FIRST ELECTION. HNS' right of First HNS Election may
be triggered by NextWave, as contemplated in Article II.B.1., or by HNS itself,
as contemplated in Article II.B.2 below.
1. TRIGGER OF FIRST HNS ELECTION BY NEXTWAVE. During the First
Election Period, NextWave will notify HNS in any case that NextWave designates
a Market that it intends to offer HNS the opportunity to provision with
Equipment ("Notice of Intent to Provision").
1.1 The receipt by HNS of a Notice of Intent to Provision will be
deemed the Commencement Date. The Notice of Intent to Provision will specify,
at a minimum:
a. The name of the Market and of the BTA(s) or parts thereof
comprising the Market.
b. The estimated amount and type of Equipment to be purchased, the
schedule for delivery, and the amount of Financing required.
c. Information required pursuant to Article IV -- Terms of Supply.
1.2 Upon receipt of a Notice of Intent to Provision, HNS may, at
its sole option to be exercised within 10 business days of such Notice, elect
to provision any
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<PAGE> 5
Market which is the subject of the Notice of Intent to Provision, such election
will be exercised in accordance with mutually agreed terms of supply.
2. TRIGGER OF FIRST HNS ELECTION BY HNS. During the First Election
Period, HNS may, at its sole option, elect to provision NextWave Market(s), such
election to be made by notice to NextWave by HNS ("Notice of Availability of
Financing") stating that HNS is ready, willing and able to provide Financing in
amounts requested by NextWave, not to exceed $245M. If HNS delivers such Notice
of Availability of Financing, HNS will be entitled to provision Equipment to be
purchased and deployed by NextWave in the *___* within two (2) years from the
date of such Notice, to the extent that such additional Financing completes the
build-out of the *___*. That portion of the Financing in excess of that which
can be deployed in the *___* within such two (2) years, will be made available,
at HNS option, for the following:
2.1 If HNS delivers the Notice of Availability of Financing within
60 days following the close of NextWave's initial public offering, HNS may
elect to build-out a top 20 Market, designated by NextWave (with the *___*
designated as the priority Market) per NextWave's build-out requirements.
2.2 If HNS delivers the Notice of Availability of Financing within
90 days following the close of NextWave's initial public offering, HNS may
elect to build-out a mutually agreeable Top 50 Market, per NextWave's
build-out requirements.
2.3 If HNS delivers the Notice of Availability of Financing during
the last 90 days of the First Election Period, HNS may elect:
a. To build-out a previously unprovisioned Market
designated by NextWave and agreed upon by HNS, which may be a Market acquired
by NextWave in the D, E and F block auctions; or,
b. To build-out any previously provisioned Market
designated by NextWave and agreed upon by HNS.
2.4 Upon receipt of a Notice of Intent to Provision, HNS may, at
its sole option to be exercised within 10 business days of such Notice, elect
to provision any Market which is the subject of the Notice of Intent to
Provision, such election will be exercised in accordance with mutually agreed
terms of supply.
5
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 6
III. SECOND HNS ELECTION
Commencing on June 1, 1998 and continuing until December 31, 2002 (the
"Second Election Period"), NextWave will offer to purchase from HNS, and HNS
will have the right, at its own election, to supply to NextWave, Equipment
(with associated Financing as provided in this Agreement) ("Second HNS
Election"). Upon exercise by HNS of this Second HNS Election, NextWave will
take and purchase Equipment from HNS as provided herein.
A. TOTAL AMOUNT. NextWave will offer to purchase from HNS $1
billion ("Total Amount") of Equipment, and, upon acceptance by HNS in
accordance with the terms of this Agreement, NextWave will purchase the Total
Amount of Equipment from HNS (subject to a material reduction in NextWave's
total capital budget or population coverage) which Total Amount is inclusive of
Initial Equipment and of Equipment supplied pursuant to any First HNS
Election. The Total Amount will be reduced dollar-for-dollar for each dollar of
Equipment sales offered and refused by HNS in this Second Election Period.
B. NOTICE OF INTENT TO PROVISION. During the Second Election
Period, NextWave will provide HNS with a Notice of Intent to Provision any
Market designated by NextWave that NextWave intends to offer HNS the
opportunity to provision with Equipment. NextWave will so designate and offer
HNS the opportunity to provision two of the Top 50 Markets available as of
June 1, 1998 (for purposes of this sentence a Market will be "available" if:
(i) it is previously unprovisioned; or (ii) it has been previously provisioned
but an additional vendor is to be added to the Market). The receipt by HNS of a
Notice of Intent to Provision will be deemed the Commencement Date pursuant to
Article IV -- Terms of Supply as provided in this Agreement. The Notice of
Intent to Provision will specify, at a minimum:
1. The name of the Market and of the BTA(s) or parts thereof
comprising the Market.
2. The estimated amount and type of Equipment to be purchased and
the amount of Financing required.
3. Information available as to the Terms of Supply, as contemplated
in Article IV, below.
C. SECOND HNS ELECTION. Upon receipt of a Notice of Intent to
Provision, HNS may, at its sole option, elect to provision any Market which is
the subject of the Notice of Intent to Provision, such election will be
exercised in accordance with Article IV -- Terms of Supply.
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<PAGE> 7
IV. TERMS OF SUPPLY
Upon exercise of the Second HNS Election, the Parties will enter into a
purchase agreement covering Equipment to be purchased hereunder ("Purchase
Agreement") in accordance with the terms of supply specified in this Article
("Terms of Supply").
A. COMPETITIVE PROCESS FOR ESTABLISHING TERMS OF SUPPLY. With
respect to any Market which is the subject of a Notice of Intent to Provision a
Market:
1. As NextWave issues an open tender process, request for proposal
or similar open procurement process (an "RFP(s)") or otherwise commences
negotiation with other vendors, NextWave will promptly submit such RFP to HNS or
otherwise commence negotiations with HNS with respect to such Market(s).
NextWave will deliver all information, including build-out schedule, technical
specifications, etc. reasonably necessary or requested by HNS in order to permit
HNS to evaluate the opportunity to provision Equipment in such Market. The date
of delivery of substantially all such information to HNS will be the
"Commencement Date".
2. Prior to consummating any Equipment supply agreement with
respect to such Market(s), NextWave will present to HNS the terms and conditions
which HNS must meet in order to consummate a Purchase Agreement (the "Final
Terms"). The Final Terms will be in accordance with this Article IV--Terms of
Supply, and in all other respects will be no less favorable than the terms of:
a. If NextWave is conducting an RFP process, the executable
proposals submitted by other vendors in response to such RFP; or,
b. If NextWave is not conducting an open RFP process, the then
current arrangements consummated with other vendors within 12 months prior to
presentation by NextWave of the Final Terms.
3. HNS will deliver a firm commitment to meet the Final Terms by
the later of 10 business days after delivery by NextWave of the Final Terms or
60 days after the Commencement Date (provided that if NextWave has not issued an
RFP with respect to any Market tendered to HNS in connection with the First HNS
Election, HNS must respond to NextWave's tender of Final Terms with respect to
such Market no later than 10 business days after receiving them.) In the event
that HNS elects not to commit to meet the Final Terms, NextWave will be free to
complete the transaction with any other vendor on terms no less favorable to HNS
than the Final Terms within 60 days of receipt of HNS' notice of election not to
commit to meet such Final Terms.
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<PAGE> 8
B. NEGOTIATED TERMS OF SUPPLY. In the event NextWave does not use
an RFP or negotiate with other vendors for a Market, the Terms of Supply for
such Market will be determined by negotiation between the Parties as provided
herein and subject to the other terms of this Agreement. Any resultant
Purchase Agreement will be no less favorable to HNS than the terms and
conditions, taken as a whole, granted to other equipment vendors, and the Final
Terms presented by NextWave will be no less favorable to HNS than the then
current arrangements consummated within 12 months prior to presentation by
NextWave of such Final Terms.
C. DETERMINATION OF QUANTITIES OF EQUIPMENT TO BE SUPPLIED. It is
understood that in connection with each Purchase Agreement to be entered into
in accordance with this Agreement, HNS and NextWave will define the percentage
of the Equipment deployed in such Market to be purchased from HNS (the "Supply
Percentage"), which Supply Percentage HNS will continue to supply during the
term of the applicable Purchase Agreement. For a period of three years after
the term of any such Purchase Agreements, if NextWave chooses to purchase
additional Equipment for deployment in such Market, NextWave will deliver to
HNS a Notice of Intent to Provision a Market in accordance with Section III.B,
and HNS will have the right to provision Equipment in accordance with the terms
of this Article IV in order to ensure that HNS will continue to supply NextWave
such Supply Percentage of Equipment.
D. DETERMINATION OF PRICE OF SUPPLY. The price for Equipment
pursuant to any Purchase Agreements entered into in accordance with this
Agreement will be established as follows:
1. In the event that HNS is responding to an RFP, the price will
be the average best and final price of all other vendors (excluding HNS, alone
or jointly with Qualcomm) also submitting a proposal in response to such RFP,
or
2. In the event that HNS and NextWave are otherwise negotiating the
terms of such Purchase Agreement, the price will be the average price of all
other (excluding HNS, alone or jointly with Q) existing supply arrangements in
effect at such time. NextWave will ensure that the prices of the other vendors
used to calculate the price under the applicable Purchase Agreement will be
based on an "apples-to-apples" comparison.
E. DETERMINATION OF EQUIPMENT SPECIFICATIONS.
1. In connection with the execution of each Purchase Agreement,
NextWave and HNS will work together to develop an infrastructure deployment
strategy that will take into account the respective company's requirements.
HNS will have the option to supply BTS infrastructure product, or
alternatively, BSS infrastructure product, in all cases compliant to the
NextWave interface standard in effect on the date of the relevant
8
<PAGE> 9
Purchase Agreement. So long as HNS is a supplier in good standing of Equipment
for NextWave, NextWave will keep HNS informed of development of the
Infrastructure Equipment Requirements Document.
2. The Equipment delivered by HNS in accordance with this
Agreement will comply in all material respects with the NextWave Infrastructure
Equipment Requirements Document in effect on the date of such Purchase
Agreement and will also include ancillary services to be provided by HNS under
the applicable Purchase Agreement; provided that if NextWave amends such
Requirements Document or otherwise waives or delays any deliverable thereunder
in order to reduce the requirements upon any other vendor, the Requirements
Document, as it applies to HNS, will be deemed similarly amended.
F. RESOLUTION OF DISPUTES RELATING TO TERMS OF SUPPLY
To ensure speedy and amicable resolution of disputes relating to Terms
of Supply, the Parties will negotiate Terms of Supply in all cases diligently
and in good faith, it being understood that HNS' right to supply hereunder is
absolute provided that HNS is prepared to supply Equipment on competitive terms
and conditions, including price and financing and provided that HNS offers to
supply Equipment compliant with the Infrastructure Requirements Document current
at the time of execution of the Purchase Agreement and with NextWave's schedule
requirements (assuming other vendors offer to satisfy such Requirements Document
and schedule) ("Competitive Terms"). NextWave will in no event cease such
negotiations unless and until it has provided HNS with Final Terms. In the
event that HNS believes such Final Terms contain terms which are less favorable
to HNS than Competitive Terms, then HNS may, at its sole option (after notifying
NextWave of the discrepancies between the Final Terms proposed by HNS and terms
which HNS considers Competitive Terms), elect to enter into a Purchase Agreement
on the Final Terms proposed by NextWave and submit any such discrepancies as
disputes for final and binding settlement by arbitration by a single arbitrator
appointed by the American Arbitration Association ("AAA") in arbitration to be
conducted according to the Commercial Arbitration Rules of the AAA, it being
agreed that the Parties will use best reasonable efforts to cause the arbitrator
to resolve the dispute within ninety days of its submission by HNS and that the
arbitrator will select, with respect to each Purchase Agreement term or
condition submitted by HNS, either the Final Terms or the proposed HNS terms as
more closely approximating "Competitive Terms."
9
<PAGE> 10
V. FINANCING
A. HNS has agreed to supply Initial Financing subject to the terms
of the Vendor Credit Facility attached hereto as Attachment 1, and the terms of
this Agreement.
B. NextWave has provided to HNS projections (the "Projections")
and other information (financial or otherwise) other than Projections
("Information") in respect to NextWave and its proposed financing, business and
operations, including the Information and Projections provided to HNS in
connection with the Investment Documents. NextWave hereby represents and
covenants that (a) all Information that has been or will be made available to
HNS by NextWave or any of NextWave's representatives is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which
such statements are made and (b) the Projections that have been or will be made
available to HNS by NextWave or any of NextWave's representatives have been or
will be prepared in good faith based upon reasonable assumptions.
C. HNS commitment to provide the Credit Facility described in the
Term Sheet is subject to (a) there not occurring or becoming known to HNS any
material adverse condition or material adverse change in or affecting the
business, operations, property condition (financial or otherwise) or prospects
of NextWave and its subsidiaries, taken as a whole, (b) HNS not becoming aware
after the date hereof of any information or other matter affecting NextWave or
the transactions contemplated by the Term Sheet which is inconsistent in a
material and adverse manner with any such information or other matter disclosed
to us prior to the date hereof, (c) the negotiation, execution and delivery on
or before January 31, 1997 of definitive documentation with respect to the
Credit Facility satisfactory to HNS and its counsel and (d) the other
conditions set forth or referred to in the Term Sheet. The terms and conditions
set forth in the Term Sheet may be modified or supplemented if further
information becomes available to HNS in accordance with clause (b) above. Those
matters that are not covered by the provisions of the Term Sheet are subject to
the approval and agreement of HNS and NextWave.
D. The Term Sheet is intended to be solely for the benefit of the
Parties hereto and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the Parties hereto.
E. MOST FAVORED LENDER. The terms and conditions of any Financing
will be no less favorable to HNS, as lender, taken as a whole, as compared to
other NextWave vendor financing of comparable infrastructure equipment during
the 12 months immediately preceding the comparable Financing Agreement, taking
into consideration,
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<PAGE> 11
among other things, the amount, accrued interest, interest only payments,
amortization, the term of the financing, the security pledged by NextWave, etc.
The terms of the Financing are set forth on Attachment 2 to this Agreement. To
the extent that NextWave commits, within twelve (12) months before or after HNS
executes any commitment regarding any Financing (including, without limitation,
the Initial Financing), to use equity or third party debt financing (excluding,
without limitation, the Initial Financing), to use equity or third party debt
financing (excluding vendor financing provided (or procured) by other vendors)
to pay any portion of the purchase price of any Equipment then being supplied
by HNS and purchased by NextWave, it will apply a proportionate amount of such
equity or debt financing to purchases of HNS Equipment; provided, however, that
in the event that NextWave has offered to pay any portion of the purchase price
of any Equipment, and HNS does not accept such offer, NextWave will be free to
enter into a similar agreement with another vendor and NextWave will have no
obligation in accordance with the terms of this Agreement.
F. MOST FAVORED BORROWER. The terms and conditions of any
Financing will be no less favorable to NextWave, as borrower, (taken as a whole
in connection with the overall transaction, taking into consideration, among
other things, price of Equipment, the amount of Financing, accrued interest,
interest only payments, amortization, the term of the Financing, the security
pledged by NextWave, etc.) as compared to other vendor financing by HNS to
comparable PCS licensees, taking into consideration, among other things, the
interest rate payable, the term of the financing, the security pledged and
other elements of the credit exposure to HNS.
G. RESOLUTION OF DISPUTES RELATING TO TERMS OF FINANCING
To ensure speedy and amicable resolution of disputes relating to Terms
of Financing, the Parties will negotiate Terms of Financing in all cases
diligently and in good faith, it being understood that Financing will be on
competitive terms and conditions, (with the understanding that the Parties
intend Terms of Financing to include terms specified in Appendix 1 hereto)
("Competitive Finance Terms"). NextWave will in no event cease such
negotiations unless and until it has provided HNS with final Finance terms
("Final Finance Terms") which NextWave believes are Competitive Finance Terms.
In the event that HNS believes such Final Finance Terms contain terms which are
less favorable to HNS than Competitive Finance Terms, then HNS may, at its sole
option (after notifying NextWave of the discrepancies between the Final Finance
Terms proposed by NextWave and terms which HNS considers Competitive
Finance Terms), elect to enter into a Financing agreement on the Final
Financing Terms proposed by NextWave and submit any such discrepancies as
disputes for final and binding settlement by arbitration by a single arbitrator
appointed by the American Arbitration Association ("AAA") in arbitration to be
conducted according to the Commercial Arbitration Rules of the AAA, it being
agreed that the Parties will use best reasonable efforts to cause the
arbitrator to resolve the dispute within ninety days of its submission by HNS
and that the arbitrator will select, with respect to each Purchase Agreement
term or condition
11
<PAGE> 12
submitted by HNS, either the Final Terms or the proposed HNS terms as more
closely approximating "Competitive Financing Terms."
VI. PREFERRED SUPPLY ARRANGEMENTS
A. AREA BASED PRODUCTS. HNS will jointly work with NextWave in the
development of products specifically for use by NextWave in its
local-loop-bypass/area-based services (such products which are cooperatively
developed are "Area-Based Services Products"). NextWave will purchase at least
*___* of all of its requirements for such jointly developed Area-Based Services
Products in support of such services (including any equipment purchases by
NextWave on behalf of third Parties such as MCI, etc.) for the first five years
of deployment from HNS, provided that HNS offers such Area-Based Services
Products on competitive terms, conditions, features, financing etc. Area
Based Products developed as contemplated in Article VI.A. will not be
considered either: (i) Initial Equipment; or, (ii) Equipment which is the
subject of HNS First or Second HNS Election.
B. DATA PRODUCTS. HNS will jointly work with NextWave in the
development of products specifically for use by NextWave in its data services
(such products which are cooperatively developed are "Data Products"). NextWave
will purchase at least *___* of all its requirements for such jointly developed
Data Products requirements in support of such services (including any equipment
purchases by NextWave on behalf of third parties such as MCI, etc.) for the
first five years of deployment from HNS, provided that HNS offers such Data
Products on competitive terms, conditions, features, financing etc. Data
Products developed as contemplated in this Article VI.A. will not be considered
either: (i) Initial Equipment; or, (ii) Equipment which is the subject of HNS
First or Second HNS Election.
C. RESEARCH AND DEVELOPMENT FUNDING. In connection with the
Initial Investment, NextWave will make the following research and development
payments to HNS:
1. NextWave will deliver to HNS a payment of $8 million dollars on
April 1, 1997; provided, however, if the Net Share Price (as defined below) of
the initial public offering is equal to or greater than $8 per share, such $8
million will be payable in two equal installments on the twelfth and
twenty-fourth month from the date of consummation of the Initial Investment.
2. a. If the Net Share Price of the initial public offering
is less than $7.00 per share, NextWave will deliver to HNS a payment equal to
the product of $7.00 less the Net Share Price and the number of shares acquired
by HNS in the Initial
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*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 13
Investment, up to a maximum of $12 million (the "Contingent Credit"). The
Contingent Credit will be payable in three equal installments on December 31,
of each of 1997, 1998 and 1999; provided, however, that commencing on the
effective date of a registration statement for the shares purchased by HNS with
the Initial Investment, in the event that the closing price (or, if no closing
price is available, the average of the bid and asked prices for the trading
day) for shares of Series B Common Stock (trading separately from CVR, as
defined below) of NextWave will have exceeded the Minimum Share Price for such
year for at least twenty trading days, then NextWave will not be obligated to
pay the annual installment of the Contingent Credit, provided that satisfaction
of the Minimum Share Price during any one year will in no event affect the
annual installment of the Contingent Credit due in any other year.
b. (i) That portion of the additional payment, if any,
which is payable to HNS on December 31, 1997 will be paid by NextWave under the
agreed to terms herein except that, in the event that HNS does not on that date
retain all of the Initial Investment Shares, the payment due will be reduced by
a proportion equal to the proportion: *___*
3. The following definitions will apply for purposes of this
Article VI.C.3.
3.1 "Net Share Price" will mean the initial public offering price
per unit offered by NextWave in connection with such public offering, less the
value of any
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* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 14
Contingent value right ("CVR") or other valuable ancillary consideration not
given to HNS in the Initial Investment attached to the Series B Common Stock of
NextWave distributed in connection with such public offer. *___* References
in this Article to shares and to share prices will be adjusted equitably in
the event of any stock split, recapitalization or the like.
3.2 "Minimum Share Price" will have the following meaning:
<TABLE>
<CAPTION>
YEAR MINIMUM SHARE PRICE
- ------ -------------------
<S> <C>
1997 *___*
1998 *___*
1999 *___*
</TABLE>
3.3 "HNS Shares" will mean that number of Initial Investment Shares held
by HNS on the applicable measurement date.
3.4 "Initial Investment Shares" will mean those shares of Series B Common
Stock purchased by HNS with the Initial Investment. The terms of this Section
VI.C assume that the Initial Investment Shares will be 10,000,000 shares.
D. SPECTRUM. NextWave will permit HNS to use its PCS spectrum in the
Washington/Baltimore BTA for experimental purposes which are not competitive
with NextWave and which do not interfere with NextWave operations; provided that
NextWave may request HNS to discontinue use of and vacate such spectrum at any
time for any reason, provided that NextWave will use reasonable efforts to give
HNS reasonable notice prior to demanding that HNS vacate such spectrum. NextWave
will coordinate with HNS, at HNS expense, to fill any application or other
documentation that may be required by the FCC to authorize the use of such
spectrum.
E. NEXTWAVE SERVICE. NextWave will provide HNS (its parent HE, GM and other
majority owned affiliates thereof) preferential wholesale rates for all of
NextWave's offered services (voice, data, multi-media, etc.) including any
mutually agreed to proprietary services such as data communication back-links
for DirecTV and internet access via DirecPC, mobile communication services for
automotive businesses, etc. Such preferential rates are subject to volume
commitments and other terms and conditions but should provide discounts, service
by service, in the range of *___* off of the then current retail prices.
14
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 15
F. WIRELESS CARRIER.
1. In the event that HNS elects to deploy certain wireless
services for which any of NextWave's generally available network capabilities
would be appropriate (e.g. DirecPC and vehicle communications management
systems), HNS will offer such capabilities as part of its offering, provided
that NextWave's service offering enable HNS to offer such service on
competitive terms, conditions, features, financing, etc., as compared to other
competitive wireless offerings.
2. In the event that HNS makes generally available any wireless
services incorporating NextWave network facilities or services, as contemplated
in Article VI.F.1., above, HNS will offer such wireless services to NextWave on
the terms on which it otherwise makes such wireless services generally
available.
VII. GENERAL
A. Neither Party will be liable to the other for any incidental,
consequential or punitive damages arising in connection with this Agreement.
B. Neither Party to this Agreement will make a public announcement
of the matters described in this Agreement without the prior written consent of
the other Parties.
C. This Agreement will be governed by and construed in accordance
with the laws of the State of New York, without regard to conflict of law
provisions. As used herein, the term "Parties" will refer to NextWave (together
with its subsidiaries) and HNS; each individually, a "Party."
D. All notices by one Party to the other hereunder will be in
writing and will be deemed to be duly given if sent by (a) same day courier and
(b) facsimile, confirmed by telephone at the address set forth below:
If to HNS:
Hughes Network Systems, Inc.
11717 Exploration Lane
Germantown, MD 20876
Attn: Sheldon Fisher, Director of Business Development -- DCN
Facsimile: (301) 428-2818
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<PAGE> 16
If to NextWave:
NextWave Telecom Inc.
1100 New York Avenue, NW, Suite 650E
Washington, DC 20005
Attn: Legal Department
Facsimile: (202) 371-1497
E. NextWave agrees to keep confidential all pricing information and other
terms relating to PCS Systems to be supplied by in accordance with the terms and
conditions of this Agreement. Either Party may disclose the terms of this
Agreement, and its existence, to the extent required by law, subject to such
Party first notifying the other Party. In addition, NextWave will have the right
to disclose the terms of this Agreement to its shareholders and investment
bankers; provided that each such shareholder or investment banker signs a
non-disclosure agreement with NextWave and with HNS agreeing to keep such
information in the strictest of confidence and provided further that any such
shareholder provides HNS a copy of any agreement it has with NextWave concerning
the supply of Equipment. Neither Party to this Agreement will make a public
announcement of the matters described in this Agreement without the prior
written consent of the other Party.
F. This Agreement may be amended, supplemented or otherwise modified only
by a written instrument executed by the Parties hereto. No waiver by either
Party of any of the provisions hereof will be effective unless explicitly set
forth in writing and executed by the Party so waiving. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any Party, will be
deemed to constitute a waiver by the Party taking such action of compliance with
any representations, warranties, covenants, or agreements contained herein, and
in any documents delivered or to be delivered pursuant to this Agreement. The
waiver by any Party hereto of a breach of any provision of this Agreement will
not operate or be construed as a waiver of any subsequent breach.
G. This Agreement will not be assignable by HNS without the prior written
consent of NextWave or by NextWave without the prior written consent of HNS
(such consents of either Party not to be unreasonably withheld).
H. The Section headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement.
I. If any provision of this Agreement will be declared by any court of
competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement will not be affected and will remain in full force
and effect.
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<PAGE> 17
J. This Agreement may be executed in any number of counterparts, each of
which will be deemed to be an original and all of which together will be deemed
to be one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have executed and delivered this
Agreement as of the date first above written.
AGREED AND ACCEPTED:
<TABLE>
<S> <C>
Hughes Network Systems, Inc. NextWave Telecom Inc.
By: /s/ Pradman Kaul By: /s/ Allen Salmasi
----------------------------------- -----------------------------------
Title: President & COO Date: 10/29/96 Title: President & CEO Date: 10/29/96
--------------- -------- --------------- --------
</TABLE>
17
<PAGE> 1
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.24
PURCHASE AND SUPPLY AGREEMENT
This Purchase and Supply Agreement ("Agreement") is entered into effective as
of November 8, 1996 ("Effective Date"), by and between NextWave Telecom Inc.
("NextWave") and The Allen Group Inc., for itself and on behalf of its wholly
owned subsidiaries and divisions which include Allen Telecom Group, Inc.,
Grayson Electronics Company and Comsearch (individually and collectively,
"Supplier") with reference to the following:
WHEREAS, NextWave Personal Communications Inc., a subsidiary of NextWave, was
the winning bidder for 63 personal communications services ("PCS") licenses in
the C-Block auction conducted by the Federal Communications Commission ("FCC"),
and upon final granting of these licenses, NextWave intends to build and deploy
PCS networks throughout the United States;
WHEREAS, Supplier desires to provide to NextWave, and NextWave desires to
acquire from Supplier, certain RF equipment complying with NextWave's
specifications (the "Equipment") together with associated and ancillary
services ("Services") to NextWave or to one or more of NextWave's Affiliates
(where NextWave may act through such Affiliates, the term NextWave refers to
NextWave and such Affiliates);
WHEREAS, concurrently and in connection with this Agreement, Supplier and
NextWave are entering into that certain Subscription Agreement (the
"Subscription Agreement") pursuant to which SUPPLIER has subscribed to
purchase, in accordance with the terms thereof, one million (1,000,000) shares
of Series B Common Stock ($0.0001 par value) for an aggregate purchase price of
$5 million (the "Shares"); and
WHEREAS, Supplier desires to provide for financing of NextWave's procurement of
the Equipment and Services on the terms set forth herein.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and for such other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, Supplier and
NextWave, intending to be legally bound, agree as follows:
1. EQUIPMENT SUPPLY AND RELATED SERVICES.
A. Subject to the terms and conditions of this Agreement,
NextWave hereby agrees to purchase from time to time from the date hereof
through the period ending December 31, 2001, $50 Million of Equipment and
Services from Supplier (the "Purchase Commitment") pursuant to one or more
definitive purchase agreements ("Purchase Agreements") to be entered into by
NextWave and Supplier. Subject to delays in NextWave's buildout of its PCS
networks for reasons beyond its control, NextWave hereby agrees to purchase
forty percent (40%) of the Purchase Commitment during the first two years of
the term hereof, and twenty percent (20%) of the Purchase Commitment per year
thereafter. In connection with this Purchase Commitment, Supplier shall make
available to NextWave $50 Million of Financing in accordance with the
<PAGE> 2
terms of Section 2 hereof. The Purchase Agreements will set forth the
commercial terms governing the purchase of Equipment and Services from Supplier
which shall be acceptable to NextWave and Supplier. During the entire term of
this Agreement, the commercial terms of the Purchase Agreements, taken as a
whole, relating to customer pricing, lead times, financing, warranties and
other terms and conditions will be at least as favorable as the terms and
conditions, taken as a whole, quoted or charged by Supplier to other customers
for similar quantities and shall be, at a minimum, competitive with industry
standards.
B. The parties acknowledge that, concurrent with the execution of
this Agreement, Supplier has executed and delivered to NextWave the
Subscription Agreement pursuant to which Supplier has agreed to purchase shares
of Series B Common Stock (the "Investment") for a total purchase price of Five
Million Dollars ($5,000,000.00). In the event the Investment is not
consummated as contemplated in the Subscription Agreement, this Agreement shall
automatically terminate and neither party shall have any further liability or
obligation to the other party hereunder.
2. FINANCING.
Supplier hereby commits to provide NextWave financing in the aggregate
amount of $50 Million (the "Financing") over a period of five years from the
Effective Date (the "Term") in the form of a multiple drawdown term loan
facility (the "Loans"), pursuant to definitive financing documents to be
entered into by NextWave and Supplier (the "Financing Documents"). The
proceeds of the Loans will be used by NextWave solely to finance the purchase
price of the Equipment and Services supplied by Supplier pursuant to the terms
of this Agreement and the Purchase Agreements. The Loans will be made on the
first day of each month (the "Drawdown Date") to fund payment obligations of
NextWave to Supplier incurred during the immediately preceding month. Loans
made during the first thirty six (36) months of the Term shall bear interest at
a rate equal to *_________________________________________* and shall have
repayment terms as set forth below:
*----------------------------------------------------------------------
----------------------------------------------------------------------*
Loans made during the last twenty four (24) months of the Term shall bear
interest at a rate equal to *______________________* and shall have repayment
terms as set forth below:
*----------------------------------------------------------------------
----------------------------------------------------------------------*
The Financing Documents will (i) provide that Supplier shall hold a purchase
money security interest on the Equipment purchased hereunder and (ii) reflect
the terms set forth in this Section 2 and such other terms and conditions as
are customary and usual for such a transaction, including, without limitation,
default and remedies provisions.
3. CONFIDENTIALITY.
2
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 3
Supplier acknowledges that all technical documentation delivered to
Supplier by NextWave hereunder, and all other information relating to the
design, development, configuration, use, installation, operation and
maintenance of cell sites and a network system constitute confidential or
proprietary information of NextWave (referred to as "Confidential
Information"). During the Term, and for a period of two (2) years thereafter,
Supplier shall not duplicate, use other than in accordance with this Agreement,
or disclose to any third person, including but not limited to any independent
contractor, consultant, customer or supplier, any Confidential Information of
NextWave. Supplier shall adopt all reasonable precautions to protect
Confidential Information received hereunder and to prevent its dissemination to
unauthorized persons and entities. The foregoing restrictions shall not apply
to any Confidential Information which Supplier can demonstrate: (i) is wholly
and independently developed by Supplier or lawfully received free of
restriction from another source having the rights to furnish such Confidential
Information; (ii) has become generally available to the public without breach
of this Agreement; or (iii) at the time of disclosure to Supplier was known to
Supplier free of restriction. Each party agrees to keep confidential the terms
of this Agreement. Notwithstanding the foregoing, Supplier shall have the
right: (i) to develop independently products and services having features or
functionality contemplated by the Confidential Information and (ii) to market
or otherwise provide such products or services to third parties. In addition,
each party may disclose the terms of this Agreement, and its existence, to the
extent required by law, subject to such party first notifying the other Party.
Each party will have the right to disclose the terms of this Agreement to its
shareholders and investment bankers.
4. GENERAL
(A) The term of this Agreement shall commence on the date hereof,
and shall continue in effect until the last Loan advanced hereunder has been
paid in full. Notwithstanding the foregoing, either party may terminate this
Agreement immediately upon giving notice to the other party at any time after
the occurrence of any of the following events with respect to such other party
(i) insolvency, bankruptcy or liquidation or filing any application therefor,
or other commitment of an affirmative act of insolvency; (ii) attachment,
execution or seizure of substantially all of the assets or filing any
application therefor; (iii) assignment or transfer of that portion of the
business to which this Agreement pertains to a trustee for the benefit of
creditors; (iv) subject to the immediately following sentence, disposition, by
sale or assignment of all rights, of that portion of the business or material
assets to which this Agreement pertains; (v) termination of its business or
dissolution, or (vi) loss of the Company's PCS licenses as a Designated Entity
and Small Business. Notwithstanding the foregoing, in the event Supplier
transfers or sells a division or subsidiary (the "Transferred Entity") that is
providing Equipment or Services hereunder, the balance of NextWave's Purchase
Commitment remaining on the date of such transfer shall be reduced by an amount
equal to a percentage which reflects the amount paid for Equipment and Services
provided by the Transferred Entity prior to the date of such transfer compared
to the total amount paid for Equipment and Services provided by Supplier prior
to the date of such transfer.
3
<PAGE> 4
(B) For the purposes of this Agreement, the term "Affiliate" shall
mean: (i) any entity that controls, is controlled by, or is under common
control with a party, directly or indirectly, where "control" means the power,
right or authority, by equity ownership, contract or otherwise, to direct the
management and policies, or elect a majority of the board of directors (or
similar governing body) of an entity. In the case of NextWave, the term
Affiliate shall also include, without limitation, wireless service providers
with which NextWave has entered into, or subsequently enters into, a strategic
relationship from time to time, provided that such wireless service providers
are neither competitors of Supplier nor customers of Supplier prior to their
affiliation with NextWave.
(C) This Agreement shall be binding upon and inure to the benefit
of the parties and their permitted successors and assigns. Notwithstanding the
foregoing, no rights, obligations or liabilities of either party hereunder may
be assigned or transferred by such party without the express prior written
consent of the other party, which shall not be unreasonably withheld, provided
that each party shall have the right to assign this Agreement to an affiliate.
For purposes of this Section 4(C) an "affiliate" means any entity that, either
directly or through one or more intermediaries, controls, is controlled by or
is under common control with a party.
(D) This Agreement constitutes the entire agreement between the
parties and supersedes all prior oral or written negotiations and agreements
between the parties with respect to the subject matter hereof. This Agreement
may be amended or supplemented at any time by mutual written agreement of the
parties, but neither this Agreement nor any term hereof may be amended,
modified, released, discharged, abandoned or changed in any manner except by an
instrument in writing which refers to his Agreement and which is executed by
each of the parties. No waiver by either Party of any of the provisions hereof
will be effective unless explicitly set forth in writing and executed by the
Party so waiving.
(E) The parties hereby agree to execute and deliver all documents
and instruments and to take or cause to be taken such other actions that are
reasonably necessary or appropriate to consummate the transactions contemplated
by this Agreement.
(F) This Agreement is made and entered into in the State of New
York and shall be governed by and construed and enforced in accordance with the
laws of the State of New York.
(G) All notices given by either party hereunder must be in writing
and delivered by certified mail (return receipt requested), overnight courier,
or facsimile with confirmation, at the addresses set forth below:
If to Supplier:
The Allen Group Inc.
25101 Chagrin Boulevard
Beachwood, Ohio 44122
Attn: Treasurer
4
<PAGE> 5
Facsimile: (216) 765-0410
with a copy to:
The Allen Group Inc.
25101 Chagrin Boulevard
Beachwood, Ohio 44122
Attn: General Counsel
Facsimile: (216) 765-0410
If to NextWave:
NextWave Telecom Inc.
9455 Towne Centre Drive
San Diego, California 92121
Attn: Legal Department
Facsimile: (619) 642-1912
(H) The Section headings contained in this Agreement are for
reference purposes only and will not affect the meaning or interpretation of
this Agreement.
(I) If any provision of this Agreement will be declared by any
court of competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement will not be affected and will remain in full force
and effect.
(J) This Agreement may be executed in any number of counterparts,
each of which will be deemed to be an original and all of which together will
be deemed to be one and the same instrument. This Agreement may be executed
via facsimile with original signatures to follow via overnight courier.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
AGREED AND ACCEPTED:
The Allen Group Inc. NextWave Telecom Inc.
By: /s/ James LePort By: /s/ Allen Salmasi
--------------------------------- -----------------------------------
Title: Vice President Date: 11/8/96 Title: CEO & President Date: 11/13/96
----------------------------- -------------------------------
<PAGE> 1
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.32
AGREEMENT FOR PROCUREMENT
OF PERSONAL COMMUNICATIONS SERVICES PRODUCTS,
LICENSED MATERIALS AND SERVICES
BETWEEN
NEXTWAVE WIRELESS INC.
AND
LUCENT TECHNOLOGIES INC.
DATED: NOVEMBER 15, 1996
LUCENT TECHNOLOGIES PROPRIETARY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE I GENERAL PROVISIONS APPLICABLE TO ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 HEADINGS AND DEFINITIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 TERM OF AGREEMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3 SCOPE AND TRIAL AGREEMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 PURCHASE COMMITMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5 ADDITIONAL PROCUREMENT OPTION AND GAP PURCHASES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.6 PLANNING INFORMATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.7 ORDERS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.8 ORDER ACKNOWLEDGMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.9 CHANGES IN CUSTOMER'S ORDERS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.10 PRICES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.11 INVOICES AND TERMS OF PAYMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.12 INSTALLATION INTERVALS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.13 TRANSPORTATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.14 PACKING, MARKING, AND SHIPPING: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.15 TITLE AND RISK OF LOSS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.16 COMPLIANCE WITH LAWS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.17 TAXES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.18 TRAINING: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.19 LATE AND DEFERRED DELIVERY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.20 CANCELLATION FOR BREACH: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.21 PATENTS, TRADEMARKS AND COPYRIGHTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.22 USE OF INFORMATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.23 NOTICES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.24 RIGHT OF ACCESS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.25 INDEPENDENT CONTRACTOR: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.26 CUSTOMER'S REMEDIES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.27 FORCE MAJEURE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.28 ASSIGNMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.29 PUBLICITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.30 APPLICABLE LAW: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.31 SURVIVAL OF OBLIGATIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.32 SEVERABILITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.33 NON-WAIVER: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.34 [INTENTIONALLY DELETED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.35 PUBLICATION OF AGREEMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.36 DISPUTE RESOLUTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.37 MANAGEMENT STATUS REVIEW: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE II PROVISIONS APPLICABLE TO THE PURCHASE OF PRODUCTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 GENERAL: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.2 SYSTEM OUTAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.3 DOCUMENTATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.4 PRODUCT COMPLIANCES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.5 PRODUCT CHANGES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
2.6 CONTINUING PRODUCT SUPPORT - PARTS AND SERVICES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.7 SPECIFICATIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.8 CUSTOMER TECHNICAL SUPPORT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.9 PRODUCT WARRANTY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III PROVISIONS APPLICABLE TO THE LICENSING OF SOFTWARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1 GENERAL: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.2 LICENSE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.3 TITLE, RESTRICTIONS AND CONFIDENTIALITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.4 CHANGES IN LICENSED MATERIALS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.5 MODIFICATIONS TO SOFTWARE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.6 MODIFICATION BY CUSTOMER: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.7 RELATED DOCUMENTATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.8 SOFTWARE WARRANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.9 CANCELLATION OF LICENSE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.10 TAXES APPLICABLE TO SOFTWARE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IV PROVISIONS APPLICABLE TO ENGINEERING, INSTALLATION, AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . 29
4.1 GENERAL: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.2 ACCEPTANCE OF PRODUCTS AND INSTALLATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 CONDITIONS OF INSTALLATION AND OTHER SERVICES PERFORMED ON
CUSTOMER'S SITE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.4 WORK DONE BY OTHERS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.5 SERVICES WARRANTIES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE V ENTIRE AGREEMENT AND EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.1 ENTIRE AGREEMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
LUCENT TECHNOLOGIES PROPRIETARY
<PAGE> 4
AGREEMENT FOR PROCUREMENT
OF PERSONAL COMMUNICATIONS SERVICES PRODUCTS,
LICENSED MATERIALS AND SERVICES
BETWEEN NEXTWAVE WIRELESS INC. AND
LUCENT TECHNOLOGIES INC.
This Agreement for Procurement of Personal Communications Products,
Licensed Materials, and Services (including any Attachments, this "Agreement")
is made effective as of the 15th day of November, 1996 ("Effective Date")
between Lucent Technologies Inc., a Delaware corporation, having an office at
600 Mountain Avenue, Murray Hill, New Jersey 07984 ("Seller" or "Lucent"), and
NextWave Wireless Inc., a Delaware corporation, having an office at 9455 Town
Center Drive, San Diego, California 92121 ("Customer" or "NextWave").
WHEREAS, NextWave Personal Communications Inc. ("NPCI"), an affiliate
of NextWave, is the winning bidder for licenses to provide broadband personal
communications services ("PCS") in certain basic trading areas ("BTAs") in the
C-block auction (the "Auction") recently held by the Federal Communications
Commission ("FCC"); and
WHEREAS, NextWave intends to construct facilities, deploy PCS
infrastructure equipment, distribute and sell PCS subscriber equipment and
provide PCS and other wireless communication services in the United States and
outside the United States; and
WHEREAS, Lucent is a supplier of code division multiple access
("CDMA") infrastructure products and provides related installation,
engineering, support and other services related to such products; and
WHEREAS, subject to the terms and conditions of this Agreement,
NextWave desires to purchase CDA infrastructure products and related services
from Lucent for deployment within certain BTAs in the United States and Lucent
desires to sell such products and services to NextWave.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree to the
following terms and conditions.
[CONTINUED ON NEXT PAGE]
1
LUCENT TECHNOLOGIES PROPRIETARY
<PAGE> 5
ARTICLE I
GENERAL PROVISIONS APPLICABLE TO ENTIRE AGREEMENT
1.1 HEADINGS AND DEFINITIONS:
All headings used in this Agreement are inserted for convenience only
and are not intended to affect the meaning or interpretation of this Agreement
or any clause. For the purpose of this Agreement, the following definitions
will apply:
"Advertising" means all advertising, sales promotion, press releases,
and other publicity matters relating to performance under this
Agreement;
"Affiliate" means any entity that, directly or indirectly, through one
or more intermediaries, controls, is controlled by or is under common
control with another entity, where "control" means to own or control
over fifty percent (50%) of the voting power of the applicable entity
or otherwise to direct or cause the direction of the management and
policies of such entity, whether through ownership of voting
securities or by contract or otherwise, but any such entity shall be
deemed to be an Affiliate only so long as such control exists;
"Commercial Service" means use of a Product or any part thereof for
commercial service;
"Customer Price List" means Seller's published price notification
releases furnished by Seller for the purpose of communicating Seller's
prices or pricing related information to Customer;
"Delivery Date" shall have the meaning defined in Section 1.8 of this
Agreement;
"Designated Processor" means the Product for which the licenses to use
Licensed Materials are initially granted;
"Firmware" means a combination of (i) hardware and (ii) Software
represented by a pattern of bits contained in such hardware;
"Form" means physical shape;
"Fit" means physical size or mounting arrangement (e.g., electrical or
mechanical connections);
"Function" means product features and performance;
"Force Majeure" means fires, strikes, riots, embargoes, explosions,
earthquakes, floods, wars, water, the elements, labor disputes,
government requirements, civil or military authorities, acts of God or
by the public enemy, inability to secure raw materials or
transportation facilities, acts or omissions of carriers or suppliers,
or other causes beyond a party's control whether or not similar to the
foregoing;
"Hazardous Material" means material designated as a "hazardous
chemical substance or mixture" by the Administrator, pursuant to
Section 6 of the Toxic Substance Control Act, a "hazardous material"
as defined in the Hazardous Materials Transportation Act (49 U.S.C.
1801, et seq.), or a
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"hazardous substance" as defined in the Occupational Safety and Health
Act Hazard Communication Standard (29 CFR 1910.1200);
"Information" means all documentation and technical and business
information in whatever form recorded, which a party may furnish
under, or has furnished in contemplation of, this Agreement;
"Initial Financing" means the $200 million of vendor financing to be
provided by Seller pursuant to the terms of that certain "Vendor
Credit Facility--Summary of Terms and Conditions" attached hereto as
Attachment 1.1A;
"Initial BTAs" means those BTAs listed under the heading "Initial
BTAs" on Attachment 1.1B to this Agreement.;
"Installation" means the installation of the applicable Products and
Software to be installed at a particular Site at a particular time.
The term includes appropriate interface with other Products and
Software installed by Seller prior to or contemporaneously with the
Products and Software, as set forth in the SOW;
"Integration Acceptance Test" means the ECP Tests, IMS Tests, OMP
Acceptance Tests, System Initialization Tests, 5ESS(R)-2000 Switch
DCS Tests, and PCS CDMA Minicell Tests described in the Seller's
Acceptance Test Procedures attached hereto as Attachment 4.2;
"Licensed Area" means an area for which the Federal Communications
Commission ("FCC") has granted a permit to construct a Personal
Communication Services System;
"Licensed Materials" means the Software and Related Documentation for
which licenses are granted by Seller under this Agreement; no Source
Code versions of Software are included in Licensed Materials;
"NextWave Services" means items and activities which are the
responsibility of the Customer under the body of this Agreement but
not the Attachments other than the SOW;
"PCS System" means a Personal Communications Services System, which
would consist of the minimally necessary Products, Licensed
Materials, Services, and integration thereof necessary to provide PCS
within any definable geographic area according to the Specifications;
"Product(s)" means the PCS access manager, 5ESS switch, PCS CDMA
minicells and parts thereof, as more particularly described and
defined in the Specifications; but the term does not mean Software
whether or not such Software is part of Firmware;
"Product Manufacturing Information" means manufacturing drawings and
specifications of raw materials and components, including part
manufacturing drawings and specifications covering special tooling and
the operation thereof, and a detailed list of all commercially
available parts and components purchased by Seller on the open market
disclosing the part number, name and location of the supplier, and
price lists;
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"Related Documentation" means materials useful in connection with
Software, such as, including, but not limited to, flow charts, logic
diagrams, program descriptions, and specifications. No Source Code
versions of Software are included in Related Documentation;
"Repair Parts' means new, remanufactured, reconditioned, refurbished,
and functionally equivalent parts for the maintenance, replacement,
and repair of Products sold pursuant to this Agreement;
"Services" means the performance of work by Seller in connection with
the manufacture and supply of Products and related Licensed Materials,
including, but not limited to: (1) engineering Services such as
preparation of equipment specifications, preparation and updating of
office records, and preparation of a summary of material not
specifically itemized in an Order; (2) installation Services such as
installation and equipment removal; and (3) other Services such as
(but not limited to) maintenance and repair. Services do not include
any NextWave Services (unless expressly requested by Customer and
agreed to by Seller under mutually acceptable terms and conditions);
"Sites" means those specific locations where the Products and Software
will be installed by Seller in accordance with the terms of this
Agreement;
"Software" means a computer program consisting of a set of logical
instructions and tables of information which guide the functioning of
a processor; such program may be contained in any medium whatsoever,
including hardware containing a pattern of bits representing such
program, but the term "Software" does not mean or include such medium;
"Source Code" means any version of Software incorporating high-level
or assembly language that generally is not directly executable by a
processor. Except as may be expressly provided, this Agreement does
not require Seller to furnish any Source Code;
"SOW" means the Scope of Work attached to this Agreement as Attachment
1.1C. The SOW, among other things, describes in more detail various
responsibilities of Seller and NextWave in the procurement, shipment,
engineering, installation, and servicing of the Products;
"Specifications" means the technical specifications and functionality
requirements for the Products and Software mutually agreed to by the
parties and attached to this Agreement as Attachment 2.7A (as may be
modified by mutual written agreement of the parties from time to time
in accordance with Section 2.7A);
"Standard Lead Times" means the delivery intervals or lead times (as
measured from the date of receipt of a conforming Order) permitted to
Seller to manufacture, ship and install Products and Licensed
Materials as set forth in Attachment 1.1D to this Agreement;
"Subsidiary" of a company means a corporation the majority of whose
shares or other securities entitled to vote for election of directors
is now or hereafter owned or controlled by such company either
directly or indirectly; but any such corporation shall be deemed to be
a Subsidiary of such company only as long as such ownership or control
exists;
"Use" with respect to Licensed Materials means (i) loading the
Licensed Materials, or any portion thereof, into a processor for use
and execution of the instructions and tables contained in such
Licensed Materials and (ii) such use and execution;
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"Warranty Period" means the period of time listed in the respective
WARRANTY clauses.
1.2 TERM OF AGREEMENT:
Subject to the provisions of this Section 1.2 and Section 1.31, this
Agreement shall be effective on the Effective Date and, except as otherwise
provided herein, shall continue in effect for a period of two (2) years,
subject to extension in accordance with Section 1.5 below. The modification or
termination of this Agreement shall not affect the rights or obligations of
either party under any Order accepted by Seller before the effective date of
the modification or termination.
This Agreement is subject to the closing and effectiveness of Seller's
obligations to make loans under the Initial Financing. In the event Seller's
obligations to make loans under the Initial Financing has not become effective
by March 1, 1997, either party shall have the right to terminate this Agreement
upon written notice to the other party and, thereupon, this Agreement shall be
null and void and of no further force and effect, except with respect to the
obligations of the parties in connection with any Gap Purchases (as defined in
Section 1.5 below). In the event either party exercises its right to terminate
this Agreement under this paragraph, the parties agree that all unpaid invoices
outstanding as of the date of such termination shall accelerate and become
immediately due and payable and Customer agrees to make full payment of the
same to Seller within ten (10) calendar days from the date of such termination.
Notwithstanding anything contained in this Agreement to the contrary,
Seller shall have the right to reject any Order placed by Customer under this
Agreement and the right to withhold shipment on any Order previously placed by
Customer under this Agreement, without liability, in the event (a)(i) such
Order relates to any Gap Purchases or (ii) Buyer fails to meet any conditions
for borrowing on the date such conditions must be met under the Initial
Financing which are not waived by the applicable lenders under the Initial
Financing, and (b) Buyer has not demonstrated through other means satisfactory
to Seller (e.g., cash deposit, guarantee, letter of credit, or other surety or
financing) that Buyer is sufficiently creditworthy (in accordance with Seller's
then customary credit requirements and practices).
1.3 SCOPE AND TRIAL AGREEMENT:
The terms and conditions of this Agreement shall apply to all
transactions in which Seller furnishes Products, Licensed Materials, and
Services to Customer for Customer's own or its Affiliates' use in certain BTAs
and not for resale to other than its Affiliates. To the extent that any terms
and conditions in any other Article of the Agreement conflict with the
provisions of this Article I, such terms and conditions supersede such
conflicting provisions of this Article I.
Beginning on the Effective Date, the parties agree to use all
reasonable and diligent efforts to negotiate and enter into as soon as possible
a mutually acceptable, definitive trial agreement ("Trial Agreement") by and
among Seller, Customer, and MCI Communications Corporation regarding the
deployment of Products, Licensed Materials, and Services in the
Baltimore/Washington D.C. BTA. Said Trial Agreement shall be as contemplated
by that certain Memorandum of Understanding between the parties and MCI and
shall additionally provide that Customer shall procure from Seller all of
Customer's requirements for Products, Licensed Materials, and related Services
for the trial under the terms and conditions of this Agreement.
Notwithstanding the foregoing, Seller and Customer agree to conduct a trial of
the Products, Licensed Materials, and Services in the Baltimore/Washington D.C.
BTA in accordance with the terms and conditions of this Agreement and such
other terms as will be mutually agreed in writing.
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1.4 PURCHASE COMMITMENT:
Subject to the terms and conditions of this Agreement and the
provision of the Initial Financing by Seller, Customer commits to purchase by
December 31, 1998 no less than $200 million (as measured by the purchase prices
therefor as set forth in Attachment 1.10 hereto) of Products, Licensed
Materials, and Services from Seller (the "Initial Products ") for deployment in
the Initial BTAs. Customer agrees to use the Initial Products towards the
build-out of a PCS System in each BTA which comprises the Initial BTAs. Seller
agrees to provide the Initial Products on an engineer, furnish and install
basis.
Customer may obtain, under a separate written agreement between the
parties, additional PCS equipment, software, and related services to expand
the coverage of or add features in addition to those constructed or initiated
with the Initial Products. To the extent such additional equipment, software,
and/or services are purchased from Seller and deployed in the Initial BTAs
during the term of this Agreement, the prices paid by Customer to Seller
therefor shall by credited against the $200 million purchase commitment set
forth above.
1.5 ADDITIONAL PROCUREMENT OPTION AND GAP PURCHASES:
Seller shall have the option to cause Customer to purchase up to an
additional $1 billion (including the Initial Products) worth of PCS CDMA
infrastructure equipment and related Software and services, subject to all of
the terms and conditions set forth on Attachment 1.5 to this Agreement,
including, but not limited to (a) the availability of financing for such
purchases on a *____________________*, and (ii) such purchases and financing
being on mutually acceptable terms and conditions (as determined in accordance
with Attachment 1.5).
Except for the ATM switch necessary for Inter-MSC soft handoff (which
may be purchased by Customer from third party vendors), to the extent that any
additional PCS CDMA infrastructure equipment not included in the Initial
Products is necessary to provide the proper function of a PCS System in
accordance with the Specifications, Customer may purchase such equipment from
Seller during the term of this Agreement, and under the terms hereof, at the
same price discounts applicable to the Initial Products hereunder; provided
that such equipment is generally available from Seller on the Effective Date.
Any such purchases of such additional equipment will be credited towards
Customer's $200 million purchase commitment hereunder.
Notwithstanding the provisions of the first sentence of the second
paragraph of Section 1.2, during the period beginning on the Effective Date and
ending on the date Seller's obligation to make loans under the Initial
Financing becomes effective (the "Gap Period"), Customer shall have the right
to procure from Seller under the terms of this Agreement Products, Licensed
Materials, and Services for deployment in the *______________________________
_________________* described in Section 1.3 of this Agreement ("Gap
Purchases").
1.6 PLANNING INFORMATION:
Customer will provide to Seller non-binding, rolling, four-quarter
forecasts of Customer's expected annual PCS CDMA minicell needs. Customer's
forecast for the period January 1, 1997 to December 31, 1997 is attached hereto
as Attachment 1.6. Customer shall deliver to Seller an updated version of such
annual forecast on or before the beginning of each calendar quarter during the
term of this Agreement beginning on January 1, 1997. Customer will endeavor to
make such forecast and each
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quarterly update thereto accurate to within +/- 25% of Customer's actual Orders
(and +/- 15% with respect to the soonest quarter of the most recent forecast).
Seller shall have no obligation to deliver within the Standard Lead
Times any PCS CDMA minicells ordered by Customer which exceed 125% (or, with
respect to Orders with requested delivery dates within 3 months of such Order,
which exceed 115%) of Customer's forecasted amounts; provided, however, that,
subject to the terms and conditions of this Agreement, Seller shall use
commercially reasonable efforts to deliver such excess quantities by the
Delivery Dates requested by Customer and, in any event, as soon as reasonably
possible.
1.7 ORDERS:
Customer shall order Products, Licensed Materials, and/or Services
from Seller by issuing written purchase orders or, if agreed to by the parties,
by issuing electronic purchase orders (each, an "Order"). All Orders submitted
by Customer shall be deemed to incorporate and be subject to the terms and
conditions of this Agreement unless otherwise agreed in writing.
All Orders shall contain the information necessary for Seller to
fulfill the Order including, the (a) description of the Products, Licensed
Materials, and/or Services being ordered, (b) requested place of delivery and
delivery date or completion interval, (c) expected applicable Sites for
Installation, and (d) location to which the applicable invoice should be
rendered for payment.
Except as expressly set forth in this Agreement, Seller agrees to
deliver all Orders placed by Customer in accordance with the terms and
conditions of this Agreement within the Standard Lead Times.
No provision or data on any Order or contained in any documents
attached to or referenced in any Order or any subordinate document (such as
shipping releases), shall be binding, except data necessary for Seller to fill
the Order. All such other data and provisions are hereby rejected. Electronic
Orders shall be binding on Customer notwithstanding the absence of a signature.
In the event of any conflict between the terms and conditions of such Order and
this Agreement, the terms and conditions set forth in this Agreement shall
govern unless otherwise expressly agreed to in writing by the parties.
1.8 ORDER ACKNOWLEDGMENT:
All Orders shall be acknowledged by Seller as set forth herein.
Seller shall acknowledge the date of Order receipt either in writing or
electronic data interface format within ten (10) business days.
For all purposes of this Agreement, the term "Delivery Date" shall
mean the date specified by Customer in an Order when Products are to be
delivered to the Site specified in the Order; provided, however, that if
Customer submits an Order requesting a delivery or completion interval less
than the Standard Lead Time, Seller will accept such Order only for its
Standard Lead Times. Seller will, however, attempt to meet Customer's
requested shortened interval and provide confirmation or denial of the
requested shortened interval within three (3) days for PCS CDMA minicells and
within twenty-one (21) days for other Products. Additional charges may be
applicable if mutually agreed.
Seller agrees that it shall not ship any Products before their
Delivery Date without the prior consent of Customer.
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While it is Seller's objective to provide Customer with a written or
electronic acknowledgment of each Order received, it is Customer's
responsibility to advise Seller of any missing or late notifications to insure
that the Order has not been lost.
1.9 CHANGES IN CUSTOMER'S ORDERS:
Changes made by Customer to an acknowledged Order shall be treated as
a separate Order unless the parties expressly agree otherwise. If any such
change affects Seller's ability to meet its obligations under the original
Order, any price, Delivery Date, or completion date requested by Customer with
respect to such original Order is subject to change as agreed to by the
parties.
1.10 PRICES:
Prices, fees, and charges (hereinafter "prices") shall be as set forth
in Attachment 1.10 to this Agreement. The prices set forth in Attachment 1.10
for Products and Software shall be fixed until the earlier of (a) the second
anniversary of the Effective Date, or (b) the date upon which Customer fully
satisfies its *_______________* purchase commitment for Initial Products (the
"Price Change Date"). The prices set forth in Attachment 1.10 for Services
shall be subject to yearly adjustment by Seller, beginning on the first
anniversary of the Effective Date; provided, however, that in no event shall
the amount of increase in any Services prices exceed in any year the
corresponding amount by which the Producer Price Index increased during that
year.
The prices for Products, Licensed Materials, and Services procured by
Customer under this Agreement after the Price Change Date shall be as mutually
agreed.
Unless expressly stated in writing, Seller's prices are exclusive of
charges for transportation and freight, and any sales or other tax or duty
which Seller may be required to collect or pay upon the Order.
Notwithstanding anything herein contained to the contrary, prices for
any Gap Purchases made by Customer shall be Seller's list prices (as published
in the Customer Price Lists in effect on the Effective Date) less the following
discounts: (i) *_________________________*; (ii) *__________________________*;
(iii) *_______________________________*; (iv) *___________________________*; and
(v) *________________________________*. On the date Seller's obligations to
make loans under the Initial Financing becomes effective, Customer shall
receive purchase credits to be applied to purchases hereunder from Seller in an
amount equal to the amounts actually paid by Customer to Seller under this
paragraph for Gap Purchases less the amounts which would have been paid by
Customer for the Products, Licensed Materials, and Services which comprise the
Gap Purchases under this Section 1.10 had the same been procured by Customer
after the effectiveness of the Initial Financing.
1.11 INVOICES AND TERMS OF PAYMENT:
Products, Licensed Materials, and Services (including transportation
charges and taxes, if applicable) will be billed by Seller as hereinafter set
forth:
(a) With respect to Products, Licensed Materials, and Services
deployed in the Initial BTAs other than the *_____________________________*:
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(i) *___________________________________________________________________________
________________________________________________________________________________
___________________________________________*; and
(ii) *__________________________________________________________________________
________________________________________________________________________________
_________________________________*;
(b) With respect to Products, Licensed Materials, and Services
deployed in the *________________________* for purposes of the trial and not Gap
Purchases:
(i) *___________________________________________________________________________
________________________________________________________________________________
____________________________________*.; and
(ii) *__________________________________________________________________________
________________________________________________________________________________
____________________________________________________________________________*;
and
(c) With respect to GAP Purchases:
(i) *___________________________________________________________________________
________________________________________________________________________________
__________________________________________________*; and
(ii) *__________________________________________________________________________
________________________________________________________________________________
________________________________________________________*.
Notwithstanding anything herein contained to the contrary, the parties
acknowledge and agree that the invoicing procedure set forth above shall apply
only to Initial Products which are generally available. Products, Licensed
Materials, and Services procured by Customer under this Agreement which are not
generally available Initial Products shall be subject to such invoicing terms
as are mutually agreed to by the parties in writing.
*______________________________________________________________________________
________________________________________________________________________________
__________________________________________*.
Delinquent payments are subject to a late payment charge at the rate
of one and one-half percent (1-1/2%) per month, or portion thereof, of the
amount due (but not to exceed the maximum lawful rate). Any disputed items
remaining after the resolution of such dispute will be subject to a retroactive
late payment
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charge based upon the original invoice date. Customer agrees to pay Seller's
reasonable attorneys fees and other costs incurred by Seller in collection of
any amounts invoiced hereunder and past due. Customer shall notify Seller of
any disputed invoice amounts within thirty (30) days from the date of the
invoice. Seller may apply any credit which remains outstanding in favor of
Customer to the oldest undisputed invoice which remains in Customer's
portfolio.
1.12 INSTALLATION INTERVALS:
The Installation intervals for Products procured by Customer under
this Agreement shall be as set forth in Attachment 1.12 attached hereto .
Customer shall ensure that all Site(s) comply with the Site requirements
jointly agreed to and specified in the SOW (the "Site Requirements").
1.13 TRANSPORTATION:
Seller, in accordance with its normal practices, will arrange for
transportation for Products and Licensed Materials, will prepay transportation,
if applicable, and invoice transportation charges from Seller's factory or, if
Seller elects to store or stage the Products and/or Licensed Materials at
Seller's warehouse, staging, or marshaling facility (collectively, a "Seller
Warehouse") from Seller's Warehouse (but not to such warehouse). Attached to
this Agreement as Attachment 1.13 is an estimate of the transportation expenses
anticipated for the Initial Products.
If Customer elects to route Products and/or Licensed Materials or to
arrange for transportation, Seller will provide related services subject to a
separate fee.
Premium transportation will only be used with Customer's concurrence.
1.14 PACKING, MARKING, AND SHIPPING:
Seller shall, at no additional charge, pack and mark shipping
containers in accordance with its standard practices for domestic shipments.
Where in order to meet Customer's requests, Seller packs and/or agrees to mark
Products or shipping cartons in accordance with Customer's specifications,
Seller shall invoice Customer agreed to additional charges for such packing
and/or marking; provided, however, that nothing herein shall obligate Seller to
pack or mark in accordance with Customer's request without the prior written
agreement of Seller to do so in each instance. Seller agrees to furnish to
Customer Seller's specifications for bar coding the Products.
Seller shall:
(a) Enclose a packing memorandum including a detailed bill of materials
with each shipment and, if the shipment contains more than one
package, identify the package containing the memorandum; and
(b) Mark Products as practicable for identification in accordance with
Seller's marking specifications (e.g., model/serial number and month
and year of manufacture).
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Partial shipments under an Order may be made by Seller and separately
invoiced; provided, however, that Seller shall not separately invoice
Customer for any partial shipments to be delivered to a Site where
the Products and Licensed Materials provided under such partial
shipment cannot materially perform in accordance with the applicable
Product Specifications without other Products and/or Licensed
Materials covered by that Order.
1.15 TITLE AND RISK OF LOSS:
Title (except as provided in the clause USE OF INFORMATION and in
Article III) and risk of loss to a Product, Licensed Material, or other item
furnished to Customer under this Agreement shall pass to Customer upon delivery
to its final destination. However, where due to Customer's request or
nonperformance the item must be held in a Lucent Marshaling Center or other
storage facility, title and risk of loss shall pass upon storage at such
Marshaling Center or other storage facility. Delivery of an item to its final
destination by Seller shall be deemed complete at such time as all
transportation, interim warehousing, hauling and hoisting required to be
performed by Seller or its agents for the item have been completed.
Notwithstanding the above, if sooner, title and risk of loss to the item shall
pass to Customer at the point at which Seller or Seller's supplier or agent
turns over possession of the item to Customer, Customer's employee, Customer's
designated carrier, warehouser or hoister, or other pre-designated Customer's
agent.
Customer shall notify Seller promptly of any claim with respect to
loss which occurs while Seller has the risk of loss and shall cooperate in
every reasonable way to facilitate the settlement of any claim.
Nothing herein shall, during the period Seller or Customer has the
risk of loss to an item, relieve the other party of responsibility for loss to
the item resulting from such other party's acts or omissions or the acts or
omissions of that party's employees or agents.
1.16 COMPLIANCE WITH LAWS:
Performance under this Agreement shall be subject to all applicable
laws, orders, and regulations of federal, state, and local governmental
entities in the appropriate jurisdictions.
1.17 TAXES:
Customer shall be liable for and shall reimburse Seller for all taxes
and similar charges, however designated (excluding taxes on Seller's net
income), imposed upon or arising from the provision of Services to Customer
hereunder, or the transfer, sale, license, or use of Products, Licensed
Materials, or other items provided by Seller to Customer hereunder (other than
the amounts that would be payable by Seller under Section 1.26(a)--CUSTOMER'S
REMEDIES). Taxes reimbursable under this paragraph shall be separately listed
on the invoice.
Seller shall not collect the otherwise applicable tax if the front of
the relevant Order indicates that the purchase is exempt from Seller's
collection of such tax and a valid tax exemption certificate is furnished by
Customer to Seller.
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1.18 TRAINING:
Seller will make available Seller's standard training for Customer's
personnel in the planning for, operation and maintenance of Products and
Software furnished hereunder free of charge in accordance with Attachment 1.18
attached hereto.
In addition to the foregoing, Seller will provide additional training
for employees of Customer in accordance with, and for the fees specified in,
Attachment 1.18. Customer may request Seller to provide additional training at
either a Seller training facility or at Customer's facilities, and Seller shall
use reasonable efforts to accommodate Customer's requests for additional
training upon terms and conditions mutually agreed to by the parties. Customer
shall receive credits of *________________* of training to be allocated as
mutually agreed by the parties across the training courses described on
Attachment 1.18
1.19 LATE AND DEFERRED DELIVERY:
In the event PCS CDMA minicells ordered by Customer in accordance with
this Agreement are not delivered by Seller by or within ten (10) calendar days
after the Standard Lead Times (or, if a longer delivery interval is agreed to
by the parties for the applicable Order, after such longer delivery interval)
(a "Late Delivery"), and Late Deliveries occur with respect to
*___________________* or more of the PCS CDMA minicells committed by Seller to
be delivered in any ninety (90) calendar day period occurring during the term
of this Agreement, and further provided that at least twenty (20) PCS CDMA
minicells were committed to be delivered during the applicable ninety (90) day
period, then Customer shall have the right to forward to Seller written notice
of Customer's intent to invoke its rights under this Section 1.19 (a "Late
Delivery Notice").
In the event Seller fails to deliver all PCS CDMA minicells which
comprise the Late Deliveries to Customer during the thirty (30) day period
following the date of any Late Delivery Notice, Customer shall have the right
to:
*_______________________________________________________________________________
__________________________________________________________________*.
Upon Customer's written request issued no less than five (5) days
prior to the scheduled shipment date for any Product, Seller shall delay
shipment of such Product by not more than sixty (60) days, subject to the
payment by Customer to Seller of reasonable warehousing costs; provided,
however, that in no event shall the delayed shipment of any Order (or part
thereof) exceed the original Delivery Date by more than sixty (60) days.
1.20 CANCELLATION FOR BREACH:
Except as otherwise provided in Section 1.19, in the event Seller or
Customer is in material breach or material default of this Agreement or any
Order placed hereunder and such breach or default continues uncured for a
period of forty-five (45) days after the receipt by the defaulting or breaching
party of written notice from the non-defaulting or non-breaching party (and
such additional time as may be agreed upon by the parties), then the
non-defaulting or non-breaching party shall have the right to cancel this
Agreement and/or that part of any Order affected by the breach or default
without any charge, obligation or liability, except for those items already
fully discharged in accordance with this Agreement and such Order.
1.21 PATENTS, TRADEMARKS AND COPYRIGHTS:
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In the event of any claim, action, proceeding or suit by a third party
against Customer alleging an infringement of any United States patent, United
States copyright, or United States trademark, or a violation in the United
States of any trade secret or proprietary rights by reason of the use, in
accordance with the Specifications, of any Product or Licensed Material
furnished by Seller to Customer under this Agreement, Seller, at its expense,
will defend and indemnify Customer, subject to the conditions and exceptions
stated below. Seller will reimburse Customer for any cost, expense or
attorney's fee, reasonably incurred by Customer or otherwise incurred at
Seller's written request or authorization, and will indemnify Customer against
any liability assessed against Customer by final judgment on account of such
infringement or violation arising out of such use.
If Customer's use of any Product or Licensed Material shall be
enjoined or in Seller's opinion is likely to be enjoined, Seller will, at its
expense and at its option, either (1) replace the enjoined Product or Licensed
Material furnished pursuant to this Agreement with a suitable substitute free
of any infringement, (2) modify it so that it will be free of the infringement
and still perform in accordance with the applicable Specifications, or (3)
procure for Customer a license or other right to use it. If none of the
foregoing options is practical, Seller will remove the enjoined Product or
Licensed Material and refund to Customer any amounts paid to Seller less a
reasonable charge for any actual period of use by Customer.
Customer shall give Seller prompt written notice of all such claims,
actions, proceedings or suits alleging infringement or violation and Seller
shall have full and complete authority to assume and control the defense
thereof, including appeals, and to settle same (subject to Customer's right to
retain separate counsel, at its expense). Customer shall, upon Seller's
request and at Seller's expense, furnish all information and assistance
available to Customer and cooperate in every reasonable way to facilitate the
defense and/or settlement of any such claim, action, proceeding or suit, all at
Seller's cost and expense.
No undertaking of Seller under this clause shall extend to any such
alleged infringement or violation to the extent that it: (1) arises directly
from adherence to design modifications, specifications, drawings, or written
instructions which Seller is directed in writing by Customer to follow, but
only if such alleged infringement or violation does not reside in corresponding
commercial Product or Licensed Material of Seller's design or selection; or (2)
arises directly from adherence to instructions from Customer to apply
Customer's trademark, trade name, or other company identification; or (3)
resides in a Product or Licensed Material which is not of Seller's origin and
which is furnished by Customer to Seller for use under this Agreement; or (4)
relates directly to the combined use of Products or Licensed Materials provided
by Seller with other Products or Licensed Materials, furnished either by Seller
or others, which combination was not installed, recommended or otherwise
approved by Seller. In the foregoing cases numbered (1) through (4), Customer
will defend and save Seller harmless, subject to the same terms and conditions
and exceptions stated above with respect to the Seller's rights and obligations
under this clause.
The liability of Seller and Customer with respect to any and all
claims, actions, proceedings, or suits by third parties alleging infringement
of patents, trademarks, or copyrights or violation of trade secrets or
proprietary rights because of, or in connection with, any items furnished
pursuant to this Agreement shall be limited to the specific undertakings
contained in this clause.
1.22 USE OF INFORMATION:
All Information which bears a legend or notice restricting its use,
copying or dissemination, shall remain the property of the furnishing party.
The furnishing party grants the receiving party the right to use such
Information only as follows. Such Information (1) shall not be reproduced or
copied, in whole or part,
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<PAGE> 17
except for use as authorized in this Agreement; and (2) shall, together with
any full or partial copies thereof, be returned or destroyed when no longer
needed. Moreover, when Seller is the receiving party, Seller shall use such
Information only for the purpose of performing under this Agreement, and when
Customer is the receiving party, Customer shall use such Information only (1)
to Order, (2) to evaluate Products, Licensed Materials or Services, or (3) to
install, operate, and maintain the particular Products or Licensed Materials
for which it was originally furnished. Unless the furnishing party consents in
writing, such Information, except for that part, if any, which is known to the
receiving party free of any confidential obligation, which becomes generally
known to the public through acts not attributable to the receiving party, or
which is ordered by a court or administrative body of competent jurisdiction to
be disclosed, shall be held in confidence by the receiving party. The
receiving party may disclose such Information to other persons, upon the
furnishing party's prior written authorization, but solely to perform acts
which this clause expressly authorizes the receiving party to perform itself
and further provided such other person agrees in writing (a copy of which
writing will be provided to the furnishing party at its request) to the same
conditions respecting use of Information contained in this clause and to any
other reasonable conditions requested by the furnishing party.
The term "Information" as used in this clause does not include
Software (whether or not embodied in Firmware) or Related Documentation. The
use of Software and Related Documentation is governed by Article III of this
Agreement.
1.23 NOTICES:
All notices under this Agreement shall be in writing (except where
otherwise stated) and shall be addressed to the addresses set forth below or to
such other address as either party may designate by notice pursuant hereto.
Such notices shall be sent by confirmed telecopy or nationally recognized
overnight courier or delivered by hand and shall be deemed to have been given
when received.
Seller: Lucent Technologies Inc.
5440 Millstream Road
McLeansville, North Carolina 27301
Attn: Contract Manager, Network Systems-PCS Markets
With a copy to: Lucent Technologies Inc.
283 King George Road
Warren, New Jersey 07059
Attn: Corporate Counsel, Building C, 2nd Floor
Customer: NextWave Wireless Inc.
9455 Towne Centre Drive
San Diego, California 92121
Attn: Legal Department
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<PAGE> 18
1.24 RIGHT OF ACCESS:
Each party shall provide the other access to its facilities reasonably
required in connection with the performance of the respective obligations under
this Agreement. No charge shall be made for such access. Reasonable prior
notification will be given when access is required. Neither party shall
require releases of any personal rights in connection with visits to its
premises. During normal business hours and upon reasonable prior notice,
Customer shall have the right to visit the facilities where the Products are
being manufactured and, subject to Seller's security and confidentiality
requirements, to observe the manufacture and testing process; provided that (a)
such visits are subject to the execution by Customer of a confidentiality
agreement reasonably acceptable to Seller and (b) such visits do not
unreasonably interfere with the normal business operations of Seller.
1.25 INDEPENDENT CONTRACTOR:
All work performed by one party under this Agreement shall be
performed as an independent contractor and not as an agent of the other and no
persons furnished by the performing party shall be considered the employees or
agents of the other. The performing party shall be responsible for its
employees' compliance with all laws, rules, and regulations while performing
work under this Agreement.
1.26 CUSTOMER'S REMEDIES:
(a) Customer's exclusive remedies and the entire liability of Seller and
its affiliates and their employees and agents for any claim, loss,
damage, or expense of Customer or any other entity arising out of this
Agreement, or the use or performance of any Product, Licensed
Material, or Service, whether in an action for or arising out of
breach of contract, tort, including negligence indemnity, or strict
liability shall be as follows:
(1) For infringement -- the remedy set forth in the "PATENTS,
TRADEMARKS AND COPYRIGHTS" clause;
(2) For the performance of Products, Software, and Services or
claims that they do not conform to a warranty -- the remedy set
forth in the applicable "WARRANTY" clause;
(3) For tangible property damage and personal injury caused by
Seller's negligence, gross negligence, recklessness, willful
misconduct or breach of the representation contained in
Section 2.4 of this Agreement -- *___________________________*;
(4) For System Outages -- the remedy set forth in the "SYSTEM
OUTAGES" clause (Section 2.2); and
(5) For everything other than as set forth
above--*_______________________________________________________
__________________________________________*.
(b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER SELLER
NOR CUSTOMER (AND THEIR RESPECTIVE AFFILIATES, EMPLOYEES AND AGENTS)
SHALL BE LIABLE FOR INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGE OR
LOST PROFITS, REVENUES OR SAVINGS ARISING OUT OF THIS AGREEMENT, OR
THE USE OR PERFORMANCE OF ANY PRODUCT, LICENSED MATERIALS, SERVICES
OR NEXTWAVE SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF
BREACH OF CONTRACT, TORT, INCLUDING NEGLIGENCE, OR
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STRICT LIABILITY. THIS CLAUSE 1.26(b) SHALL SURVIVE FAILURE OF AN
EXCLUSIVE OR LIMITED REMEDY.
(c) Customer shall give Seller prompt notice of any claim. Any action or
proceeding against Seller must be brought within twenty-four (24)
months after the cause of action accrues.
1.27 FORCE MAJEURE:
Neither party shall be held responsible for any delay or failure in
performance to the extent that such delay or failure is caused by Force
Majeure. Nothing contained herein or elsewhere shall impose any obligation on
either party to settle any labor difficulty.
1.28 ASSIGNMENT:
Except as provided in this clause, neither party shall assign this
Agreement or any right or interest under this Agreement, nor delegate any work
or obligation to be performed under this Agreement, (an "assignment") without
the other party's prior written consent. The parties agree not to unreasonably
withhold their consent to any request by the other party to assign its rights
and delegate its duties under this Agreement, in whole or in part, to any
present or future Subsidiary or Affiliate of the requesting party or to any
combination of the foregoing. Any attempted assignment in contravention of
this shall be void and ineffective. Nothing shall preclude a party from
employing a subcontractor in carrying out its obligations under this Agreement.
A party's use of such subcontractor shall not release the party from its
obligations under this Agreement.
For purposes of this clause, the term "Agreement" includes this
Agreement, any subordinate contract placed under this Agreement and any Order
placed under such Agreement or subordinate contract.
1.29 PUBLICITY:
Each party shall submit to the other proposed copy of all Advertising
wherein the name, trademark, code, specification or service mark of the other
party or its affiliates is mentioned; and neither party shall publish or use
such Advertising without the other's prior written approval. Such approval
shall be granted as promptly as possible (usually within ten (10) days), and
may be withheld only for good cause.
1.30 APPLICABLE LAW:
The construction and interpretation of, and the rights and obligations
of the parties pursuant to this Agreement, shall be governed by the laws of the
State of New York.
1.31 SURVIVAL OF OBLIGATIONS:
The parties' rights and obligations which, by their nature, would
continue beyond the termination, cancellation, or expiration of this Agreement
(such as, but not limited to, Customer's license to Licensed Materials in
accordance with Section 3.2, confidentiality, payment, warranty, repair, and
indemnity obligations and the provisions of Section 1.26-- CUSTOMER'S
REMEDIES), shall survive such termination, cancellation, or expiration.
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<PAGE> 20
1.32 SEVERABILITY:
If any provision in this Agreement shall be held to be invalid or
unenforceable, the remaining portions shall remain in effect. In the event such
invalid or unenforceable provision is considered an essential element of this
Agreement, the parties shall promptly negotiate a replacement provision.
1.33 NON-WAIVER:
No waiver of the terms and conditions of this Agreement, or the
failure of either party strictly to enforce any such term or condition on one
or more occasions shall be construed as a waiver of the same or of any other
term or condition of this Agreement on any other occasion.
1.34 [INTENTIONALLY DELETED]
1.35 PUBLICATION OF AGREEMENT:
The parties shall keep the provisions of this Agreement and any Order
submitted hereunder confidential except as reasonably necessary for performance
hereunder and except to the extent disclosure may be required by applicable
laws or regulations, in which latter case, the party required to make such
disclosure shall promptly inform the other prior to such disclosure in
sufficient time to enable such other party to make known any objections it may
have to such disclosure. The disclosing party shall take all reasonable steps
to secure a protective order or otherwise assure that the Agreement or Order
will be withheld from the public record.
Notwithstanding the foregoing, Customer may disclose the provisions of
this Agreement to the extent, in the opinion of counsel to Customer, required
(a) by the Securities and Exchange Commission or any applicable securities
laws, rules or regulations in connection with any offering of securities of
Customer, NextWave Telecom, Inc. or any of their respective Affiliates, or (b)
by any other governmental authority to comply with applicable securities or
similar laws, rules or regulations; provided, however, that Customer shall take
all reasonable steps and exercise all reasonable efforts directed by Seller to
seek confidential treatment of or otherwise assure that any information herein
contained which Seller deems confidential or proprietary be withheld from the
public record.
1.36 DISPUTE RESOLUTION:
If a dispute arises out of or relates to this Agreement, or its
alleged breach, and if said dispute cannot be settled through negotiation
within thirty (30) days, the parties agree to submit the dispute to a sole
mediator selected by the parties in accordance with the applicable rules of the
American Arbitration Association ("AAA") or, at any time at the option of a
party, to mediation by the AAA. If not thus resolved within thirty (30) days it
shall be referred to a sole arbitrator selected by the parties in accordance
with the commercial arbitration rules of the AAA (the "AAA Rules") within
thirty (30) days of the mediation which arbitration shall be governed by the
AAA Rules and judgment on any award therein may be entered in any court having
jurisdiction. The arbitrator may determine issues of arbitrability but may not
award punitive damages or limit, expand or otherwise modify the terms of this
Agreement. The parties, their representatives, other participants and the
mediator and arbitrator shall hold the existence, content and result of any
mediation or arbitration in confidence, to the extent not prohibited by law or
court order.
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<PAGE> 21
1.37 MANAGEMENT STATUS REVIEW:
Once each calendar quarter, or more frequently as may be mutually
agreed, at a date and time to be mutually agreed upon by the parties, a
Management Status Review shall be held. At each Management Status Review
meeting, Seller shall provide Customer with a report of its progress in meeting
the Deployment Schedule, and the milestones contained therein. In addition, if
Customer reasonably determines in the course of such Management Status Review
that additional information available to Seller would assist Customer in its
ongoing evaluation of the progress under this Agreement, then Seller shall
promptly provide to Customer such additional information. Seller shall further
notify Customer promptly in writing upon learning of any event which Seller
reasonably believes may cause Seller to not achieve any milestone contained in
the SOW or the Deployment Schedule.
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<PAGE> 22
ARTICLE II
PROVISIONS APPLICABLE TO THE PURCHASE OF PRODUCTS
2.1 GENERAL:
The provisions of this Article II shall be applicable to the purchase
of Products from Seller. If Software is also to be licensed for use on a
purchased Product, or if a Product is also to be engineered or installed by
Seller, the provisions of Articles III and IV shall also be applicable.
2.2 SYSTEM OUTAGES
A "System Outage" is any failure of any Product to operate which
results in service outage and performance degradation which has a material
adverse effect upon subscriber service with actual loss of *___________________
____________________________* or more of such Product's effective service
capacity occurring within thirty (30) days from the date on which Seller
installs a Software Maintenance Release or Enhancement, which failure is caused
by Seller in the performance of Installation of Software Maintenance Releases
or Enhancements and which Seller is unable to cure within two (2) hours from
notification of such failure by Customer. In the event Seller does not repair
or remedy a System Outage within the foregoing two (2) hour period, Seller will
pay to Customer damages in an amount equal to *_______________________________
_______________________________* that the System Outage continues beyond the
two (2) hour cure period; *___________________________________________________*.
2.3 DOCUMENTATION:
Seller shall furnish to Customer, at no additional charge, one (1)
copy per switch and one (1) copy per base station of documentation for the
Products provided hereunder sufficient to operate and maintain such Products.
Such documentation will be that customarily provided by Seller to its Customers
at no additional charge. Such documentation shall be provided prior to or with
the shipment of the Products from Seller to Customer. Additional copies of the
documentation are available at prices set forth in the Customer Price List or,
if not priced in the Customer Price List, at Seller's standard prices.
2.4 PRODUCT COMPLIANCES:
Seller represents that a Product furnished hereunder shall comply with
all applicable laws, rules, and regulations including, but not limited to, the
requirements of Part 24 of the Federal Communication Commission's Rules and
Regulations pertaining to personal communications services in effect upon
delivery of such Product. In addition, Seller represents that a Product
furnished hereunder shall comply, to the extent required, with the requirements
of Subpart J of Part 15 of the Federal Communication Commission's Rule and
Regulations in effect upon delivery of such Product, including those sections
concerning the labeling of such Product and the suppression of radio frequency
and electromagnetic radiation to specified levels. Seller makes no undertaking
with respect to harmful interference caused by (i) installation, repair,
modification or change of Products or Software by other than Seller; (ii)
Products being subjected to misuse, neglect, accident or abuse by other than
Seller; (iii) Products or Software being used in a manner not in accordance
with operating instructions or in a suitable installation environment or
operations of other equipment in the frequency range reserved for Customer
within the Licensed Area.
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<PAGE> 23
Seller assumes no responsibility under this clause for items not
specified or supplied by Seller. Type acceptance or certification of such items
shall be the sole responsibility of Customer.
2.5 PRODUCT CHANGES:
Prior to the shipment of a Product, Seller may at any time make
changes in a Product furnished pursuant to this Agreement, or modify the
drawings and published specifications relating thereto, or substitute Products
of later design to fill an Order, provided the changes, modifications, or
substitutions under normal and proper use do not impact upon the Form, Fit, or
Function of an Ordered Product as identified in the Specifications both on a
stand alone basis and in connection with the operation of other Seller Products
and Software as contemplated in the Specifications. In the event of any such
changes by Seller, the parties shall work promptly to modify the SOW, if
necessary, to reflect such changes. Seller shall notify Customer in advance of
all changes made to the Products.
2.6 CONTINUING PRODUCT SUPPORT - PARTS AND SERVICES:
In addition to repairs provided for under the applicable Product
warranty, Seller offers repair Services and Repair Parts in accordance with the
practices and terms and conditions for Seller's Products attached to this
Agreement as Attachment 2.6. Such repair Services and Repair Parts shall be
available while Seller is manufacturing or stocking such Products or Repair
Parts, but in no event for less than five (5) years after such Product's
discontinued availability effective date. Seller may use either new,
remanufactured, reconditioned, refurbished and functionally equivalent Products
or parts in the furnishing of repairs or replacements under this Agreement.
Such Repair Parts shall comply with the Specifications.
If during the agreed to support period Seller is unable to provide
Repair Part(s) and/or repair Service(s) and a functionally equivalent
replacement has not been designated, Seller shall advise Customer, by written
notice prior to such discontinuance to allow Customer to plan appropriately,
and if Seller is unable to identify another source of supply for such Repair
Part(s) and/or repair Service(s) reasonably acceptable to Customer, Seller
shall provide Customer, upon request, with non-exclusive licenses for Product
Manufacturing Information to the extent Seller can grant such licenses, so that
Customer will have sufficient information to have manufactured, or obtain such
Service or parts from other sources.
2.7 SPECIFICATIONS:
Specifications for the Products and Software are attached hereto as
Attachment 2.7A. The Specifications in Attachment 2.7A may be modified by
mutual written agreement of the parties. The agreement of the parties with
respect to other technical requirements requested by Customer is set forth in
Attachment 2.7B attached hereto.
2.8 CUSTOMER TECHNICAL SUPPORT:
During the Warranty Period, Seller shall provide Customer with
technical support ("Technical Support") for the Products and Licensed Materials
through the Customer Technical Support Organization (CTSO). The CTSO provides
performance measurement and system engineering services at its then standard
prices, terms and conditions for such services. Special, unusual or customized
services may be billable, depending upon the nature of the request. This
support is not applicable to requests for new Software features.
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<PAGE> 24
During the Warranty Period, Seller shall provide at no cost to
Customer a customer service hotline to handle customer questions, problems, or
other customer-initiated feedback (including diagnostic center support). The
hotline shall be staffed 24 hours per day, seven (7) days per week with highly
trained specialists. The hotline representative will generate a trouble ticket
in response to each Customer inquiry, which will be used as a basis for
tracking the inquiry through resolution. The hotline representative shall
determine the immediacy and severity of a service problem in accordance with
the following priority classifications, and such determination shall establish
the level of emergency response that Seller shall provide to the extent such
problem is caused by Products, Licensed Materials or Services provided by
Seller under this Agreement:
(a) Priority 1: Product malfunction constituting a category
"critical" product failure as specified by the ISO 9000 Standard. In such
event, Seller shall take immediate corrective action regarding the problem, on
a continuous basis, twenty-four (24) hours per day, seven (7) days per week,
until such problem is resolved. Seller agrees to resolve all such Priority 1
Product malfunctions within *_________________* of Seller's receipt of notice
thereof.
(b) Priority 2: A critical Product malfunction involving any
Product that does not interrupt the availability of the System, does not result
in a System Outage or does not cause severe subscriber disservice. Seller
shall take immediate corrective action regarding the problem, on a continuous
basis during normal business hours (eight (8) hours per day, five (5) days per
week) until such problem is resolved. Seller agrees to resolve all such
Priority 2 Product malfunctions within *__________________* of Seller's receipt
of notice thereof.
(c) Priority 3: A Product malfunction that does not impair the
PCS System or subscriber operation significantly because temporary procedures
are in place to provide acceptable alternative operation of functionality.
Seller shall schedule and work on the problem on a time- available basis.
Product malfunctions in this category are mostly cosmetic in nature such as
awkward or lengthy operational sequences of commands. These are non-service
affecting malfunctions. Seller agrees to resolve all such Priority 1 Product
malfunctions within *_______________________* of Seller's receipt of notice
thereof.
(d) Priority 4: A Product malfunction involving the PCS System
that does not cause subscriber disservice. Seller shall schedule and work on
the problem at a later date, generally in conjunction with an enhancement or
change to the affected system or application. This category should consist of
only nominal problems such as misspellings on printouts from switch maintenance
terminals (the "TI interface").
Operations Support. Following the completion of each phase of
installation, Seller representatives will assist in operations support
throughout the acceptance testing period. In addition, after the Products and
Licensed Materials have been installed and all acceptance testing has been
successfully completed, Seller shall, during the Warranty Period, provide
toll-free technical assistance. In addition, Seller will support acceptance
testing procedures, specifically, the Hardware, Software, and Feature tests
specified in the Acceptance Testing Plan attached hereto as Attachment 4.2.
Seller will also provide Technical Support for Priority 1 and Priority 2
Product malfunctions during the acceptance testing period.
Support Staff. These teams will provide the Technical Support
necessary for the installation and testing of the Products and Licensed
Materials. In addition, Seller will evaluate any Priority 1 and Priority 2
defects and will ensure that any Maintenance Releases and Enhancements procured
by Customer under this Agreement, if any, are distributed to Customer. During
installation and testing
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Seller will provide technical staff to handle trouble resolution and Customer
inquiries, monitor compliance with Product performance metrics with
contractually required Product performance obligations.
Additional Technical Support. At Customer's reasonable request and
with reasonable advance notice, additional Technical Support above and beyond
these requirements may be provided under terms and prices to be mutually agreed
upon by the parties. Seller will use commercially reasonable efforts to
respond to such requests.
2.9 PRODUCT WARRANTY:
(a) Seller warrants to Customer only, that:
(i) As of the date title to Products passes to Customer, Seller
will have the right to sell, transfer, and assign such
Products and the title conveyed by Seller shall be good; and
(ii) Products will be free from defects in material and
workmanship, and will conform to the Specifications.
The parties acknowledge and agree that Seller makes no network
or system performance warranty related to or caused by RF engineering
under this Agreement. For the avoidance of doubt, Seller warrants to
Customer that the Products will conform to the Specifications. In the
event that Customer requests and Seller is willing to perform all
aspects of RF engineering relating to a PCS System such RF engineering
and related activities shall be subject to a separate written
agreement between the parties setting forth mutually acceptable terms
and conditions governing the same including, without limitation, a
network or system warranty by Seller.
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<PAGE> 26
(b) The Warranty Periods listed below are applicable to Products furnished
pursuant to this Agreement, unless otherwise stated and begin upon
delivery to the destination specified in Customer's Order or, if
installed by Seller, on acceptance by Customer or thirty (30) days
from the date Seller submits its notice of completion of its
installation, whichever is sooner:
<TABLE>
<CAPTION>
Repaired or
Class of Replacement
Product New Product* Product or Part **
-------- ----------- ---------------
<S> <C> <C>
5ESS Switch, Access Manager, *______________* *________________*
and PCS CDMA minicel
Energy Systems *______________* *________________*
All other Network Systems Products *______________* *________________*
</TABLE>
Notwithstanding anything in this Agreement to the contrary, Customer's use of
any Product for Commercial Service or to provide training or hands-on
experience to Customer's personnel shall, if prior to Seller's notice of
installation completion, commence the applicable warranty period; provided,
however, this provision shall not apply to training provided by Seller nor to
the extent that Customer's personnel merely familiarize themselves with the
Initial Products without actual operation of the Products.
(c) If, under normal and proper use during the applicable Warranty Period,
a defect or nonconformity is identified in a Product furnished by
Seller, and Customer notifies Seller in writing of such defect or
nonconformity promptly after Customer discovers such defect or
nonconformity and follows Seller's reasonable instructions regarding
the return of the defective or nonconforming Product, Seller shall
take the following action:
(i) Seller, at its option, shall attempt first to repair
or replace such Product without charge at its facility or, if not
feasible, provide a refund or credit based on the original purchase
price, and installation charges if installed by Seller. Customer must
return the Product to Seller for repair and replacement, except as
noted below.
(ii) Where Seller has elected to repair or replace a
Product which has been installed by Seller and Seller ascertains that
the Product is not readily returnable by Customer, Seller will repair
or replace the Product at Customer's site.
(d) If Seller has elected to repair or replace a defective Product which
is readily replaceable in the normal mode of maintenance and
operations, Customer is responsible for removing and reinstalling and,
in addition, for on-site repair or replacement of cable and wire
Products, Customer must make the Product accessible for repair or
replacement, and is responsible to restore the site.
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__________________________________
* Refer to the SOFTWARE WARRANTY CLAUSE for associated Software
warranties.
** The Warranty Period for a repaired product or part thereof repaired
under or for a replacement Product of Part thereof furnished in lieu of repair
under this Warranty is the period listed or the unexpired term of the new
Product Warranty Period, whichever is longer.
LUCENT TECHNOLOGIES PROPRIETARY
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<PAGE> 27
(e) Products returned for repair or replacement will be accepted by Seller
only in accordance with its reasonable instructions and procedures for
such returns. The transportation expense associated with returning
such Product to Seller shall be borne by Customer. Seller shall pay
the cost of transportation of the repaired or replacing Product to the
destination designated by Customer within the BTA.
(f) Defective or nonconforming Products or parts which are replaced
hereunder shall become Seller's property. Seller may use either new,
remanufactured, reconditioned, refurbished, however, in all events
functionally equivalent Products or parts in the furnishing of repairs
or replacements under this Agreement such that upon repair or
replacement the applicable Product performs in accordance with the
Specifications.
(g) If Seller determines that a Product for which warranty Service is
claimed is not defective or not nonconforming, Customer shall pay
Seller's reasonable costs of handling, inspecting, testing, and
transporting such Product in connection with the requested warranty
service and, if applicable, reasonable traveling and related expenses;
provided, however, that such Products for which warranty service is
claimed are: (i) identified by Product diagnostics as having failed,
but result in "no trouble found"; and (ii) are not able to be
diagnosed by the fault localization capabilities of the Product.
(h) Seller makes no warranty with respect to defective conditions or
nonconformities to the extent (and only to the extent) resulting from
the following: Customer modifications, misuse, neglect, accident or
abuse; improper wiring, repairing, splicing, alteration, installation,
storage or maintenance by other than Seller; use in a manner not in
accordance with Seller's or vendor's specifications, or operating
instructions or failure of Customer to apply previously applicable
Seller modifications and corrections. In addition, Seller makes no
warranty with respect to Products which have had their serial numbers
or months and year of manufacture deliberately removed or altered by
other than Seller and with respect to expendable items, including,
without limitation, fuses, light bulbs, motor brushes, and the like.
(i) THE FOREGOING PRODUCT WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ALL
OTHER EXPRESS AND IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
CUSTOMER'S SOLE AND EXCLUSIVE REMEDY SHALL BE SELLER'S OBLIGATION TO
REPAIR, REPLACE, CREDIT OR REFUND AS SET FORTH ABOVE IN THIS WARRANTY.
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ARTICLE III
PROVISIONS APPLICABLE TO THE LICENSING OF SOFTWARE
3.1 GENERAL:
The provisions of this Article apply to the granting of licenses
pursuant to this Agreement by Seller to Customer for Licensed Materials.
3.2 LICENSE:
Upon delivery of Licensed Materials, but subject to the performance of
Customer's obligations to make payment of all applicable license fees under
this Agreement when due (after allowing for any applicable grace periods)
including, but not limited to, any continuing up-date fees, Seller grants to
Customer a personal, nontransferable, and nonexclusive license pursuant to this
Agreement to use such Licensed Materials in any BTA where Seller has supplied
Products to Customer with either the Designated Processor or on any comparable
Seller-provided replacement if the Designated Processor becomes inoperative.
Customer shall use Licensed Materials only for its own (or its Affiliates')
business operation. In the event Customer transfers any Designated Processor
(or its replacement) procured under this Agreement to an Affiliate of Customer,
Seller grants to such Affiliate a nonexclusive license to use such transferred
Designated Processor (or its replacement) on the same terms and conditions of
the license granted to Customer under this Section 3.2.
The license grants Customer no right to and Customer will not
sublicense such Licensed Materials, or modify, decompile, or disassemble
Software furnished as object code to generate corresponding Source Code.
3.3 TITLE, RESTRICTIONS AND CONFIDENTIALITY:
All Licensed Materials (whether or not part of Firmware) furnished by
Seller, and all copies thereof made by Customer, including translations,
compilations, and partial copies are the property of Seller.
Except for any part of such Licensed Materials which is or becomes
generally known to the public through acts not attributable to Customer,
Customer shall hold such Licensed Materials in confidence, and shall not,
without Seller's prior written consent, disclose, provide, or otherwise make
available, in whole or in part, any Licensed Materials to anyone, except to its
employees having a need-to-know and to its consultants and subcontractors,
provided that such consultants and subcontractors first execute a written
confidentiality agreement substantially identical to the provisions of this
Section 3.3. Customer shall not copy Software embodied in Firmware. Customer
shall not make any copies of any other Licensed Materials except as necessary
in connection with the rights granted hereunder. Customer shall reproduce and
include any Seller copyright and proprietary notice on all such necessary
copies of the Licensed Materials. Customer shall also mark all media containing
such copies with a warning that the Licensed Materials are subject to
restrictions contained in an agreement between Seller and Customer and that
such Licensed Materials are the property of Seller.
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LUCENT TECHNOLOGIES PROPRIETARY
<PAGE> 29
Customer shall take appropriate action, by instruction, agreement, or
otherwise, with the persons permitted access to the Licensed Materials so as to
enable Customer to satisfy its obligations under this Agreement.
When the Licensed Materials are no longer needed by Customer, or if
Customer's license is canceled or terminated, Customer shall return all copies
of such Licensed Materials to Seller or follow written disposition instructions
provided by Seller.
3.4 CHANGES IN LICENSED MATERIALS:
Prior to shipment, Seller may at any time modify the specifications
relating to its Licensed Materials and shall provide notification thereof to
Customer prior to such shipment. Seller may substitute modified Licensed
Materials to fill an Order, provided the modifications, under normal and proper
Use, do not materially adversely affect the Use, Function, or performance of
the Ordered Licensed Materials or the Function of the related Products in
accordance with the Specifications. Unless otherwise agreed, such substitution
shall not result in any additional charges to Customer.
3.5 MODIFICATIONS TO SOFTWARE:
Customer may request Seller to make changes to Seller's Software.
Upon receipt of a document describing in detail the changes requested by
Customer, Seller will respond in writing to Customer within thirty (30) days.
If Seller agrees to undertake such modifications, the response shall quote a
proposed delivery date and a fee for a license under such modified Software.
Seller shall, subject to payment of Seller's Annual Maintenance Fees
(as set forth in Attachment 1.10), make available to Customer during the term
of this Agreement all Software maintenance releases and Software upgrades that
Seller makes generally available to its other customers in order to correct
defects or deficiencies in the Software (the "Maintenance Releases"). Seller
shall, subject to payment of Seller's standard license fees and charges, make
available to Customer during the term of this Agreement modifications or
improvements to the Software which improve performance or capacity or which add
functionality and are not required to achieve performance in accordance with
the Specifications ("Enhancements"). All Maintenance Releases and Enhancements
shall, upon payment of the applicable fees and charges, be subject to the
Software license terms set forth in Section 3.2.
Seller agrees to provide Customer access to its specifications for all
industry standard interfaces for its Products, including OA&M interfaces.
Seller agrees to make available to Customer, upon payment of the applicable
prices and charges set forth in the Customer Price List, any interfaces which
are deemed final by the appropriate standards body no later than eighteen (18)
months after such standards are published, as Customer and Seller agree are
necessary. As of the Effective Date, the parties agree to accept IS-634 Rev. A
as such a standard.
3.6 MODIFICATION BY CUSTOMER:
Unless otherwise agreed, Customer is not granted any right to modify
Software furnished by Seller under this Agreement.
3.7 RELATED DOCUMENTATION:
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LUCENT TECHNOLOGIES PROPRIETARY
<PAGE> 30
Seller shall furnish to Customer, at no additional charge, one (1)
copy per switch and one (1) copy per twenty-five (25) PCS CDMA minicells of the
Related Documentation for Software furnished by Seller pursuant to this
Agreement. Such Related Documentation will be that customarily provided by
Seller to its Customers at no additional charge. Such Related Documentation
shall be provided prior to or with the provision of Software by Seller to
Customer. Additional copies of the Related Documentation are available at
prices set forth in the Customer Price List.
3.8 SOFTWARE WARRANTY
(a) Seller warrants to Customer only that Software will, upon
shipment, be free from those defects which materially affect
performance in accordance with the Specifications or other
agreed upon specifications referenced in the Order and Seller
further warrants that it has the right to grant the licenses
to Use Software it grants under this Agreement.
(b) The Warranty Periods listed below begin upon delivery to the
destination specified in Customer's Order or, if installed by
Seller, on acceptance by Customer or thirty (30) days from the
date Seller submits its notice of completion of installation,
whichever is sooner. The Warranty Periods listed below are
applicable to Software, the Related Documentation and
associated with such Software, and the medium on which such
Software is recorded, unless otherwise stated.
<TABLE>
<CAPTION>
Software Warranty Period
-------- ---------------
<S> <C>
5ESS, Access Manager and
PCS CDMA Minicell (including Software
Updates and Software Generic Releases
for such Software) *_____________*
</TABLE>
The Warranty Period for media and Related Documentation shall
commence on the same date as commences the Warranty Period for
their associated Software. The Warranty Period for Software
for the 5ESS, Access Manager and PCS CDMA Minicell (including
Software Updates or Software Generic Releases for such
Software) (including any prior Software Update issued to
Customer in respect thereto) expires upon installation of any
subsequent Software Update or Software Generic Release for
such Software (or Software Update). If any prior Software
version or Update is re-installed by Seller, the warranty
shall continue to run for the unexpired portion of the
original Software version or Update warranty.
(c) If, under normal and proper use during the applicable Warranty
Period, Software covered in paragraph (a), subparagraph (i)
proves to have a defect, which materially affects its
performance in accordance with the Specifications, and
Customer notifies Seller in writing of such defect promptly
after Customer discovers or should have discovered such defect
and follows Seller's instructions, if any, regarding return of
defective Software, Seller shall at its option, attempt first
to either correct or replace such Software without charge or
if correction or replacement is not feasible, provide a refund
or credit the full amount of the original license fee.
(d) Software returned for correction or replacement will be
accepted by Seller only in accordance with its instructions
and procedures for such returns. The transportation
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LUCENT TECHNOLOGIES PROPRIETARY
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<PAGE> 31
expense associated with returning such Software to Seller
shall be borne by Customer. Seller shall pay the costs of
transportation of the corrected or replacing Software to the
destination designated by Customer within the applicable BTA.
(e) Seller makes no warranty with respect to defective conditions
or nonconformities resulting from the following:
modifications, misuse, neglect, or accident by other than
Seller; installation, use or maintenance in a manner not in
accordance with Seller's specifications, operating
instructions, or license-to-use; or failure of Customer to
apply previously applicable Seller modifications and
corrections. In addition, Seller makes no warranty with
respect to defects related to Customer's data base errors.
Moreover, no warranty is made that Software will run
uninterrupted or error free.
(f) THE FOREGOING SOFTWARE WARRANTIES ARE EXCLUSIVE AND ARE IN
LIEU OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES, INCLUDING
BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. CUSTOMER'S SOLE AND EXCLUSIVE
REMEDY SHALL BE SELLER'S OBLIGATION TO CORRECT, REPLACE,
CREDIT, OR REFUND AS SET FORTH ABOVE IN THIS WARRANTY.
3.9 CANCELLATION OF LICENSE:
In the event this Agreement terminates prior to the expiration of the
term for Customer's default or breach in accordance with Section 1.20 and
through no fault of Seller, the licenses granted herein for which Customer's
payment obligations are not up-to-date shall concurrently terminate; provided
that, if Seller terminates this Agreement under Section 1.20 for a violation of
any of the provisions of the last paragraph of Section 3.2 or Section 3.3, then
all such licenses shall concurrently terminate.
3.10 TAXES APPLICABLE TO SOFTWARE:
Notwithstanding clause TAXES in Article I of this Agreement, Seller
shall not bill, collect, or remit any state or local sales or use tax with
respect to the license of Software under this Agreement, or with respect to the
performance of Services related to such software, which Customer represents to
Seller is not properly due under Customer's interpretation of the law of the
taxing jurisdiction, if (1) Customer submits to Seller a written explanation of
the authorities upon which Customer bases its position that the license or
performance of Services is not subject to sales or use tax, and (2) Seller
reasonably agrees that there is authority for Customer's position, provided,
however, that Customer shall hold Seller harmless for all costs and expenses
(including, but not limited to, taxes and related charges payable under clause
TAXES, and reasonable attorney's fees) arising from the assertion by a taxing
authority that the license of, or the performance of Services with respect to,
the Software was subject to state or local sales or use tax.
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LUCENT TECHNOLOGIES PROPRIETARY
<PAGE> 32
ARTICLE IV
PROVISIONS APPLICABLE TO ENGINEERING,
INSTALLATION, AND OTHER SERVICES
4.1 GENERAL:
The provisions of this Article IV shall be applicable to the
furnishing by Seller of Services other than Services furnished pursuant to any
other Article of this Agreement.
4.2 ACCEPTANCE OF PRODUCTS AND INSTALLATION:
The parties acknowledge and agree that the Trial Agreement shall
contain mutually acceptable acceptance test procedures for the Products,
Licensed Materials and Services procured under this Agreement and deployed
pursuant to the Trial Agreement and that such acceptance test procedures shall
be based upon Seller's acceptance test procedures set forth on Attachment 4.2
and other mutually agreed upon procedures (which shall include, without
limitation, a cluster acceptance test procedure).
With respect to Initial Products purchased under this Agreement and
not deployed under the Trial Agreement, Seller shall perform and Customer shall
have the opportunity to observe all acceptance tests described in Attachment
4.2 in addition to a mutually agreed upon cluster acceptance test. Upon
completion of the Integration Acceptance Test, Seller will submit to Customer a
Notice of Completion, pursuant to section "1.23 - Notices" of this Agreement.
Upon the earlier of (a) Customer's determination that such Integration
Acceptance Test results are satisfactory and in conformance with the applicable
acceptance standards set forth in Attachment 4.2, (b) the expiration of the
thirty (30) day period following the issuance of the Notice of Completion, or
(c) Commercial Service at any time after installation, the Initial Products
shall be deemed accepted by Customer. Seller will promptly correct any defects
for which it is responsible. For purposes of this Agreement, "Integration
Test" shall mean the acceptance test procedure whereby a PCS CDMA minicell is
integrated with the associated 5ESS switch and access manager and excludes all
subsequent optimization and cluster and system acceptance test procedures.
4.3 CONDITIONS OF INSTALLATION AND OTHER SERVICES PERFORMED ON CUSTOMER'S
SITE:
ITEMS PROVIDED BY CUSTOMER
Except as the parties may have otherwise agreed in this Agreement or
in other written agreements of the parties, Customer will be responsible for
furnishing the following items (as required by the conditions of the particular
Installation or other on-site Service, hereinafter collectively referred to as
the "Service") at no charge to Seller and these items will not be included in
Seller's price for the Service. Seller's representative shall have the right
to inspect the site prior to Service start date.
Regulatory Commission Approvals--Prior to Service start date, obtain
such approvals, licenses, permits, tariffs and/or other authorities from the
Federal Communications Commission and state and local public utilities
commissions as may be necessary for construction and operation of a Personal
Communications Services System.
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LUCENT TECHNOLOGIES PROPRIETARY
<PAGE> 33
Easements, Permits and Rights-of-Way--Prior to Installation start
date, provide all rights-of-way, easements, licenses to come upon land to
perform the Service, permits and authority for installation of Products and
other items; permits for opening sidewalks, streets, alleys, and highways; and
construction and building permits.
Access to Building and Work Site--Allow employees of Seller and it
subcontractors free access to premises and facilities at all hours during the
scheduled Service. Customer shall obtain for Seller's and its subcontractors'
employees any necessary identification and clearance credentials to enable
Seller and its subcontractors to have access to the work site.
General Building Conditions--When Customer provides or arranges for a
third party to provide facilities or structures for PCS installation services,
Customer shall prior to Service start date:
a. Insure that the PCS site structures are in a structurally safe
and sound condition to properly house the materials to be
installed, in accordance with weight, strength, and structural
requirements specified by Seller;
b. Take such action as may be necessary to insure that the
premises will be dry and free from dust and Hazardous
Materials, including but not limited to asbestos, and in such
condition as not to be injurious to Seller's or its
subcontractors' employees or to the materials to be installed.
Prior to commencement of the Services and during the
performance of the Service, Customer shall, if requested by
Seller, provide Seller with sufficient data to assist Seller's
supplier in evaluating the environmental conditions at the
work site (including the presence of Hazardous Materials).
The price quoted by Seller's supplier for the Service does not
include the cost of removal or disposal of the Hazardous
Materials from the work site. Customer is responsible for
removing and disposing of the Hazardous Materials, including
but not limited to asbestos, if necessary, prior to
commencement of the Service.
Sensitive Equipment--Prior to commencement of the Service,
inform Seller of the presence of any known sensitive equipment at the work site
(e.g., equipment sensitive to static electricity or light).
Repairs to Buildings--Prior to Service start date, make such
alterations and repairs as are necessary for proper installation of items to be
installed.
Openings in Buildings--Prior to Service start date, furnish
suitable openings in buildings to allow the items to be installed to be placed
in position, and provide necessary openings and ducts for cable and conductors
in floors and walls as designated on engineering drawings furnished by Seller.
Surveys--Prior to Service start date furnish surveys
(describing the physical characteristics, legal limitations and utility
locations for the work site) and, if reasonably requested, a legal description
of the site.
Electrical Current, Heat, Light and Water--Provide electric
current for charging storage batteries and for any other necessary purposes
with suitable terminals where work is to be performed; provide temperature
control and general illumination (regular and emergency) in rooms in which work
is to be performed or Products or other items stored, equivalent to that
ordinarily furnished for similar purposes in a working office; provide exit
lights; provide water and other necessary utilities for the proper execution of
the Service.
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LUCENT TECHNOLOGIES PROPRIETARY
<PAGE> 34
PCS Utility Requirements--Negotiate with the power and
telephone companies for installation of the power and telephone facilities
necessary to proper operation of the Products and/or other items being
installed. The type and quantity of such facilities shall be subject to
Seller's reasonable approval. Customer shall have the telephone company
provide, place, install, extend and terminate telephone facilities into the
PCS; line up and test the telephone company facilities outside and inside the
PCS; and provide to Seller copies of the test results prior to Seller's
commencing Integration Testing of the PCS.
Material Furnished by Customer--New or used material furnished
by Customer shall be in such condition that it requires no repair and no
adjustment or test effort in excess of that normal for new equipment. Customer
assumes all responsibility for the proper functioning of such material.
Customer shall also provide the necessary information for Seller to properly
install such material.
Furniture--provide and install all furniture necessary for the
performance of the Service.
Floor Space and Storage Facilities--Provide, during progress
of the Service, suitable and easily accessible floor space and storage
facilities (a) to permit storing major items of Products and other material
closely adjacent to where they will be used, and (b) for tools and property of
Seller and its subcontractors. Where the Service is to be performed outside of
a building or in a building under construction, Customer shall, in addition to
the above requirements, as appropriate, permit or secure permission for Seller
and its subcontractors to maintain at the work site, storage facilities (such
as trailers) for Products, materials and other items and for tools and
equipment needed to complete the Service.
Watch Service--Where appropriate, provide normal security (for
cell sites, commercial alarms) necessary to prevent admission of unauthorized
persons to building and other areas where installation Service is performed and
to prevent unauthorized removal of the Products and other items. Seller will
inform Customer as to which storage facilities at the work site Seller will
keep locked.
Use of Available Testing Equipment--Customer shall make
available to Seller the maintenance test facilities which are imbedded in
equipment to which the Product or other item being installed will be connected
or added. Seller's use of such test equipment shall not interfere with the
Customer's normal equipment maintenance functions.
Access to Existing Facilities--Customer shall permit Seller
reasonable use of such portions of the existing plant or equipment as are
necessary for the proper completion of such tests as require coordination with
existing facilities. Such use shall not interfere with the Customer's normal
maintenance of equipment.
Grounds--Customer shall provide access to suitable and
isolated building ground as required for Seller's standard grounding of
equipment. Where installation is outside or in a building under construction,
Customer shall also furnish lightning protection ground.
Requirements for Customer Designed Circuits--Customer shall
furnish information covering the proper test and readjust requirements for
apparatus and requirements for circuit performance associated with circuits
designed by Customer or standard circuits modified by Customer's drawings.
Through Tests and Trunk Tests--Customer shall make required
through tests and trunk tests to other offices after Seller provides its notice
of completion or notice of advanced turnover.
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LUCENT TECHNOLOGIES PROPRIETARY
<PAGE> 35
ITEMS TO BE FURNISHED BY SELLER
The following items will be furnished by Seller (if required by the
conditions of the particular Service) and the price thereof is included in
Seller's price for Service:
Protection of Equipment and Building--Seller shall provide protection
for Customer's equipment and buildings during the performance of the Service
and in accordance with Seller's standard practices.
Method of Procedure--Seller shall prepare a detailed Method of
Procedure ("MOP") before starting work on live equipment. Customer shall
review the MOP and any requested changes shall be negotiated. Customer shall
give Seller written acceptance of the MOP prior to start of the work.
Maintenance--Maintenance of Products, Software and other items from
completion of installation until date of acceptance.
Locally Purchased Items--Purchase of items indicated by the
Specifications as needing to be purchased locally.
The following items will be furnished by Seller if requested by
Customer, but Customer will be billed and shall pay for them in addition to
Seller's standard or firm quoted price for the Services:
Protection of Buildings and Equipment--Seller may provide protection
of buildings and equipment in accordance with special practices of Customer
differing from Seller's standard practices.
Readjusting Apparatus--Seller may provide readjustment (in excess of
that normally required on new apparatus) of apparatus associated with relocated
or rewired circuits.
Cross-Connections (Other than to Outside Cable Terminations)--Seller
may run or rerun permanent cross-connections in accordance with revised
cross-connection lists furnished by Customer.
Handling, Packing, Transportation and Disposition of Removed and
Surplus Customer Equipment--Seller may pack, transport, and dispose of surplus
and removed Customer equipment as agreed by the parties.
Premium Time Allowances and Night Shift Bonuses--If requested by
Customer, Seller may have its Services personnel work premium time and night
shifts to the extent that Seller may deem such to be necessary to effect the
required coordination of installing and testing operations or other Services
because of Customer's requirements.
Emergency Lighting System--Seller may provide new emergency lighting
system (other than the original ceiling mounted stumble lighting) to satisfy
illumination and safety needs of Products of certain heights.
Hazardous Materials Cleanup--At the conclusion of the Service, Seller
shall not be responsible for the cleanup, removal, and proper disposal of
Hazardous Materials present at Customer's premises which are not brought to the
premises by Seller.
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LUCENT TECHNOLOGIES PROPRIETARY
<PAGE> 36
4.4 WORK DONE BY OTHERS:
Work done at the site by Customer or its other vendors or contractors
shall not interfere with Seller's performance of the installation or other
Services. If Customer or its other vendors or contractors fail to timely
complete the site readiness or if Customer's or its other vendors or
contractors' work interferes with Seller's performance, the scheduled
completion date of Seller's Services under this agreement shall be extended as
necessary to compensate for such delay or interference.
4.5 SERVICES WARRANTIES:
(a) Seller warrants to Customer only, that Services will be performed in a
careful and workmanlike manner and in accordance with the
Specifications or those referenced in the Order and with accepted
practices in the community in which such Services are performed, using
material free from defects except where such material is specified or
provided by Customer. If Services prove to be not so performed and if
Customer notifies Seller, with respect to engineering, installation,
or repair Services, within *_______________* commencing on the date of
completion of the Service, Seller, at its option, either will correct
the defective or nonconforming Service or render a full or prorated
refund or credit based on the original charge for the Services.
(b) Where Seller performs engineering or installation Services as part of
a combined engineering, furnishing, and installation Order, the six
(6) month period referenced above shall commence on completion of the
installation Service.
(c) THE FOREGOING SERVICES WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ALL
OTHER EXPRESS AND IMPLIED WARRANTIES INCLUDING, BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
CUSTOMER'S SOLE AND EXCLUSIVE REMEDY SHALL BE SELLER'S OBLIGATION TO
MARK CORRECTIONS OR GIVE A CREDIT OR REFUND AS SET FORTH ABOVE IN THIS
WARRANTY.
(d) With respect to consultation services and other services not
identified in (a) above, the applicable warranty provisions will be
negotiated on a case by case basis.
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LUCENT TECHNOLOGIES PROPRIETARY
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 37
ARTICLE V
ENTIRE AGREEMENT AND EXECUTION
5.1 ENTIRE AGREEMENT:
The terms and conditions contained in this Agreement, any incorporated
Attachments, any subordinate agreements, the Initial Financing and Orders
accepted pursuant to this Agreement or any subordinate agreement supersede all
prior oral or written understandings between the parties with respect to the
subject matter thereof and constitute the entire agreement of the parties with
respect to such subject matter. Such terms and conditions shall not be
modified or amended except by a writing signed by authorized representatives of
both parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives on the date(s) indicated.
NEXTWAVE WIRELESS INC. LUCENT TECHNOLOGIES INC.
By: /s/ Allen Salmasi By: /s/ Nina Aversano
-------------------------------- -------------------------
Name: Allen Salmasi Name: Nina Aversano
------------------------------ -----------------------
Title: Chairman, President and CEO Title: Pres., GCM
----------------------------- ----------------------
Date: November 15, 1996 Date: November 15, 1996
------------------------------ -----------------------
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<PAGE> 1
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.35
EQUIPMENT REQUIREMENTS AGREEMENT
This Agreement is entered into as of the 30th day of November, 1995 by
and between NextWave Personal Communications Inc., a Delaware corporation
("NextWave"), and QUALCOMM Incorporated, a Delaware corporation ("QUALCOMM").
WHEREAS, NextWave intends to acquire broadband C-Block personal
communications services ("PCS") licenses from the United States Federal
Communications Commission (the "FCC") and to construct facilities, deploy PCS
infrastructure equipment, distribute and sell PCS subscriber equipment and
provide PCS and other wireless communication services in the U.S. and abroad,
by itself and/or as part of various consortia and affiliations with other
communications companies and industry participants;
WHEREAS, the FCC has previously issued broadbased PCS licenses to 30
MHz spectrum blocks, the A-blocks and B-blocks, in the 1850-1990 MHz band;
WHEREAS, QUALCOMM has developed its code division multiple access
("CDMA") technology for use in PCS and other wireless applications;
WHEREAS, concurrently with this Agreement, QUALCOMM and NextWave are
entering into certain agreements providing for, among other things, a $5
million equity investment by QUALCOMM in NextWave (the "Equity Agreement") and
a $25 million loan commitment by QUALCOMM (the "Loan Agreement"), subject to
the conditions specified therein (the Equity Agreement and the Loan Agreement
are collectively hereinafter referred to as the "Investment Agreements"); and
WHEREAS, QUALCOMM and NextWave are entering into this Agreement in
part as an inducement to QUALCOMM to enter into the Investment Agreements.
NOW THEREFOR, in consideration of the foregoing premises and the
mutual covenants and conditions set forth below, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties to this Agreement agree as follows:
1. IMPLEMENTATION OF CDMA TECHNOLOGY.
*__________________________________________________________.
___________________________________________________________.
__________________________________________________________*.
2. PURCHASE OF CDMA EQUIPMENT.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 2
A. PURCHASE OF INFRASTRUCTURE EQUIPMENT FOR MARKET TRIAL.
NextWave hereby orders and agrees to purchase from QUALCOMM, and QUALCOMM hereby
accepts and agrees to sell to NextWave, subject to the terms of this Agreement
and, subject to negotiations in good faith, the terms of the Infrastructure and
Purchase and Supply Agreement in form of Exhibit A attached hereto (the
"Infrastructure Agreement"), two hundred (200) Base Station Transceivers (BTSs)
and up to *_______* Base Station Controllers (BSCs) (collectively, the "Market
Trial Equipment") for delivery *_________________________________________*. The
purchase price for the Market Trial Equipment will be calculated based on the
formula set forth below in paragraph b. The above order for Market Trial
Equipment is conditioned upon (a) NextWave being awarded C-Block PCS licenses as
a result of the FCC auctions covering at least 20M POPs; provided that if
NextWave receives licenses for less than 50M POPs, the parties negotiate in good
faith to agree to reasonably reschedule the delivery requirements and to scale
back the amount of Market Trial Equipment ordered hereunder by NextWave, and (b)
NextWave receiving equity or debt financing of at least $70 million. Unless
QUALCOMM has implemented and makes available an IS-651 interface in time for the
market trial, QUALCOMM and NextWave agree that the Market Trial Equipment will
be provided as a turn-key network solution (i.e., the BSC shall contain the
NIS).
B. PURCHASE OF INFRASTRUCTURE EQUIPMENT FOR AWARDED MARKETS.
BTSs and BSCs are collectively hereinafter referred to as "Infrastructure
Equipment." Infrastructure Equipment shall be capable of providing for
commercial features, functionality and performance as reasonably required to
provide for a commercially viable system.
Any PCS license for any basic trading area ("BTA") which is awarded to
NextWave and/or its existing Affiliates as a result of the C-Block FCC auctions
shall hereinafter be referred to as a "NextWave Market". Immediately after the
conclusion of the C-Block auctions,
*_______________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_________________*. If, in accordance with this Agreement, NextWave does not
award QUALCOMM's Share of the NextWave Markets to QUALCOMM, then NextWave shall
award such NextWave Markets to the Competing Bidder at or less than the prices
contained in the Competing Bid.
In exchange for NextWave's obligation to award QUALCOMM the QUALCOMM's
Share of NextWave Markets for the competitive bidding process and pricing
arrangements described above, QUALCOMM agrees to treat NextWave as a preferred
customer for delivery allocation purposes, meaning that purchase orders received
and accepted by QUALCOMM from NextWave for Infrastructure Equipment in
accordance with the Infrastructure Equipment Agreement (e.g., consistent with
lead time and forecast requirements) before orders received by QUALCOMM from any
other U.S.
2.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 3
PCS carrier shall, subject to the exceptions set forth below, be fulfilled by
QUALCOMM before QUALCOMM fulfills such other U.S. PCS carrier's later order.
Notwithstanding the foregoing, nothing herein shall be deemed to limit
QUALCOMM's rights to fulfill Infrastructure Equipment purchase orders received
from any U.S. PCS carrier earlier than those received from NextWave nor shall
anything in this Agreement be deemed to limit QUALCOMM's rights to fulfill
Infrastructure Equipment purchase orders received from any U.S. PCS carrier
later than those received from NextWave where QUALCOMM can fulfill such later
order without materially impacting its obligation to also fulfill any NextWave
earlier Infrastructure Equipment purchase order. If QUALCOMM chooses to fulfill
an order for Infrastructure Equipment received from a U.S. PCS carrier later
than a NextWave purchase order and, solely as a result thereof, QUALCOMM's
ability to materially fulfill NextWave's earlier purchaser order is
significantly delayed, QUALCOMM will reduce QUALCOMM's Prices for that portion
of the Infrastructure Equipment so delayed to equal the prices contained in the
Competing Bid and shall provide such other remedies which are to be agreed upon
pursuant to section 3 a. below.
NextWave shall use its best efforts to ensure that RFQ and
determination of QUALCOMM's Prices versus the Competing Bid is based on an
"apples-to-apples" comparison. NextWave has performed extensive due diligence
concerning the existing and planned features, functionality and performance of
QUALCOMM's Infrastructure Equipment and shall issue an RFQ that provides for a
pricing comparison with the Competing Bid on a fair and reasonable basis. Until
QUALCOMM has implemented an IS-651 interface (or interface similar thereto), the
"apples-to-apples" comparison shall consider the total price of QUALCOMM's
turn-key solution to the total price of the turn-key solution offered by the
Competing Bidder. As used herein, the term "QUALCOMM's Share" means that
percentage of NextWave's Markets which become Awarded Markets (in which NextWave
shall purchase all of its requirements for Infrastructure Equipment from
QUALCOMM), which percentage is to be calculated as follows: (a)
*_____________________________* (calculated on a Per POP basis) (the "Minimum
QUALCOMM Share") if QUALCOMM does not elect to convert at least fifteen million
dollars ($15,000,000) of the funds loaned to NextWave under the Loan Agreement
into Series B Stock of NextWave as permitted under the Loan Agreement and (b)
*___________________________* (calculated on a Per POP basis) (the "Maximum
QUALCOMM Share") if QUALCOMM does elect to convert at least fifteen million
dollars ($15,000,000) of the funds loaned to NextWave under the Loan Agreement
into Series B Stock of NextWave as permitted under the Loan Agreement. QUALCOMM
will use its best efforts to provide for an IS-651 interface (or similar type of
interface) *_______________________*, but this depends upon, among other things,
adoption of standard and whether it has then been implemented by the switch
vendor. Prior to completion of such interface by QUALCOMM, NextWave will
purchase turn-key systems, including BTSs and BSCs (with NIS) from QUALCOMM to
meet its purchase commitment and if QUALCOMM has not, due to its own fault,
implemented the IS-651 interface (or a similar interface) *__________________*,
the parties will then negotiate in good faith to agree upon a plan whereby
QUALCOMM would purchase back (at the
3.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 4
original price charged by QUALCOMM) those NISs which were delivered after the
date IS-651 should have been implemented and made available by QUALCOMM.
i. In determining whether QUALCOMM's Prices are *_______________*
of the Competing Bid, a fair and reasonable comparison of the responses shall be
made. If NextWave reasonably determines that the QUALCOMM Prices are not
*______________* of the Competing Bid for any NextWave Market, NextWave shall
immediately notify QUALCOMM by letter signed by a responsible executive officer
and inform QUALCOMM by how much QUALCOMM must reduce QUALCOMM's Prices in order
that QUALCOMM's Prices are equal to *________* of the Competing Bid. QUALCOMM
may, in its sole discretion, within ten business (10) days after its receipt of
such notice, reduce the QUALCOMM Prices to *_________________* of the Competing
Bid. If requested by QUALCOMM, NextWave agrees that QUALCOMM may designate a
third party independent auditor acceptable to NextWave (which acceptance shall
not be unreasonably withheld) whom shall be permitted by NextWave to review the
response to the RFQ by the Competing Bidder as compared to QUALCOMM's response
to verify whether the QUALCOMM Prices are *____________________________* of the
Competing Bid. After NextWave has purchased from QUALCOMM (a) at least
*_______________________* of Infrastructure Equipment if the Minimum QUALCOMM
Share applies and (b) *___________________________________* of Infrastructure
Equipment if the Maximum QUALCOMM Share applies, NextWave's obligation to
continue to purchase Infrastructure Equipment from QUALCOMM under this Agreement
shall be conditioned upon QUALCOMM's Prices being
*__________________________________________*.
During the *________________* period immediately following the
Effective Date of this Agreement (the "*____________* Supply Period"), NextWave
and its Affiliates shall purchase from QUALCOMM, and QUALCOMM agrees to sell to
NextWave and its Affiliates, subject to the terms of this Agreement and the
terms of the Infrastructure Agreement, all of NextWave's and its Affiliates'
requirements for BTSs and BSCs in the Awarded Markets.
3. TERMS OF EQUIPMENT PURCHASES.
The parties acknowledge that Exhibit A does not cover all of the terms
and conditions concerning the purchase and sale of the Market Trial Equipment
and Infrastructure Equipment, nor have all of the terms and conditions
contained in Exhibit A been fully agreed upon, and the parties agree to
negotiate in good faith and agree upon the final terms and conditions
consistent with this Agreement. With respect to the purchase and sale of
Infrastructure Equipment of the Awarded Markets, the parties agree to
negotiate the following additional terms to be incorporated into the
Infrastructure Agreement.
i. Orders shall be made in accordance with forecast procedures to
be agreed upon by the parties, with provisions for factory reservations,
cancellation,
4.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 5
rescheduling and lead times. Such provisions and procedures shall be based
upon the final terms of the attached Infrastructure Agreement.
ii.The parties shall establish Acceptance Test Procedures that
provide tests which demonstrate that installed BTS and BSC equipment operate
substantially in accordance with agreed-upon performance requirements and
specifications. The Acceptance Test Procedures will also establish parameters
for the results of tests necessary for Product Acceptance. The acceptance
parameters will be divided into items which are required for system operation
and must be verified prior to Product Acceptance and other items that may be
corrected within reasonable amount of time (to be agreed upon).
iii.With respect to each Awarded Market, the parties will
establish a System Acceptance Date by which time the Acceptance Test Procedures
shall have been successfully completed with respect to BTS and BSC equipment
first ordered by NextWave for installation in that BTA.
iv.The Infrastructure Agreement shall provide for reasonable
incentives and penalties in the case of early or late delivery of equipment.
If QUALCOMM demonstrates ATP equipment by a date that is at least 90 days
earlier than the system acceptance date for that market, NextWave will provide
an early delivery bonus payment to QUALCOMM. In the event that QUALCOMM
delivers ATP equipment by a date that is between 90 days and 180 days after the
date specified in the order for that equipment, NextWave will be entitled to a
late penalty in a form and in an amount to be negotiated. In the event that
QUALCOMM delivers equipment by a date that is more than 180 days after the date
specified in the order for that equipment, NextWave may thereafter terminate,
at any time within 30 days after such 180 day period, its supply relationship
with QUALCOMM in the Awarded Market for which the equipment was ordered and
late by more than 180 days.
v.QUALCOMM would provide NextWave most favored pricing and
other terms and conditions as compared to those provided by QUALCOMM to
similarly situated customers based on similar terms and conditions, including
but not limited to quantities, lead times, warranty, etc.
B. PRODUCT FINANCING. Subject to the negotiation of commercially
reasonable terms and conditions, QUALCOMM would finance one hundred percent
(100%) (or a lesser amount as may be covered below) of the purchase price of
equipment purchased by NextWave from QUALCOMM. The terms and conditions of any
such financing by QUALCOMM would be commercially reasonable, taking into
consideration, among other things, the interest rate payable by NextWave, the
term of the financing, the security pledged by NextWave to ensure repayment.
NextWave understands that for commercial reasons the terms of any financing to
be provided by QUALCOMM must be of a nature, given the financial condition and
risks associated with NextWave's business, that would permit QUALCOMM to
syndicate or assign such financing on commercially acceptable terms to
reputable credit and lending institutions.
5.
<PAGE> 6
To the extent that NextWave uses equity or third party debt financing
(excluding vendor product financing provided by the Competing Bidder) to pay
any portion of the purchase price of equipment ordered from the Competing
Bidder, it will apply a proportionate amount of such equity or debt financing
to purchases of QUALCOMM equipment.
c.CONFIDENTIALITY. NextWave agrees to keep confidential all pricing
information and other terms relating to Equipment to be supplied by QUALCOMM in
accordance with the terms and conditions of the Non-Disclosure Agreement
currently in existence between QUALCOMM and NextWave. Either party may disclose
the terms of this Agreement, and its existence, to the extent required by law,
subject to such party first notifying the other party. In addition, NextWave
shall have the right to disclose the terms of this Agreement to its shareholders
and investment bankers; provided that each such shareholder or investment banker
signs a non-disclosure agreement with NextWave and with QUALCOMM agreeing to
keep such information in the strictest of confidence and provided further that
any such shareholder provides QUALCOMM a copy of any agreement it has with
NextWave concerning the supply of CDMA equipment.
4. MISCELLANEOUS.
a.TERM OF AGREEMENT. NextWave's obligation to purchase Equipment
pursuant to this Agreement and the Infrastructure Agreement shall remain in
effect for a period of five (5) years from the date hereof. This Agreement
becomes null and void if QUALCOMM has not invested at least five million dollars
($5,000,000) of equity in NextWave as provided for in the escrow agreement and
subscription agreement entered into concurrently herewith.
b.NO SOLICITATION. Unless there is a change of control in QUALCOMM,
NextWave (on behalf of itself and its Affiliates, including but not limited to
CodeWorks) agrees that for a period of two (2) years following the date hereof,
it will not solicit or induce any employee or independent contractor of
QUALCOMM to terminate or breach an employment, contractual or other
relationship with QUALCOMM nor will NextWave (on behalf of itself and its
Affiliates, including but not limited to CodeWorks) hire or otherwise employ
any employee or independent contractor of QUALCOMM or any individual that was
employed by QUALCOMM within the six-month period prior to being employed by
NextWave (or any affiliate of NextWave, including but not limited to
CodeWorks), unless such person has approached NextWave independently without
solicitation by NextWave and NextWave first consults with QUALCOMM and obtains
QUALCOMM's prior written approval, which approval shall not be unreasonably
withheld. Unless there is a change of control in NextWave, QUALCOMM agrees
that for a period of two (2) years following the date hereof, it will not
solicit or induce any employee or independent contractor of NextWave to
terminate or breach an employment, contractual or other relationship with
NextWave nor will QUALCOMM hire or otherwise employ any employee or independent
contractor of NextWave or any individual that was employed by NextWave within
the six-month period prior to being employed by QUALCOMM, unless such person
has approached QUALCOMM
6.
<PAGE> 7
independently without solicitation by QUALCOMM and QUALCOMM first consults with
NextWave and obtains NextWave's prior written approval, which approval shall
not be unreasonably withheld.
c.ASSIGNMENT; SUCCESSORS AND ASSIGNS. NextWave shall not transfer or
assign this Agreement or any right or interest under this Agreement, nor
delegate any obligation under this Agreement (an "assignment"), without
QUALCOMM's prior written consent, which consent shall not be unreasonably
withheld. Any attempted assignment in contravention of this Section shall be
void and ineffective. This Agreement shall be binding on any and all of
NextWave's successors, assigns and licensees. If NextWave transfers any or all
of its PCS licenses to any third party, the provisions of Section 2 of this
Agreement shall be binding upon such third party with respect to any such
transferred PCS license.
d.PUBLICITY. Subject to any applicable requirements of applicable
federal, state or local laws or regulations of the United States, no party
hereto will make or cause to be made, whether orally, in writing or otherwise,
any public announcement or statement to the news media or the investment or
business communities with respect to the transactions contemplated by this
Agreement or any of the provisions hereof without the prior written consent of
the other party.
e.SEVERABILITY. If any provision or term of this Agreement shall be
held to be invalid or unenforceable, the remaining provisions and terms of this
Agreement shall remain in full force and effect.
f.NOTICES. All notices, requests, demands, consents and other
communications required or permitted under this Agreement shall be in writing
and shall be delivered to the party to whom notice is to be given, by personal
delivery, by facsimile transmission or by first class mail, postage prepaid, to
the addresses (and shall be deemed to have been duly delivered on the date
received by such party):
If to QUALCOMM: If to NextWave:
QUALCOMM Incorporated NextWave Telecom Inc.
6455 Lusk Boulevard 5 West Main Street
San Diego, California 92121 Elmsford , NY 10523
Tel: (619) 587-1121 Tel: (914) 592-4252
Fax: (619) 658-2500 Fax: (914) 347-4450
Attn.: General Counsel Attn.: Ed Knapp
g.GOVERNING LAW. This Agreement is made and entered into in the State
of California and shall be governed by the laws of the State of California as
applied to contracts entered into in and performed entirely in California by
California residents. Any dispute, claim or controversy which may arise
between the parties hereto out of or
7.
<PAGE> 8
in relation to this Agreement, or breach or validity thereof ("Dispute"), shall
first be settled amicably by mutual consultation between senior management of
the parties within sixty (60) days of the written notice by one of the parties.
If the parties fail to settle the Dispute amicably within sixty (60) days from
such written notice, it shall be settled only by a court of competent
jurisdiction in the County of San Diego, State of California.
h.ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof.
i.Neither party shall be liable to the other for any consequential
damages as a result of any breach of this Agreement
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed on their behalf by their respective duly authorized
agents as of the date first written above:
QUALCOMM INCORPORATED NEXTWAVE TELECOM INC.
By: /s/ STEVEN ALTMAN By: /s/ ALLEN SALMASI
------------------------------ ----------------------------------
Title: VP, General Counsel Title: CEO & President
--------------------------- -------------------------------
8.
<PAGE> 1
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.36
NEXTWAVE RESALE AGREEMENT
<PAGE> 2
NEXTWAVE RESALE AGREEMENT
This PCS ("Personal Communications Services") Resale Agreement
("Agreement") is entered into and is in effect as of September 19, 1996, by
and between NEXTWAVE WIRELESS INC. and its Affiliates, a Delaware corporation,
with principal offices located at 9455 Towne Centre Drive, San Diego,
California 92121 ("NEXTWAVE") and Cellexis International, Inc. and its
Affiliates, an Arizona corporation, with principal offices located at 4685
South Ash Avenue, Suite H5, Tempe, AZ 85282 ("COMPANY") and the terms of
which are contained herein.
A. NextWave Personal Communications Inc. ("NextWave PCI") is a
wholly owned subsidiary of NextWave Telecom Inc. a Delaware corporation.
NextWave PCI was formed to participate in the Federal Communications
Commission's ("FCC's") PCS auctions;
B. NextWave Wireless is a wholly owned subsidiary of NextWave
Telecom Inc. organized to construct facilities, deploy PCS network equipment,
and provide PCS in the licensed markets.
C. NextWave PCI has successfully bid for 63 licenses covering
approximately 110 million POPs (based on current census data) in various
markets across the United States (see ATTACHMENT B), NextWave and NextWave PCI
intend to construct facilities, deploy PCS network equipment and provide PCS in
those licensed markets.
D. Subject to the terms and conditions set forth hereto, in the
PCS markets awarded to NextWave in the C-block auction, COMPANY desires to
purchase PCS minutes of use ("MOUs") on a resale basis from NextWave pursuant
to a ten (10) year commitment by COMPANY to purchase digital wireless voice
services from NextWave in all markets where COMPANY desires to resell digital
wireless voice services where NextWave provides service. NextWave desires to
sell PCS minutes of use to COMPANY for resale in those markets under a single
24-hour flat rate service with no access fee based upon COMPANY's advance
commitment to purchase minutes of use.
WHEREAS, COMPANY will be responsible to provide customer acquisition
(i.e., sales, marketing, advertising and customer activation), billing,
collections, customer service/care, customer retention and handset fulfillment.
THEREFORE, in consideration of the foregoing, and of the mutual
covenants and agreements hereinafter set forth, NextWave and agree as follows:
1. DEFINITIONS.
(A) AFFILIATE means, with respect to any Party, any person,
corporation or other legal entity that, directly or indirectly, controls, is
controlled by or is under common control with such Party. For purposes of this
definition, "control" (including, with correlative meanings, the terms
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<PAGE> 3
"controlling", "controlled by" and "under common control with"), means the
possession, directly or indirectly, of the power (i) to vote securities having
ordinary voting power sufficient to elect a majority of the directors of such
Party or (ii) to direct or cause the direction of the management and policies
(including investment policies) of that Party, whether by contract or
otherwise.
(B) FULL MOBILITY SERVICE means the provision of digital wireless
voice airtime with mobile inter-cell (base station) hand-off capability.
(C) LICENSES means PCS licenses held by NextWave or its
Affiliates.
(D) PCS AUCTIONS means the auction conducted by the FCC to assign
licenses to the successful bidders for 120 MHz of spectrum as broadband PCS
licenses in the 1850-1990 MHz band. The PCS band has been sub-divided into
three 30 MHz blocks (blocks A, B, and C) and three 10 MHz blocks (blocks D, E
and F). The FCC has allocated a portion of the broadband PCS spectrum (blocks
C and F) to certain entities called the "Entrepreneurs". The FCC completed the
C-block auction in July, 1996. Together these two blocks make up the
"Entrepreneurs' Band".
(E) MINUTE OF USE ("MOU") means the particular use interval
provided by NextWave for digital mobile voice service for resale to end-users
and is measured from time of seizure to the time of termination.
(F) BASE MOU PRICE means NextWave's MOU price prior to any
discounts. Usage is billed in 60 second intervals and partial minutes are
rounded up to the next full minute.
(G) BTA (Basic Trading Area) means a particular market boundary as
defined by Rand McNally & COMPANY and the FCC.
(H) ROAMING AGREEMENTS means any agreement whereby NextWave or its
Affiliates has the ability to purchase airtime from, interconnect with and/or
use the wireless network facilities of another operator of a wireless network.
(I) TERM has the meaning set forth in Article 9.
2. PROVISION OF AIRTIME.
2.1 PROVISION OF SERVICES. NextWave and its Affiliates shall sell
Full Mobility Services to COMPANY in each BTA for which NextWave or any of its
Affiliates is awarded or otherwise obtains a License, or enters into a Roaming
Agreement.
2.2 SERVICES DESCRIPTION. Full Mobility Services shall involve
the establishment and maintenance of wireless circuits for the continuous
transmission of digital voice signals.
2.3 COMPANY FORECAST. Ninety (90) days prior to the offering of
commercial Full Mobility Service in any BTA, as communicated to COMPANY by
NextWave at least One Hundred and Twenty-Days (120) prior to the offering of
such commercial Service, COMPANY will provide NextWave with a forecast of
anticipated Full Mobility Service requirements, on a
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<PAGE> 4
quarterly basis, for that BTA for the remainder of the calendar year and for
each year thereafter. COMPANY will provide NextWave with quarterly updates to
its initial and annual forecasts.
2.4 NETWORK FEATURE FUNCTIONALITY. As practicable, NextWave is
committed to maintain its infrastructure with the most recent commercial
releases of vendor software available that implements the standards and
protocols described in the J-STD-008 air interface and associated standards,
and new feature functionality that operates with such standards and protocols.
For those capabilities that affect end users or subscribers, NextWave will
share with COMPANY its timeline and schedule of infrastructure upgrades as they
become available.
2.5 ROAMING ARRANGEMENTS. NextWave will make reasonable efforts
to negotiate favorable roaming agreements and rates with other wireless
licensees in the United States, and wireless operators in Canada, Mexico, and
other countries that may provide for roaming from PCS networks in the United
States for traffic to and from each other's wireless licensed markets.
NextWave will make available, at NextWave's sole discretion, rapid roaming
clearing capabilities through, either a direct interface to other networks with
which it has roaming arrangements or via industry clearing houses.
2.6 INTERCONNECTION.
(A) LEC INTERCONNECTION. NextWave has the responsibility to
negotiate interconnect agreements with the other local carriers. COMPANY and
NextWave agree on the need to minimize interconnect charges for MOUs
originating and terminating on NextWave's network. NextWave will continue its
efforts to influence lower interconnect rates through the regulatory agencies
and processes. MOU pricing is exclusive of interconnection fees for both
originating and terminating traffic from and to non-NextWave networks, which
shall be charged to COMPANY at the negotiated base rate.
(B) IXC INTERCONNECTION. NextWave intends to interconnect with
the major interexchange carriers (e.g., AT&T, MCI, Sprint) via trunk
connections with their points of presence at the expense of the IXC.
Similarly, as COMPANY requires, NextWave will use reasonable efforts to
interconnect with other long distance services under similar conditions.
NextWave's price for MOUs includes origination for direct interconnection with
IXCs for mobile-to-land calls to the extent that the costs of such
interconnection are borne by the IXC. If the IXC does not bear the cost of
such interconnection or if direct interconnection with the IXC is not feasible
or practicable, then any interconnection charges shall be borne by COMPANY on a
pass-through basis.
2.7 NUMBER OWNERSHIP.
(A) PURCHASE AND ALLOCATION OF NUMBERS. COMPANY shall obtain
numbers ("Numbers") from NANPA for activation by NextWave on the Network. In
the event COMPANY is not authorized or is otherwise unable to obtain Numbers,
NextWave shall obtain Numbers, in entire block increments, on a pass-through
cost basis. In the event there is a shortage of Numbers and an allocation of
Number blocks is required, NextWave may allocate Number blocks pro rata among
its airtime customers based on the relative number of subscribers.
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<PAGE> 5
(B) NUMBER TRANSFERS. COMPANY will pay a nominal fee for the
engineering and administrative charges associated with the moving of COMPANY's
numbers to another network. COMPANY will be charged a comparable rate to other
carriers' rates and industry practices, a standard rate per number and all
non-recurring charges associated with forwarding COMPANY's traffic to any
number on a non-NextWave network.
(C) TRANSFER SUPPORT. NextWave will support COMPANY's move of the
numbers to the new wireless network, for a nominal charge, ensuring proper
addressing and recording for the Local Exchange Routing Guide ("LERG").
2.8 RESELLER SWITCH INTERFACE.
(A) NON-FACILITIES BASED. NextWave will make available to
COMPANY, at a mutually agreed upon fee, access to customer care capabilities
including, but not limited to, home location register services (i.e., customer
profile management and customer features service management), authentication,
and if practicable, call detail recording ("CDR") access. COMPANY will be
responsible for providing personnel and all other resources required to deliver
customer care services to COMPANY's subscribers.
(B) FACILITIES BASED. NextWave will make available a T1/T3
interface to a COMPANY owned and operated switch for the delivery of COMPANY's
calls to and from the Public Switched Telephone Network ("PSTN"). COMPANY's
numbers must be activated on NextWave's switch to allow NextWave to properly
provide mobility to those customers. The demarcation point will be at
NextWave's switch and COMPANY will be responsible for the provisioning and
costs, both recurring and non-recurring, of all circuits between COMPANY's
switch and demarcation point at NextWave's switch. If COMPANY desires,
NextWave will engineer and maintain these circuits at a mutually agreed fee.
2.9 SERVICE ACTIVATIONS, DE-ACTIVATIONS AND CHARGES.
(A) SERVICE ACTIVATION PLATFORM. NextWave will offer COMPANY a
direct datalink interface to NextWave's service activation platform to allow
COMPANY an automated mechanism to perform customer on-line activations,
de-activations, and service change orders. NextWave reserves the right to set
the interface standard for connections to its service activation platform.
NextWave's service activation platform will collect COMPANY service orders,
format the requests, and download them into NextWave's switches and appropriate
sub-systems in as near real time as practicable. COMPANY will be responsible
for all of the costs associated with providing and maintaining its own on-site
computer terminal, software and modem/datalink connection.
(B) NUMBER REMOVAL CHARGES. COMPANY's service activation for each
customer is free of any activation fee as long as COMPANY purchases its PCS
numbers directly from NANPA. COMPANY will be charged a $10 removal fee for
those situations when a number is removed from a NextWave switch. The fee is
required to cover administrative expenses.
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<PAGE> 6
2.10 HANDSET SOURCING AND FULFILLMENT.
(A) VOLUME PURCHASE ORDERS AND DELIVERY. If COMPANY desires,
NextWave, through its association with specific strategic partners and
suppliers, will use reasonable efforts to allow COMPANY to participate in any
NextWave volume purchase arrangements. NextWave will make arrangements for the
ordering of the handsets and accessories and the equipment will be drop shipped
by the manufacturer to COMPANY. COMPANY and supplier will be responsible for
making, shipping, delivery and payment arrangements.
(B) PRICING AND THIRD PARTY EQUIPMENT. Pricing of the services in
(a) above is not available at this time, but will be determined and shared with
COMPANY in advance of NextWave's commercial service introduction. Further,
COMPANY is free to purchase any licensed subscriber equipment directly from
equipment manufacturers as long as purchased subscriber equipment is in full
compliance with the established TIA, CTIA and NextWave's network air-interface
and performance standards.
2.11 ENHANCED SERVICES.
(A) COMPANY PROVIDED SERVICES. NextWave will offer COMPANY the
opportunity to provide its own enhanced services platform. If COMPANY desires
to provide additional vertical services to its customers through its own or
through a third-party's enhanced services platform and if such addition to
NextWave's network is practicable, COMPANY and NextWave will make reasonable
efforts to jointly develop and mutually agree to the technical procedures and
lockdown requirements to properly test the service prior to its introduction on
the NextWave network. NextWave reserves its right to set its interface
standard for any connections to NextWave's switches. Engineering and set-up
fees for such service configurations will be determined on a case-by-case basis
and mutually agreed-to prior to service introduction. The interconnection to
COMPANY's enhanced services platform will be based upon NextWave's standard
interface. The demarcation point will be at NextWave's switch. COMPANY will
be responsible for all of the recurring and non-recurring interconnection costs
associated with providing and maintaining the connection to COMPANY's enhanced
services platform. Hardware, software and tangible resources (i.e., switching,
processing or storage of data) on NextWave's master switching center and
network that are required to support features and functionality provided by
COMPANY's enhanced services platform shall be made available by NextWave, to
the extent practicable, at prices based on NextWave's reasonable, direct and
allocable expenses relating to such hardware, software or tangible resources
utilization.
(B) NEXTWAVE PROVIDED SERVICES. NextWave plans to offer a family
of enhanced services which may include voice mail, enhanced voice (with
out-dial-to-a-pager capability), short messaging, custom calling features
(i.e., call waiting, three-way calling, call forwarding, no answer transfer,
etc.), single number service, fax store and forward, e-mail, star features and
information services. These services will be offered to COMPANY on an
individual and/or package basis on terms to be agreed upon.
(C) ENHANCED SERVICES PRICING. The parties agree that service
features, enhanced services, and their associated pricing must be competitive.
Pricing for NextWave's features and
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<PAGE> 7
enhanced services will be competitive with prevailing retail pricing. NextWave
will price services either individually or provide bulk pricing for global
feature activation in a market. NextWave recognizes that switch-based features
and enhanced services will increasingly be packaged at retail with airtime and
become a "tablestakes" for the business. Prior to commercial availability, the
parties agree to develop a plan for enhanced services to identify COMPANY's
needs, refine NextWave implementation approaches that might include use of
COMPANY AIN platforms, and agree on wholesale pricing for such services. For
situations where COMPANY purchases enhanced services from NextWave and
subsequently migrates to another enhanced services platform, the parties will
develop a plan to minimize COMPANY's subscriber churn and to recover NextWave's
capital investment.
2.12 NETWORK SERVICE TRAINING AND TROUBLE REPORTING.
(A) SCOPE OF SERVICES. NextWave will provide COMPANY network
service training and documentation prior to COMPANY's introduction of any
NextWave enhanced services offering in any market. Scheduling for such
training will be mutually agreed upon by both parties.
(B) NOTIFICATION OF SERVICE. NextWave will promptly notify
COMPANY's customer care department or COMPANY's assigned point of contact of
service enhancements, network expansions, and major services outages. NextWave
and COMPANY will mutually agree to the notification procedures prior to
NextWave's commercial service offering. Additionally, NextWave will routinely
provide COMPANY with updated NextWave service maps as service is expanded.
2.13 NETWORK ACCESS TO LOCAL CUSTOMER CARE. NextWave, at no cost
to COMPANY, will provide COMPANY with one (1) customer care "star feature"
(e.g., *CARE) that will directly connect COMPANY's customer to COMPANY's local
customer care center. COMPANY will be responsible for any network access
charges related to interconnection and transport of such calls from NextWave's
switches to COMPANY's customer care center. For the situation where these star
feature customer service calls originate in a roaming market and are routed
directly to COMPANY's customer care center, COMPANY will be responsible for
local network interconnection and transport charges.
3. PURCHASE COMMITMENT.
3.1 Subject to the terms and conditions hereof, COMPANY agrees to
purchase on an exclusive basis from NextWave a minimum of five Billion
(5,000,000,000) minutes, of Full Mobility Service during the Term in all of the
BTAs in which NextWave has a License (the "Commitment"). The term "exclusive"
means, for the purpose of this Agreement, that NextWave will be the sole
provider of digital wireless voice MOU's for COMPANY in markets where NextWave
provides Full Mobility Service.
3.2 COMPANY shall purchase at least 5% of its Commitment within
the three (3) year period following the date NextWave first offers Full
Mobility Service on a commercial basis
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<PAGE> 8
in either NextWave's New York City or Los Angeles BTAs ("Commercial Service
Date") and 25% of its Commitment within the five (5) year period following the
Commercial Service Date.
3.3 In addition to the amount of any purchase price to be paid by
COMPANY under this Agreement, COMPANY agrees to pay to NextWave, and NextWave
will in turn regularly remit to a third party escrow agent designated by
NextWave, the amount of two cents ($0.02) per minute for the first Four Billion
(4,000,000,000) minutes used by COMPANY under this Agreement to ensure the
purchase of the full Commitment by COMPANY. NextWave will include such two
cents per minute on its regular invoices to COMPANY for billable MOUs. If and
when COMPANY purchases and NextWave receives all payments for the full
Commitment, then the aggregate amount of the funds in escrow , together with
accrued interest, if any, less the reasonable costs of the escrow agent, shall
be promptly returned to COMPANY. If COMPANY fails to purchase the full
Commitment within the time required by this Agreement, or if this Agreement is
otherwise expires or is terminated (other than for the convenience of or breach
by NextWave) prior to COMPANY's purchase of the full Commitment, then the
aggregate amount of the funds in escrow, together with accrued interest, if
any, shall be permanently retained by NextWave. Nothing herein shall limit
NextWave's remedies, rights or relief under this Agreement or at law or equity.
4. PRICING AND PAYMENT TERMS.
4.1 FULL MOBILITY PRICING. Pricing for Full Mobility Service,
measured in one minute increments, for each BTA will be as set forth for in the
Pricing Schedule attached hereto as Attachment C. NextWave's pricing
illustrated in ATTACHMENT C is exclusive of the interconnection fees and
enhanced services that are listed in SECTION 9.
4.2 RESALE TO FACILITIES-BASED CARRIERS. If COMPANY resells Full
Mobility Service to facilities-based carriers and in connection therewith
requires NextWave to implement a PIC/CIC code, then COMPANY shall pay NextWave
an additional fee of *________* per minute of Full Mobility Service sold to each
such carrier of management of PIC/CIC and associated databases.
4.3 ROAMING AGREEMENTS. Pricing for Full Mobility Service
provided pursuant to a Roaming Agreement will be the greater of (i) the Full
Mobility Service price set forth in the Pricing Schedule or (ii) NextWave's
incremental cost of usage under the Reciprocal Agreement plus *______* per
minute.
4.4 E911 SERVICE. Emergency (911 and E911) and Lawful Intercept
calls will be handled by NextWave, unless otherwise required by regulatory
authorities. Each airtime invoice shall include a monthly charge (calculated on
a per subscriber basis in the maximum amount allowed by applicable regulatory
authority), for the provision of Emergency and Lawful Intercept services.
COMPANY shall pay such charges within the timeframe specified for payment of
Full Mobility Services. If regulatory authorities shall subsequently change the
requirements for Emergency or Lawful Intercept calls or mandate the provision
of other services, the parties shall cooperate in the provision of such
services with associated fees and charges to be handled in a similar manner to
the Emergency and Lawful Intercept Services.
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4.5 INVOICES.
(A) NextWave will offer COMPANY either (i) a datalink interface to
electronically deliver COMPANY's monthly billing data or (ii) a magnetic tape
version of the same. Magnetic billing tapes are NextWave's standard means of
delivering COMPANY's billing data. If COMPANY desires a datalink interface,
COMPANY will be responsible for all costs of providing and maintaining the
datalink.
(B) NextWave's billing data to COMPANY will include the customer's
mobile number, electronic serial number and peak/off-peak indicators, dialed
number, originating and terminating call site identification, and/or time
stamps on a call-by-call basis.
(C) If COMPANY desires its billing data transferred in shorter
intervals other than monthly (i.e., bi-monthly, etc.), NextWave and COMPANY
will negotiate in good faith, the terms and conditions of providing billing
data in shorter intervals.
(D) NextWave will offer multiple billing cycles from which COMPANY
can choose to allow COMPANY flexibility as to when it will be billed. COMPANY
must formally request its selected billing cycle in writing (or by some
mutually agreed to means). Absent a formal request, NextWave will assign
COMPANY a billing cycle.
(E) NextWave's standard payment terms is net thirty (30) days upon
receipt of bill. A 1.5% late payment fee per month or partial month will be
added to COMPANY's total bill if payment is not received in the time specified.
4.6 DISPUTED CHARGES. COMPANY shall provide NextWave with written
notice of any disputed MOU or service charges within thirty (30) days after the
mailing date of the invoice containing such charges. Any disputed charges will
be handled under the dispute resolution process described in SECTION 8 herein.
If a disputed amount is not resolved and the parties seek resolution in
accordance with SECTION 8.2, then the disputed amounts shall be placed into an
escrow account pending resolution. Any earned interest accrued on these
amounts will pass to the party being awarded the disputed amounts. If the
disputed amounts are shared in any manner between the parties, the accrued
interest will be shared in the same proportion as the disputed amounts.
4.7 TAXES. The prices paid by COMPANY for MOUs are exclusive of
any applicable sales, use, personal property or other taxes attributable to
periods during the Term based upon or measured by the MOUs and any associated
services provided or used by NextWave in performing its obligations under this
Agreement. COMPANY shall reimburse NextWave on a pass-through basis for those
taxes paid by NextWave that are attributable to COMPANY pursuant to this
SECTION 4.7. Each Party shall provide and make available to the other any
resale certificates, information regarding out-of-state sales or use of
equipment, materials or services, and other exemption certificates or
information reasonably requested by the other Party. The Parties will also
work together to segregate into separate payment streams, any taxable,
nontaxable or items for which a sales, use or similar tax has already been paid
by NextWave.
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4.8 RETAIL BAD DEBT AND FRAUD RESPONSIBILITY; DETECTION AND
PREVENTION.
(A) RETAIL BAD DEBT AND SUBSCRIPTION FRAUD. Retail bad debt and
fraudulent usage as a result of subscription fraud is COMPANY's sole
responsibility. COMPANY will be responsible for all originating and
terminating fees, long distance and roaming charges, and MOUs used on
NextWave's network incurred from retail bad debt and subscription fraud.
(B) CLONING FRAUD. NextWave will make reasonable efforts to limit or
eliminate cloning fraud on its network. NextWave's development of CDMA
technology and its "coding of each call" is anticipated to reduce exposure to
cloning fraud. Additionally, NextWave will make reasonable efforts to deploy
systems to monitor usage patterns, traffic patterns and the like to quickly
detect potential fraudulent use on a number. Upon detection of any suspected
cloning activity, NextWave will promptly notify COMPANY to investigate the
number further and take proper action. COMPANY will have 24 hours to
substantiate the customer's usage or to suspend service and correct the
situation. If COMPANY determines fraud was committed, NextWave will credit
COMPANY for the local airtime usage prior to NextWave's notice to COMPANY.
COMPANY will be responsible for all local access and long distance usage prior
to and after NextWave's notice to COMPANY; NextWave and COMPANY will work
together in good faith to curtail fraud, and will follow customer-industry
practice for billing and reimbursement of fraudulent usage. In the event that
COMPANY, its employees or affiliates were negligent for cloning fraud, COMPANY
will be responsible for all local airtime, as well as local access, long
distance and other charges (including costs associated with the number change)
prior to and after NextWave's notice to COMPANY.
4.9 AUDITS OF FINANCIAL RECORDS. NextWave and COMPANY each shall
keep adequate books and records in sufficient detail to enable the amounts to
be paid under Article 4 of this Agreement. Each party shall be entitled to have
an accounting firm of national recognition reasonably acceptable to the other
party audit the relevant books and records of the other party for the purpose
of confirming the accuracy of the calculation of the amounts due under Article
4. The auditor will disclose to the reviewing party only the information
necessary to verify the calculation of the amounts due under Article 4 and not
any confidential information of the other party, including but not limited to
any customer lists of the other party. Any such audit shall be performed at the
requesting party's expense (except if such audit reveals an overcharge of more
than five percent (5%) of the correct amount due under Article 4, then such
audit shall be at the expense of the other party), during normal business hours
after reasonable notice and, at the request of the audited party, shall be
subject to the independent agent's execution of a reasonable confidentiality
agreement. Such audits shall be conducted no more frequently than once every
year. In no event may a party commence an inspection of any statement later
than two (2) years from the date of such statement. Prior to any inspection by
a party, the parties will in good faith meet, discuss and attempt to resolve
any objection or discrepancy claimed by the party requesting the audit.
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5. CONFIDENTIALITY.
5.1 CONFIDENTIAL INFORMATION. By virtue of this Agreement, the
Parties may have access to, or exchange, information that is confidential to
one another. As used in this Agreement, the term "Confidential Information"
shall mean only such information of the other Party that may be reasonably
understood from legends, the nature of such information itself and/or the
circumstances of such information's disclosure, to be confidential and/or
proprietary to the other Party or to third-parties to which the other Party
owes a duty of non- disclosure. Notwithstanding the foregoing, NextWave agrees
that all of the following information which NextWave may receive or otherwise
obtain in the course of its performance under this Agreement, including without
limitation in the course of providing the Service, shall be deemed the
Confidential Information of COMPANY of purposes of this Agreement: (i) COMPANY
Subscriber lists and numbers, account information, usage, and information
regarding business planning and operations of COMPANY and COMPANY's
administrative, financial information, forecasts, predictions or marketing
reports or activities; (ii) all Subscriber and other customer information; and
(iii) COMPANY network and Intelligent Network capabilities, interconnection
arrangements, architecture, strategies, development and implementation plans,
and vendor relationships. Notwithstanding the foregoing, COMPANY agrees that
all of the following information which COMPANY may receive or otherwise obtain
in the course of its performance under this Agreement shall be deemed
Confidential Information of NextWave for purposes of this Agreement:
information concerning NextWave's Network, Network performance trials,
equipment requirements, Network system engineering and design specifications,
cell-site location planning strategies, Network usage and performance data,
development plans for its intelligent network and enhanced features and
services, financial, accounting or marketing reports, and business plans,
analyses, forecasts, and predictions.
5.2 RESTRICTIONS ON DISCLOSURE AND USE. Each of the Parties
agrees that as to any Confidential Information relating to one Party
("Discloser") obtained in any manner by the other Party ("Recipient")
hereunder:
(A) to use such Confidential Information only in the
performance of this Agreement or as otherwise expressly permitted by this
Agreement or by the Discloser;
(B) not to make copies of any such Confidential
Information or any part thereof except to the extent required to fulfill the
Party's obligations under this Agreement;
(C) not to disclose any such Confidential Information to
any third-party, using the same degree of care used to protect Recipient's own
confidential or proprietary information of like importance, but in any case
using no less than reasonable degree of care; provided, however, that Recipient
may disclose Confidential Information received hereunder to (i) its Affiliates
who are bound to protect the received Confidential Information from
unauthorized use and disclosure under the terms of a written agreement
(including without limitation a pre-existing written agreement), and (ii) to
its employees, consultants and agents, and it Affiliates' employees,
consultants and agents, who have a need to know to perform or exercise rights
under
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this Agreement, and who are bound to protect the received Confidential
Information from unauthorized use and disclosure under the terms of a written
agreement (including without limitation a pre-existing written agreement).
Confidential Information shall not otherwise be disclosed to any third-party
without the prior written consent of the Discloser; and
(D) to return to the other Party, or destroy, all of such
Party's Confidential Information received hereunder, whether in any tangible
medium of expression or electronic or other form or format, promptly upon the
expiration or termination this Agreement.
5.3 EXCEPTIONS. The restrictions set forth in this Article 9 on
the use and disclosure of Confidential Information shall not apply to
information that:
(A) was publicly known at the time of Discloser's
communication thereof to Recipient;
(B) becomes publicly know through no fault of Recipient
subsequent to the time of Discloser's communication thereof to recipient;
(C) is in Recipient's possession free of any obligation
of confidence at the time of Discloser's communication thereof to Recipient;
(D) is developed by Recipient independently of and
without use of any of Disclosure's Confidential Information or other
information that Discloser disclosed in confidence to any third-party;
(E) is rightfully obtained by Recipient without
restriction from third-parties authorized to make such disclosure; or
(F) is identified by Discloser in writing as no longer
proprietary or confidential.
5.4 DISCLOSURE PURSUANT TO LEGAL REQUIREMENT. In the event
Recipient is required by law, regulation or court order to disclose any of
Discloser's Confidential Information, Recipient will promptly notify Discloser
in writing prior to making any such disclosure in order to facilitate Discloser
seeking a protective order or other appropriate remedy from the proper
authority. Recipient agrees to cooperate with Discloser in seeking such order
or other remedy. Recipient further agrees that if Discloser is not successful
in precluding the requesting legal body from requiring the disclosure of the
Confidential Information, it will furnish only that portion of the
Confidential Information which is legally required and will exercise all
reasonable efforts to obtain reliable assurances that confidential treatment
will be accorded the Confidential Information.
5.5 PUBLICITY. The parties expressly agree that the terms and
conditions of this Agreement, and any activities contemplated hereby or
performed hereunder, are the Confidential Information of the Parties and shall
not be disclosed in any manner without the prior written approval of the other
Party (which shall not be unreasonably withheld); provided, however, that
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(i) COMPANY and NextWave agree that NextWave shall have the right to issue a
news release to announce the transaction contemplated herein and (ii) that the
parties acknowledge that NextWave has filed a registration statement with the
Securities and Exchange Commission and will be required to disclose the
existence of this Agreement and describe the material terms contained herein.
To the extent any information has been disclosed to the public pursuant to this
SECTION 5.5, such information shall not be deemed Confidential Information.
Notwithstanding the foregoing, each Party agrees that the Airtime pricing terms
contained in Attachment C are confidential and shall not be disclosed, except
as may be required by law or pursuant to any legal proceeding, in which case
the provisions of Article 5.4 shall apply. The Parties acknowledge that
NextWave will be required to file this Agreement with the Securities and
Exchange Commission as an exhibit to its registration statement. NextWave
shall seek confidential treatment of the Airtime pricing terms.
5.6 PROPRIETARY NOTICES. Each Party shall reproduce and maintain
on any copies of the other Party's Confidential Information received or made
hereunder such proprietary legends or notices (whether of the Party providing
the Confidential Information or of a third- party) as are contained in or on
the original.
5.7 RETURN OF CONFIDENTIAL INFORMATION. Each Party agrees to
return to the other Party or destroy all of such other Party's Confidential
Information promptly upon the termination of this Agreement. Neither Party
shall thereafter retain any such Confidential information or any copies thereof
fixed in any tangible medium of expression in whatever form or format.
5.8 COOPERATION. In the event either Party becomes aware that any
Person (including, without limitation, any employee or agent of a Party) is
taking or threatens to take any action which would violate any of the foregoing
provisions, such Party shall promptly and fully advise the other Party (with
written confirmation as soon as practicable thereafter) of all facts known to
it concerning such action or threatened action. Neither Party shall in any way
aid, abet or encourage any such action or threatened action. Each Party agrees
to cooperate in all reasonable ways to prevent such action or threatened
action, including, without limitation, assigning any cause of action it may
have, related to the violation of the foregoing provisions, to the other Party,
and each Party agrees to do all reasonable things and cooperate in all
reasonable ways as may be requested by the other Party to protect the trade
secret and proprietary rights of such other Party in and to the Confidential
Information. A Party shall also be liable for any breach of the terms of this
Article 9 in the event that Confidential Information received from the other
Party is disclosed by an employee, agent or consultant of such Party or a
third-party to whom such Party has disclosed such information and such
disclosure would violate the terms of this Article 9 were such employee, agent,
consultant or third-party a party hereto.
5.9 NO USE OF NEXTWAVE INTELLECTUAL PROPERTY RIGHTS. Nothing
herein shall be deemed to grant to COMPANY any right, license or other interest
in or under, or right to use, and COMPANY shall not use, any patents,
copyrights, trade secrets, trademarks, service marks, trade names or other
similar designation, or any other intellectual property rights of NextWave or
any of this Affiliates.
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6. LIMITED LIABILITY.
6.1 IN NO EVENT WILL EITHER PARTY AND/OR ANY OF ITS AFFILIATES BE
LIABLE TO OR THROUGH THE OTHER PARTY FOR ANY OF THE FOLLOWING:
(A) DAMAGES CAUSED BY OTHER PARTY'S AND/OR ITS AFFILIATES' OR
SUPPLIERS' FAILURE TO PERFORM THEIR OBLIGATIONS OR RESPONSIBILITIES;
(B) CLAIMS OR DEMANDS BROUGHT AGAINST THE OTHER PARTY BY
THIRD PARTIES OTHER THAN THOSE THIRD PARTY CLAIMS IN RESPECT OF WHICH SUCH
PARTY IS EXPRESSLY OBLIGATED TO INDEMNIFY THE OTHER PARTY PURSUANT TO A
PROVISION OF THIS AGREEMENT; OR
(C) ANY LOST PROFITS, LOSS OF BUSINESS, LOSS OF USE (OR
INTERRUPTIONS OF BUSINESS), LOST SAVINGS, LOST OPPORTUNITIES OR OTHER
CONSEQUENTIAL, SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY OR PUNITIVE DAMAGES;
ANY OR ALL OF WHICH ARISE FROM OR IN CONNECTION WITH THE DELIVERY,
USE, OR PERFORMANCE OF SERVICE GOVERNED BY THIS AGREEMENT, AND EVEN IF A PARTY
AND/OR ANY OF ITS AFFILIATES HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
6.2 The limitations of remedies and liabilities set forth in this
SECTION 6 shall not apply to any obligation of one party to pay the other party
all amounts due and owing under this Agreement.
7. INDEMNIFICATION.
7.1 NextWave shall indemnify, defend and hold harmless COMPANY,
and all of COMPANY's and its affiliates' officers, directors, partners,
employees and agents, from and against any and all losses, claims, damages,
liabilities or expenses of any kind (including, but not limited to, reasonable
attorneys fees and costs) arising out of any claim, action or proceeding by a
third party against any of them to the extent it is based on (i) a claim for
personal injury (including death) or damage to personal property for which
Nextwave or any of its affiliates is legally responsible, or (ii) Nextwave or
its affiliate's failure to comply with all applicable laws, regulations and
orders in the performance of its obligations under this Agreement.
7.2 COMPANY shall indemnify, defend and hold harmless Nextwave,
and all of Nextwave's and its affiliates' officers, directors, partners,
employees and agents, from and against any and all losses, claims, damages,
liabilities or expenses of any kind (including, but not limited to, reasonable
attorneys fees and costs) arising out of any claim, action or proceeding by a
third party against any of them to the extent it is based on (i) a claim for
personal injury
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(including death) or damage to personal property for which COMPANY or any of
its affiliates is legally responsible, or (ii) a claim by a customer of
COMPANY, or (iii) COMPANY or its affiliate's failure to comply with all
applicable laws, regulations and orders in the performance of its obligations
under this agreement.
7.3 The party seeking indemnity under the foregoing provisions
shall notify the indemnifying party of any such claim, action or proceeding,
and the indemnifying party shall promptly and at its sole cost undertake the
defense thereof, except for claims by a customer of COMPANY, for which COMPANY
shall at its sole cost undertake the defense thereof for itself, and upon
demand thereof, Nextwave and/or its affiliates. No such claim shall be
compromised or settled without the prior written consent of the indemnified
party if the settlement would restrict or adversely affect the indemnified
party. Such consent shall not be unreasonably withheld. After the indemnified
party tenders the defense of any such claim, action or proceeding, the
indemnified party shall have the right to participate at its own cost and
expense in such claim, action, or proceeding using counsel of its own choosing.
8. DISPUTE RESOLUTION
8.1 DISPUTE RESOLUTION. Either Party may identify a dispute that
has arisen in performance of this Agreement by notifying the other Party's
account manager in writing, setting forth the dispute with reasonable
specificity. The account managers shall promptly attempt to resolve such
dispute by negotiation. If within ten (10) calendar days of written notice of
a dispute the account managers have been unable to resolve it, then either
Party may escalate resolution of the dispute to an appropriate senior executive
of NextWave or to an appropriate senior executive of COMPANY by notifying them
in writing, setting forth the dispute with reasonable specificity. The senior
executives shall attempt to resolve such dispute by negotiation. If within ten
(10) calendar days of such escalation of a dispute the senior executives have
been unable to resolve it, then either Party may seek resolution of the dispute
by arbitration in accordance with the following Paragraph.
8.2 ARBITRATION. Without prejudice to either Party's right to
seek equitable relief (including, but not limited to, injunction) from a court,
any dispute arising out of or related to this Agreement, which cannot be
resolved by negotiation, shall be settled by binding arbitration in accordance
with the J.A.M.S./ENDISPUTE arbitration rules and procedures ("Endispute
Rules") and in accordance with the terms of this Article 8. The costs of
arbitration, including the fees and expenses of the arbitrator, shall be shared
equally by the Parties unless the arbitration award provides otherwise. Each
Party shall bear the cost of preparing and presenting its case. The Parties
agree that this provision and the Arbitrator's authority to grant relief shall
be subject to the United States Arbitration Act, 9 U.S.C. 1-16 et seq.
("USAA"), the provisions of this Agreement, and the ABA-AAA Code of Ethics for
Arbitrators in Commercial Disputes. The Parties agree that the arbitrator
shall have no power or authority to make awards or issue orders of any kind
except as expressly permitted by this Agreement, and in no event shall the
arbitrator have the authority to make any award that provides for punitive or
exemplary damages. The arbitrator's decision shall follow the plain meaning of
the relevant documents, and shall be final
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and binding. The award may be confirmed and enforced in any court of competent
jurisdiction. All post-award proceedings shall be governed by the USAA.
9. TERM.
This Agreement shall be effective when executed. The Term of this
Agreement shall be ten (10) years with one (1) renewal option for COMPANY to
renew for an additional five (5) years; provided that if COMPANY elects to
renew the Agreement the parties shall review and adjust the pricing. The Term
shall commence upon the first day of commercial availability of Full Mobility
Service in any NextWave BTA, where the conditions in SECTION 11.3 below are
met. One (1) year prior to the expiration of the initial ten-year Term, the
parties will meet to determine the pricing for the five-year renewal period.
If the parties are unable to reach agreement six (6) months prior to the
expiration of the initial ten-year Term, the then existing terms and
conditions, including pricing shall continue for a transition period of six (6)
months after the expiration of the initial ten-year Term. If, in the event
that COMPANY exceeds ten (10) billion billable MOU during the term, then the
parties will meet to determine the pricing for volume breaks above ten (10)
billion MOU for the airtime table in ATTACHMENT C.
10. TERMINATION PROVISION.
NextWave may terminate this Agreement without liability by written
notice to COMPANY in the event that:
(I) COMPANY fails to pay any amounts due hereunder within
fifteen (15) days after notice from NextWave;
(II) COMPANY's use of NextWave's services or network (a)
violates any laws, rules or regulations (b) is in non compliance with services
standards established by NextWave; or
(III) COMPANY commits a material breach of this Agreement
and it is not cured within sixty (60) days of notice from NextWave.
11. MISCELLANEOUS.
11.1 GOVERNING LAW AND CHOICE OF FORUM. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
other than the laws thereof that would require reference to the laws of any
other jurisdiction. For all purposes for which resort to a court may be had,
the parties irrevocably consent to the exclusive jurisdiction and venue of the
federal and state courts located in the State of New York.
11.2 NOTICES. All notices, demands, requests, or other
communications which may be or are required to be given or made by any Party,
to the other Party pursuant to this Agreement shall be in writing and shall be
hand delivered, mailed first-class registered or certified mail, return receipt
requested, postage pre-paid, delivered by overnight air courier, or transmitted
by telegram, telex, or facsimile transmission addressed as follows:
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If to COMPANY:
Cellexis International, Inc.
4685 S. Ash Suite H-5
Tempe, AZ 85282
Attn: Doug Fougnies
Fax: (602) 664-1056
with a copy to:
Attn:
Fax: ( )
If to NextWave:
NextWave Wireless Inc.
3 Skyline Drive, 3rd Floor
Hawthorne, NY 10532
Attn: Kevin R. Carroll
Assistant Vice President, Business Planning & Development
Fax: ( 914) 345-1141
with a copy to:
NextWave Wireless Inc.
9455 Towne Centre Drive
San Diego, CA 92121
Attn: General Counsel
Fax: (619) 642-1912
Each Party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be given, served or
sent. Each notice, demand, request or communication which shall be mailed,
delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent or received for all purposes at such time as
it is delivered to the addressees (with the return receipt, the delivery
receipt or affidavit of messenger, or the facsimile answer back being deemed
conclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
11.3 CONDITIONS. COMPANY's commitment to purchase airtime from
NextWave is subject to each of the following conditions being satisfied: (a)
NextWave shall offer commercial mobility service in Markets covering at least
40 million POPs by December 31, 1998, and at
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least 70 million POPs by December 31, 2001; (b) NextWave provides airtime in
its Markets meeting jointly agreed to technical specifications (to be agreed to
within sixty (60) days of the date hereof) including those for availability,
capacity, coverage, hand-off, interconnection and service quality; and (c)
NextWave provides COMPANY and its affiliates interconnection as specified in
SECTION 2.6.
11.4 FORCE MAJEURE. Neither party shall be liable for delays in
delivery or performance, or for failure to provide service, deliver or perform
when caused by any of the following which are beyond the reasonable control of
the delayed party:
(I) Acts of God, acts of the public enemy, acts or
failures to act by the other party, acts of civil or military authority,
governmental priorities, strikes or other labor disturbances, hurricanes,
earthquakes, fires, floods, epidemics, embargoes, war, riots, delays in
transportation, and loss or damage to goods in transit; or
(II) Inability on account of causes beyond a reasonable
control of the delayed party to obtain products, components, services or
facilities.
In the event of such delay, the date of delivery or performance shall
be extended for a period equal to the effect of the time lost by reason of the
delay.
11.5 ASSIGNMENT. This Agreement may not be assigned, in whole or
in part, by any Party without the prior written consent of the other Party,
except that COMPANY may assign this Agreement to any of its Affiliates without
the consent of NextWave and either Party may assign this Agreement to a
successor in connection with the acquisition of the Party; provided that the
successor confirms by written agreement its agreement to assume the acquired
Party's obligations under this Agreement. For purposes of this subsection
only, the term "Affiliates" shall mean an entity under common control,
controlling or controlled by a Party; provided that "control" as used herein
shall mean the ownership, directly or indirectly, of at least eighty percent
(80%) of the aggregate of all voting interests in such entity. Any other
attempt to assign this Agreement shall be null, void and of no force or effect.
11.6 AUTHORIZATION AND ENFORCEABILITY. Each Party hereby
represents that:
(A) it has all requisite corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated
hereby;
(B) the execution, delivery and performance of this
agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all requisite corporate action on the party of each
Party; and
(C) this Agreement has been duly executed and delivered
by such Party and is valid and binding obligation of such Party, enforceable
against it in accordance with its terms.
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11.7 SEVERABILITY. If any provision of this Agreement shall be
found by any court or administrative body of competent jurisdiction to be
invalid or unenforceable, the invalidity or unenforceability of such provision
shall not affect the other provisions of this Agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full force and
effect. The Parties hereby agree to attempt to substitute for any invalid or
unenforceable provision a valid and enforceable provision which achieves to the
greatest extent possible the economic, legal and commercial objectives of the
invalid and unenforceable provision.
11.8 SURVIVAL. The following provisions shall survive the
termination of this Agreement, and shall continue in full force and effect
along with any other provisions of this Agreement which by their nature or in
accordance with the terms, whether or not listed, shall survive such
termination: Articles 5, 6, 7, 8 and 9 and Articles 4.9, 11.1, 11.2, 11.7,
11.8, 11.13, 11.14, 11.16 and 11.17.
11.9 ENTIRE AGREEMENT. This Agreement, which includes the attached
Schedules, constitutes the entire agreement and understanding between the
Parties hereto in connection with subject matter hereof, and supersedes and
cancels all previous negotiations, commitments and writings with respect
thereto.
11.10 COUNTERPARTS. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each Party, or the
signatures of all persons required to bind party, appear on each counterpart;
but it shall be sufficient that the signature of, or on behalf of, each Party,
or the signatures of the persons required to bind any Party, appear on one or
more of the counterparts. All counterparts shall collectively constitute a
single agreement.
11.11 CAPTIONS FOR CONVENIENCE ONLY. The captions used in this
agreement are included for convenience only and shall not be considered part of
this Agreement for any purpose. Unless expressly state otherwise, all
references herein to "Articles" are to the relevant portions of this Agreement,
and all references to "Schedules" are to the attachments to this Agreement.
11.12 AMENDMENT. This Agreement shall not be amended, modified or
rescinded in any manner, except by an instrument in writing signed by duly
authorized representatives of each of the Parties hereto.
11.13 NO THIRD-PARTY BENEFICIARY. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any Persons other than the Parties and their
respective successors and permitted assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
person to any Party, nor shall any provision give any third person any right of
subrogation or action against any Party.
11.14 EXPENSES. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated hereby are consummated,
each Party will pay its own costs and expenses incurred in connection with the
negotiation and execution of this Agreement and the
18
<PAGE> 20
transactions contemplated hereby (including executing all such documents and
doing such acts and things as may reasonably be required for the purpose of
giving full effect to this Agreement).
11.15 WAIVER. Any term or condition of this Agreement may be waived
at any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the Party waiving such term or condition. No
waiver by any Party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this agreement on any future occasion. All
remedies, either under this Agreement or by law or otherwise afforded, will be
cumulative and not alternative.
11.16 BINDING. This Agreement is binding upon, inures to the
benefit of and is enforceable by the Parties hereto and their respective
permitted successors and assigns.
11.17 SPECIFIC PERFORMANCE. The obligations of the Parties under
Article 5 of this agreement are unique. If any Party should be in Default
under Article 5 of this Agreement, the Defaulting Party acknowledges that it
would be extremely impracticable to measure the resulting damages.
Accordingly, in addition to any other available rights or remedies, the
Non-Defaulting Party may sue inequity for specific performance and the
Defaulting Party expressly waives the defense that a remedy in damages would be
adequate.
11.18 REGULATORY COMPLIANCE. Notwithstanding any provision in this
Agreement to the contrary, NextWave shall not be obligated to furnish COMPANY
with Full Mobility Services under rates, charges, temrs or conditions, that
violate any applicable provisions of the Communications Act of 1934, as
amended, the applicable rules, regulations or policies of the FCC or any other
federal or state agency with jurisdiction over NextWave's services.
19
<PAGE> 21
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective and delivered as of the date set forth below.
CELLEXIS INTERNATIONAL INC. NEXTWAVE WIRELESS, INC.,
AN ARIZONA CORPORATION A DELAWARE CORPORATION
Date: September 19, 1996 Date: September 19, 1996
-------------------------- ---------------------------
/s/ Douglas V. Fougnies /s/ Kevin R. Carroll
-------------------------- ---------------------------
(Signature) (Signature)
By: Douglas V. Fougnies By: Kevin R. Carroll
---------------------------- -----------------------------
Title: CEO Title: AVP - Business Planning
---------------------------- ----------------------------
20
<PAGE> 22
ATTACHMENT A
NextWave's Network Elements and Functionality
The following are the network elements and functionality NextWave will make
available, to the extent practicable and pursuant to pricing specified in the
Agreement, in each PCS market either directly or indirectly through a third
party:
a.) ADVANCED INTELLIGENT NETWORK ("AIN") PLATFORM. The AIN
platform is the platform from which COMPANY will store and offer its and
customers all of their non-switched based vertical services. As an option,
when available NextWave may provide its AIN platform.
b.) THIRD PARTY INTERCONNECTION ACCESS. The physical
interconnection to the Public Switching Telephone Network ("PSTN"). The
responsibility for the associated monthly and usage-sensitive costs for such
circuits carrying COMPANY's customers' mobile-to-landline and
landline-to-mobile traffic to and from NextWave's network is COMPANY's.
c.) BACKHAUL INTERCONNECTION. In BTA markets where COMPANY is a
local access provider of facilities, COMPANY will make available to NextWave
standard T1 and T3 facilities at COMPANY's most favorable rate for like terms,
quantities, and conditions. These facilities may be used by NextWave for
switch-to-base station, switch-to-base station controller, base station-to-base
controller and switch-to-switch connections.
d.) SS-7 BACKBONE. The SS-7 signaling backbone network carrying
standard IS-41 message sets between NextWave's network and COMPANY's HLR
database access.
e.) FCC LICENSE TO PROVIDE PCS. The Federal Communications
Commission's ("FCC") license to provide Personal Communication Service ("PCS")
in the markets of interest.
f.) RADIO COVERAGE AND ACCESS. The deployment of competitive
coverage at a predetermined and mutually agreed to minimum level/grade of PCS
access service.
g.) MOBILE SWITCHING CENTER. The switching capability to provide
the end customer with the proper mobility and roaming capability. AIN software
for standard IS-41 interconnection to COMPANY's AIN platform and PSTN
interconnection.
h.) SWITCH-BASED VERTICAL SERVICES. These end customer vertical
software services provided at the Mobile Switching Center for example, but not
limited to, Call Waiting, Call Forwarding, Three-Way Calling, and Caller ID.
i.) LOCAL WIRELESS OPERATIONS AND MANAGEMENT OF THE NETWORK.
NextWave will design, engineer, construct, and maintain the PCS network in each
BTA and maintain a minimum service availability level.
<PAGE> 23
ATTACHMENT B
NextWave's PCS Markets
<TABLE>
<S> <C> <C>
COLONIAL REGION LONE STAR REGION OHIO VALLEY REGION
--------------- ---------------- ------------------
Boston, MA Austin, TX Cincinnati, OH
Manchester/Nashua, NH Bryan-College Station, TX Columbus, OH
New London, CT Houston, TX Dayton, OH
Portland/Brunswick, ME San Antonio, TX HOOSIER REGION
--------------
Providence, RI Temple-Killeen, TX Bloomington, IN
Worcester, MA AMIGO REGION Columbus, IN
------------
HOLLYWOOD REGION Brownsville, TX Evansville, IN
----------------
Los Angeles, California El Paso, TX Indianapolis, IN
DOLPHIN REGION Las Cruces, NM Lafayette, IN
--------------
San Diego, California McAllen, TX SOONER REGION
-------------
CAPITAL REGION NY-METRO REGION Oklahoma City, OK
-------------- ---------------
Baltimore, MD Albany, NY THOROUGHBRED REGION
-------------------
Hagerstown, MD Allentown, PA Lexington, KY
Norfolk, VA New Haven, CT Louisville, KY
Richmond, VA Poughkeepsie, NY TWIN CITIES REGION
------------------
Washington, DC Scranton, PA Minneapolis, MN
GREENGRASS REGION BIG APPLE REGION ROCKY MOUNTAIN REGION
----------------- ---------------- ---------------------
Asheville, NC NYC BTA Denver
Charlotte, NC STEELER REGION PACIFIC NORTHWEST REGION
-------------- ------------------------
Greensboro, NC Pittsburgh, PA Bellingham, WA
Hickory, NC SUNSHINE REGION Longview, WA
---------------
Roanoke, VA Gainsville, FL Olympia, WA
MID. AMERICA Jacksonville, FL Portland, OR
------------
Joplin, MO Lakeland-Winter Haven, FL Seattle, WA
Kansas City, MO Melbourne, FL
Springfield, MO Orlando, FL
BUCKEYE REGION Sarasota, FL
--------------
Cleveland, OH Tampa, FL
</TABLE>
<PAGE> 24
ATTACHMENT C
PRICING SCHEDULE
*_________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________.*
*Confidential treatment requested
<PAGE> 25
[LOGO]
NEXTWAVE TELECOM INC.
3 Skyline Drive
Hawthorne, New York 10532
VOICE (914) 345-1100
FAX (914) 345-1140/41
October 23, 1996
Mr. Douglas V. Fougnies
Chairman, CEO & President
Cellexis International, Inc.
5005 North 7th Avenue
Phoenix, AZ 85013
Dear Doug,
As we discussed on the phone yesterday, NextWave would like to amend
the September 19, 1996, Resale Agreement executed between Cellexis
International, Inc. and NextWave (the "Resale Agreement" as follows:
Unless otherwise indicated herein, capitalized terms shall have the
meanings stated in the Resale Agreement.
1. ARTICLE 3 is hereby amended in its entirety as follows:
" 3. PURCHASE COMMITMENT.
3.1 Subject to the terms and conditions hereof, COMPANY agrees to
purchase on a take-or-pay basis from NextWave a minimum of Five Billion
(5,000,000,000) minutes of Full Mobility Service during the Term in all of the
BTAs in which NextWave has a license (the "Commitment").
3.2 Subject to the service quality provisions specified in
ATTACHMENTS D AND E and NextWave's build out conditions specified in SECTION
11.3, COMPANY shall purchase at least 5% of its Commitment (the "Initial
Purchase Commitment") within the three (3) year period following the date
NextWave first offers Full Mobility Service on a commercial basis in either
NextWave's New York City or Los Angeles BTA ("Commercial Service Date") and 25%
of its
<PAGE> 26
Commitment (the "Secondary Purchase Commitment") within the five (5) year
period following the Commercial Service Date.
In the event COMPANY fails to satisfy the Initial Purchase Commitment by the
third anniversary of the Commercial Service Date (the "Third Anniversary
Date"), COMPANY shall remit to NextWave, within five (5) business days thereof,
an amount in cash equal to the difference between the Initial Purchase
Commitment and the actual number of minutes of Full Mobility Service purchased
by COMPANY prior to the Third Anniversary Date multiplied by the then
applicable purchase price per minute being charged to COMPANY in accordance
with SECTION 4.1 hereof. In the event COMPANY fails to satisfy the Secondary
Purchase Commitment by the fifth anniversary of the Commercial Service Date
(the "Fifth Anniversary Date"), COMPANY shall remit to NextWave, within five
(5) business days thereof, an amount in cash equal to the difference between
the Secondary Purchase Commitment and the actual number of minutes of Full
Mobility Service purchased by COMPANY prior to the Fifth Anniversary Date
multiplied by the then applicable purchase price per minute being charged to
COMPANY in accordance with SECTION 4.1 hereof.
In the event COMPANY fails to purchase one hundred percent (100%) of
the Commitment prior to the tenth anniversary of the Commercial Service Date
(the "Tenth Anniversary Date"), COMPANY shall remit to NextWave, within five
(5) business days thereof, an amount in cash equal to the difference between
the Commitment and the actual number of minutes of Full Mobility Service
purchased by COMPANY prior to the Tenth Anniversary Date multiplied by the then
applicable purchase price per minute being charged to COMPANY in accordance
with SECTION 4.1 hereof.
3.3 In addition to the amount of any purchase price to be paid by
COMPANY under this Agreement, COMPANY agrees to pay to NextWave, and NextWave
will in turn regularly remit to a third party escrow agent designated by
NextWave, the amount of two cents ($0.02) per minute (the "Escrow Payment") for
the first Four Billion (4,000,000,000) minutes used by COMPANY under this
Agreement to ensure the purchase of the full Commitment by COMPANY. NextWave
will include such Escrow Payment on its regular invoices to COMPANY for
billable MOUs. If and when COMPANY purchases and NextWave receives all
payments for the full Commitment, then the aggregate amount of the Escrow
Payments in escrow, together with accrued interest, if any, less the reasonable
costs of the escrow agent, shall be promptly returned to COMPANY. If COMPANY
fails to purchase the full Commitment within the time required by this
Agreement, or if this Agreement expires or is otherwise terminated (other than
for the convenience of or breach by NextWave) prior to COMPANY's purchase of
the full Commitment, then the aggregate amount of the Escrow Payment held in
escrow, together with accrued interest, if any, shall be permanently retained
by NextWave. Nothing contained herein shall release COMPANY from its
obligations under SECTION 3.2 of this Agreement nor shall it limit NextWave's
remedies, rights or relief under this Agreement or at law or equity. "
<PAGE> 27
2.) SECTION 11.3 is hereby amended in its entirety as follows:
" 11.3 CONDITIONS. COMPANY's commitment to purchase airtime from
NextWave is subject to each of the following conditions being satisfied: (a)
NextWave shall offer commercial mobility service in Markets covering at least
40 million POPs by December 31, 1998, and at least 70 million POPs by December
31, 2001; (b) NextWave provides Airtime in its Markets meeting the system
performance criteria and technical specifications detailed in ATTACHMENT D AND
ATTACHMENT E, respectively; and (c) NextWave provides COMPANY and its
Affiliates interconnection as specified in SECTION 2.6. "
3.) With respect to ATTACHMENT C entitled "Pricing Schedule":
*__________________________________________________________________________
__________________________________________________________________________*
4.) ATTACHMENT D and ATTACHMENT E hereto are hereby added to the Resale
Agreement in their entirety.
All other terms and conditions contained in the Resale Agreement shall
continue in full form and effect.
If you agree with these changes, please indicate so by signing in the
space provided below and return this letter to me. The amends will become
effective immediately upon your execution of this letter agreement.
Sincerely,
/s/ KEVIN R. CARROLL
Kevin R. Carroll
AVP - Business Planning & Development
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 28
attachments
Accepted and agreed to:
/s/ DOUGLAS V. FOUGNIES October 24, 1996
______________________________________________ ________________
Douglas V. Fougnies, Chairman, CEO & President Date
<PAGE> 29
ATTACHMENT D
SYSTEM PERFORMANCE CRITERIA
1.1 COVERAGE AREA
The Coverage Area shall be that minimal signal strength necessary to provide
service such that calls are successful *____* of the time averaged along the
Coverage Area boundary, irrespective of the direction of the call (land-mobile,
mobile-land) with no greater than *____* frame error rate (FER) on average.
1.2 HANDSET COMPATIBILITY
NextWave shall demonstrate the full compatibility of its network with handsets
of COMPANY's choice that have been certified as compliant with domestic PCS
interface standards, so long as these handsets have been demonstrated to be
fully compatible with one other domestic IS-95 (CDMA) compliant 1.9 GHz network
and certified as IS-95, 1.9 GHz compliant by recognized standard or
certification bodies.
1.3 NETWORK CALL BLOCKAGE/QUALITY OBJECTIVES
The following considerations are required concerning network call blockage:
o Average busy hour blockage within the NextWave network will not exceed
*____* of all call attempts.
o The above values are to be met, unless superseded by necessary regulatory
mandates.
o Emergency calls should be given the highest possible resource priority.
1.4 DROPPED CALLS
The number of dropped calls measured over a period of a month in a Coverage Area
shall not exceed *____* of the total number of subscriber calls originated in
that Coverage Area.
1.5 NETWORK AVAILABILITY
NextWave will engineer and manage its network to meet the above service and
quality levels established for the Coverage Area. The emphasis of management
activities will be on preventative maintenance, such that potential outages
will be resolved before customers are affected.
*Confidential treatment requested
<PAGE> 30
A Network Outage is the inability, or a significant degradation in the ability
of a customer to establish and maintain a channel of communication as a result
of failure or degradation in the performance of NextWave's network.
In the event of a major network outage, NextWave will notify COMPANY of the
conditions affecting the customers, including, but not limited to
out-of-service events, and high system traffic loads.
Any FCC-reportable Network Outages, including disruption of 911/E911 and
emergency services will be reported to COMPANY.
1.6 PERFORMANCE VERIFICATION
NextWave will provide to the COMPANY quarterly statistics that define the
performance of the network including blocked calls, dropped calls, and frame
error rates. In addition, NextWave will provide coverage maps that define the
Coverage Area.
<PAGE> 31
ATTACHMENT E
TECHNICAL STANDARDS
NextWave shall be in general compliance with the following standards:
I. WIRELESS NETWORK INTERFACE STANDARDS
A. IS-41REV B CELLULAR RADIO TELECOMMUNICATIONS INTERSYSTEM OPERATIONS
NextWave's Network shall be in general compliance with IS-41 Revision B. This
shall be upgraded to be in general compliance with IS-41 Revision C when IS-41
Revision C is commercially available.
B. EIA/TIA/IS-52: UNIFORM DIALING PROCEDURES AND CALL PROCESSING
TREATMENT FOR CELLULAR RADIO TELECOMMUNICATIONS - NOVEMBER, 1989
C. EIA/TIA/IS-52-A: UNIFORM DIALING PROCEDURES AND CALL PROCESSING
TREATMENT FOR CELLULAR RADIO TELECOMMUNICATIONS - WHEN PUBLISHED
D. EIA/TIA/IS-53: CELLULAR FEATURES DESCRIPTION: - AUGUST, 1991
E. EIA/TIA/IS-53-A: CELLULAR FEATURES DESCRIPTION: - MAY, 1995
F. EIA/TIA/IS-93: CELLULAR RADIO TELECOMMUNICATIONS A-D INTERFACE
STANDARDS - OCTOBER, 1993.
II. SS7 INTERFACE STANDARDS
A. TR-NWT-000246: BELL COMMUNICATIONS RESEARCH SPECIFICATION OF SIGNALING
SYSTEM NUMBER 7, ISSUE 3
B. TR-NWT-000082: SIGNALING TRANSFER POINT GENERIC REQUIREMENTS, ISSUE 5
C. TR-TSY-000317: SWITCHING SYSTEM REQUIREMENTS FOR CALL CONTROL USING
THE INTEGRATED SERVICES DIGITAL NETWORK USER PART (ISDNUP)
D. TR-TSY-000394: SWITCHING SYSTEM REQUIREMENTS FOR INTERCHANGE CARRIERS
USING THE INTEGRATED SERVICES DIGITAL NETWORK USER PART (ISDNUP)
E. TR-NWT-000444: SWITCHING SYSTEM GENERIC REQUIREMENTS SUPPORTING ISDN
ACCESS USING THE INTEGRATED SERVICES DIGITAL NETWORK USER PART (ISDNUP)
F. ANSI T1.114 SS7 TRANSACTION CAPABILITIES APPLICATION PART (TCAP)
G. ANSI T1.112: SS7 SIGNALING CONNECTION CONTROL PART (SCCP)
<PAGE> 32
H. ANSI T1.111: SS7 MESSAGE TRANSFER PART (MTP)
III. AIR INTERFACE STANDARDS
A. ANSI-J-STD-008: PERSONAL STATION -BASE STATION COMPATIBILITY
REQUIREMENTS FOR 1.8 TO 2.0 GHZ CDMA PERSONAL COMMUNICATIONS SYSTEMS.
<PAGE> 1
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS
DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.37
NEXTWAVE RESALE AGREEMENT
<PAGE> 2
NEXTWAVE RESALE AGREEMENT
This PCS ("Personal Communications Services") Resale Agreement
("Agreement") is entered into and is in effect as of September 19, 1996, by and
between NEXTWAVE WIRELESS INC. and its Affiliates, a Delaware corporation, with
principal offices located at 9455 Towne Centre Drive, San Diego, California
92121 ("NEXTWAVE") and United Calling Network Inc. and its Affiliates, a
California corporation, with principal offices located at 27068 La Paz, Suite
#403, Laguna Hills, CA 92656 ("COMPANY") and the terms of which are contained
herein.
A. NextWave Personal Communications Inc. ("NextWave PCI") is a
wholly owned subsidiary of NextWave Telecom Inc. a Delaware corporation.
NextWave PCI was formed to participate in the Federal Communications
Commission's ("FCC's") PCS auctions;
B. NextWave Wireless is a wholly owned subsidiary of NextWave
Telecom Inc. organized to construct facilities, deploy PCS network equipment,
and provide PCS in the licensed markets.
C. NextWave PCI has successfully bid for 63 licenses covering
approximately 110 million POPs (based on current census data) in various
markets across the United States (see ATTACHMENT B), NextWave and NextWave PCI
intend to construct facilities, deploy PCS network equipment and provide PCS in
those licensed markets.
D. Subject to the terms and conditions set forth hereto, in the
PCS markets awarded to NextWave in the C-block auction, COMPANY desires to
purchase PCS minutes of use ("MOUs") on a resale basis from NextWave pursuant
to a ten (10) year commitment by COMPANY to purchase digital wireless voice
services from NextWave in all markets where COMPANY desires to resell digital
wireless voice services where NextWave provides service. NextWave desires to
sell PCS minutes of use to COMPANY for resale in those markets under a single
24-hour flat rate service with no access fee based upon COMPANY's advance
commitment to purchase minutes of use.
WHEREAS, COMPANY will be responsible to provide customer acquisition
(i.e., sales, marketing, advertising and customer activation), billing,
collections, customer service/care, customer retention and handset fulfillment.
THEREFORE, in consideration of the foregoing, and of the mutual
covenants and agreements hereinafter set forth, NextWave and agree as follows:
1. DEFINITIONS.
(a) AFFILIATE means, with respect to any Party, any person,
corporation or other legal entity that, directly or indirectly, controls, is
controlled by or is under common control with such Party. For purposes of this
definition, "control" (including, with correlative meanings, the terms
1
<PAGE> 3
"controlling", "controlled by" and "under common control with"), means the
possession, directly or indirectly, of the power (i) to vote securities having
ordinary voting power sufficient to elect a majority of the directors of such
Party or (ii) to direct or cause the direction of the management and policies
(including investment policies) of that Party, whether by contract or
otherwise.
(b) FULL MOBILITY SERVICE means the provision of digital wireless
voice airtime with mobile inter-cell (base station) hand-off capability.
(c) LICENSES means PCS licenses held by NextWave or its
Affiliates.
(d) PCS AUCTIONS means the auction conducted by the FCC to assign
licenses to the successful bidders for 120 MHz of spectrum as broadband PCS
licenses in the 1850-1990 MHz band. The PCS band has been sub-divided into
three 30 MHz blocks (blocks A, B, and C) and three 10 MHz blocks (blocks D, E
and F). The FCC has allocated a portion of the broadband PCS spectrum (blocks
C and F) to certain entities called the "Entrepreneurs". The FCC completed the
C-block auction in July, 1996. Together these two blocks make up the
"Entrepreneurs' Band".
(e) MINUTE OF USE ("MOU") means the particular use interval
provided by NextWave for digital mobile voice service for resale to end-users
and is measured from time of seizure to the time of termination.
(f) BASE MOU PRICE means NextWave's MOU price prior to any
discounts. Usage is billed in 60 second intervals and partial minutes are
rounded up to the next full minute.
(g) BTA (Basic Trading Area) means a particular market boundary as
defined by Rand McNally & COMPANY and the FCC.
(h) ROAMING AGREEMENTS means any agreement whereby NextWave or its
Affiliates has the ability to purchase airtime from, interconnect with and/or
use the wireless network facilities of another operator of a wireless network.
(i) TERM has the meaning set forth in Article 9.
2. PROVISION OF AIRTIME.
2.1 PROVISION OF SERVICES. NextWave and its Affiliates shall sell
Full Mobility Services to COMPANY in each BTA for which NextWave or any of its
Affiliates is awarded or otherwise obtains a License, or enters into a Roaming
Agreement.
2.2 SERVICES DESCRIPTION. Full Mobility Services shall involve
the establishment and maintenance of wireless circuits for the continuous
transmission of digital voice signals.
2.3 COMPANY FORECAST. Ninety (90) days prior to the offering of
commercial Full Mobility Service in any BTA, as communicated to COMPANY by
NextWave at least One Hundred and Twenty-Days (120) prior to the offering of
such commercial Service, COMPANY will provide NextWave with a forecast of
anticipated Full Mobility Service requirements, on a
2
<PAGE> 4
quarterly basis, for that BTA for the remainder of the calendar year and for
each year thereafter. COMPANY will provide NextWave with quarterly updates to
its initial and annual forecasts.
2.4 NETWORK FEATURE FUNCTIONALITY. As practicable, NextWave is
committed to maintain its infrastructure with the most recent commercial
releases of vendor software available that implements the standards and
protocols described in the J-STD-008 air interface and associated standards,
and new feature functionality that operates with such standards and protocols.
For those capabilities that affect end users or subscribers, NextWave will
share with COMPANY its timeline and schedule of infrastructure upgrades as they
become available.
2.5 ROAMING ARRANGEMENTS. NextWave will make reasonable efforts
to negotiate favorable roaming agreements and rates with other wireless
licensees in the United States, and wireless operators in Canada, Mexico, and
other countries that may provide for roaming from PCS networks in the United
States for traffic to and from each other's wireless licensed markets.
NextWave will make available, at NextWave's sole discretion, rapid roaming
clearing capabilities through, either a direct interface to other networks with
which it has roaming arrangements or via industry clearing houses.
2.6 INTERCONNECTION.
(a) LEC INTERCONNECTION. NextWave has the responsibility to
negotiate interconnect agreements with the other local carriers. COMPANY and
NextWave agree on the need to minimize interconnect charges for MOUs
originating and terminating on NextWave's network. NextWave will continue its
efforts to influence lower interconnect rates through the regulatory agencies
and processes. MOU pricing is exclusive of interconnection fees for both
originating and terminating traffic from and to non-NextWave networks, which
shall be charged to COMPANY at the negotiated base rate.
If COMPANY elects facilities-based resale, it will be responsible for
the fixed and recurring costs of providing, operating, and maintaining the
circuits between NextWave's and COMPANY's switches and between COMPANY's switch
and the PSTN.
(b) IXC INTERCONNECTION. NextWave intends to interconnect with
the major interexchange carriers (e.g., AT&T, MCI, Sprint) via trunk
connections with their points of presence at the expense of the IXC.
Similarly, as COMPANY requires, NextWave will use reasonable efforts to
interconnect with other long distance services under similar conditions.
NextWave's price for MOUs includes origination for direct interconnection with
IXCs for mobile-to-land calls to the extent that the costs of such
interconnection are borne by the IXC. If the IXC does not bear the cost of
such interconnection or if direct interconnection with the IXC is not feasible
or practicable, then any interconnection charges shall be borne by COMPANY on a
pass-through basis.
If COMPANY elects facilities-based resale, it will be responsible for
the fixed and recurring costs of providing, operating, and maintaining the
circuits between NextWave's and COMPANY's switches and between COMPANY's switch
and the PSTN.
2.7 NUMBER OWNERSHIP.
(a) PURCHASE AND ALLOCATION OF NUMBERS. COMPANY shall obtain
numbers ("Numbers") from NANPA for activation by NextWave on the Network. In
the event COMPANY is not authorized or is otherwise unable to obtain Numbers,
NextWave shall obtain Numbers, in entire block increments, on a pass-through
cost basis. In the event there is a shortage of Numbers and an allocation of
Number blocks is required, NextWave may allocate Number blocks pro rata among
its airtime customers based on the relative number of subscribers.
3
<PAGE> 5
(b) NUMBER TRANSFERS. COMPANY will pay a nominal fee for the
engineering and administrative charges associated with the moving of COMPANY's
numbers to another network. COMPANY will be charged a comparable rate to other
carriers' rates and industry practices, a standard rate per number and all
non-recurring charges associated with forwarding COMPANY's traffic to any
number on a non-NextWave network. In the event the governing agencies mandate
number portability, NextWave will support, in a timely manner, the guidelines
specified in the ruling.
(c) TRANSFER SUPPORT. NextWave will support COMPANY's move of the
numbers to the new wireless network, for a nominal charge, ensuring proper
addressing and recording for the Local Exchange Routing Guide ("LERG").
2.8 RESELLER SWITCH INTERFACE.
(a) NON-FACILITIES BASED. NextWave will make available to
COMPANY, at a mutually agreed upon fee, access to customer care capabilities
including, but not limited to, home location register services (i.e., customer
profile management and customer features service management), authentication,
and if practicable, call detail recording ("CDR") access. COMPANY will be
responsible for providing personnel and all other resources required to deliver
customer care services to COMPANY's subscribers.
(b) FACILITIES BASED. NextWave will make available a T1/T3
interface to a COMPANY owned and operated switch for the delivery of COMPANY's
calls to and from the Public Switched Telephone Network ("PSTN"). COMPANY's
numbers must be activated on NextWave's switch to allow NextWave to properly
provide mobility to those customers. The demarcation point will be at
NextWave's switch and COMPANY will be responsible for the provisioning and
costs, both recurring and non-recurring, of all circuits between COMPANY's
switch and demarcation point at NextWave's switch. If COMPANY desires,
NextWave will engineer and maintain these circuits at a mutually agreed fee.
2.9 SERVICE ACTIVATIONS, DE-ACTIVATIONS AND CHARGES.
(a) SERVICE ACTIVATION PLATFORM. NextWave will offer COMPANY a
direct datalink interface to NextWave's service activation platform to allow
COMPANY an automated mechanism to perform customer on-line activations,
de-activations, and service change orders. NextWave reserves the right to set
the interface standard for connections to its service activation platform.
NextWave's service activation platform will collect COMPANY service orders,
format the requests, and download them into NextWave's switches and appropriate
sub-systems in as near real time as practicable. COMPANY will be responsible
for all of the costs associated with providing and maintaining its own on-site
computer terminal, software and modem/datalink connection.
(b) NUMBER REMOVAL CHARGES. COMPANY's service activation for each
customer is free of any activation fee as long as COMPANY purchases its PCS
numbers directly from NANPA. COMPANY will be charged a $10 removal fee for
those situations when a number is removed from a NextWave switch. The fee is
required to cover administrative expenses. In the event the governing agencies
mandate number portability, NextWave will support, in a timely manner, the
guidelines specified in the ruling.
4
<PAGE> 6
2.10 HANDSET SOURCING AND FULFILLMENT.
(a) VOLUME PURCHASE ORDERS AND DELIVERY. If COMPANY desires,
NextWave, through its association with specific strategic partners and
suppliers, will use reasonable efforts to allow COMPANY to participate in any
NextWave volume purchase arrangements. NextWave will make arrangements for the
ordering of the handsets and accessories and the equipment will be drop shipped
by the manufacturer to COMPANY. COMPANY and supplier will be responsible for
making, shipping, delivery and payment arrangements.
(b) PRICING AND THIRD PARTY EQUIPMENT. Pricing of the services in
(a) above is not available at this time, but will be determined and shared with
COMPANY in advance of NextWave's commercial service introduction. Further,
COMPANY is free to purchase any licensed subscriber equipment directly from
equipment manufacturers as long as purchased subscriber equipment is in full
compliance with the established TIA, CTIA and NextWave's network air-interface
and performance standards.
2.11 ENHANCED SERVICES.
(a) COMPANY PROVIDED SERVICES. NextWave will offer COMPANY the
opportunity to provide its own enhanced services platform. If COMPANY desires
to provide additional vertical services to its customers through its own or
through a third-party's enhanced services platform and if such addition to
NextWave's network is practicable, COMPANY and NextWave will make reasonable
efforts to jointly develop and mutually agree to the technical procedures and
lockdown requirements to properly test the service prior to its introduction on
the NextWave network. NextWave reserves its right to set its interface
standard for any connections to NextWave's switches. Engineering and set-up
fees for such service configurations will be determined on a case-by-case basis
and mutually agreed-to prior to service introduction. The interconnection to
COMPANY's enhanced services platform will be based upon NextWave's standard
interface. The demarcation point will be at NextWave's switch. COMPANY will
be responsible for all of the recurring and non-recurring interconnection costs
associated with providing and maintaining the connection to COMPANY's enhanced
services platform. Hardware, software and tangible resources (i.e., switching,
processing or storage of data) on NextWave's master switching center and
network that are required to support features and functionality provided by
COMPANY's enhanced services platform shall be made available by NextWave, to
the extent practicable, at prices based on NextWave's reasonable, direct and
allocable expenses relating to such hardware, software or tangible resources
utilization.
(b) NEXTWAVE PROVIDED SERVICES. NextWave plans to offer a family
of enhanced services which may include voice mail, enhanced voice (with
out-dial-to-a-pager capability), short messaging, custom calling features
(i.e., call waiting, three-way calling, call forwarding, no answer transfer,
etc.), single number service, fax store and forward, e-mail, star features and
information services. These services will be offered to COMPANY on an
individual and/or package basis on terms to be agreed upon.
(c) ENHANCED SERVICES PRICING. The parties agree that service
features, enhanced services, and their associated pricing must be competitive.
Pricing for NextWave's features and
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enhanced services will be competitive with prevailing retail pricing. NextWave
will price services either individually or provide bulk pricing for global
feature activation in a market. NextWave recognizes that switch-based features
and enhanced services will increasingly be packaged at retail with airtime and
become a "tablestakes" for the business. Prior to commercial availability, the
parties agree to develop a plan for enhanced services to identify COMPANY's
needs, refine NextWave implementation approaches that might include use of
COMPANY AIN platforms, and agree on wholesale pricing for such services. For
situations where COMPANY purchases enhanced services from NextWave and
subsequently migrates to another enhanced services platform, the parties will
develop a plan to minimize COMPANY's subscriber churn and to recover NextWave's
capital investment.
2.12 NETWORK SERVICE TRAINING AND TROUBLE REPORTING.
(a) SCOPE OF SERVICES. NextWave will provide COMPANY network
service training and documentation prior to COMPANY's introduction of any
NextWave enhanced services offering in any market. Scheduling for such
training will be mutually agreed upon by both parties.
(b) NOTIFICATION OF SERVICE. NextWave will promptly notify
COMPANY's customer care department or COMPANY's assigned point of contact of
service enhancements, network expansions, and major services outages. NextWave
and COMPANY will mutually agree to the notification procedures prior to
NextWave's commercial service offering. Additionally, NextWave will routinely
provide COMPANY with updated NextWave service maps as service is expanded.
2.13 NETWORK ACCESS TO LOCAL CUSTOMER CARE. NextWave, at no cost
to COMPANY, will provide COMPANY with one (1) customer care "star feature"
(e.g., *CARE) that will directly connect COMPANY's customer to COMPANY's local
customer care center. COMPANY will be responsible for any network access
charges related to interconnection and transport of such calls from NextWave's
switches to COMPANY's customer care center. For the situation where these star
feature customer service calls originate in a roaming market and are routed
directly to COMPANY's customer care center, COMPANY will be responsible for
local network interconnection and transport charges.
3. PURCHASE COMMITMENT.
3.1 Subject to the terms and conditions hereof, COMPANY agrees, on
a take-or-pay basis, to purchase on an exclusive basis from NextWave a minimum
of Five Billion (5,000,000,000) minutes, of Full Mobility Service during the
Term in aggregate all of the BTAs in which NextWave has a License (the
"Commitment").
3.2 Subject to the Quality Provisions detailed in Attachment D and
NextWave's build-out conditions detailed in Section 11.3, COMPANY shall
purchase at least 5% of its Commitment within the three (3) year period
following the date NextWave first offers Full Mobility Service on a commercial
basis
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in either NextWave's New York City or Los Angeles BTAs ("Commercial Service
Date") and 25% of its Commitment within the five (5) year period following the
Commercial Service Date.
3.3 In addition to the amount of any purchase price to be paid by
COMPANY under this Agreement, COMPANY agrees to pay to NextWave, and NextWave
will in turn regularly remit to a third party escrow agent designated by
NextWave, the amount of two cents ($0.02) per minute for the first Four Billion
(4,000,000,000) minutes used by COMPANY under this Agreement to ensure the
purchase of the full Commitment by COMPANY. NextWave will include such two
cents per minute on its regular invoices to COMPANY for billable MOUs. If and
when COMPANY purchases and NextWave receives all payments for the full
Commitment, then the aggregate amount of the funds in escrow, together with
accrued interest, if any, less the reasonable costs of the escrow agent, shall
be promptly returned to COMPANY. If COMPANY fails to purchase the full
Commitment within the time required by this Agreement, or if this Agreement is
otherwise expires or is terminated (other than for the convenience of or breach
by NextWave) prior to COMPANY's purchase of the full Commitment, then the
aggregate amount of the funds in escrow, together with accrued interest, if any,
shall be permanently retained by NextWave. Nothing herein shall limit
NextWave's remedies, rights or relief under this Agreement or at law or equity.
4. PRICING AND PAYMENT TERMS.
4.1 FULL MOBILITY PRICING. Pricing for Full Mobility Service,
measured in one minute increments, for each BTA will be as set forth for in the
Pricing Schedule attached hereto as Attachment C. NextWave's pricing
illustrated in ATTACHMENT C is exclusive of the interconnection fees and
enhanced services that are listed in SECTION 9.
4.2 RESALE TO FACILITIES-BASED CARRIERS. If COMPANY resells Full
Mobility Service to facilities-based carriers and in connection therewith
requires NextWave to implement a PIC/CIC code, then COMPANY shall pay NextWave
an additional fee of *_______* per minute of Full Mobility Service sold to each
such carrier of management of PIC/CIC and associated databases.
4.3 ROAMING AGREEMENTS. Pricing for Full Mobility Service
provided pursuant to a Roaming Agreement will be the greater of (i) the Full
Mobility Service price set forth in the Pricing Schedule or (ii) NextWave's
incremental cost of usage under the Reciprocal Agreement plus *________* per
minute.
4.4 E911 SERVICE. Emergency (911 and E911) and Lawful Intercept
calls will be handled by NextWave, unless otherwise required by regulatory
authorities. Each airtime invoice shall include a monthly charge (calculated on
a per subscriber basis in the maximum amount allowed by applicable regulatory
authority), for the provision of Emergency and Lawful Intercept services.
COMPANY shall pay such charges within the timeframe specified for payment of
Full Mobility Services. If regulatory authorities shall subsequently change the
requirements for Emergency or Lawful Intercept calls or mandate the provision
of other services, the parties shall cooperate in the provision of such
services with associated fees and charges to be handled in a similar manner to
the Emergency and Lawful Intercept Services.
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4.5 INVOICES.
(a) NextWave will offer COMPANY either (i) a datalink interface to
electronically deliver COMPANY's monthly billing data or (ii) a magnetic tape
version of the same. Magnetic billing tapes are NextWave's standard means of
delivering COMPANY's billing data. If COMPANY desires a datalink interface,
COMPANY will be responsible for all costs of providing and maintaining the
datalink.
(b) NextWave's billing data to COMPANY will include the customer's
mobile number, electronic serial number and peak/off-peak indicators, dialed
number, originating and terminating call site identification, and/or time
stamps on a call-by-call basis.
(c) If COMPANY desires its billing data transferred in shorter
intervals other than monthly (i.e., bi-monthly, etc.), NextWave and COMPANY
will negotiate in good faith, the terms and conditions of providing billing
data in shorter intervals.
(d) NextWave will offer multiple billing cycles from which COMPANY
can choose to allow COMPANY flexibility as to when it will be billed. COMPANY
must formally request its selected billing cycle in writing (or by some
mutually agreed to means). Absent a formal request, NextWave will assign
COMPANY a billing cycle.
(e) NextWave's standard payment terms is net thirty (30) days upon
receipt of bill. A 1.5% late payment fee per month or partial month will be
added to COMPANY's total bill if payment is not received in the time specified.
4.6 DISPUTED CHARGES. COMPANY shall provide NextWave with written
notice of any disputed MOU or service charges within thirty (30) days after the
mailing date of the invoice containing such charges. Any disputed charges will
be handled under the dispute resolution process described in SECTION 8 herein.
If a disputed amount is not resolved and the parties seek resolution in
accordance with SECTION 8.2, then the disputed amounts shall be placed into an
escrow account pending resolution. Any earned interest accrued on these
amounts will pass to the party being awarded the disputed amounts. If the
disputed amounts are shared in any manner between the parties, the accrued
interest will be shared in the same proportion as the disputed amounts.
4.7 TAXES. The prices paid by COMPANY for MOUs are exclusive of
any applicable sales, use, personal property or other taxes attributable to
periods during the Term based upon or measured by the MOUs and any associated
services provided or used by NextWave in performing its obligations under this
Agreement. COMPANY shall reimburse NextWave on a pass-through basis for those
taxes paid by NextWave that are attributable to COMPANY pursuant to this
SECTION 4.7. Each Party shall provide and make available to the other any
resale certificates, information regarding out-of-state sales or use of
equipment, materials or services, and other exemption certificates or
information reasonably requested by the other Party. The Parties will also
work together to segregate into separate payment streams, any taxable,
nontaxable or items for which a sales, use or similar tax has already been paid
by NextWave.
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4.8 RETAIL BAD DEBT AND FRAUD RESPONSIBILITY; DETECTION AND
PREVENTION.
(a) RETAIL BAD DEBT AND SUBSCRIPTION FRAUD. Retail bad debt and
fraudulent usage as a result of subscription fraud is COMPANY's sole
responsibility. COMPANY will be responsible for all originating and
terminating fees, long distance and roaming charges, and MOUs used on
NextWave's network incurred from retail bad debt and subscription fraud.
(b) CLONING FRAUD. NextWave will make reasonable efforts to limit or
eliminate cloning fraud on its network. NextWave's development of CDMA
technology and its "coding of each call" is anticipated to reduce exposure to
cloning fraud. Additionally, NextWave will make reasonable efforts to deploy
systems to monitor usage patterns, traffic patterns and the like to quickly
detect potential fraudulent use on a number. Upon detection of any suspected
cloning activity, NextWave will promptly notify COMPANY to investigate the
number further and take proper action. COMPANY will have 24 hours to
substantiate the customer's usage or to suspend service and correct the
situation. If COMPANY determines fraud was committed, NextWave will credit
COMPANY for the local airtime usage prior to NextWave's notice to COMPANY.
COMPANY will be responsible for all local access and long distance usage prior
to and after NextWave's notice to COMPANY; NextWave and COMPANY will work
together in good faith to curtail fraud, and will follow customer-industry
practice for billing and reimbursement of fraudulent usage. In the event that
COMPANY, its employees or affiliates were negligent for cloning fraud, COMPANY
will be responsible for all local airtime, as well as local access, long
distance and other charges (including costs associated with the number change)
prior to and after NextWave's notice to COMPANY.
4.9 AUDITS OF FINANCIAL RECORDS. NextWave and COMPANY each shall
keep adequate books and records in sufficient detail to enable the amounts to
be paid under Article 4 of this Agreement. Each party shall be entitled to have
an accounting firm of national recognition reasonably acceptable to the other
party audit the relevant books and records of the other party for the purpose
of confirming the accuracy of the calculation of the amounts due under Article
4. The auditor will disclose to the reviewing party only the information
necessary to verify the calculation of the amounts due under Article 4 and not
any confidential information of the other party, including but not limited to
any customer lists of the other party. Any such audit shall be performed at the
requesting party's expense (except if such audit reveals an overcharge of more
than five percent (5%) of the correct amount due under Article 4, then such
audit shall be at the expense of the other party), during normal business hours
after reasonable notice and, at the request of the audited party, shall be
subject to the independent agent's execution of a reasonable confidentiality
agreement. Such audits shall be conducted no more frequently than once every
year. In no event may a party commence an inspection of any statement later
than two (2) years from the date of such statement. Prior to any inspection by
a party, the parties will in good faith meet, discuss and attempt to resolve
any objection or discrepancy claimed by the party requesting the audit.
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5. CONFIDENTIALITY.
5.1 CONFIDENTIAL INFORMATION. By virtue of this Agreement, the
Parties may have access to, or exchange, information that is confidential to one
another. As used in this Agreement, the term "Confidential Information" shall
mean only such information of the other Party that may be reasonably understood
from legends, the nature of such information itself and/or the circumstances of
such information's disclosure, to be confidential and/or proprietary to the
other Party or to third-parties to which the other Party owes a duty of
non-disclosure. Notwithstanding the foregoing, NextWave agrees that all of the
following information which NextWave may receive or otherwise obtain in the
course of its performance under this Agreement, including without limitation in
the course of providing the Service, shall be deemed the Confidential
Information of COMPANY of purposes of this Agreement: (i) COMPANY Subscriber
lists and numbers, account information, usage, and information regarding
business planning and operations of COMPANY and COMPANY's administrative,
financial information, forecasts, predictions or marketing reports or
activities; (ii) all Subscriber and other customer information; and (iii)
COMPANY network and Intelligent Network capabilities, interconnection
arrangements, architecture, strategies, development and implementation plans,
and vendor relationships. Notwithstanding the foregoing, COMPANY agrees that
all of the following information which COMPANY may receive or otherwise obtain
in the course of its performance under this Agreement shall be deemed
Confidential Information of NextWave for purposes of this Agreement: information
concerning NextWave's Network, Network performance trials, equipment
requirements, Network system engineering and design specifications, cell-site
location planning strategies, Network usage and performance data, development
plans for its intelligent network and enhanced features and services, financial,
accounting or marketing reports, and business plans, analyses, forecasts, and
predictions.
5.2 RESTRICTIONS ON DISCLOSURE AND USE. Each of the Parties
agrees that as to any Confidential Information relating to one Party
("Discloser") obtained in any manner by the other Party ("Recipient")
hereunder:
(a) to use such Confidential Information only in the
performance of this Agreement or as otherwise expressly permitted by this
Agreement or by the Discloser;
(b) not to make copies of any such Confidential
Information or any part thereof except to the extent required to fulfill the
Party's obligations under this Agreement;
(c) not to disclose any such Confidential Information to
any third-party, using the same degree of care used to protect Recipient's own
confidential or proprietary information of like importance, but in any case
using no less than reasonable degree of care; provided, however, that Recipient
may disclose Confidential Information received hereunder to (i) its Affiliates
who are bound to protect the received Confidential Information from
unauthorized use and disclosure under the terms of a written agreement
(including without limitation a pre-existing written agreement), and (ii) to
its employees, consultants and agents, and it Affiliates' employees,
consultants and agents, who have a need to know to perform or exercise rights
under
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this Agreement, and who are bound to protect the received Confidential
Information from unauthorized use and disclosure under the terms of a written
agreement (including without limitation a pre-existing written agreement).
Confidential Information shall not otherwise be disclosed to any third-party
without the prior written consent of the Discloser; and
(d) to return to the other Party, or destroy, all of such
Party's Confidential Information received hereunder, whether in any tangible
medium of expression or electronic or other form or format, promptly upon the
expiration or termination this Agreement.
5.3 EXCEPTIONS. The restrictions set forth in this Article 9 on
the use and disclosure of Confidential Information shall not apply to
information that:
(a) was publicly known at the time of Discloser's
communication thereof to Recipient;
(b) becomes publicly know through no fault of Recipient
subsequent to the time of Discloser's communication thereof to recipient;
(c) is in Recipient's possession free of any obligation
of confidence at the time of Discloser's communication thereof to Recipient;
(d) is developed by Recipient independently of and
without use of any of Disclosure's Confidential Information or other
information that Discloser disclosed in confidence to any third-party;
(e) is rightfully obtained by Recipient without
restriction from third-parties authorized to make such disclosure; or
(f) is identified by Discloser in writing as no longer
proprietary or confidential.
5.4 DISCLOSURE PURSUANT TO LEGAL REQUIREMENT. In the event
Recipient is required by law, regulation or court order to disclose any of
Discloser's Confidential Information, Recipient will promptly notify Discloser
in writing prior to making any such disclosure in order to facilitate Discloser
seeking a protective order or other appropriate remedy from the proper
authority. Recipient agrees to cooperate with Discloser in seeking such order
or other remedy. Recipient further agrees that if Discloser is not successful
in precluding the requesting legal body from requiring the disclosure of the
Confidential Information, it will furnish only that portion of the
Confidential Information which is legally required and will exercise all
reasonable efforts to obtain reliable assurances that confidential treatment
will be accorded the Confidential Information.
5.5 PUBLICITY. The parties expressly agree that the terms and
conditions of this Agreement, and any activities contemplated hereby or
performed hereunder, are the Confidential Information of the Parties and shall
not be disclosed in any manner without the prior written approval of the other
Party (which shall not be unreasonably withheld); provided, however, that
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(i) COMPANY and NextWave agree that NextWave shall have the right to issue a
news release to announce the transaction contemplated herein and (ii) that the
parties acknowledge that NextWave has filed a registration statement with the
Securities and Exchange Commission and will be required to disclose the
existence of this Agreement and describe the material terms contained herein.
To the extent any information has been disclosed to the public pursuant to this
SECTION 5.5, such information shall not be deemed Confidential Information.
Notwithstanding the foregoing, each Party agrees that the Airtime pricing terms
contained in Attachment C are confidential and shall not be disclosed, except
as may be required by law or pursuant to any legal proceeding, in which case
the provisions of Article 5.4 shall apply. The Parties acknowledge that
NextWave will be required to file this Agreement with the Securities and
Exchange Commission as an exhibit to its registration statement. NextWave
shall seek confidential treatment of the Airtime pricing terms.
5.6 PROPRIETARY NOTICES. Each Party shall reproduce and maintain
on any copies of the other Party's Confidential Information received or made
hereunder such proprietary legends or notices (whether of the Party providing
the Confidential Information or of a third-party) as are contained in or on
the original.
5.7 RETURN OF CONFIDENTIAL INFORMATION. Each Party agrees to
return to the other Party or destroy all of such other Party's Confidential
Information promptly upon the termination of this Agreement. Neither Party
shall thereafter retain any such Confidential information or any copies thereof
fixed in any tangible medium of expression in whatever form or format.
5.8 COOPERATION. In the event either Party becomes aware that any
Person (including, without limitation, any employee or agent of a Party) is
taking or threatens to take any action which would violate any of the foregoing
provisions, such Party shall promptly and fully advise the other Party (with
written confirmation as soon as practicable thereafter) of all facts known to
it concerning such action or threatened action. Neither Party shall in any way
aid, abet or encourage any such action or threatened action. Each Party agrees
to cooperate in all reasonable ways to prevent such action or threatened
action, including, without limitation, assigning any cause of action it may
have, related to the violation of the foregoing provisions, to the other Party,
and each Party agrees to do all reasonable things and cooperate in all
reasonable ways as may be requested by the other Party to protect the trade
secret and proprietary rights of such other Party in and to the Confidential
Information. A Party shall also be liable for any breach of the terms of this
Article 9 in the event that Confidential Information received from the other
Party is disclosed by an employee, agent or consultant of such Party or a
third-party to whom such Party has disclosed such information and such
disclosure would violate the terms of this Article 9 were such employee, agent,
consultant or third- party a party hereto.
5.9 NO USE OF NEXTWAVE INTELLECTUAL PROPERTY RIGHTS. Nothing
herein shall be deemed to grant to COMPANY any right, license or other interest
in or under, or right to use, and COMPANY shall not use, any patents,
copyrights, trade secrets, trademarks, service marks, trade names or other
similar designation, or any other intellectual property rights of NextWave or
any of this Affiliates.
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6. LIMITED LIABILITY.
6.1 IN NO EVENT WILL EITHER PARTY AND/OR ANY OF ITS AFFILIATES BE
LIABLE TO OR THROUGH THE OTHER PARTY FOR ANY OF THE FOLLOWING:
(a) DAMAGES CAUSED BY OTHER PARTY'S AND/OR ITS AFFILIATES' OR
SUPPLIERS' FAILURE TO PERFORM THEIR OBLIGATIONS OR RESPONSIBILITIES;
(b) CLAIMS OR DEMANDS BROUGHT AGAINST THE OTHER PARTY BY
THIRD PARTIES OTHER THAN THOSE THIRD PARTY CLAIMS IN RESPECT OF WHICH SUCH
PARTY IS EXPRESSLY OBLIGATED TO INDEMNIFY THE OTHER PARTY PURSUANT TO A
PROVISION OF THIS AGREEMENT; OR
(c) ANY LOST PROFITS, LOSS OF BUSINESS, LOSS OF USE (OR
INTERRUPTIONS OF BUSINESS), LOST SAVINGS, LOST OPPORTUNITIES OR OTHER
CONSEQUENTIAL, SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY OR PUNITIVE DAMAGES;
ANY OR ALL OF WHICH ARISE FROM OR IN CONNECTION WITH THE DELIVERY,
USE, OR PERFORMANCE OF SERVICE GOVERNED BY THIS AGREEMENT, AND EVEN IF A PARTY
AND/OR ANY OF ITS AFFILIATES HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
6.2 The limitations of remedies and liabilities set forth in this
SECTION 6 shall not apply to any obligation of one party to pay the other party
all amounts due and owing under this Agreement.
7. INDEMNIFICATION.
7.1 NextWave shall indemnify, defend and hold harmless COMPANY,
and all of COMPANY's and its affiliates' officers, directors, partners,
employees and agents, from and against any and all losses, claims, damages,
liabilities or expenses of any kind (including, but not limited to, reasonable
attorneys fees and costs) arising out of any claim, action or proceeding by a
third party against any of them to the extent it is based on (i) a claim for
personal injury (including death) or damage to personal property for which
Nextwave or any of its affiliates is legally responsible, or (ii) Nextwave or
its affiliate's failure to comply with all applicable laws, regulations and
orders in the performance of its obligations under this Agreement.
7.2 COMPANY shall indemnify, defend and hold harmless Nextwave,
and all of Nextwave's and its affiliates' officers, directors, partners,
employees and agents, from and against any and all losses, claims, damages,
liabilities or expenses of any kind (including, but not limited to, reasonable
attorneys fees and costs) arising out of any claim, action or proceeding by a
third party against any of them to the extent it is based on (i) a claim for
personal injury
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(including death) or damage to personal property for which COMPANY or any of
its affiliates is legally responsible, or (ii) a claim by a customer of
COMPANY, or (iii) COMPANY or its affiliate's failure to comply with all
applicable laws, regulations and orders in the performance of its obligations
under this agreement.
7.3 The party seeking indemnity under the foregoing provisions
shall notify the indemnifying party of any such claim, action or proceeding,
and the indemnifying party shall promptly and at its sole cost undertake the
defense thereof, except for claims by a customer of COMPANY, for which COMPANY
shall at its sole cost undertake the defense thereof for itself, and upon
demand thereof, Nextwave and/or its affiliates. No such claim shall be
compromised or settled without the prior written consent of the indemnified
party if the settlement would restrict or adversely affect the indemnified
party. Such consent shall not be unreasonably withheld. After the indemnified
party tenders the defense of any such claim, action or proceeding, the
indemnified party shall have the right to participate at its own cost and
expense in such claim, action, or proceeding using counsel of its own choosing.
8. DISPUTE RESOLUTION
8.1 DISPUTE RESOLUTION. Either Party may identify a dispute that
has arisen in performance of this Agreement by notifying the other Party's
account manager in writing, setting forth the dispute with reasonable
specificity. The account managers shall promptly attempt to resolve such
dispute by negotiation. If within ten (10) calendar days of written notice of
a dispute the account managers have been unable to resolve it, then either
Party may escalate resolution of the dispute to an appropriate senior executive
of NextWave or to an appropriate senior executive of COMPANY by notifying them
in writing, setting forth the dispute with reasonable specificity. The senior
executives shall attempt to resolve such dispute by negotiation. If within ten
(10) calendar days of such escalation of a dispute the senior executives have
been unable to resolve it, then either Party may seek resolution of the dispute
by arbitration in accordance with the following Paragraph.
8.2 ARBITRATION. Without prejudice to either Party's right to
seek equitable relief (including, but not limited to, injunction) from a court,
any dispute arising out of or related to this Agreement, which cannot be
resolved by negotiation, shall be settled by binding arbitration in accordance
with the J.A.M.S./ENDISPUTE arbitration rules and procedures ("Endispute
Rules") and in accordance with the terms of this Article 8. The costs of
arbitration, including the fees and expenses of the arbitrator, shall be shared
equally by the Parties unless the arbitration award provides otherwise. Each
Party shall bear the cost of preparing and presenting its case. The Parties
agree that this provision and the Arbitrator's authority to grant relief shall
be subject to the United States Arbitration Act, 9 U.S.C. 1-16 et seq.
("USAA"), the provisions of this Agreement, and the ABA-AAA Code of Ethics for
Arbitrators in Commercial Disputes. The Parties agree that the arbitrator
shall have no power or authority to make awards or issue orders of any kind
except as expressly permitted by this Agreement, and in no event shall the
arbitrator have the authority to make any award that provides for punitive or
exemplary damages. The arbitrator's decision shall follow the plain meaning of
the relevant documents, and shall be final
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and binding. The award may be confirmed and enforced in any court of competent
jurisdiction. All post-award proceedings shall be governed by the USAA.
9. TERM.
This Agreement shall be effective when executed. The Term of this
Agreement shall be ten (10) years with one (1) renewal option for COMPANY to
renew for an additional five (5) years; provided that if COMPANY elects to
renew the Agreement the parties shall review and adjust the pricing. The Term
shall commence upon the first day of commercial availability of Full Mobility
Service in any NextWave BTA, where the conditions in SECTION 11.3 below are
met. One (1) year prior to the expiration of the initial ten-year Term, the
parties will meet to determine the pricing for the five-year renewal period.
If the parties are unable to reach agreement six (6) months prior to the
expiration of the initial ten-year Term, the then existing terms and
conditions, including pricing shall continue for a transition period of six (6)
months after the expiration of the initial ten-year Term. If, in the event
that COMPANY exceeds ten (10) billion billable MOU during the term, then the
parties will meet to determine the pricing for volume breaks above ten (10)
billion MOU for the airtime table in ATTACHMENT C.
10. TERMINATION PROVISION.
NextWave may terminate this Agreement without liability by written
notice to COMPANY in the event that:
(i) COMPANY fails to pay any amounts due hereunder within
fifteen (15) days after notice from NextWave;
(ii) COMPANY's use of NextWave's services or network (a)
violates any laws, rules or regulations (b) is in non compliance with services
standards established by NextWave; or
(iii) COMPANY commits a material breach of this Agreement
and it is not cured within sixty (60) days of notice from NextWave.
11. MISCELLANEOUS.
11.1 GOVERNING LAW AND CHOICE OF FORUM. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
other than the laws thereof that would require reference to the laws of any
other jurisdiction. For all purposes for which resort to a court may be had,
the parties irrevocably consent to the exclusive jurisdiction and venue of the
federal and state courts located in the State of New York.
11.2 NOTICES. All notices, demands, requests, or other
communications which may be or are required to be given or made by any Party,
to the other Party pursuant to this Agreement shall be in writing and shall be
hand delivered, mailed first-class registered or certified mail, return receipt
requested, postage pre-paid, delivered by overnight air courier, or transmitted
by telegram, telex, or facsimile transmission addressed as follows:
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If to COMPANY:
Attn: Phillip V. Miller, CEO
United Calling Network Inc.
Fax: (213) 737-3133
If to NextWave:
NextWave Wireless Inc.
9455 Towne Centre Drive
San Diego, CA 92121
Attn: Bob Klass
Fax: (619) 597-4041
with a copy to:
NextWave Wireless Inc.
9455 Towne Centre Drive
San Diego, CA 92121
Attn: General Counsel
Fax: (619) 642-1912
Each Party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be given, served or
sent. Each notice, demand, request or communication which shall be mailed,
delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent or received for all purposes at such time as
it is delivered to the addressees (with the return receipt, the delivery
receipt or affidavit of messenger, or the facsimile answer back being deemed
conclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
11.3 CONDITIONS. COMPANY's commitment to purchase airtime from
NextWave is subject to each of the following conditions being satisfied: (a)
NextWave shall offer commercial mobility service in Markets covering at least 40
million POPs by December 31, 1998, and at least 70 million POPs by December 31,
2001; (b) NextWave provides airtime in its Markets meeting the technical
specifications detailed in Attachment D; and (c) NextWave provides COMPANY and
its affiliates interconnection as specified in SECTION 2.6.
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<PAGE> 18
11.4 FORCE MAJEURE. Neither party shall be liable for delays in
delivery or performance, or for failure to provide service, deliver or perform
when caused by any of the following which are beyond the reasonable control of
the delayed party:
(i) Acts of God, acts of the public enemy, acts or
failures to act by the other party, acts of civil or military authority,
governmental priorities, strikes or other labor disturbances, hurricanes,
earthquakes, fires, floods, epidemics, embargoes, war, riots, delays in
transportation, and loss or damage to goods in transit; or
(ii) Inability on account of causes beyond a reasonable
control of the delayed party to obtain products, components, services or
facilities.
In the event of such delay, the date of delivery or performance shall
be extended for a period equal to the effect of the time lost by reason of the
delay.
11.5 ASSIGNMENT. This Agreement may not be assigned, in whole or
in part, by any Party without the prior written consent of the other Party,
except that COMPANY may assign this Agreement to any of its Affiliates without
the consent of NextWave and either Party may assign this Agreement to a
successor in connection with the acquisition of the Party; provided that the
successor confirms by written agreement its agreement to assume the acquired
Party's obligations under this Agreement. For purposes of this subsection
only, the term "Affiliates" shall mean an entity under common control,
controlling or controlled by a Party; provided that "control" as used herein
shall mean the ownership, directly or indirectly, of at least eighty percent
(80%) of the aggregate of all voting interests in such entity. Any other
attempt to assign this Agreement shall be null, void and of no force or effect.
11.6 AUTHORIZATION AND ENFORCEABILITY. Each Party hereby
represents that:
(A) it has all requisite corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated
hereby;
(B) the execution, delivery and performance of this
agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all requisite corporate action on the party of each Party;
and
(C) this Agreement has been duly executed and delivered
by such Party and is valid and binding obligation of such Party, enforceable
against it in accordance with its terms.
11.7 SEVERABILITY. If any provision of this Agreement shall be
found by any court or administrative body of competent jurisdiction to be
invalid or unenforceable, the invalidity or unenforceability of such provision
shall not affect the other provisions of this Agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full force and
effect. The Parties hereby agree to attempt to substitute for any invalid or
unenforceable provision a valid and enforceable provision which achieves to the
greatest extent possible the economic, legal and commercial objectives of the
invalid and unenforceable provision.
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<PAGE> 19
11.8 SURVIVAL. The following provisions shall survive the
termination of this Agreement, and shall continue in full force and effect
along with any other provisions of this Agreement which by their nature or in
accordance with the terms, whether or not listed, shall survive such
termination: Articles 5, 6, 7, 8 and 9 and Articles 4.9, 11.1, 11.2, 11.7,
11.8, 11.13, 11.14, 11.16 and 11.17.
11.9 ENTIRE AGREEMENT. This Agreement, which includes the attached
Schedules, constitutes the entire agreement and understanding between the
Parties hereto in connection with subject matter hereof, and supersedes and
cancels all previous negotiations, commitments and writings with respect
thereto.
11.10 COUNTERPARTS. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each Party, or the
signatures of all persons required to bind party, appear on each counterpart;
but it shall be sufficient that the signature of, or on behalf of, each Party,
or the signatures of the persons required to bind any Party, appear on one or
more of the counterparts. All counterparts shall collectively constitute a
single agreement.
11.11 CAPTIONS FOR CONVENIENCE ONLY. the captions used in this
agreement are included for convenience only and shall not be considered part of
this Agreement for any purpose. Unless expressly state otherwise, all
references herein to "Articles" are to the relevant portions of this Agreement,
and all references to "Schedules" are to the attachments to this Agreement.
11.12 AMENDMENT. This Agreement shall not be amended, modified or
rescinded in any manner, except by an instrument in writing signed by duly
authorized representatives of each of the Parties hereto.
11.13 NO THIRD-PARTY BENEFICIARY. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any Persons other than the Parties and their
respective successors and permitted assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
person to any Party, nor shall any provision give any third person any right of
subrogation or action against any Party.
11.14 EXPENSES. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated hereby are consummated,
each Party will pay its own costs and expenses incurred in connection with the
negotiation and execution of this Agreement and the transactions contemplated
hereby (including executing all such documents and doing such acts and things
as may reasonably be required for the purpose of giving full effect to this
Agreement).
11.15 WAIVER. Any term or condition of this Agreement may be waived
at any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the Party waiving such term or condition. No
waiver by any Party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or
18
<PAGE> 20
condition of this agreement on any future occasion. All remedies, either under
this Agreement or by law or otherwise afforded, will be cumulative and not
alternative.
11.16 BINDING. This Agreement is binding upon, inures to the
benefit of and is enforceable by the Parties hereto and their respective
permitted successors and assigns.
11.17 SPECIFIC PERFORMANCE. The obligations of the Parties under
Article 5 of this agreement are unique. If any Party should be in Default
under Article 5 of this Agreement, the Defaulting Party acknowledges that it
would be extremely impracticable to measure the resulting damages.
Accordingly, in addition to any other available rights or remedies, the
Non-Defaulting Party may sue inequity for specific performance and the
Defaulting Party expressly waives the defense that a remedy in damages would be
adequate.
11.18 REGULATORY COMPLIANCE. Notwithstanding any provision in this
Agreement to the contrary, NextWave shall not be obligated to furnish COMPANY
with Full Mobility Services under rates, charges, temrs or conditions, that
violate any applicable provisions of the Communications Act of 1934, as
amended, the applicable rules, regulations or policies of the FCC or any other
federal or state agency with jurisdiction over NextWave's services.
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<PAGE> 21
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective and delivered as of the date set forth below.
UNITED CALLING NETWORK INC., NEXTWAVE WIRELESS INC.,
A CALIFORNIA CORPORATION A DELAWARE CORPORATION
Date: October 11, 1996 Date: October 11, 1996
-------------------------- --------------------------
/s/ PHILLIP VAN MILLER /s/ JAMES MADSEN
- -------------------------------- --------------------------------
(Signature) (Signature)
By: Phillip Van Miller By: James Madsen
--------------------------- ----------------------------
Title: C.E.O. Title: Senior VP Business Development
------------------------- -------------------------
20
<PAGE> 22
ATTACHMENT A
NextWave's Network Elements and Functionality
The following are the network elements and functionality NextWave will make
available, to the extent practicable and pursuant to pricing specified in the
Agreement, in each PCS market either directly or indirectly through a third
party:
a.) ADVANCED INTELLIGENT NETWORK ("AIN") PLATFORM. The AIN
platform is the platform from which COMPANY will store and offer its and
customers all of their non-switched based vertical services. As an option, when
available NextWave may provide its AIN platform.
b.) THIRD PARTY INTERCONNECTION ACCESS. The physical
interconnection to the Public Switching Telephone Network ("PSTN"). The
responsibility for the associated monthly and usage-sensitive costs for such
circuits carrying COMPANY's customers' mobile-to-landline and landline-to-mobile
traffic to and from NextWave's network is COMPANY's.
c.) BACKHAUL INTERCONNECTION. In BTA markets where COMPANY is a
local access provider of facilities, COMPANY will make available to NextWave
standard T1 and T3 facilities at COMPANY's most favorable rate for like terms,
quantities, and conditions. These facilities may be used by NextWave for
switch-to-base station, switch-to-base station controller, base station-to-base
controller and switch-to-switch connections.
d.) SS-7 BACKBONE. The SS-7 signaling backbone network carrying
standard IS-41 message sets between NextWave's network and COMPANY's HLR
database access.
e.) FCC LICENSE TO PROVIDE PCS. The Federal Communications
Commission's ("FCC") license to provide Personal Communication Service ("PCS")
in the markets of interest.
f.) RADIO COVERAGE AND ACCESS. The deployment of competitive
coverage at a predetermined and mutually agreed to minimum level/grade of PCS
access service.
g.) MOBILE SWITCHING CENTER. The switching capability to
provide the end customer with the proper mobility and roaming capability. AIN
software for standard IS-41 interconnection to COMPANY's AIN platform and PSTN
interconnection.
h.) SWITCH-BASED VERTICAL SERVICES. These end customer
vertical software services provided at the Mobile Switching Center for example,
but not limited to, Call Waiting, Call Forwarding, Three-Way Calling, and Caller
ID.
i.) LOCAL WIRELESS OPERATIONS AND MANAGEMENT OF THE NETWORK.
NextWave will design, engineer, construct, and maintain the PCS network in each
BTA and maintain a minimum service availability level.
<PAGE> 23
ATTACHMENT B
NextWave's PCS Markets
<TABLE>
<CAPTION>
- --------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
COLONIAL REGION LONE STAR REGION OHIO VALLEY REGION
Boston, MA Austin, TX Cincinnati, OH
Manchester/Nashua, NH Bryan-College Station, TX Columbus, OH
New London, CT Houston, TX Dayton, OH
Portland/Brunswick, ME San Antonio, TX
Providence, RI Temple-Killeen, TX
Worcester, MA HOOSIER REGION
Bloomington, IN
AMIGO REGION Columbus, IN
HOLLYWOOD REGION Brownsville, TX Evansville, IN
Los Angeles, California El Paso, TX Indianapolis, IN
Las Cruces, NM Lafayette, IN
McAllen, TX
DOLPHIN REGION
San Diego, California SOONER REGION
NY-METRO REGION Oklahoma City, OK
Albany, NY
Allentown, PA
CAPITAL REGION New Haven, CT THOROUGHBRED REGION
Baltimore, MD Poughkeepsie, NY Lexington, KY
Hagerstown, MD Scranton, PA Louisville, KY
Norfolk, VA
Richmond, VA
Washington, DC BIG APPLE REGION TWIN CITIES REGION
NYC BTA Minneapolis, MN
GREENGRASS REGION
Asheville, NC STEELER REGION ROCKY MOUNTAIN REGION
Charlotte, NC Pittsburgh, PA Denver
Greensboro, NC
Hickory, NC
Roanoke, VA SUNSHINE REGION PACIFIC NORTHWEST REGION
Gainsville, FL Bellingham, WA
Jacksonville, FL Longview, WA
MID. AMERICA Lakeland-Winter Haven, FL Olympia, WA
Joplin, MO Melbourne, FL Portland, OR
Kansas City, MO Orlando, FL Seattle, WA
Springfield, MO Sarasota, FL
Tampa, FL
BUCKEYE REGION
Cleveland, OH
- --------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
<PAGE> 24
ATTACHMENT C
PRICING SCHEDULE
*_________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________.*
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 25
ATTACHMENT D
SYSTEM PERFORMANCE CRITERIA
1.1 COVERAGE AREA
The Coverage Area shall be that minimal signal strength necessary to provide
service such that calls are successful *______* of the time averaged along the
Coverage Area boundary, irrespective of the direction of the call (land-mobile,
mobile-land) with no greater than *_____* frame error rate (FER) on average.
1.2 HANDSET COMPATIBILITY
NextWave shall demonstrate the full compatibility of its network with handsets
of COMPANY's choice that have been certified as compliant with domestic PCS
interface standards, so long as these handsets have been demonstrated to be
fully compatible with one other domestic IS-95 (CDMA) compliant 1.9 GHz network
and certified as IS-95, 1.9 GHz compliant by recognized standard or
certification bodies.
1.3 NETWORK CALL BLOCKAGE/QUALITY OBJECTIVES
The following considerations are required concerning network call blockage:
- - Average busy hour blockage within the NextWave network will not exceed
*_____* of all call attempts.
- - The above values are to be met, unless superseded by necessary regulatory
mandates.
- - Emergency calls should be given the highest possible resource priority.
1.4 DROPPED CALLS
The number of dropped calls measured over a period of a month in a Coverage
Area shall not exceed *_____* of the total number of subscriber calls originated
in that Coverage Area.
1.5 NETWORK AVAILABILITY
NextWave will engineer and manage its network to meet the above service and
quality levels established for the Coverage Area. The emphasis of management
activities will be on preventative maintenance, such that potential outages will
be resolved before customers are affected.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 26
A Network Outage is the inability, or a significant degradation in the ability
of a customer to establish and maintain a channel of communication as a result
of failure or degradation in the performance of NextWave's network.
In the event of a major network outage, NextWave will notify COMPANY of the
conditions affecting the customers, including, but not limited to out-of-service
events, and high system traffic loads.
Any FCC-reportable Network Outages, including disruption of 911/E911 and
emergency services will be reported to COMPANY.
1.6 PERFORMANCE VERIFICATION
NextWave will provide to the COMPANY quarterly statistics that define the
performance of the network including blocked calls, dropped calls, and frame
error rates. In addition, NextWave will provide coverage maps that define the
Coverage Area.
<PAGE> 27
ATTACHMENT E
TECHNICAL STANDARDS
NextWave shall be in general compliance with the following standards:
I. WIRELESS NETWORK INTERFACE STANDARDS
A. IS-41REV B CELLULAR RADIO TELECOMMUNICATIONS INTERSYSTEM OPERATIONS
NextWave's Network shall be in general compliance with IS-41 Revision B. This
shall be upgraded to be in general compliance with IS-41 Revision C when IS-41
Revision C is commercially available.
B. EIA/TIA/IS-52: UNIFORM DIALING PROCEDURES AND CALL PROCESSING
TREATMENT FOR CELLULAR RADIO TELECOMMUNICATIONS - NOVEMBER, 1989
C. EIA/TIA/IS-52-A: UNIFORM DIALING PROCEDURES AND CALL PROCESSING
TREATMENT FOR CELLULAR RADIO TELECOMMUNICATIONS - WHEN PUBLISHED
D. EIA/TIA/IS-53: CELLULAR FEATURES DESCRIPTION: - AUGUST, 1991
E. EIA/TIA/IS-53-A: CELLULAR FEATURES DESCRIPTION: - MAY, 1995
F. EIA/TIA/IS-93: CELLULAR RADIO TELECOMMUNICATIONS A-D INTERFACE
STANDARDS - OCTOBER, 1993.
II. SS7 INTERFACE STANDARDS
A. TR-NWT-000246: BELL COMMUNICATIONS RESEARCH SPECIFICATION OF SIGNALING
SYSTEM NUMBER 7, ISSUE 3
B. TR-NWT-000082: SIGNALING TRANSFER POINT GENERIC REQUIREMENTS, ISSUE 5
C. TR-TSY-000317: SWITCHING SYSTEM REQUIREMENTS FOR CALL CONTROL USING
THE INTEGRATED SERVICES DIGITAL NETWORK USER PART (ISDNUP)
D. TR-TSY-000394: SWITCHING SYSTEM REQUIREMENTS FOR INTERCHANGE
CARRIERS USING THE INTEGRATED SERVICES DIGITAL NETWORK USER PART
(ISDNUP)
E. TR-NWT-000444: SWITCHING SYSTEM GENERIC REQUIREMENTS SUPPORTING
ISDN ACCESS USING THE INTEGRATED SERVICES DIGITAL NETWORK USER PART
(ISDNUP)
F. ANSI T1.114 SS7 TRANSACTION CAPABILITIES APPLICATION PART (TCAP)
<PAGE> 28
G. ANSI T1.112: SS7 SIGNALING CONNECTION CONTROL PART (SCCP)
H. ANSI T1.111: SS7 MESSAGE TRANSFER PART (MTP)
III. AIR INTERFACE STANDARDS
A. ANSI-J-STD-008: PERSONAL STATION -BASE STATION COMPATIBILITY
REQUIREMENTS FOR 1.8 TO 2.0 GHZ CDMA PERSONAL COMMUNICATIONS SYSTEMS.
<PAGE> 1
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.38
NEXTWAVE RESALE AGREEMENT
WITH
PERSONAL COMMUNICATIONS NETWORK, INC.
<PAGE> 2
NEXTWAVE RESALE AGREEMENT
This PCS ("Personal Communications Services") Resale Agreement
("Agreement") is entered into and is in effect as of October 29, 1996, by and
between NEXTWAVE WIRELESS INC. and its Affiliates, a Delaware corporation, with
principal offices located at 9455 Towne Centre Drive, San Diego, California
92121 ("NEXTWAVE") and PERSONAL COMMUNICATIONS NETWORK, INC and its Affiliates,
a Delaware corporation, with principal offices located at 10 Plog Road,
Fairfield, NJ 07004 ("COMPANY") and the terms of which are contained herein.
A. NextWave Personal Communications Inc. ("NextWave PCI") is a
wholly owned subsidiary of NextWave Telecom Inc. a Delaware corporation.
NextWave PCI was formed to participate in the Federal Communications
Commission's ("FCC's") PCS auctions;
B. NextWave is a wholly owned subsidiary of NextWave Telecom Inc.
organized to construct facilities, deploy PCS network equipment, and provide
PCS in the licensed markets.
C. NextWave PCI has successfully bid for 63 licenses covering
approximately 110 million POPs (based on current census data) in various
markets across the United States (see ATTACHMENT B).
D. NextWave intends to construct facilities, deploy PCS network
equipment and provide PCS in those licensed markets.
E. Subject to the terms and conditions set forth herein, in the
PCS markets awarded to NextWave in the C-block auction and any other PCS
markets NextWave is awarded in the FCC's D, E, and F-block auctions, COMPANY
desires to purchase PCS minutes of use ("MOUs") on a resale basis from NextWave
pursuant to a ten (10) year commitment by COMPANY to purchase digital wireless
voice services from NextWave in all markets where COMPANY desires to resell
digital wireless voice services where NextWave provides service. NextWave
desires to sell PCS minutes of use to COMPANY for resale in those markets under
a single 24-hour flat rate service, excluding interconnection charges with no
access fee based upon COMPANY's advance commitment to purchase minutes of use.
COMPANY will be responsible to provide customer acquisition (i.e., sales,
marketing, advertising and customer activation), billing, collections, customer
service/care, customer retention, handset fulfillment and any other services
required to acquire and retain retail customers.
THEREFORE, in consideration of the foregoing, and of the mutual
covenants and agreements hereinafter set forth, NextWave and COMPANY agree as
follows:
1. DEFINITIONS.
(a) AFFILIATE means, with respect to any party, any person,
corporation or other legal entity that, directly or indirectly, controls, is
controlled by or is under common control with such
1
<PAGE> 3
party. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), means the possession, directly or indirectly, of the power (i) to vote
securities having ordinary voting power sufficient to elect a majority of the
directors of such party or (ii) to direct or cause the direction of the
management and policies (including investment policies) of that party, whether
by contract or otherwise.
Presently, NextWave's Affiliates consist of: NextWave Telecom Inc., NextWave
PCI, NextWave Partners, NextWave Power Partners, and TELE*code.
Presently, COMPANY's Affiliates consist of: Electronics Communications Corp.,
Electrocomm Wireless, Inc., Threshold Communications, Inc., and General Towers
of America, Inc.
(b) FULL MOBILITY SERVICE means the provision of digital wireless
voice airtime with mobile inter-cell (base station) hand-off capability.
(c) LICENSES means PCS licenses held by NextWave.
(d) PCS AUCTIONS means the auction conducted by the FCC to assign
licenses to the successful bidders for 120 MHz of spectrum as broadband PCS
licenses in the 1850-1990 MHz band. The PCS band has been sub-divided into
three 30 MHz blocks (blocks A, B, and C) and three 10 MHz blocks (blocks D, E
and F). The FCC has allocated a portion of the broadband PCS spectrum (blocks
C and F) to certain entities called "Entrepreneurs". The FCC completed the
C-block auction in July, 1996. Together these two blocks make up the
"Entrepreneurs' Band".
(e) MINUTE OF USE ("MOU") means the particular use interval
provided by NextWave for digital mobile voice service for resale to end-users
and is measured from time of seizure of a control channel to the time of
release of the channel on NextWave's network.
(f) BASE MOU PRICE means NextWave's MOU price prior to any
discounts. Usage is billed in 60 second intervals and partial minutes are
rounded up to the next full minute.
(g) BTA (Basic Trading Area) means a particular market boundary as
defined by Rand McNally & Company and the FCC.
(h) ROAMING AGREEMENTS means any agreement whereby NextWave or its
Affiliates has the ability to purchase airtime from, interconnect with and/or
use the wireless network facilities of another operator of a wireless network.
(i) TERM has the meaning set forth in ARTICLE 9.
(j) TRANSFER OF CONTROL AND OWNERSHIP shall mean the completion of
any transaction where upon the holder of COMPANY's outstanding voting
securities immediately prior to the transaction either (i) own less than fifty
(50) percent of COMPANY's outstanding voting securities immediately after the
completion of the transaction, or (ii) transfer a number of the
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<PAGE> 4
outstanding voting securities of the COMPANY sufficient to permit the acquiring
party to elect a majority of the board of directors of the COMPANY.
2. PROVISION OF AIRTIME.
2.1 PROVISION OF SERVICES. NextWave shall sell Full Mobility
Services to COMPANY in each BTA for which NextWave or any of its Affiliates is
awarded or otherwise obtains a License, or enters into a Roaming Agreement.
2.2 SERVICES DESCRIPTION. Full Mobility Services shall involve
the establishment and maintenance of wireless circuits for the continuous
transmission of digital voice signals.
2.3 COMPANY FORECAST. Ninety (90) days prior to the offering of
commercial Full Mobility Service in any BTA, as communicated to COMPANY by
NextWave at least One Hundred and Twenty-Days (120) prior to the offering of
such commercial Service, COMPANY will provide NextWave with a forecast of
anticipated Full Mobility Service requirements for that BTA for the remainder
of the calendar year. COMPANY will provide NextWave with quarterly updates to
its initial and annual forecasts.
2.4 NETWORK FEATURE FUNCTIONALITY. As practicable, NextWave is
committed to maintain its infrastructure with the most recent commercial
releases of vendor software available that implements the standards and
protocols described in the J-STD-008 air interface and associated standards as
detailed in ATTACHMENT E, and new feature functionality that operates with such
standards and protocols. For those capabilities that affect end users or
subscribers, NextWave will share with COMPANY its timeline and schedule of
infrastructure upgrades as they become available.
2.5 ROAMING ARRANGEMENTS. NextWave will make reasonable efforts
to negotiate favorable roaming agreements and rates with other wireless
licensees in the United States, and wireless operators in Canada, Mexico, and
other countries that may provide for roaming from PCS networks in the United
States for traffic to and from each other's wireless licensed markets.
NextWave will make available rapid roaming clearing capabilities through, at
NextWave's sole discretion, either a direct interface to other networks with
which it has roaming arrangements or via industry clearing houses.
2.6 INTERCONNECTION.
(a) LEC INTERCONNECTION. NextWave has the responsibility to
negotiate interconnect agreements with local carriers. COMPANY and NextWave
agree on the need to minimize interconnect charges for MOUs originating and
terminating on NextWave's network. NextWave will continue its efforts to
influence lower interconnect rates through the regulatory agencies and
processes. MOU pricing is exclusive of interconnection fees for both
originating and terminating traffic from and to non-NextWave networks, which
shall be charged to COMPANY at the negotiated base rate.
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<PAGE> 5
If COMPANY elects facilities-based resale, it will be responsible for
the fixed and recurring costs of providing, operating, and maintaining the
circuits between NextWave's and COMPANY's switches and between COMPANY's switch
and the Public Switched Telephone Network ("PSTN").
(b) IXC INTERCONNECTION. NextWave intends to interconnect with the
major interexchange carriers (e.g., AT&T, MCI, Sprint) via trunk connections
with their points of presence at the expense of the IXC. Similarly, as COMPANY
requires, NextWave will use reasonable efforts to interconnect with other long
distance services under similar conditions. NextWave's price for MOUs includes
origination for direct interconnection with IXCs for mobile-to-land calls to
the extent that the costs of such interconnection are borne by the IXC. If the
IXC does not bear the cost of such interconnection or if direct interconnection
with the IXC is not feasible or practicable, then any interconnection charges
shall be borne by COMPANY on a pass-through basis.
If COMPANY elects facilities-based resale, it will be responsible for
the fixed and recurring costs of providing, operating, and maintaining the
circuits between NextWave's and COMPANY's switches and between COMPANY's switch
and the PSTN.
2.7 NUMBER OWNERSHIP.
(a) PURCHASE AND ALLOCATION OF NUMBERS. COMPANY shall obtain
numbers ("Numbers") from North American Numbering Plan Administration ("NANPA")
for activation by NextWave on the Network. In the event COMPANY is not
authorized or is otherwise unable to obtain Numbers, NextWave shall obtain
Numbers, in entire block increments, on a pass-through cost basis. In the
event there is a shortage of Numbers and an allocation of Number blocks is
required, NextWave may allocate Number blocks pro rata among its airtime
customers based on the relative number of subscribers.
(b) NUMBER TRANSFERS. COMPANY will pay a nominal fee for the
engineering and administrative charges associated with the moving of COMPANY's
numbers to another network. COMPANY will be charged a comparable rate to other
carriers' rates and industry practices, a standard rate per number and all
non-recurring charges associated with forwarding COMPANY's traffic to any
number on a non-NextWave network. In the event the governing agencies mandate
number portability, NextWave will support, in a timely manner, the guidelines
specified in the ruling.
(c) TRANSFER SUPPORT. NextWave will support COMPANY's move of the
numbers to the new wireless network, for a nominal charge, ensuring proper
addressing and recording for the Local Exchange Routing Guide ("LERG").
2.8 RESELLER SWITCH INTERFACE.
(a) NON-FACILITIES BASED. NextWave will make available to
COMPANY, at a mutually agreed upon fee, access to customer care capabilities
including, but not limited to, home location register services (i.e., customer
profile management and customer features service
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<PAGE> 6
management), authentication, and if practicable, call detail recording ("CDR")
access. COMPANY will be responsible for providing personnel and all other
resources required to deliver customer care services to COMPANY's subscribers.
(b) FACILITIES-BASED. NextWave will make available a T1/T3
interface to a COMPANY owned and operated switch for the delivery of COMPANY's
calls to and from the PSTN. COMPANY's numbers must be activated on NextWave's
switch to allow NextWave to properly provide mobility to those customers. The
demarcation point will be at NextWave's switch and COMPANY will be responsible
for the provisioning and costs, both recurring and non-recurring, of all
circuits between COMPANY's switch and demarcation point at NextWave's switch.
If COMPANY desires, NextWave will engineer and maintain these circuits at a
mutually agreed fee.
2.9 SERVICE ACTIVATIONS, DE-ACTIVATIONS AND CHARGES.
(a) SERVICE ACTIVATION PLATFORM. NextWave will offer COMPANY a
direct datalink interface to NextWave's service activation platform to allow
COMPANY an automated mechanism to perform customer on-line activations,
de-activations, and service change orders. NextWave reserves the right to set
the interface standard for connections to its service activation platform.
NextWave's service activation platform will collect COMPANY service orders,
format the requests, and download them into NextWave's switches and appropriate
sub-systems in as near real time as practicable. COMPANY will be responsible
for all of the costs associated with providing and maintaining its own on-site
computer terminal, software and modem/datalink connection.
(b) NUMBER REMOVAL CHARGES. COMPANY's service activation for each
customer is free of any activation fee as long as COMPANY purchases its PCS
numbers directly from NANPA. COMPANY will be charged a $10 removal fee for
those situations when a number is removed from a NextWave switch. The fee is
required to cover administrative expenses. In the event the governing agencies
mandate number portability, NextWave will support, in a timely manner, the
guidelines specified in the ruling.
2.10 HANDSET SOURCING AND FULFILLMENT.
(a) VOLUME PURCHASE ORDERS AND DELIVERY. If COMPANY desires,
NextWave, through its association with specific strategic partners and
suppliers, will use reasonable efforts to allow COMPANY to participate in any
NextWave volume purchase arrangements. NextWave will make arrangements for the
ordering of the handsets and accessories and the equipment will be drop shipped
by the manufacturer to COMPANY. COMPANY and supplier will be responsible for
making, shipping, delivery and payment arrangements.
(b) PRICING AND THIRD PARTY EQUIPMENT. Pricing of the services in
(a) above is not available at this time, but will be determined and shared with
COMPANY in advance of NextWave's commercial service introduction. Further,
COMPANY is free to purchase any licensed subscriber equipment directly from
equipment manufacturers as long as purchased
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subscriber equipment is in full compliance with the established TIA, CTIA and
NextWave's network air-interface and performance standards.
2.11 ENHANCED SERVICES.
(a) COMPANY PROVIDED SERVICES. NextWave will offer COMPANY the
opportunity to provide its own enhanced services platform. If COMPANY desires
to provide additional vertical services to its customers through its own or
through a third-party's enhanced services platform and if such addition to
NextWave's network is practicable, COMPANY and NextWave will make reasonable
efforts to jointly develop and mutually agree to the technical procedures and
lockdown requirements to properly test the service prior to its introduction on
the NextWave network. NextWave reserves its right to set its interface
standard for any connections to NextWave's switches. Engineering and set-up
fees for such service configurations will be determined on a case-by-case basis
and mutually agreed-to prior to service introduction. The interconnection to
COMPANY's enhanced services platform will be based upon NextWave's standard
interface. The demarcation point will be at NextWave's switch. COMPANY will
be responsible for all of the recurring and non-recurring interconnection costs
associated with providing and maintaining the connection to COMPANY's enhanced
services platform. Hardware, software and tangible resources (i.e., switching,
processing or storage of data) on NextWave's master switching center and
network that are required to support features and functionality provided by
COMPANY's enhanced services platform shall be made available by NextWave, to
the extent practicable, at prices based on NextWave's reasonable, direct and
allocable expenses relating to such hardware, software or tangible resources
utilization.
(b) NEXTWAVE PROVIDED SERVICES. NextWave plans to offer a family
of enhanced services which may include voice mail, enhanced voice (with
out-dial-to-a-pager capability), short messaging, custom calling features
(i.e., call waiting, three-way calling, call forwarding, no answer transfer,
etc.), single number service, fax store and forward, e-mail, star features and
information services. These services will be offered to COMPANY on an
individual and/or package basis on terms to be agreed upon.
(c) ENHANCED SERVICES PRICING. The parties agree that service
features, enhanced services, and their associated pricing must be competitive.
Pricing for NextWave's features and enhanced services will be competitive with
prevailing retail pricing. NextWave will price services either individually or
provide bulk pricing for global feature activation in a market. NextWave
recognizes that switch-based features and enhanced services will increasingly
be packaged at retail with airtime and become a "tablestakes" for the business.
Prior to commercial availability, the parties agree to develop a plan for
enhanced services to identify COMPANY's needs, refine NextWave implementation
approaches that might include use of COMPANY AIN platforms, and agree on
wholesale pricing for such services. For situations where COMPANY purchases
enhanced services from NextWave and subsequently migrates to another enhanced
services platform, the parties will develop a plan to minimize COMPANY's
subscriber churn and to recover NextWave's capital investment.
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2.12 NETWORK SERVICE TRAINING AND TROUBLE REPORTING.
(a) SCOPE OF SERVICES. NextWave will provide COMPANY network
service training and documentation prior to COMPANY's introduction of any
NextWave enhanced services offering in any market. Scheduling for such
training will be mutually agreed upon by both parties.
(b) NOTIFICATION OF SERVICE. NextWave will promptly notify
COMPANY's customer care department or COMPANY's assigned point of contact of
service enhancements, network expansions, and major services outages. NextWave
and COMPANY will mutually agree to the notification procedures prior to
NextWave's commercial service offering. Additionally, NextWave will routinely
provide COMPANY with updated NextWave service maps as service is expanded.
2.13 NETWORK ACCESS TO LOCAL CUSTOMER CARE. NextWave, at no cost to
COMPANY, will provide COMPANY with one (1) customer care "star feature" (e.g.,
*CARE) that will directly connect COMPANY's customer to COMPANY's local
customer care center. COMPANY will be responsible for any network access
charges related to interconnection and transport of such calls from NextWave's
switches to COMPANY's customer care center. For the situation where these star
feature customer service calls originate in a roaming market and are routed
directly to COMPANY's customer care center, COMPANY will be responsible for
local network interconnection and transport charges.
3. PURCHASE COMMITMENT.
3.1 Subject to the terms and conditions hereof, NextWave agrees to
provide Full Mobility Service MOUs for resale and COMPANY agrees to purchase on
a take-or-pay basis from NextWave a minimum of Five Billion (5,000,000,000)
minutes of Full Mobility Service during the Term in all of the BTAs in which
NextWave has a license (the "Commitment").
3.2 Subject to the quality provisions detailed in ATTACHMENTS D
AND E and NextWave's build out conditions detailed in SECTION 11.3, COMPANY
shall purchase at least 5% of its Commitment within the three (3) year period
following the date NextWave first offers Full Mobility Service on a commercial
basis in a NextWave BTA ("Commercial Service Date") and 25% of its Commitment
within the five (5) year period following the Commercial Service Date.
In the event COMPANY fails to satisfy the Initial Purchase Commitment by the
third anniversary of the Commercial Service Date (the "Third Anniversary
Date"), COMPANY shall remit to NextWave, within five (5) business days thereof,
an amount in cash equal to the difference between the Initial Purchase
Commitment and the actual number of minutes of Full Mobility Service purchased
by COMPANY prior to the Third Anniversary Date multiplied by the then
applicable purchase price per minute being charged to COMPANY in accordance
with SECTION 4.1 hereof.
In the event COMPANY fails to satisfy the Secondary Purchase Commitment by the
fifth anniversary of the Commercial Service Date (the "Fifth Anniversary
Date"), COMPANY shall
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remit to NextWave, within five (5) business days thereof, an amount in cash
equal to the difference between the Secondary Purchase Commitment and the
actual number of minutes of Full Mobility Service purchased by COMPANY prior to
the Fifth Anniversary Date multiplied by the then applicable purchase price per
minute being charged to COMPANY in accordance with SECTION 4.1 hereof.
In the event COMPANY fails to purchase one hundred percent (100%) of
the Commitment prior to the tenth anniversary of the Commercial Service Date
(the "Tenth Anniversary Date"), COMPANY shall remit to NextWave, within five
(5) business days thereof, an amount in cash equal to the difference between
the Commitment and the actual number of minutes of Full Mobility Service
purchased by COMPANY prior to the Tenth Anniversary Date multiplied by the then
applicable purchase price per minute being charged to COMPANY in accordance
with SECTION 4.1 hereof.
3.3 In addition to the amount of any purchase price to be paid by
COMPANY under this Agreement, COMPANY agrees to pay to NextWave, and NextWave
will in turn regularly remit to a third party escrow agent designated by
NextWave, the amount of two cents ($0.02) per minute (the "Escrow Payment") for
the first Four Billion (4,000,000,000) minutes used by COMPANY under this
Agreement to ensure the purchase of the full Commitment by COMPANY. NextWave
will include such Escrow Payment on its regular invoices to COMPANY for
billable MOUs. If and when COMPANY purchases and NextWave receives all
payments for the full Commitment, then the aggregate amount of the Escrow
Payments in escrow, together with accrued interest, if any, less the reasonable
costs of the escrow agent, shall be promptly returned to COMPANY. If COMPANY
fails to purchase the full Commitment within the time required by this
Agreement, or if this Agreement expires or is otherwise terminated (other than
for the convenience of or breach by NextWave) prior to COMPANY's purchase of
the full Commitment, then the aggregate amount of the Escrow Payment held in
escrow, together with accrued interest, if any, shall be permanently retained
by NextWave. Nothing contained herein shall release COMPANY from its
obligations under SECTION 3.2 of this Agreement nor shall it limit NextWave's
remedies, rights or relief under this Agreement or at law or equity.
4. PRICING AND PAYMENT TERMS.
4.1 FULL MOBILITY PRICING. Pricing for Full Mobility Service,
measured in one minute increments, for each BTA will be as set forth for in the
Pricing Schedule attached hereto as ATTACHMENT C. NextWave's pricing
illustrated in ATTACHMENT C is exclusive of the interconnection fees and
enhanced services that are listed in ARTICLE 9.
4.2 RESALE TO FACILITIES-BASED CARRIERS. If COMPANY resells Full
Mobility Service to facilities-based carriers and in connection therewith
requires NextWave to implement a PIC/CIC code, then COMPANY shall pay NextWave
an additional fee of *______* per minute of Full Mobility Service sold to each
such carrier of management of PIC/CIC and associated databases.
* CONFIDENTIAL TREATMENT REQUESTED
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4.3 ROAMING AGREEMENTS. Pricing for Full Mobility Service provided
pursuant to a Roaming Agreement will be the greater of (i) the Full Mobility
Service price set forth in the Pricing Schedule in ATTACHMENT C or (ii)
NextWave's incremental cost of usage under the Reciprocal Agreement plus
*_____* per minute.
4.4 WIRELESS LOCAL LOOP SERVICES. The Parties also desire to
enter into an arrangement in the future whereby NextWave would provide COMPANY
with a wireless local loop service ("Wireless Local Loop") which would be a
premises based wireless communication service similar in application to today's
narrowband wireline service offerings. The Parties intend to negotiate in good
faith the terms and conditions including, but not limited to the performance
specifications and pricing of the Wireless Local Loop service sometime following
the execution of this Airtime Agreement. Any MOUs committed or used under this
Agreement are for Full Mobility Service only. Wireless Local Loop MOUs will
require a separate commitment and will be priced separately from this Agreement.
4.5 E911 SERVICE. Emergency (911 and E911) and Lawful Intercept
calls will be handled by NextWave, unless otherwise required by regulatory
authorities. Each airtime invoice shall include a monthly charge (calculated on
a per subscriber basis in the maximum amount allowed by applicable regulatory
authority), for the provision of Emergency and Lawful Intercept services.
COMPANY shall pay such charges within the timeframe specified for payment of
Full Mobility Services. If regulatory authorities subsequently change the
requirements for Emergency or Lawful Intercept calls or mandate the provision of
other services, the parties shall cooperate in the provision of such services
with associated fees and charges to be handled in a similar manner to the
Emergency and Lawful Intercept Services.
4.6 INVOICES.
(a) NextWave will offer COMPANY either (i) a datalink interface to
electronically deliver COMPANY's monthly billing data or (ii) a magnetic tape
version of the same. Magnetic billing tapes are NextWave's standard means of
delivering COMPANY's billing data. If COMPANY desires a datalink interface,
COMPANY will be responsible for all costs of providing and maintaining the
datalink.
(b) NextWave's billing data to COMPANY will include the customer's
mobile number, electronic serial number and peak/off-peak indicators, dialed
number, originating and terminating call site identification, and/or time
stamps on a call-by-call basis.
(c) If COMPANY desires its billing data transferred in shorter
intervals other than monthly (i.e., bi-monthly, etc.), NextWave and COMPANY
will negotiate in good faith, the terms and conditions of providing billing
data in shorter intervals.
(d) NextWave will offer multiple billing cycles from which COMPANY
can choose to allow COMPANY flexibility as to when it will be billed. COMPANY
must formally request
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* CONFIDENTIAL TREATMENT REQUESTED
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its selected billing cycle in writing (or by some mutually agreed to means).
Absent a formal request, NextWave will assign COMPANY a billing cycle.
(e) Invoices are payable in full upon receipt. Each invoice will
contain a Due Date. Such Due Date will be calculated based on the date the
bills are generated plus 30 days. If payment is not received by the Due Date,
then a Late Payment Penalty equal to 1.5% of the balance due will be assessed.
Additionally, a Late Payment Charge equal to 0.06% of the unpaid past due
balance will be assessed for each day that payment is not received.
(f) At NextWave's sole discretion, service may be restricted or
interrupted if payment of any undisputed past due amount is not made within ten
days after the Due Date.
(g) At NextWave's sole discretion, an additional security deposit
or letter of credit may be assessed if COMPANY incurs a Late Payment Penalty
more than once in any six month period.
(h) If NextWave commences legal proceedings to collect any
undisputed past due amount, COMPANY will be liable for all charges (including,
without limitation, collection costs, court costs and attorney's fees)
reasonably incurred by NextWave in enforcing its rights hereunder.
4.7 DISPUTED CHARGES. COMPANY shall provide NextWave with written
notice of any disputed charges on or before the Due Date of such charges. Any
disputed charges will be handled under the dispute resolution process described
in ARTICLE 8 herein. If a disputed amount is not resolved within twenty (20)
days after the Due Date or if either party seeks resolution in accordance with
SECTION 8.2, then the disputed amounts shall be placed into an escrow account
pending resolution. Failure to place such amounts in an escrow account will
result in such amounts being treated as undisputed past due amounts. Any
earned interest accrued on these amounts will pass to the party being awarded
the disputed amounts. If the disputed amounts are shared in any manner between
the parties, the accrued interest will be shared in the same proportion as the
disputed amounts. Any Late Payment Penalties or Late Payment Charges incurred
as a result of past due amounts that are ultimately credited to the COMPANY
will be reversed.
4.8 TAXES AND SURCHARGES. The prices paid by COMPANY for MOUs are
exclusive of any applicable sales, use, personal property or other taxes or
surcharges attributable to periods during the Term based upon or measured by
the MOUs and any associated services provided or used by NextWave in performing
its obligations under this Agreement. COMPANY shall reimburse NextWave on a
pass-through basis for those taxes paid by NextWave that are attributable to
COMPANY pursuant to this SECTION 4.8. Each party shall provide and make
available to the other any resale certificates, information regarding
out-of-state sales or use of equipment, materials or services, and other
exemption certificates or information reasonably requested by the other party.
The parties will also work together to segregate into separate payment streams,
any taxable, nontaxable or items for which a sales, use or similar tax has
already been paid by NextWave.
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4.9 RETAIL BAD DEBT AND FRAUD RESPONSIBILITY; DETECTION AND
PREVENTION.
(a) RETAIL BAD DEBT AND SUBSCRIPTION FRAUD. Retail bad debt and
fraudulent usage as a result of subscription fraud is COMPANY's sole
responsibility. COMPANY will be responsible for all originating and
terminating fees, long distance and roaming charges, and MOUs used on
NextWave's network incurred from retail bad debt and subscription fraud.
(b) CLONING FRAUD. NextWave will make reasonable efforts to limit or
eliminate cloning fraud on its network. NextWave's development of CDMA
technology and its "coding of each call" is anticipated to reduce exposure to
cloning fraud. Additionally, NextWave will make reasonable efforts to deploy
systems to monitor usage patterns, traffic patterns and the like to detect
potential cloning fraudulent use on a number. Upon detection of suspected
cloning activity, NextWave will notify COMPANY to investigate the number
further and take proper action. COMPANY will have 24 hours to substantiate the
customer's usage or to suspend service or change the mobile number/serial
number combination to correct the situation. If COMPANY determines that
cloning fraud was committed, NextWave will credit COMPANY for the local Airtime
usage only deemed to be fraudulent and incurred prior to NextWave's notice to
COMPANY. In situations where the COMPANY identifies cloning fraud that
NextWave did not detect, the COMPANY may submit a request to NextWave for
credit for the local Airtime usage only deemed to be fraudulent. In either
case, the COMPANY must supply NextWave with reasonable evidence that cloning
fraud did in fact occur. COMPANY will be responsible for all other charges,
including but not limited to long distance, international, and roaming charges,
and for any costs incurred by the COMPANY associated with preventing, detecting
or correcting a cloning fraud occurrence. NextWave and COMPANY will work
together in good faith to curtail cloning fraud, and will follow
customer-industry practice for billing and crediting of fraudulent usage. In
the event that COMPANY, its employees or Affiliates were negligent in taking
reasonable measures to prevent cloning fraud, COMPANY will be responsible for
all charges and will not receive any credits from NextWave.
4.10 AUDITS OF FINANCIAL RECORDS. NextWave and COMPANY each shall
keep adequate books and records in sufficient detail to enable the amounts to
be paid under ARTICLE 4 of this Agreement. Each party shall be entitled to have
an accounting firm of national recognition reasonably acceptable to the other
party audit the relevant books and records of the other party for the purpose
of confirming the accuracy of the calculation of the amounts due under ARTICLE
4. The auditor will disclose to the reviewing party only the information
necessary to verify the calculation of the amounts due under ARTICLE 4 and not
any confidential information of the other party, including but not limited to
any customer lists of the other party. Any such audit shall be performed at the
requesting party's expense (except if such audit reveals an overcharge of more
than five percent (5%) of the correct amount due under ARTICLE 4, then such
audit shall be at the expense of the other party), during normal business hours
after reasonable notice and, at the request of the audited party, shall be
subject to the independent agent's execution of a reasonable confidentiality
agreement. Such audits shall be conducted no more frequently than once every
year. In no event may a party commence an inspection of any statement later
than two (2) years from the date of such statement. Prior to any inspection by
a party, the parties will in good faith
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meet, discuss and attempt to resolve any objection or discrepancy claimed by
the party requesting the audit.
5. CONFIDENTIALITY.
5.1 CONFIDENTIAL INFORMATION. By virtue of this Agreement, the
parties may have access to, or exchange, information that is confidential to
one another. As used in this Agreement, the term "Confidential Information"
shall mean only such information of the other party that may be reasonably
understood from legends, the nature of such information itself and/or the
circumstances of such information's disclosure, to be confidential and/or
proprietary to the other Party or to third-parties to which the other Party
owes a duty of non-disclosure. Notwithstanding the foregoing, NextWave agrees
that all of the following information which NextWave may receive or otherwise
obtain in the course of its performance under this Agreement, including without
limitation in the course of providing the Service, shall be deemed the
Confidential Information of COMPANY for purposes for this Agreement: (i)
COMPANY Subscriber lists and numbers, account information, usage, and
information regarding business planning and operations of COMPANY and COMPANY's
administrative, financial information, forecasts, predictions or marketing
reports or activities; (ii) all Subscriber and other customer information; and
(iii) COMPANY network and Intelligent Network capabilities, interconnection
arrangements, architecture, strategies, development and implementation plans,
and vendor relationships. Notwithstanding the foregoing, COMPANY agrees that
all of the following information which COMPANY may receive or otherwise obtain
in the course of its performance under this Agreement shall be deemed
Confidential Information of NextWave for purposes for this Agreement:
information concerning NextWave's Network, Network performance trials,
equipment requirements, Network system engineering and design specifications,
cell-site location planning strategies, Network usage and performance data,
development plans for its intelligent network and enhanced features and
services, financial, accounting or marketing reports, and business plans,
analyses, forecasts, and predictions.
5.2 RESTRICTIONS ON DISCLOSURE AND USE. Each of the Parties
agrees that as to any Confidential Information relating to one party
("Discloser") obtained in any manner by the other party ("Recipient")
hereunder:
(a) to use such Confidential Information only in the
performance of this Agreement or as otherwise expressly permitted by this
Agreement or by the Discloser;
(b) not to make copies of any such Confidential
Information or any part thereof except to the extent required to fulfill the
Party's obligations under this Agreement;
(c) not to disclose any such Confidential Information to
any third-party, using the same degree of care used to protect Recipient's own
confidential or proprietary information of like importance, but in any case
using no less than reasonable degree of care; provided, however, that Recipient
may disclose Confidential Information received hereunder to (i) its Affiliates
who are bound to protect the received Confidential Information from
unauthorized use and disclosure under the terms of a written agreement
(including without limitation a pre-existing
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written agreement), and (ii) its employees, consultants and agents, and it
Affiliates' employees, consultants and agents, who have a need to know to
perform or exercise rights under this Agreement, and who are bound to protect
the received Confidential Information from unauthorized use and disclosure
under the terms of a written agreement (including without limitation a
pre-existing written agreement). Confidential Information shall not otherwise
be disclosed to any third-party without the prior written consent of the
Discloser; and
(d) to return to the other party, or destroy, all of such
party's Confidential Information received hereunder, whether in any tangible
medium of expression or electronic or other form or format, promptly upon the
expiration or termination this Agreement.
5.3 EXCEPTIONS. The restrictions set forth in this Article 5 on
the use and disclosure of Confidential Information shall not apply to
information that:
(a) was publicly known at the time of Discloser's
communication thereof to Recipient;
(b) becomes publicly known through no fault of Recipient
subsequent to the time of Discloser's communication thereof to Recipient;
(c) is in Recipient's possession free of any obligation
of confidence at the time of Discloser's communication thereof to Recipient;
(d) is developed by Recipient independently of and
without use of any of Discloser's Confidential Information or other information
that Discloser disclosed in confidence to any third-party;
(e) is rightfully obtained by Recipient without
restriction from third-parties authorized to make such disclosure; or
(f) is identified by Discloser in writing as no longer
proprietary or confidential.
5.4 DISCLOSURE PURSUANT TO LEGAL REQUIREMENT. In the event
Recipient is required by law, regulation or court order to disclose any of
Discloser's Confidential Information, Recipient will promptly notify Discloser
in writing prior to making any such disclosure in order to facilitate Discloser
seeking a protective order or other appropriate remedy from the proper
authority. Recipient agrees to cooperate with Discloser in seeking such order
or other remedy. Recipient further agrees that if Discloser is not successful
in precluding the requesting legal body from requiring the disclosure of the
Confidential Information, it will furnish only that portion of the
Confidential Information which is legally required and will exercise all
reasonable efforts to obtain reliable assurances that confidential treatment
will be accorded the Confidential Information.
5.5 PUBLICITY. The Parties expressly agree that the terms and
conditions of this Agreement, and any activities contemplated hereby or
performed hereunder, are the Confidential
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Information of the Parties and shall not be disclosed in any manner without the
prior written approval of the other Party (which shall not be unreasonably
withheld); provided, however, that (i) COMPANY and NextWave agree that NextWave
shall have the right to issue a news release to announce the transaction
contemplated herein and (ii) the Parties acknowledge that NextWave has filed a
registration statement with the Securities and Exchange Commission and will be
required to disclose the existence of this Agreement and describe the material
terms contained herein. To the extent any information has been disclosed to
the public pursuant to this SECTION 5.5, such information shall not be deemed
Confidential Information. Notwithstanding the foregoing, each party agrees
that the Airtime pricing terms contained in ATTACHMENT C are confidential and
shall not be disclosed, except as may be required by law or pursuant to any
legal proceeding, in which case the provisions of SECTION 5.4 shall apply. The
Parties acknowledge that NextWave will be required to file this Agreement with
the Securities and Exchange Commission as an exhibit to its registration
statement. NextWave shall seek confidential treatment of the Airtime pricing
terms.
5.6 PROPRIETARY NOTICES. Each Party shall reproduce and maintain
on any copies of the other Party's Confidential Information received or made
hereunder such proprietary legends or notices (whether of the party providing
the Confidential Information or of a third-party) as are contained in or on
the original.
5.7 RETURN OF CONFIDENTIAL INFORMATION. Each party agrees to
return to the other Party or destroy all of such other Party's Confidential
Information promptly upon the termination of this Agreement. Neither party
shall thereafter retain any such Confidential information or any copies thereof
fixed in any tangible medium of expression in whatever form or format.
5.8 COOPERATION. In the event either Party becomes aware that any
Person (including, without limitation, any employee or agent of a party) is
taking or threatens to take any action which would violate any of the foregoing
provisions, such Party shall promptly and fully advise the other Party (with
written confirmation as soon as practicable thereafter) of all facts known to
it concerning such action or threatened action. Neither Party shall in any way
aid, abet or encourage any such action or threatened action. Each Party agrees
to cooperate in all reasonable ways to prevent such action or threatened
action, including, without limitation, assigning any cause of action it may
have related to the violation of the foregoing provisions, to the other Party,
and each Party agrees to do all reasonable things and cooperate in all
reasonable ways as may be requested by the other Party to protect the trade
secret and proprietary rights of such other Party in and to the Confidential
Information. A Party shall also be liable for any breach of the terms of this
ARTICLE 5 in the event that Confidential Information received from the other
party is disclosed by an employee, agent or consultant of such Party or a
third-party to whom such Party has disclosed such information and such
disclosure would violate the terms of this ARTICLE 5 were such employee, agent,
consultant or third-party a party hereto.
5.9 NO USE OF NEXTWAVE INTELLECTUAL PROPERTY RIGHTS. Nothing herein
shall be deemed to grant to COMPANY any right, license or other interest in or
under, or right to use, and COMPANY shall not use, any patents, copyrights,
trade secrets, trademarks, service marks,
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trade names or other similar designation, or any other intellectual property
rights of NextWave or any of its Affiliates.
NO USE OF COMPANY INTELLECTUAL PROPERTY RIGHTS. Nothing herein shall
be deemed to grant to NextWave any right, license or other interest in or
under, or right to use, and NextWave shall not use, any patents, copyrights,
trade secrets, trademarks, service marks, trade names or other similar
designation, or any other intellectual property rights of COMPANY or any of its
Affiliates.
6. LIMITED LIABILITY.
6.1 IN NO EVENT WILL EITHER PARTY AND/OR ANY OF ITS AFFILIATES BE
LIABLE TO OR THROUGH THE OTHER PARTY FOR ANY OF THE FOLLOWING:
(a) DAMAGES CAUSED BY OTHER PARTY'S AND/OR ITS AFFILIATES' OR
SUPPLIERS' FAILURE TO PERFORM THEIR OBLIGATIONS OR RESPONSIBILITIES;
(b) CLAIMS OR DEMANDS BROUGHT AGAINST THE OTHER PARTY BY
THIRD PARTIES OTHER THAN THOSE THIRD PARTY CLAIMS IN RESPECT OF WHICH SUCH
PARTY IS EXPRESSLY OBLIGATED TO INDEMNIFY THE OTHER PARTY PURSUANT TO A
PROVISION OF THIS AGREEMENT; OR
(c) ANY LOST PROFITS, LOSS OF BUSINESS, LOSS OF USE (OR
INTERRUPTIONS OF BUSINESS), LOST SAVINGS, LOST OPPORTUNITIES OR OTHER
CONSEQUENTIAL, SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY OR PUNITIVE DAMAGES;
ANY OR ALL OF WHICH ARISE FROM OR IN CONNECTION WITH THE DELIVERY,
USE, OR PERFORMANCE OF SERVICE GOVERNED BY THIS AGREEMENT, EVEN IF A PARTY
AND/OR ANY OF ITS AFFILIATES HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS.
6.2 The limitations of remedies and liabilities set forth in this
ARTICLE 6 shall not apply to any obligation of one party to pay the other party
all amounts due and owing under this Agreement.
7. INDEMNIFICATION.
7.1 NextWave shall indemnify, defend and hold harmless COMPANY,
and all of COMPANY's and its Affiliates' officers, directors, partners,
employees and agents, from and against any and all losses, claims, damages,
liabilities or expenses of any kind (including, but not limited to, reasonable
attorneys fees and costs) arising out of any claim, action or proceeding by a
third party against any of them to the extent it is based on (i) a claim for
personal injury (including death) or damage to personal property for which
NextWave or any of its Affiliates is
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legally responsible, or (ii) NextWave or any Affiliate's failure to comply with
all applicable laws, regulations and orders in the performance of its
obligations under this Agreement.
7.2 COMPANY shall indemnify, defend and hold harmless NextWave,
and all of NextWave's and its Affiliates' officers, directors, partners,
employees and agents, from and against any and all losses, claims, damages,
liabilities or expenses of any kind (including, but not limited to, reasonable
attorneys fees and costs) arising out of any claim, action or proceeding by a
third-party against any of them to the extent it is based on (i) a claim for
personal injury (including death) or damage to personal property for which
COMPANY or any of its Affiliates is legally responsible, or (ii) a claim by a
customer of COMPANY, or (iii) COMPANY or its Affiliate's failure to comply with
all applicable laws, regulations and orders in the performance of its
obligations under this Agreement.
7.3 The party seeking indemnity under the foregoing provisions
shall notify the indemnifying party of any such claim, action or proceeding,
and the indemnifying party shall promptly and at its sole cost undertake the
defense thereof, except for claims by a customer of COMPANY, for which COMPANY
shall at its sole cost undertake the defense thereof for itself, and upon
demand thereof, NextWave and/or its Affiliates. No such claim shall be
compromised or settled without the prior written consent of the indemnified
party if the settlement would restrict or adversely affect the indemnified
party. Such consent shall not be unreasonably withheld. After the indemnified
party tenders the defense of any such claim, action or proceeding, the
indemnified party shall have the right to participate at its own cost and
expense in such claim, action, or proceeding using counsel of its own choosing.
8. DISPUTE RESOLUTION
8.1 DISPUTE RESOLUTION. Either Party may identify a dispute that
has arisen in performance of this Agreement by notifying the other Party's
account manager in writing, setting forth the dispute with reasonable
specificity. The account managers shall promptly attempt to resolve such
dispute by negotiation. If within ten (10) calendar days of written notice of
a dispute the account managers have been unable to resolve it, then either
Party may escalate resolution of the dispute to an appropriate senior executive
of NextWave or to an appropriate senior executive of COMPANY by notifying them
in writing, setting forth the dispute with reasonable specificity. The senior
executives shall attempt to resolve such dispute by negotiation. If within ten
(10) calendar days of such escalation of a dispute the senior executives have
been unable to resolve it, then either Party may seek resolution of the dispute
by arbitration in accordance with SECTION 8.2.
8.2 ARBITRATION. Without prejudice to either party's right to
seek equitable relief (including, but not limited to, injunction) from a court,
any dispute arising out of or related to this Agreement, which cannot be
resolved by negotiation, shall be settled by binding arbitration in accordance
with the J.A.M.S./ENDISPUTE arbitration rules and procedures ("Endispute
Rules") and in accordance with the terms of this ARTICLE 8. The costs of
arbitration, including the fees and expenses of the arbitrator, shall be shared
equally by the parties unless the arbitration
16
<PAGE> 18
award provides otherwise. Each party shall bear the cost of preparing and
presenting its case. The parties agree that this provision and the
Arbitrator's authority to grant relief shall be subject to the United States
Arbitration Act, 9 U.S.C. 1-16 et seq. ("USAA"), the provisions of this
Agreement, and the ABA-AAA Code of Ethics for Arbitrators in Commercial
Disputes. The parties agree that the arbitrator shall have no power or
authority to make awards or issue orders of any kind except as expressly
permitted by this Agreement, and in no event shall the arbitrator have the
authority to make any award that provides for punitive or exemplary damages.
The arbitrator's decision shall follow the plain meaning of the relevant
documents, and shall be final and binding. The award may be confirmed and
enforced in any court of competent jurisdiction. All post-award proceedings
shall be governed by the USAA.
9. TERM.
This Agreement shall be effective when executed. The Term of this
Agreement shall be ten (10) years with one (1) renewal option for COMPANY to
renew for an additional five (5) years, which renewal shall not be unreasonably
withheld; provided that if COMPANY elects to renew the Agreement the parties
shall review and adjust the pricing. The Term shall commence upon the first
day of commercial availability of Full Mobility Service in any NextWave BTA,
where the conditions in SECTION 11.3 below are met. One (1) year prior to the
expiration of the initial ten-year Term, the parties will meet to determine the
pricing for the five-year renewal period. If the parties are unable to reach
agreement six (6) months prior to the expiration of the initial ten-year Term,
the then existing terms and conditions, including pricing shall continue for a
transition period of six (6) months after the expiration of the initial
ten-year Term. If, in the event that COMPANY exceeds five (5) billion billable
MOU during the Term, then the parties will meet to determine the pricing for
volume breaks above five (5) billion MOU for the Airtime table in ATTACHMENT C.
10. TERMINATION PROVISION.
10.1 NextWave may terminate this Agreement without liability by
written notice to COMPANY in the event that:
(i) COMPANY fails to pay any amounts due hereunder within
(30) days after notice from NextWave other than amounts that are being
reasonably disputed pursuant to SECTION 4.6 ; or
(ii) COMPANY's use of NextWave's services or network (a)
violates any laws, rules or regulations (b) is in non compliance with services
standards established by NextWave; or
(iii) COMPANY commits a material breach of this Agreement
and it is not cured within sixty (60) days of notice from NextWave.
10.2 COMPANY may terminate this Agreement without liability by
written notice to NextWave in the event that:
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<PAGE> 19
(i) NextWave fails to meet the conditions provide for in
SECTION 11.3; or
(ii) NextWave commits a material breach of this Agreement
and it is not cured within sixty (60) days of notice from COMPANY.
(iii) Within the earlier of forty-five (45) calendar days from
the date of execution of this Agreement or December 12, 1996, there is a
voluntary or involuntary Transfer of Control and Ownership of COMPANY to a
non-COMPANY Affiliate.
11. MISCELLANEOUS.
11.1 GOVERNING LAW AND CHOICE OF FORUM. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
other than the laws thereof that would require reference to the laws of any
other jurisdiction. For all purposes for which resort to a court may be had,
the parties irrevocably consent to the exclusive jurisdiction and venue of the
federal and state courts located in the State of New York.
11.2 NOTICES. All notices, demands, requests, or other
communications which may be or are required to be given or made by any party,
to the other party pursuant to this Agreement shall be in writing and shall be
hand delivered, mailed first-class registered or certified mail, return receipt
requested, postage pre-paid, delivered by overnight air courier, or transmitted
by telegram, telex, or facsimile transmission addressed as follows:
If to PERSONAL COMMUNICATIONS NETWORK, INC.:
10 Plog Road
Fairfield, NJ 07004
Attn: William Taylor
Fax: (201) 808-2674
with a copy to:
10 Plog Road
Fairfield, NJ 07004
Attn: Les Winder
Fax: (201) 808-2674
If to NEXTWAVE:
18
<PAGE> 20
NextWave Wireless Inc.
3 Skyline Drive, 3rd Floor
Hawthorne, NY 10532
Attn: Kevin R. Carroll
Assistant Vice President, Business Planning & Development
Fax: (914) 345-1141
with a copy to:
NextWave Wireless Inc.
9455 Towne Centre Drive
San Diego, CA 92121
Attn: General Counsel
Fax: (619) 642-1912
Each Party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be given, served or
sent. Each notice, demand, request or communication which shall be mailed,
delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent or received for all purposes at such time as
it is delivered to the addressees (with the return receipt, the delivery
receipt or affidavit of messenger, or the facsimile answer back being deemed
conclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
11.3 CONDITIONS. COMPANY's commitment to purchase Airtime from
NextWave is subject to each of the following conditions being satisfied: (a)
NextWave offering commercial mobility service in Markets covering at least 40
million POPs by December 31, 1998, and at least 70 million POPs by December 31,
2001; (b) NextWave providing Airtime in its Markets meeting the system
performance criteria and technical specifications detailed in ATTACHMENT D and
ATTACHMENT E, respectively; and (c) NextWave providing COMPANY and its
Affiliates interconnection as specified in SECTION 2.6.
11.4 FORCE MAJEURE. Neither party shall be liable for delays in
delivery or performance, or for failure to provide service, deliver or perform
when caused by any of the following which are beyond the reasonable control of
the delayed party:
(i) Acts of God, acts of the public enemy, acts or
failures to act by the other party, acts of civil or military authority,
governmental priorities, strikes or other labor disturbances, hurricanes,
earthquakes, fires, floods, epidemics, embargoes, war, riots, delays in
transportation, and loss or damage to goods in transit; or
(ii) Inability on account of causes beyond the reasonable
control of the delayed party to obtain products, components, services or
facilities.
In the event of such delay, the date of delivery or performance shall
be extended for a period equal to the effect of the time lost by reason of the
delay.
19
<PAGE> 21
11.5 ASSIGNMENT. This Agreement may not be assigned, in whole or
in part, by any Party without the prior written consent of the other Party,
except that either Party may assign this Agreement to any of its Affiliates
without the consent of the other Party and either Party may assign this
Agreement to a successor in connection with the acquisition of the Party;
provided that the successor confirms by written agreement its agreement to
assume the acquired Party's obligations under this Agreement. For purposes of
this subsection only, the term "Affiliates" shall mean an entity under common
control, controlling or controlled by a Party; provided that "control" as used
herein shall mean the ownership, directly or indirectly, of at least eighty
percent (80%) of the aggregate of all voting interests in such entity. Any
other attempt to assign this Agreement shall be null, void and of no force or
effect.
11.6 AUTHORIZATION AND ENFORCEABILITY. Each party hereby
represents that:
(a) it has all requisite corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated
hereby;
(b) the execution, delivery and performance of this
agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all requisite corporate action on the party of each
party; and
(c) this Agreement has been duly executed and delivered by
such party and is valid and binding obligation of such party, enforceable
against it in accordance with its terms.
11.7 SEVERABILITY. If any provision of this Agreement shall be
found by any court or administrative body of competent jurisdiction to be
invalid or unenforceable, the invalidity or unenforceability of such provision
shall not affect the other provisions of this Agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full force and
effect. The parties hereby agree to attempt to substitute for any invalid or
unenforceable provision a valid and enforceable provision which achieves to the
greatest extent possible the economic, legal and commercial objectives of the
invalid and unenforceable provision.
11.8 SURVIVAL. The following provisions shall survive the
termination of this Agreement, and shall continue in full force and effect
along with any other provisions of this Agreement which by their nature or in
accordance with the terms, whether or not listed, shall survive such
termination: ARTICLES 5, 6, 7, 8 and 9 and SECTIONS 4.9, 11.1, 11.2, 11.7,
11.8, 11.13, 11.14, 11.16 and 11.17.
11.9 ENTIRE AGREEMENT. This Agreement, which includes the attached
Schedules, constitutes the entire agreement and understanding between the
parties hereto in connection with subject matter hereof, and supersedes and
cancels all previous negotiations, commitments and writings with respect
thereto.
20
<PAGE> 22
11.10 COUNTERPARTS. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each party, or the
signatures of all persons required to bind party, appear on each counterpart;
but it shall be sufficient that the signature of, or on behalf of, each party,
or the signatures of the persons required to bind any party, appear on one or
more of the counterparts. All counterparts shall collectively constitute a
single agreement.
11.11 CAPTIONS FOR CONVENIENCE ONLY. The captions used in this
Agreement are included for convenience only and shall not be considered part of
this Agreement for any purpose. Unless expressly state otherwise, all
references herein to "Articles" are to the relevant portions of this Agreement,
and all references to "Schedules" are to the attachments to this Agreement.
11.12 AMENDMENT. This Agreement shall not be amended, modified or
rescinded in any manner, except by an instrument in writing signed by duly
authorized representatives of each of the parties hereto.
11.13 NO THIRD-PARTY BENEFICIARY. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties and their
respective successors and permitted assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
person to any party, nor shall any provision give any third person any right of
subrogation or action against any party.
11.14 EXPENSES. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated hereby are consummated,
each party will pay its own costs and expenses incurred in connection with the
negotiation and execution of this Agreement and the transactions contemplated
hereby (including executing all such documents and doing such acts and things
as may reasonably be required for the purpose of giving full effect to this
Agreement).
11.15 WAIVER. Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by law or otherwise afforded, will be
cumulative and not alternative.
11.16 BINDING. This Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
permitted successors and assigns.
11.17 SPECIFIC PERFORMANCE. The obligations of the parties under
Article 5 of this agreement are unique. If any party should be in Default
under Article 5 of this Agreement, the Defaulting Party acknowledges that it
would be extremely impracticable to measure the resulting damages.
Accordingly, in addition to any other available rights or remedies, the
Non-Defaulting
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<PAGE> 23
Party may sue in equity for specific performance and the Defaulting Party
expressly waives the defense that a remedy in damages would be adequate.
11.18 REGULATORY COMPLIANCE. Notwithstanding any provision in this
Agreement to the contrary, NextWave shall not be obligated to furnish COMPANY
with Full Mobility Services under rates, charges, terms or conditions that
violate any applicable provisions of the Communications Act of 1934, as
amended, the applicable rules, regulations or policies of the FCC or any other
federal or state agency with jurisdiction over NextWave's services.
[Remainder of Page Intentionally Left Blank]
22
<PAGE> 24
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective and delivered as of the date set forth below.
PERSONAL COMMUNICATIONS NETWORK, INC. NEXTWAVE WIRELESS INC.,
A DELAWARE CORPORATION A DELAWARE CORPORATION
Date: October 29, 1996 Date: October 29, 1996
------------------------------- -------------------------------
/s/ Les Winder /s/ Kevin R. Carroll
--------------------------------- ---------------------------------
(Signature) (Signature)
By: Les Winder By: Kevin R. Carroll
--------------------------------- ---------------------------------
Title: President Title: AVP - Business Plng. & Devlp.
------------------------------ ------------------------------
23
<PAGE> 25
ATTACHMENT A
NextWave's Network Elements and Functionality
The following are the network elements and functionality NextWave will make
available, to the extent practicable and pursuant to pricing specified in the
Agreement, in each PCS market either directly or indirectly through a third
party:
a.) ADVANCED INTELLIGENT NETWORK ("AIN") PLATFORM. The AIN
platform is the platform from which COMPANY will store and offer its and
customers all of their non-switched based vertical services. As an option, when
available NextWave may provide its AIN platform.
b.) THIRD PARTY INTERCONNECTION ACCESS. The physical
interconnection to the Public Switching Telephone Network ("PSTN"). The
responsibility for the associated monthly and usage-sensitive costs for such
circuits carrying COMPANY's customers' mobile-to-landline and landline-to-mobile
traffic to and from NextWave's network is COMPANY's.
c.) BACKHAUL INTERCONNECTION. In BTA markets where COMPANY is a
local access provider of facilities, COMPANY will make available to NextWave
standard T1 and T3 facilities at COMPANY's most favorable rate for like terms,
quantities, and conditions. These facilities may be used by NextWave for
switch-to-base station, switch-to-base station controller, base station-to-base
controller and switch-to-switch connections.
d.) SS-7 BACKBONE. The SS-7 signaling backbone network carrying
standard IS-41 message sets between NextWave's network and COMPANY's HLR
database access.
e.) FCC LICENSE TO PROVIDE PCS. The Federal Communications
Commission's ("FCC") license to provide Personal Communication Service ("PCS")
in the markets of interest.
f.) RADIO COVERAGE AND ACCESS. The deployment of competitive
coverage at a predetermined and mutually agreed to minimum level/grade of PCS
access service.
g.) MOBILE SWITCHING CENTER. The switching capability to
provide the end customer with the proper mobility and roaming capability. AIN
software for standard IS-41 interconnection to COMPANY's AIN platform and PSTN
interconnection.
h.) SWITCH-BASED VERTICAL SERVICES. These end customer
vertical software services provided at the Mobile Switching Center for example,
but not limited to, Call Waiting, Call Forwarding, Three-Way Calling, and Caller
ID.
i.) LOCAL WIRELESS OPERATIONS AND MANAGEMENT OF THE NETWORK.
NextWave will design, engineer, construct, and maintain the PCS network in each
BTA and maintain a minimum service availability level.
<PAGE> 26
ATTACHMENT B
NextWave's PCS Markets
<TABLE>
<CAPTION>
- --------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
COLONIAL REGION LONE STAR REGION OHIO VALLEY REGION
Boston, MA Austin, TX Cincinnati, OH
Manchester/Nashua, NH Bryan-College Station, TX Columbus, OH
New London, CT Houston, TX Dayton, OH
Portland/Brunswick, ME San Antonio, TX
Providence, RI Temple-Killeen, TX
Worcester, MA HOOSIER REGION
Bloomington, IN
AMIGO REGION Columbus, IN
HOLLYWOOD REGION Brownsville, TX Evansville, IN
Los Angeles, California El Paso, TX Indianapolis, IN
Las Cruces, NM Lafayette, IN
McAllen, TX
DOLPHIN REGION
San Diego, California SOONER REGION
NY-METRO REGION Oklahoma City, OK
Albany, NY
Allentown, PA
CAPITAL REGION New Haven, CT THOROUGHBRED REGION
Baltimore, MD Poughkeepsie, NY Lexington, KY
Hagerstown, MD Scranton, PA Louisville, KY
Norfolk, VA
Richmond, VA
Washington, DC BIG APPLE REGION TWIN CITIES REGION
NYC BTA Minneapolis, MN
GREENGRASS REGION
Asheville, NC STEELER REGION ROCKY MOUNTAIN REGION
Charlotte, NC Pittsburgh, PA Denver
Greensboro, NC
Hickory, NC
Roanoke, VA SUNSHINE REGION PACIFIC NORTHWEST REGION
Gainsville, FL Bellingham, WA
Jacksonville, FL Longview, WA
MID. AMERICA Lakeland-Winter Haven, FL Olympia, WA
Joplin, MO Melbourne, FL Portland, OR
Kansas City, MO Orlando, FL Seattle, WA
Springfield, MO Sarasota, FL
Tampa, FL
BUCKEYE REGION
Cleveland, OH
- --------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
<PAGE> 27
ATTACHMENT C
PRICING SCHEDULE
*_______________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________*
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 28
ATTACHMENT D
SYSTEM PERFORMANCE CRITERIA
1.1 COVERAGE AREA
The Coverage Area shall be that minimal signal strength necessary to provide
service such that calls are successful *____* of the time averaged along the
Coverage Area boundary, irrespective of the direction of the call (land-mobile,
mobile-land) with no greater than *___* frame error rate (FER) on average.
1.2 HANDSET COMPATIBILITY
NextWave shall demonstrate the full compatibility of its network with handsets
of COMPANY's choice that have been certified as compliant with domestic PCS
interface standards, so long as these handsets have been demonstrated to be
fully compatible with one other domestic IS-95 (CDMA) compliant 1.9 GHz network
and certified as IS-95, 1.9 GHz compliant by recognized standard or
certification bodies.
1.3 NETWORK CALL BLOCKAGE/QUALITY OBJECTIVES
The following considerations are required concerning network call blockage:
- - Average busy hour blockage within the NextWave network will not exceed
*___* of all call attempts.
- - The above values are to be met, unless superseded by necessary regulatory
mandates.
- - Emergency calls should be given the highest possible resource priority.
1.4 DROPPED CALLS
The number of dropped calls measured over a period of a month in a Coverage
Area shall not exceed *___* of the total number of subscriber calls originated
in that Coverage Area.
1.5 NETWORK AVAILABILITY
NextWave will engineer and manage its network to meet the above service and
quality levels established for the Coverage Area. The emphasis of management
activities will be on preventative maintenance, such that potential outages will
be resolved before customers are affected.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 29
A Network Outage is the inability, or a significant degradation in the ability
of a customer to establish and maintain a channel of communication as a result
of failure or degradation in the performance of NextWave's network.
In the event of a major network outage, NextWave will notify COMPANY of the
conditions affecting the customers, including, but not limited to out-of-service
events, and high system traffic loads.
Any FCC-reportable Network Outages, including disruption of 911/E911 and
emergency services will be reported to COMPANY.
1.6 PERFORMANCE VERIFICATION
NextWave will provide to the COMPANY quarterly statistics that define the
performance of the network including blocked calls, dropped calls, and frame
error rates. In addition, NextWave will provide coverage maps that define the
Coverage Area.
<PAGE> 30
ATTACHMENT E
TECHNICAL STANDARDS
NextWave shall be in general compliance with the following standards:
I. WIRELESS NETWORK INTERFACE STANDARDS
A. IS-41REV B CELLULAR RADIO TELECOMMUNICATIONS INTERSYSTEM OPERATIONS
NextWave's Network shall be in general compliance with IS-41 Revision B. This
shall be upgraded to be in general compliance with IS-41 Revision C when IS-41
Revision C is commercially available.
B. EIA/TIA/IS-52: UNIFORM DIALING PROCEDURES AND CALL PROCESSING
TREATMENT FOR CELLULAR RADIO TELECOMMUNICATIONS - NOVEMBER, 1989
C. EIA/TIA/IS-52-A: UNIFORM DIALING PROCEDURES AND CALL PROCESSING
TREATMENT FOR CELLULAR RADIO TELECOMMUNICATIONS - WHEN PUBLISHED
D. EIA/TIA/IS-53: CELLULAR FEATURES DESCRIPTION: - AUGUST, 1991
E. EIA/TIA/IS-53-A: CELLULAR FEATURES DESCRIPTION: - MAY, 1995
F. EIA/TIA/IS-93: CELLULAR RADIO TELECOMMUNICATIONS A-D INTERFACE
STANDARDS - OCTOBER, 1993.
II. SS7 INTERFACE STANDARDS
A. TR-NWT-000246: BELL COMMUNICATIONS RESEARCH SPECIFICATION OF SIGNALING
SYSTEM NUMBER 7, ISSUE 3
B. TR-NWT-000082: SIGNALING TRANSFER POINT GENERIC REQUIREMENTS, ISSUE 5
C. TR-TSY-000317: SWITCHING SYSTEM REQUIREMENTS FOR CALL CONTROL USING
THE INTEGRATED SERVICES DIGITAL NETWORK USER PART (ISDNUP)
D. TR-TSY-000394: SWITCHING SYSTEM REQUIREMENTS FOR INTERCHANGE
CARRIERS USING THE INTEGRATED SERVICES DIGITAL NETWORK USER PART
(ISDNUP)
E. TR-NWT-000444: SWITCHING SYSTEM GENERIC REQUIREMENTS SUPPORTING
ISDN ACCESS USING THE INTEGRATED SERVICES DIGITAL NETWORK USER PART
(ISDNUP)
F. ANSI T1.114 SS7 TRANSACTION CAPABILITIES APPLICATION PART (TCAP)
<PAGE> 31
G. ANSI T1.112: SS7 SIGNALING CONNECTION CONTROL PART (SCCP)
H. ANSI T1.111: SS7 MESSAGE TRANSFER PART (MTP)
III. AIR INTERFACE STANDARDS
A. ANSI-J-STD-008: PERSONAL STATION -BASE STATION COMPATIBILITY
REQUIREMENTS FOR 1.8 TO 2.0 GHZ CDMA PERSONAL COMMUNICATIONS SYSTEMS.
<PAGE> 1
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.39
NEXTWAVE RESALE AGREEMENT
WITH
FLAGSHIP WIRELESS INC.
<PAGE> 2
NEXTWAVE RESALE AGREEMENT
This PCS ("Personal Communications Services") Resale Agreement
("Agreement") is entered into and is in effect as of November 19, 1996, by and
between NEXTWAVE WIRELESS INC. and its Affiliates, a Delaware corporation, with
principal offices located at 9455 Towne Centre Drive, San Diego, California
92121 ("NEXTWAVE") and FLAGSHIP WIRELESS INC. and its Affiliates, a California
corporation, with principal offices located at 639 Kettner Boulevard, San
Diego, California 92101 ("COMPANY") and the terms of which are contained
herein. NextWave and COMPANY may hereinafter be referred to collectively as the
"Parties", and individually as the "Party".
A. NextWave Personal Communications Inc. ("NextWave PCI") is a
wholly owned subsidiary of NextWave Telecom Inc. a Delaware corporation.
NextWave PCI was formed to participate in the Federal Communications
Commission's ("FCC's") PCS auctions;
B. NextWave is a wholly owned subsidiary of NextWave Telecom Inc.
organized to construct facilities, deploy PCS network equipment, and provide
PCS in the licensed markets.
C. NextWave PCI has successfully bid for 63 licenses covering
approximately 110 million POPs (based on current census data) in various
markets across the United States (see ATTACHMENT B). NextWave intends to
construct facilities, deploy PCS network equipment and provide PCS in those
licensed markets.
D. Subject to the terms and conditions set forth herein, in the
PCS markets awarded to NextWave in the C-block auction, COMPANY desires to
purchase PCS minutes of use ("MOUs") on a resale basis from NextWave pursuant
to a ten (10) year commitment by COMPANY to purchase digital wireless voice
services from NextWave in all markets where COMPANY desires to resell digital
wireless voice services where NextWave provides service. NextWave desires to
sell PCS minutes of use to COMPANY for resale in those markets under a single
24-hour flat rate service, excluding interconnection charges with no access fee
based upon COMPANY's advance commitment to purchase minutes of use. COMPANY
will be responsible to provide customer acquisition (i.e., sales, marketing,
advertising and customer activation), billing, collections, customer
service/care, customer retention, handset fulfillment and any other services
required to acquire and retain retail customers.
THEREFORE, in consideration of the foregoing, and of the mutual
covenants and agreements hereinafter set forth, NextWave and COMPANY agree as
follows:
1. DEFINITIONS.
(a) AFFILIATE means, with respect to any party, any person,
corporation or other legal entity that, directly or indirectly, controls, is
controlled by or is under common control with such party. For purposes of this
definition, "control" (including, with correlative meanings, the terms
1
<PAGE> 3
"controlling", "controlled by" and "under common control with"), means the
possession, directly or indirectly, of the power (i) to vote securities having
ordinary voting power sufficient to elect a majority of the directors of such
party or (ii) to direct or cause the direction of the management and policies
(including investment policies) of that party, whether by contract or
otherwise.
(b) FULL MOBILITY SERVICE means the provision of digital wireless
voice airtime with mobile inter-cell (base station) hand-off capability.
(c) LICENSES means PCS licenses held by NextWave.
(d) PCS AUCTIONS means the auction conducted by the FCC to assign
licenses to the successful bidders for 120 MHz of spectrum as broadband PCS
licenses in the 1850-1990 MHz band. The PCS band has been sub-divided into
three 30 MHz blocks (blocks A, B, and C) and three 10 MHz blocks (blocks D, E
and F). The FCC has allocated a portion of the broadband PCS spectrum (blocks
C and F) to certain entities called "Entrepreneurs". The FCC completed the
C-block auction in July, 1996 and is presently conducting the D, E, and F block
auctions. Together the C and F blocks make up the "Entrepreneurs' Band".
(e) MINUTE OF USE ("MOU") means the particular use interval
provided by NextWave for digital mobile voice service for resale to end-users
and is measured from time of seizure of a control channel to the time of
release of the channel on NextWave's network.
(f) BASE MOU PRICE means NextWave's MOU price prior to any
discounts. Usage is billed in 60 second intervals and partial minutes are
rounded up to the next full minute.
(g) BTA (Basic Trading Area) means a particular market boundary as
defined by Rand McNally & Company and the FCC.
(h) ROAMING AGREEMENTS means any agreement whereby NextWave or its
Affiliates has the ability to purchase airtime from, interconnect with and/or
use the wireless network facilities of another operator of a wireless network.
(i) TERM has the meaning set forth in ARTICLE 9.
2. PROVISION OF AIRTIME.
2.1 PROVISION OF SERVICES. NextWave shall sell Full Mobility
Services to COMPANY in each BTA for which NextWave or any of its Affiliates is
awarded or otherwise obtains a License, or enters into a Roaming Agreement.
2.2 SERVICES DESCRIPTION. Full Mobility Services shall involve
the establishment and maintenance of wireless circuits for the continuous
transmission of digital voice signals.
2.3 COMPANY FORECAST. Ninety (90) days prior to the offering of
commercial Full Mobility Service in any BTA, as communicated to COMPANY by
NextWave at least One Hundred and Twenty-Days (120) prior to the offering of
such commercial Service, COMPANY will provide NextWave with a forecast of
anticipated Full Mobility Service requirements for that
2
<PAGE> 4
BTA for the remainder of the calendar year. COMPANY will provide NextWave with
quarterly updates to its initial and annual forecasts.
2.4 NETWORK FEATURE FUNCTIONALITY. As practicable, NextWave is
committed to maintain its infrastructure with the most recent commercial
releases of vendor software available that implements the standards and
protocols described in the J-STD-008 air interface and associated standards as
detailed in ATTACHMENT E, and new feature functionality that operates with such
standards and protocols. For those capabilities that affect end users or
subscribers, NextWave will share with COMPANY its timeline and schedule of
infrastructure upgrades as they become available.
2.5 ROAMING ARRANGEMENTS. NextWave will make reasonable efforts
to negotiate favorable roaming agreements and rates with other wireless
licensees in the United States, and wireless operators in Canada, Mexico, and
other countries that may provide for roaming from PCS networks in the United
States for traffic to and from each other's wireless licensed markets.
NextWave will make available rapid roaming clearing capabilities through, at
NextWave's sole discretion, either a direct interface to other networks with
which it has roaming arrangements or via industry clearing houses.
2.6 INTERCONNECTION.
(a) LEC INTERCONNECTION. NextWave has the responsibility to
negotiate interconnect agreements with local carriers. COMPANY and NextWave
agree on the need to minimize interconnect charges for MOUs originating and
terminating on NextWave's network. NextWave will continue its efforts to
influence lower interconnect rates through the regulatory agencies and
processes. MOU pricing is exclusive of interconnection fees for both originating
and terminating traffic from and to non-NextWave networks, which shall be
charged to COMPANY at the negotiated base rate.
If COMPANY elects facilities-based resale, it will be responsible for
the fixed and recurring costs of providing, operating, and maintaining the
circuits between NextWave's and COMPANY's switches and between COMPANY's switch
and the Public Switched Telephone Network ("PSTN").
(b) IXC INTERCONNECTION. NextWave intends to interconnect with the
major interexchange carriers (e.g., AT&T, MCI, Sprint) via trunk connections
with their points of presence at the expense of the IXC. Similarly, as COMPANY
requires, NextWave will use reasonable efforts to interconnect with other long
distance services under similar conditions. NextWave's price for MOUs includes
origination for direct interconnection with IXCs for mobile-to-land calls to the
extent that the costs of such interconnection are borne by the IXC. If the IXC
does not bear the cost of such interconnection or if direct interconnection with
the IXC is not feasible or practicable, then any interconnection charges shall
be borne by COMPANY on a pass-through basis.
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If COMPANY elects facilities-based resale, it will be responsible for
the fixed and recurring costs of providing, operating, and maintaining the
circuits between NextWave's and COMPANY's switches and between COMPANY's switch
and the PSTN.
2.7 NUMBER OWNERSHIP.
(a) PURCHASE AND ALLOCATION OF NUMBERS. COMPANY shall obtain
numbers ("Numbers") from North American Numbering Plan Administration ("NANPA")
for activation by NextWave on the network. In the event COMPANY is not
authorized or is otherwise unable to obtain Numbers, NextWave shall obtain
Numbers, in entire block increments, on a pass-through cost basis. In the
event there is a shortage of Numbers and an allocation of Number blocks is
required, NextWave may allocate Number blocks pro rata among its airtime
customers based on the relative number of subscribers.
(b) NUMBER TRANSFERS. COMPANY will pay a nominal fee for the
engineering and administrative charges associated with the moving of COMPANY's
numbers to another network. COMPANY will be charged a comparable rate to other
carriers' rates and industry practices, a standard rate per number and all
non-recurring charges associated with forwarding COMPANY's traffic to any
number on a non-NextWave network. In the event the governing agencies mandate
number portability, NextWave will support, in a timely manner, the guidelines
specified in the ruling.
(c) TRANSFER SUPPORT. NextWave will support COMPANY's move of the
numbers to the new wireless network, for a nominal charge, ensuring proper
addressing and recording for the Local Exchange Routing Guide ("LERG").
2.8 RESELLER SWITCH INTERFACE.
(a) NON-FACILITIES BASED INTERFACE. NextWave will make available
to COMPANY access to customer care capabilities including, but not limited to,
home location register services (i.e., customer profile management and customer
features service management), authentication, and if practicable, call detail
recording ("CDR") access. COMPANY will be responsible for providing personnel
and all other resources required to deliver customer care services to COMPANY's
subscribers.
(b) FACILITIES-BASED INTERFACE. NextWave will make available a
T1/T3 interface to a COMPANY owned and operated switch for the delivery of
COMPANY's calls to and from the PSTN. COMPANY's numbers must be activated on
NextWave's switch to allow NextWave to properly provide mobility to those
customers. The demarcation point will be at NextWave's switch and COMPANY will
be responsible for the provisioning and costs, both recurring and
non-recurring, of all circuits between COMPANY's switch and demarcation point
at NextWave's switch. If COMPANY desires, NextWave will engineer and maintain
these circuits at a mutually agreed fee.
2.9 SERVICE ACTIVATIONS AND NUMBER REMOVAL CHARGES.
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(a) SERVICE ACTIVATION PLATFORM. NextWave will offer COMPANY a
direct datalink interface to NextWave's service activation platform to allow
COMPANY an automated mechanism to perform customer on-line activations,
de-activations, and service change orders. NextWave reserves the right to set
the interface standard for connections to its service activation platform.
NextWave's service activation platform will collect COMPANY service orders,
format the requests, and download them into NextWave's switches and appropriate
sub-systems in as near real time as practicable. COMPANY will be responsible
for all of the costs associated with providing and maintaining its own on-site
computer terminal, software and modem/datalink connection.
(b) NUMBER REMOVAL CHARGES. COMPANY's service activation for each
customer is free of any activation fee as long as COMPANY purchases its PCS
numbers directly from NANPA. The removal fee for those situations when a number
is removed from a NextWave switch and activated on another carrier's switch is
covered in SECTIONS 2.7.b and 2.7.c.
2.10 HANDSET SOURCING AND FULFILLMENT.
(a) VOLUME PURCHASE ORDERS AND DELIVERY. If COMPANY desires,
NextWave, through its association with specific strategic partners and
suppliers, will use reasonable efforts to allow COMPANY to participate in any
NextWave volume purchase arrangements. NextWave will make arrangements for the
ordering of the handsets and accessories and the equipment will be drop shipped
by the manufacturer to COMPANY. COMPANY and supplier will be responsible for
making shipping, delivery, and payment arrangements.
(b) PRICING AND THIRD-PARTY EQUIPMENT. Pricing of the services in
(a) above is not available at this time, but will be determined and shared with
COMPANY in advance of NextWave's commercial service introduction. Further,
COMPANY is free to purchase any licensed subscriber equipment directly from
equipment manufacturers as long as purchased subscriber equipment is in full
compliance with the established TIA, CTIA and NextWave's network air-interface
and performance standards.
2.11 CLASS AND ENHANCED SERVICES.
(a) COMPANY PROVIDED SERVICES. NextWave will offer COMPANY the
opportunity to provide its own enhanced services platform. If COMPANY desires
to provide additional vertical services to its customers through its own or
through a third-party's enhanced services platform and if such addition to
NextWave's network is practicable, COMPANY and NextWave will make reasonable
efforts to jointly develop and mutually agree to the technical procedures and
lockdown requirements to properly test the service prior to its introduction on
the NextWave network. NextWave reserves its right to set its interface
standard for any connections to NextWave's switches. Engineering and set-up
fees for such service configurations will be determined on a case-by-case basis
and mutually agreed to prior to service introduction. The interconnection to
COMPANY's enhanced services platform will be based upon NextWave's standard
interface. The demarcation point will be at NextWave's switch. COMPANY will
be responsible for all of the recurring and non-recurring interconnection costs
associated with providing and maintaining the connection to COMPANY's enhanced
services platform.
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Hardware, software and tangible resources (i.e., switching, processing or
storage of data) on NextWave's master switching center and network that are
required to support features and functionality provided by COMPANY's enhanced
services platform shall be made available by NextWave, to the extent
practicable, at prices based on NextWave's reasonable, direct and allocable
expenses relating to such hardware, software or tangible resources utilization.
(b) NEXTWAVE PROVIDED SERVICES. NextWave plans to offer a family
of CLASS and enhanced services which may include voice mail, enhanced voice
(with out-dial-to-a-pager capability), short messaging, custom calling features
(i.e., call waiting, three-way calling, call forwarding, no answer transfer,
etc.), single number service, fax store and forward, e-mail, star features and
information services. These services will be offered to COMPANY on an
individual and/or package basis on terms to be agreed upon.
(c) ENHANCED SERVICES PRICING. The Parties agree that service
features, CLASS and enhanced services, and their associated pricing must be
competitive. Pricing for NextWave's features and enhanced services will be
competitive with prevailing retail pricing. NextWave will price services
either individually or provide bulk pricing for global feature activation in a
market. NextWave recognizes that switch-based features and enhanced services
will increasingly be packaged at retail with airtime and become a "tablestakes"
for the business. Prior to commercial availability, the Parties agree to
develop a plan for enhanced services to identify COMPANY's needs, refine
NextWave implementation approaches that might include use of COMPANY AIN
platforms, and agree on wholesale pricing for such services.
(d) CUSTOMIZED ENHANCED SERVICE(S) PRICING. For situations where
COMPANY desires to purchase customized enhanced service(s) from NextWave,
NextWave and COMPANY will mutually agree upon the terms and conditions,
including pricing, prior to the development and introduction of the customized
enhanced service(s).
2.12 NETWORK SERVICE TRAINING AND TROUBLE REPORTING.
(a) SCOPE OF SERVICES. NextWave will provide COMPANY network
service training and documentation prior to COMPANY's introduction of any
NextWave enhanced services offering in any market. Scheduling for such
training will be mutually agreed upon by both Parties.
(b) NOTIFICATION OF SERVICE. NextWave will promptly notify
COMPANY's customer care department or COMPANY's assigned point of contact of
service enhancements, network expansions, and major services outages. NextWave
and COMPANY will mutually agree to the notification procedures prior to
NextWave's commercial service offering. Additionally, NextWave will routinely
provide COMPANY with updated NextWave service maps as service is expanded.
2.13 NETWORK ACCESS TO LOCAL CUSTOMER CARE. NextWave, at no cost to
COMPANY, will provide COMPANY with one (1) customer care "star feature" (e.g.,
*CARE) that will directly connect COMPANY's customer to COMPANY's local
customer care center. COMPANY will be responsible for any network access
charges related to interconnection and
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transport of such calls from NextWave's switches to COMPANY's customer care
center. For the situation where these star feature customer service calls
originate in a roaming market and are routed directly to COMPANY's customer
care center, COMPANY will be responsible for local network interconnection and
transport charges.
3. PURCHASE COMMITMENT.
3.1 Subject to the terms and conditions hereof, COMPANY agrees to
purchase on a take-or-pay basis from NextWave a minimum of Five Billion
(5,000,000,000) minutes of Full Mobility Service during the Term in all of the
BTAs in which NextWave has a License (the "Commitment").
3.2 Subject to the system performance criteria and technical
standards detailed in ATTACHMENTS D AND E, respectively and NextWave's
build-out conditions detailed in SECTION 11.3, COMPANY shall purchase at least
5% of its Commitment (the "Initial Purchase Commitment") within the three (3)
year period following the date NextWave first offers Full Mobility Service on a
commercial basis in a NextWave BTA ("Commercial Service Date") and 25% of its
Commitment (the "Secondary Purchase Commitment") within the five (5) year
period following the Commercial Service Date.
In the event COMPANY fails to satisfy the Initial Purchase Commitment
by the third anniversary of the Commercial Service Date (the "Third Anniversary
Date"), COMPANY shall remit to NextWave, within five (5) business days thereof,
an amount in cash equal to the difference between the Initial Purchase
Commitment and the actual number of minutes of Full Mobility Service purchased
by COMPANY prior to the Third Anniversary Date multiplied by the then applicable
purchase price per minute being charged to COMPANY in accordance with SECTION
4.1 hereof.
In the event COMPANY fails to satisfy the Secondary Purchase Commitment
by the fifth anniversary of the Commercial Service Date (the "Fifth Anniversary
Date"), COMPANY shall remit to NextWave, within five (5) business days thereof,
an amount in cash equal to the difference between the Secondary Purchase
Commitment and the actual number of minutes of Full Mobility Service purchased
by COMPANY prior to the Fifth Anniversary Date multiplied by the then applicable
purchase price per minute being charged to COMPANY in accordance with SECTION
4.1 hereof.
In the event COMPANY fails to purchase one hundred percent (100%) of
the Commitment prior to the tenth anniversary of the Commercial Service Date
(the "Tenth Anniversary Date"), COMPANY shall remit to NextWave, within five
(5) business days thereof, an amount in cash equal to the difference between
the Commitment and the actual number of minutes of Full Mobility Service
purchased by COMPANY prior to the Tenth Anniversary Date multiplied by the then
applicable purchase price per minute being charged to COMPANY in accordance
with SECTION 4.1 hereof.
3.3 In addition to the amount of any purchase price to be paid by
COMPANY under this Agreement, COMPANY agrees to pay to NextWave, and NextWave
will in turn regularly
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remit to a third-party escrow agent designated by NextWave, the amount of two
cents ($0.02) per minute (the "Escrow Payment") for the first Four Billion
(4,000,000,000) minutes used by COMPANY under this Agreement to ensure the
purchase of the full Commitment by COMPANY. NextWave will include such Escrow
Payment on its regular invoices to COMPANY for billable MOUs. If and when
COMPANY purchases and NextWave receives all payments for the full Commitment,
then the aggregate amount of the Escrow Payments in escrow, together with
accrued interest, if any, less the reasonable costs of the escrow agent, shall
be promptly returned to COMPANY. If COMPANY fails to purchase the full
Commitment within the time required by this Agreement, or if this Agreement
expires or is otherwise terminated (other than for the convenience of or breach
by NextWave) prior to COMPANY's purchase of the full Commitment, then the
aggregate amount of the Escrow Payment held in escrow, together with accrued
interest, if any, shall be permanently retained by NextWave. Nothing contained
herein shall release COMPANY from its obligations under SECTION 3.2 of this
Agreement nor shall it limit NextWave's remedies, rights or relief under this
Agreement or at law or equity.
4. PRICING AND PAYMENT TERMS.
4.1 FULL MOBILITY PRICING. Pricing for Full Mobility Service,
measured in one minute increments, for each BTA will be as set forth for in the
Pricing Schedule attached hereto as ATTACHMENT C. NextWave's pricing
illustrated in ATTACHMENT C is exclusive of the interconnection fees and
enhanced services that are listed in ARTICLE 9.
4.2 RESALE TO FACILITIES-BASED CARRIERS. If COMPANY resells Full
Mobility Service to facilities-based carriers and in connection therewith
requires NextWave to implement a PIC/CIC code, then COMPANY shall pay NextWave
an additional fee of *______* per minute of Full Mobility Service sold to each
such carrier of management of PIC/CIC and associated databases.
4.3 ROAMING AGREEMENTS. Pricing for Full Mobility Service
provided pursuant to a Roaming Agreement will be the greater of (i) the Full
Mobility Service price set forth in the Pricing Schedule in ATTACHMENT C or
(ii) NextWave's incremental cost of usage under the Reciprocal Agreement with
the local carrier plus *_____* per minute.
4.4 E911 SERVICE. Emergency (911 and E911) and Lawful Intercept
calls will be handled by NextWave, unless otherwise required by regulatory
authorities. Each airtime invoice shall include a monthly charge (calculated on
a per subscriber basis in the maximum amount allowed by applicable regulatory
authority), for the provision of Emergency and Lawful Intercept services.
COMPANY shall pay such charges within the timeframe specified for payment of
Full Mobility Services. If regulatory authorities subsequently change the
requirements for Emergency or Lawful Intercept calls or mandate the provision
of other services, the Parties shall cooperate in the provision of such
services with associated fees and charges to be handled in a similar manner to
the Emergency and Lawful Intercept Services.
4.5 INVOICES.
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(a) NextWave will offer COMPANY either (i) a datalink interface to
electronically deliver COMPANY's monthly billing data or (ii) a magnetic tape
version of the same. Magnetic billing tapes are NextWave's standard means of
delivering COMPANY's billing data. If COMPANY desires a datalink interface,
COMPANY will be responsible for all costs of providing and maintaining the
datalink.
(b) NextWave's billing data to COMPANY will include the
subscriber's mobile number, electronic serial number and peak/off-peak
indicators, dialed number, originating and terminating cell site
identification, and/or time stamps on a call-by-call basis.
(c) If COMPANY desires its billing data transferred in shorter
intervals other than monthly (i.e., bi-monthly, etc.), NextWave and COMPANY
will negotiate in good faith, the terms and conditions of providing billing
data in shorter intervals.
(d) NextWave will offer multiple billing cycles from which COMPANY
can choose to allow COMPANY flexibility as to when it will be billed. COMPANY
must formally request its selected billing cycle in writing (or by some
mutually agreed to means). Absent a formal request, NextWave will assign
COMPANY a billing cycle.
(e) Invoices are payable in full upon receipt. Each invoice will
contain a due date as to when the invoice is to be paid ("Due Date"). Such Due
Date will be calculated based on the date the bills are generated plus 30 days.
If payment is not received by the Due Date, then a late payment penalty equal
to 1.5% of the balance due ("Late Payment Penalty") will be assessed.
Additionally, a late payment charge equal to .06% of the unpaid past due
balance ("Late Payment Charge") will be assessed for each day that payment is
not received.
(f) At NextWave's sole discretion, service may be restricted or
interrupted if payment of any undisputed past due amount is not made within ten
days after the Due Date.
(g) At NextWave's sole discretion, an additional security deposit
or letter of credit may be assessed if COMPANY incurs a Late Payment Penalty
more than once in any six month period.
(h) If NextWave commences legal proceedings to collect any
undisputed past due amount, COMPANY will be liable for all charges (including,
without limitation, collection costs, court costs and attorney's fees)
reasonably incurred by NextWave in enforcing its rights hereunder.
4.6 DISPUTED CHARGES. COMPANY shall provide NextWave with written
notice of any disputed charges on or before the Due Date of such charges. Any
disputed charges will be handled under the dispute resolution process described
in ARTICLE 8 herein. If a disputed amount is not resolved within 20 days after
the Due Date or if either Party seeks resolution in accordance with SECTION
8.2, then the disputed amounts shall be placed into an escrow account pending
resolution. Failure to place such amounts in an escrow account will result in
such amounts being treated as undisputed past due amounts. Any earned interest
accrued on these amounts will pass to the Party being awarded the disputed
amounts. If the disputed amounts are shared in any
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manner between the Parties, the accrued interest will be shared in the same
proportion as the disputed amounts. Any Late Payment Penalties or Late Payment
Charges incurred as a result of past due amounts that are ultimately credited
to the COMPANY will be reversed.
4.7 TAXES AND SURCHARGES. The prices paid by COMPANY for MOUs are
exclusive of any applicable sales, use, personal property or other taxes or
surcharges attributable to periods during the Term based upon or measured by
the MOUs and any associated services provided or used by NextWave in performing
its obligations under this Agreement. COMPANY shall reimburse NextWave on a
pass-through basis for those taxes paid by NextWave that are attributable to
COMPANY pursuant to this SECTION 4.7. Each Party shall provide and make
available to the other any resale certificates, information regarding
out-of-state sales or use of equipment, materials or services, and other
exemption certificates or information reasonably requested by the other Party.
The Parties will also work together to segregate into separate payment streams,
any taxable, nontaxable or items for which a sales, use or similar tax has
already been paid by NextWave.
4.8 RETAIL BAD DEBT AND FRAUD RESPONSIBILITY; DETECTION AND
PREVENTION.
(a) RETAIL BAD DEBT AND SUBSCRIPTION FRAUD. Retail bad debt and
fraudulent usage as a result of subscription fraud is COMPANY's sole
responsibility. COMPANY will be responsible for all originating and
terminating fees, long distance and roaming charges, and MOUs used on
NextWave's network incurred from retail bad debt and subscription fraud.
(b) CLONING FRAUD. NextWave will make reasonable efforts to limit or
eliminate cloning fraud on its network. NextWave's development of CDMA
technology and its "coding of each call" is anticipated to reduce exposure to
cloning fraud. Additionally, NextWave will make reasonable efforts to deploy
systems to monitor usage patterns, traffic patterns and the like to detect
potential cloning fraudulent use on a number. Upon detection of suspected
cloning activity, NextWave will notify COMPANY to investigate the number further
and take proper action. COMPANY will have 24 hours to substantiate the
subscriber's usage or to suspend service or change the mobile number/serial
number combination to correct the situation. If COMPANY determines that cloning
fraud was committed, NextWave will credit COMPANY for the local Airtime usage
only deemed to be fraudulent and incurred prior to NextWave's notice to COMPANY.
In situations where the COMPANY identifies cloning fraud that NextWave did not
detect, the COMPANY may submit a request to NextWave for credit for the local
Airtime usage only deemed to be fraudulent. In either case, the COMPANY must
supply NextWave with reasonable evidence that cloning fraud did in fact occur.
COMPANY will be responsible for all other charges, including but not limited to
long distance, international, and roaming charges, and for any costs incurred by
the COMPANY associated with preventing, detecting or correcting a cloning fraud
occurrence. NextWave and COMPANY will work together in good faith to curtail
cloning fraud, and will follow customer-industry practice for billing and
crediting of fraudulent usage. In the event that COMPANY, its employees or
Affiliates were negligent in taking reasonable measures to prevent cloning
fraud, COMPANY will be responsible for all charges and will not receive any
credits from NextWave.
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4.9 AUDITS OF FINANCIAL RECORDS. NextWave and COMPANY each shall
keep adequate books and records in sufficient detail to enable the amounts to
be paid under ARTICLE 4 of this Agreement. Each Party shall be entitled to have
an accounting firm of national recognition reasonably acceptable to the other
Party audit the relevant books and records of the other Party for the purpose
of confirming the accuracy of the calculation of the amounts due under ARTICLE
4. The auditor will disclose to the reviewing Party only the information
necessary to verify the calculation of the amounts due under ARTICLE 4 and not
any confidential information of the other Party, including but not limited to
any customer lists of the other Party. Any such audit shall be performed at the
requesting Party's expense (except if such audit reveals an overcharge of more
than five percent (5%) of the correct amount due under ARTICLE 4, then such
audit shall be at the expense of the other Party), during normal business hours
after reasonable notice and, at the request of the audited Party, shall be
subject to the independent agent's execution of a reasonable confidentiality
agreement. Such audits shall be conducted no more frequently than once every
year. In no event may a Party commence an inspection of any statement later
than two (2) years from the date of such statement. Prior to any inspection by
a Party, the Parties will in good faith meet, discuss and attempt to resolve
any objection or discrepancy claimed by the Party requesting the audit.
5. CONFIDENTIALITY.
5.1 CONFIDENTIAL INFORMATION. By virtue of this Agreement, the
Parties may have access to, or exchange, information that is confidential to
one another. As used in this Agreement, the term "Confidential Information"
shall mean only such information of the other Party that may be reasonably
understood from legends, the nature of such information itself and/or the
circumstances of such information's disclosure, to be confidential and/or
proprietary to the other Party or to third-parties to which the other Party
owes a duty of non-disclosure. Notwithstanding the foregoing, NextWave agrees
that all of the following information which NextWave may receive or otherwise
obtain in the course of its performance under this Agreement, including without
limitation in the course of providing the Service, shall be deemed the
Confidential Information of COMPANY for purposes of this Agreement: (i) COMPANY
subscriber lists and numbers, account information, usage, and information
regarding business planning and operations of COMPANY and COMPANY's
administrative, financial information, forecasts, predictions or marketing
reports or activities; (ii) all subscriber and other customer information; and
(iii) COMPANY network and intelligent network capabilities, interconnection
arrangements, architecture, strategies, development and implementation plans,
and vendor relationships. Notwithstanding the foregoing, COMPANY agrees that
all of the following information which COMPANY may receive or otherwise obtain
in the course of its performance under this Agreement shall be deemed
Confidential Information of NextWave for purposes of this Agreement:
information concerning NextWave's network, network performance trials,
equipment requirements, network system engineering and design specifications,
cell-site location planning strategies, network usage and performance data,
development plans for its intelligent network and enhanced features and
services, financial, accounting or marketing reports, and business plans,
analyses, forecasts, and predictions.
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5.2 RESTRICTIONS ON DISCLOSURE AND USE. Each of the Parties
agrees that as to any Confidential Information relating to one Party
("Discloser") obtained in any manner by the other Party ("Recipient")
hereunder:
(a) to use such Confidential Information only in the
performance of this Agreement or as otherwise expressly permitted by this
Agreement or by the Discloser;
(b) not to make copies of any such Confidential
Information or any part thereof except to the extent required to fulfill the
Party's obligations under this Agreement;
(c) not to disclose any such Confidential Information to
any third-party, using the same degree of care used to protect Recipient's own
confidential or proprietary information of like importance, but in any case
using no less than reasonable degree of care; provided, however, that Recipient
may disclose Confidential Information received hereunder to (i) its Affiliates
who are bound to protect the received Confidential Information from
unauthorized use and disclosure under the terms of a written agreement
(including without limitation a pre-existing written agreement), and (ii) its
employees, consultants and agents, and it Affiliates' employees, consultants
and agents, who have a need to know to perform or exercise rights under this
Agreement, and who are bound to protect the received Confidential Information
from unauthorized use and disclosure under the terms of a written agreement
(including without limitation a pre-existing written agreement). Confidential
Information shall not otherwise be disclosed to any third-party without the
prior written consent of the Discloser; and
(d) to return to the other Party, or destroy, all of such
Party's Confidential Information received hereunder, whether in any tangible
medium of expression or electronic or other form or format, promptly upon the
expiration or termination this Agreement.
5.3 EXCEPTIONS. The restrictions set forth in this ARTICLE 5 on
the use and disclosure of Confidential Information shall not apply to
information that:
(a) was publicly known at the time of Discloser's
communication thereof to Recipient;
(b) becomes publicly known through no fault of Recipient
subsequent to the time of Discloser's communication thereof to Recipient;
(c) is in Recipient's possession free of any obligation
of confidence at the time of Discloser's communication thereof to Recipient;
(d) is developed by Recipient independently of and
without use of any of Discloser's Confidential Information or other information
that Discloser disclosed in confidence to any third-party;
(e) is rightfully obtained by Recipient without
restriction from third-parties authorized to make such disclosure; or
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(f) is identified by Discloser in writing as no longer
proprietary or confidential.
5.4 DISCLOSURE PURSUANT TO LEGAL REQUIREMENT. In the event
Recipient is required by law, regulation or court order to disclose any of
Discloser's Confidential Information, Recipient will promptly notify Discloser
in writing prior to making any such disclosure in order to facilitate Discloser
seeking a protective order or other appropriate remedy from the proper
authority. Recipient agrees to cooperate with Discloser in seeking such order
or other remedy. Recipient further agrees that if Discloser is not successful
in precluding the requesting legal body from requiring the disclosure of the
Confidential Information, it will furnish only that portion of the
Confidential Information which is legally required and will exercise all
reasonable efforts to obtain reliable assurances that confidential treatment
will be accorded the Confidential Information.
5.5 PUBLICITY. The Parties expressly agree that the terms and
conditions of this Agreement, and any activities contemplated hereby or
performed hereunder, are the Confidential Information of the Parties and shall
not be disclosed in any manner without the prior written approval of the other
Party (which shall not be unreasonably withheld); provided, however, that (i)
COMPANY and NextWave agree that NextWave shall have the right to issue a news
release to announce the transaction contemplated herein and (ii) the Parties
acknowledge that NextWave has filed a registration statement with the
Securities and Exchange Commission and will be required to disclose the
existence of this Agreement and describe the material terms contained herein.
To the extent any information has been disclosed to the public pursuant to this
SECTION 5.5, such information shall not be deemed Confidential Information.
Notwithstanding the foregoing, each Party agrees that the Airtime pricing terms
contained in ATTACHMENT C are confidential and shall not be disclosed, except
as may be required by law or pursuant to any legal proceeding, in which case
the provisions of SECTION 5.4 shall apply. The Parties acknowledge that
NextWave will be required to file this Agreement with the Securities and
Exchange Commission as an exhibit to its registration statement. NextWave
shall seek confidential treatment of the Airtime pricing terms.
5.6 PROPRIETARY NOTICES. Each Party shall reproduce and maintain
on any copies of the other Party's Confidential Information received or made
hereunder such proprietary legends or notices (whether of the Party providing
the Confidential Information or of a third-party) as are contained in or on
the original.
5.7 RETURN OF CONFIDENTIAL INFORMATION. Each Party agrees to
return to the other Party or destroy all of such other Party's Confidential
Information promptly upon the termination of this Agreement. Neither Party
shall thereafter retain any such Confidential information or any copies thereof
fixed in any tangible medium of expression in whatever form or format.
5.8 COOPERATION. In the event either Party becomes aware that any
person (including, without limitation, any employee or agent of a Party) is
taking or threatens to take any action which would violate any of the foregoing
provisions, such Party shall promptly and fully advise the other Party (with
written confirmation as soon as practicable thereafter) of all facts known to
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it concerning such action or threatened action. Neither Party shall in any way
aid, abet or encourage any such action or threatened action. Each Party agrees
to cooperate in all reasonable ways to prevent such action or threatened
action, including, without limitation, assigning any cause of action it may
have related to the violation of the foregoing provisions, to the other Party,
and each Party agrees to do all reasonable things and cooperate in all
reasonable ways as may be requested by the other Party to protect the trade
secret and proprietary rights of such other Party in and to the Confidential
Information. A Party shall also be liable for any breach of the terms of this
ARTICLE 5 in the event that Confidential Information received from the other
Party is disclosed by an employee, agent or consultant of such Party or a
third-party to whom such Party has disclosed such information and such
disclosure would violate the terms of this ARTICLE 5 were such employee, agent,
consultant or third-party a Party hereto.
5.9 NO USE OF NEXTWAVE INTELLECTUAL PROPERTY RIGHTS. Nothing herein
shall be deemed to grant to COMPANY any right, license or other interest in or
under, or right to use, and COMPANY shall not use, any patents, copyrights,
trade secrets, trademarks, service marks, trade names or other similar
designation, or any other intellectual property rights of NextWave or any of its
Affiliates.
5.10 NO USE OF COMPANY INTELLECTUAL PROPERTY RIGHTS. Nothing herein
shall be deemed to grant to NextWave any right, license or other interest in or
under, or right to use, and NextWave shall not use, any patents, copyrights,
trade secrets, trademarks, service marks, trade names or other similar
designation, or any other intellectual property rights of COMPANY or any of its
Affiliates.
6. LIMITED LIABILITY.
6.1 IN NO EVENT WILL EITHER PARTY AND/OR ANY OF ITS AFFILIATES BE
LIABLE TO OR THROUGH THE OTHER PARTY FOR ANY OF THE FOLLOWING:
(a) DAMAGES CAUSED BY OTHER PARTY'S AND/OR ITS AFFILIATES' OR
SUPPLIERS' FAILURE TO PERFORM THEIR OBLIGATIONS OR RESPONSIBILITIES;
(b) CLAIMS OR DEMANDS BROUGHT AGAINST THE OTHER PARTY BY
THIRD PARTIES OTHER THAN THOSE THIRD PARTY CLAIMS IN RESPECT OF WHICH SUCH
PARTY IS EXPRESSLY OBLIGATED TO INDEMNIFY THE OTHER PARTY PURSUANT TO A
PROVISION OF THIS AGREEMENT; OR
(c) ANY LOST PROFITS, LOSS OF BUSINESS, LOSS OF USE (OR
INTERRUPTIONS OF BUSINESS), LOST SAVINGS, LOST OPPORTUNITIES OR OTHER
CONSEQUENTIAL, SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY OR PUNITIVE DAMAGES;
ANY OR ALL OF WHICH ARISE FROM OR IN CONNECTION WITH THE DELIVERY,
USE, OR PERFORMANCE OF SERVICE GOVERNED BY THIS
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<PAGE> 16
AGREEMENT, EVEN IF A PARTY AND/OR ANY OF ITS AFFILIATES HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH LOSS.
6.2 The limitations of remedies and liabilities set forth in this
ARTICLE 6 shall not apply to any obligation of one Party to pay the other Party
all amounts due and owing under this Agreement.
7. INDEMNIFICATION.
7.1 NextWave shall indemnify, defend and hold harmless COMPANY,
and all of COMPANY's and its Affiliates' officers, directors, partners,
employees and agents, from and against any and all losses, claims, damages,
liabilities or expenses of any kind (including, but not limited to, reasonable
attorneys fees and costs) arising out of any claim, action or proceeding by a
third-party against any of them to the extent it is based on (i) a claim for
personal injury (including death) or damage to personal property for which
NextWave or any of its Affiliates is legally responsible, or (ii) NextWave or
its Affiliate's failure to comply with all applicable laws, regulations and
orders in the performance of its obligations under this Agreement.
7.2 COMPANY shall indemnify, defend and hold harmless NextWave,
and all of NextWave's and its Affiliates' officers, directors, partners,
employees and agents, from and against any and all losses, claims, damages,
liabilities or expenses of any kind (including, but not limited to, reasonable
attorneys fees and costs) arising out of any claim, action or proceeding by a
third-party against any of them to the extent it is based on (i) a claim for
personal injury (including death) or damage to personal property for which
COMPANY or any of its Affiliates is legally responsible, or (ii) a claim by a
customer of COMPANY, or (iii) COMPANY or its Affiliate's failure to comply with
all applicable laws, regulations and orders in the performance of its
obligations under this Agreement.
7.3 The Party seeking indemnity under the foregoing provisions
shall notify the indemnifying Party of any such claim, action or proceeding,
and the indemnifying Party shall promptly and at its sole cost undertake the
defense thereof, except for claims by a customer of COMPANY, for which COMPANY
shall at its sole cost undertake the defense thereof for itself, and upon
demand thereof, NextWave and/or its Affiliates. No such claim shall be
compromised or settled without the prior written consent of the indemnified
Party if the settlement would restrict or adversely affect the indemnified
party. Such consent shall not be unreasonably withheld. After the indemnified
Party tenders the defense of any such claim, action or proceeding, the
indemnified Party shall have the right to participate at its own cost and
expense in such claim, action, or proceeding using counsel of its own choosing.
8. DISPUTE RESOLUTION
8.1 DISPUTE RESOLUTION. Either Party may identify a dispute that
has arisen in performance of this Agreement by notifying the other Party's
account manager in writing, setting forth the dispute with reasonable
specificity. The account managers shall promptly attempt to resolve such
dispute by negotiation. If within ten (10) calendar days of written notice of
a
15
<PAGE> 17
dispute the account managers have been unable to resolve it, then either Party
may escalate resolution of the dispute to an appropriate senior executive of
NextWave or to an appropriate senior executive of COMPANY by notifying them in
writing, setting forth the dispute with reasonable specificity. The senior
executives shall attempt to resolve such dispute by negotiation. If within ten
(10) calendar days of such escalation of a dispute the senior executives have
been unable to resolve it, then either Party may seek resolution of the dispute
by arbitration in accordance with SECTION 8.2.
8.2 ARBITRATION. Without prejudice to either Party's right to
seek equitable relief (including, but not limited to, injunction) from a court,
any dispute arising out of or related to this Agreement, which cannot be
resolved by negotiation, shall be settled by binding arbitration in accordance
with the J.A.M.S./ENDISPUTE arbitration rules and procedures ("Endispute
Rules") and in accordance with the terms of this ARTICLE 8. The costs of
arbitration, including the fees and expenses of the arbitrator, shall be shared
equally by the Parties unless the arbitration award provides otherwise. Each
Party shall bear the cost of preparing and presenting its case. The Parties
agree that this provision and the Arbitrator's authority to grant relief shall
be subject to the United States Arbitration Act, 9 U.S.C. 1-16 et seq.
("USAA"), the provisions of this Agreement, and the ABA-AAA Code of Ethics for
Arbitrators in Commercial Disputes. The Parties agree that the arbitrator
shall have no power or authority to make awards or issue orders of any kind
except as expressly permitted by this Agreement, and in no event shall the
arbitrator have the authority to make any award that provides for punitive or
exemplary damages. The arbitrator's decision shall follow the plain meaning of
the relevant documents, and shall be final and binding. The award may be
confirmed and enforced in any court of competent jurisdiction. All post-award
proceedings shall be governed by the USAA.
9. TERM.
This Agreement shall be effective when executed. The Term of this
Agreement shall be ten (10) years with one (1) renewal option for COMPANY to
renew for an additional five (5) years; provided that, if COMPANY elects to
renew the Agreement, the Parties shall review and adjust the pricing. The Term
shall commence upon the first day of commercial availability of Full Mobility
Service in any NextWave BTA, where the conditions in SECTIONS 11.3.b and 11.3.c
below are met. One (1) year prior to the expiration of the initial ten-year
Term, the Parties will meet to determine the pricing for the five-year renewal
period. If the Parties are unable to reach agreement six (6) months prior to
the expiration of the initial ten-year Term, the then existing terms and
conditions, including pricing shall continue for a transition period of six (6)
months after the expiration of the initial ten-year Term. If, in the event
that COMPANY exceeds five (5) billion billable MOU during the Term, then the
Parties will meet to determine the pricing for volume breaks above five (5)
billion MOU for the Airtime table in ATTACHMENT C.
10. TERMINATION PROVISION.
10.1 NextWave may terminate this Agreement without liability by
written notice to COMPANY in the event that:
16
<PAGE> 18
(i) COMPANY fails to pay any amounts due hereunder within
fifteen (15) days after notice from NextWave;
(ii) COMPANY's use of NextWave's services or network (a)
violates any laws, rules or regulations or (b) is in non compliance with
services standards established by NextWave; or
(iii) COMPANY commits a material breach of this Agreement
which is not cured within sixty (60) days of notice from NextWave.
10.2 COMPANY may terminate this Agreement without liability by written notice
to NextWave in the event that:
(i) NextWave fails to meet the conditions provide for
in SECTION 11.3; or
(ii) NextWave commits a material breach of this Agreement
and it is not cured within sixty (60) days of notice from COMPANY.
11. MISCELLANEOUS.
11.1 GOVERNING LAW AND CHOICE OF FORUM. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
other than the laws thereof that would require reference to the laws of any
other jurisdiction. For all purposes for which resort to a court may be had,
the Parties irrevocably consent to the exclusive jurisdiction and venue of the
federal and state courts located in the State of New York.
11.2 NOTICES. All notices, demands, requests, or other
communications which may be or are required to be given or made by any Party,
to the other Party pursuant to this Agreement shall be in writing and shall be
hand delivered, mailed first-class registered or certified mail, return receipt
requested, postage pre-paid, delivered by overnight air courier, or transmitted
by telegram, telex, or facsimile transmission addressed as follows:
If to COMPANY:
Flagship Wireless Inc.
639 Kettner Boulevard
San Diego, CA 92101
Attn: John O'Brien
Fax: (619) 696-1499
with a copy to:
Attn:
17
<PAGE> 19
Fax: ( )
If to NEXTWAVE:
NextWave Wireless Inc.
9455 Towne Centre Drive
San Diego, CA 92121
Attn: James Madsen
Senior Vice President Business Development
Fax: (619) 597-4041
with a copy to:
NextWave Wireless Inc.
9455 Towne Centre Drive
San Diego, CA 92121
Attn: General Counsel
Fax: (619) 642-1912
Each Party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be given, served or
sent. Each notice, demand, request or communication which shall be mailed,
delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent or received for all purposes at such time as
it is delivered to the addressees (with the return receipt, the delivery
receipt or affidavit of messenger, or the facsimile answer back being deemed
conclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
11.3 CONDITIONS. COMPANY's Commitment to purchase Airtime from
NextWave is subject to each of the following conditions being satisfied: (a)
NextWave offering commercial mobility service in BTAs covering at least 40
million POPs by December 31, 1998, and at least 70 million POPs by December 31,
2001; (b) NextWave providing Airtime in its BTAs meeting the system performance
criteria and technical specifications detailed in ATTACHMENT D and ATTACHMENT
E, respectively; (c) COMPANY's receipt of financing for its plan to offer PCS
service on a national basis in Markets where NextWave provides service.
COMPANY must satisfy this condition prior to NextWave's provision of commercial
mobility service in the San Diego market. In the event that COMPANY has not
obtained the financing necessary to satisfy this condition, COMPANY must notify
NextWave in writing of its intent to revert to the Exclusive Pay-As-You-Go
agreement executed on August 9, 1996; and (d) NextWave providing COMPANY and
its Affiliates interconnection as specified in SECTION 2.6.
18
<PAGE> 20
11.4 FORCE MAJEURE. Neither Party shall be liable for delays in
delivery or performance, or for failure to provide service, deliver or perform
when caused by any of the following which are beyond the reasonable control of
the delayed Party:
(i) Acts of God, acts of the public enemy, acts or
failures to act by the other Party, acts of civil or military authority,
governmental priorities, strikes or other labor disturbances, hurricanes,
earthquakes, fires, floods, epidemics, embargoes, war, riots, delays in
transportation, and loss or damage to goods in transit; or
(ii) Inability on account of causes beyond the reasonable
control of the delayed Party to obtain products, components, services or
facilities.
In the event of such delay, the date of delivery or performance shall
be extended for a period equal to the effect of the time lost by reason of the
delay.
11.5 ASSIGNMENT. This Agreement may not be assigned, in whole or
in part, by any Party without the prior written consent of the other Party,
except that either Party may assign this Agreement to any of its Affiliates
without the consent of the other Party and either Party may assign this
Agreement to a successor in connection with the acquisition of the Party;
provided that the successor confirms by written agreement its agreement to
assume the acquired Party's obligations under this Agreement. For purposes of
this subsection only, the term "Affiliates" shall mean an entity under common
control, controlling or controlled by a Party; provided that "control" as used
herein shall mean the ownership, directly or indirectly, of at least eighty
percent (80%) of the aggregate of all voting interests in such entity. Any
other attempt to assign this Agreement shall be null, void and of no force or
effect.
11.6 AUTHORIZATION AND ENFORCEABILITY. Each Party hereby
represents that:
(a) it has all requisite corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby;
(b) the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the Party of each Party; and
(c) this Agreement has been duly executed and delivered by
such Party and is valid and binding obligation of such Party, enforceable
against it in accordance with its terms.
11.7 SEVERABILITY. If any provision of this Agreement shall be
found by any court or administrative body of competent jurisdiction to be
invalid or unenforceable, the invalidity or unenforceability of such provision
shall not affect the other provisions of this Agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full force and
effect. The Parties hereby agree to attempt to substitute for any invalid or
unenforceable provision a valid and enforceable provision which achieves to the
greatest extent possible the economic, legal and commercial objectives of the
invalid and unenforceable provision.
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<PAGE> 21
11.8 SURVIVAL. The following provisions shall survive the
termination of this Agreement, and shall continue in full force and effect
along with any other provisions of this Agreement which by their nature or in
accordance with the terms, whether or not listed, shall survive such
termination: ARTICLES 5, 6, 7, 8 and 9 and SECTIONS 4.9, 11.1, 11.2, 11.7,
11.8, 11.13, 11.14, 11.16 and 11.17.
11.9 ENTIRE AGREEMENT. This Agreement, which includes the attached
Schedules, constitutes the entire agreement and understanding between the
Parties hereto in connection with subject matter hereof, and supersedes and
cancels all previous negotiations, commitments and writings with respect
thereto.
11.10 COUNTERPARTS. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each Party, or the
signatures of all persons required to bind Party, appear on each counterpart;
but it shall be sufficient that the signature of, or on behalf of, each Party,
or the signatures of the persons required to bind any Party, appear on one or
more of the counterparts. All counterparts shall collectively constitute a
single agreement.
11.11 CAPTIONS FOR CONVENIENCE ONLY. The captions used in this
Agreement are included for convenience only and shall not be considered part of
this Agreement for any purpose. Unless expressly stated otherwise, all
references herein to "Articles" or "Sections" are to the relevant portions of
this Agreement, and all references to "Schedules" are to the attachments to
this Agreement.
11.12 AMENDMENT. This Agreement shall not be amended, modified or
rescinded in any manner, except by an instrument in writing signed by duly
authorized representatives of each of the Parties hereto.
11.13 NO THIRD-PARTY BENEFICIARY. Nothing in this Agreement,
whether expressed or implied, is intended to confer any rights or remedies
under or by reason of this Agreement on any persons other than the Parties and
their respective successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of any
third person to any Party, nor shall any provision give any third person any
right of subrogation or action against any Party.
11.14 EXPENSES. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated hereby are consummated,
each Party will pay its own costs and expenses incurred in connection with the
negotiation and execution of this Agreement and the transactions contemplated
hereby (including executing all such documents and doing such acts and things
as may reasonably be required for the purpose of giving full effect to this
Agreement).
11.15 WAIVER. Any term or condition of this Agreement may be waived
at any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the Party waiving such term or condition. No
waiver by any Party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or
20
<PAGE> 22
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by law or otherwise afforded, will be cumulative and not
alternative.
11.16 BINDING. This Agreement is binding upon, inures to the
benefit of and is enforceable by the Parties hereto and their respective
permitted successors and assigns.
11.17 SPECIFIC PERFORMANCE. The obligations of the Parties under
ARTICLE 5 of this Agreement are unique. If any Party should be in Default
under ARTICLE 5 of this Agreement, the Defaulting Party acknowledges that it
would be extremely impracticable to measure the resulting damages.
Accordingly, in addition to any other available rights or remedies, the
Non-Defaulting Party may sue in equity for specific performance and the
Defaulting Party expressly waives the defense that a remedy in damages would be
adequate.
11.18 REGULATORY COMPLIANCE. Notwithstanding any provision in this
Agreement to the contrary, NextWave shall not be obligated to furnish COMPANY
with Full Mobility Services under rates, charges, terms or conditions that
violate any applicable provisions of the Communications Act of 1934, as
amended, the applicable rules, regulations or policies of the FCC or any other
federal or state agency with jurisdiction over NextWave's services.
[Remainder of Page Intentionally Left Blank]
21
<PAGE> 23
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective and delivered as of the date set forth below.
FLAGSHIP WIRELESS INC., NEXTWAVE WIRELESS INC.,
A CALIFORNIA CORPORATION A DELAWARE CORPORATION
Date: December 2, 1996 Date: December 2, 1996
---------------------------- ----------------------------
/s/ JOHN M. O'BRIEN /s/ JAMES S. MADSEN
---------------------------- ----------------------------
(Signature) (Signature)
By: John M. O'Brien By: James S. Madsen
------------------------------ ------------------------------
Title: President Title: Senior Vice President
--------------------------- ---------------------------
22
<PAGE> 24
ATTACHMENT A
NextWave's Network Elements and Functionality
The following are the network elements and functionality NextWave will make
available, to the extent practicable and pursuant to pricing specified in the
Agreement, in each PCS market either directly or indirectly through a third
party:
a.) ADVANCED INTELLIGENT NETWORK ("AIN") PLATFORM. The AIN
platform is the platform from which COMPANY will store and offer its and
customers all of their non-switched based vertical services. As an option, when
available NextWave may provide its AIN platform.
b.) THIRD PARTY INTERCONNECTION ACCESS. The physical
interconnection to the Public Switching Telephone Network ("PSTN"). The
responsibility for the associated monthly and usage-sensitive costs for such
circuits carrying COMPANY's customers' mobile-to-landline and landline-to-mobile
traffic to and from NextWave's network is COMPANY's.
c.) BACKHAUL INTERCONNECTION. In BTA markets where COMPANY is a
local access provider of facilities, COMPANY will make available to NextWave
standard T1 and T3 facilities at COMPANY's most favorable rate for like terms,
quantities, and conditions. These facilities may be used by NextWave for
switch-to-base station, switch-to-base station controller, base station-to-base
controller and switch-to-switch connections.
d.) SS-7 BACKBONE. The SS-7 signaling backbone network carrying
standard IS-41 message sets between NextWave's network and COMPANY's HLR
database access.
e.) FCC LICENSE TO PROVIDE PCS. The Federal Communications
Commission's ("FCC") license to provide Personal Communication Service ("PCS")
in the markets of interest.
f.) RADIO COVERAGE AND ACCESS. The deployment of competitive
coverage at a predetermined and mutually agreed to minimum level/grade of PCS
access service.
g.) MOBILE SWITCHING CENTER. The switching capability to
provide the end customer with the proper mobility and roaming capability. AIN
software for standard IS-41 interconnection to COMPANY's AIN platform and PSTN
interconnection.
h.) SWITCH-BASED VERTICAL SERVICES. These end customer
vertical software services provided at the Mobile Switching Center for example,
but not limited to, Call Waiting, Call Forwarding, Three-Way Calling, and Caller
ID.
i.) LOCAL WIRELESS OPERATIONS AND MANAGEMENT OF THE NETWORK.
NextWave will design, engineer, construct, and maintain the PCS network in each
BTA and maintain a minimum service availability level.
<PAGE> 25
ATTACHMENT B
NextWave's PCS Markets
<TABLE>
<CAPTION>
- --------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
COLONIAL REGION LONE STAR REGION OHIO VALLEY REGION
Boston, MA Austin, TX Cincinnati, OH
Manchester/Nashua, NH Bryan-College Station, TX Columbus, OH
New London, CT Houston, TX Dayton, OH
Portland/Brunswick, ME San Antonio, TX
Providence, RI Temple-Killeen, TX
Worcester, MA HOOSIER REGION
Bloomington, IN
AMIGO REGION Columbus, IN
HOLLYWOOD REGION Brownsville, TX Evansville, IN
Los Angeles, California El Paso, TX Indianapolis, IN
Las Cruces, NM Lafayette, IN
McAllen, TX
DOLPHIN REGION
San Diego, California SOONER REGION
NY-METRO REGION Oklahoma City, OK
Albany, NY
Allentown, PA
CAPITAL REGION New Haven, CT THOROUGHBRED REGION
Baltimore, MD Poughkeepsie, NY Lexington, KY
Hagerstown, MD Scranton, PA Louisville, KY
Norfolk, VA
Richmond, VA
Washington, DC BIG APPLE REGION TWIN CITIES REGION
NYC BTA Minneapolis, MN
GREENGRASS REGION
Asheville, NC STEELER REGION ROCKY MOUNTAIN REGION
Charlotte, NC Pittsburgh, PA Denver
Greensboro, NC
Hickory, NC
Roanoke, VA SUNSHINE REGION PACIFIC NORTHWEST REGION
Gainsville, FL Bellingham, WA
Jacksonville, FL Longview, WA
MID. AMERICA Lakeland-Winter Haven, FL Olympia, WA
Joplin, MO Melbourne, FL Portland, OR
Kansas City, MO Orlando, FL Seattle, WA
Springfield, MO Sarasota, FL
Tampa, FL
BUCKEYE REGION
Cleveland, OH
- --------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
<PAGE> 26
ATTACHMENT C
PRICING SCHEDULE
* ____________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_________________________________________________________________________.*
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 27
ATTACHMENT D
SYSTEM PERFORMANCE CRITERIA
1.1 COVERAGE AREA
The Coverage Area shall be that minimal signal strength necessary to provide
service such that calls are successful *______* of the time averaged along the
Coverage Area boundary, irrespective of the direction of the call (land-mobile,
mobile-land) with no greater than *_____* frame error rate (FER) on average.
1.2 HANDSET COMPATIBILITY
NextWave shall demonstrate the full compatibility of its network with handsets
of COMPANY's choice that have been certified as compliant with domestic PCS
interface standards, so long as these handsets have been demonstrated to be
fully compatible with one other domestic IS-95 (CDMA) compliant 1.9 GHz network
and certified as IS-95, 1.9 GHz compliant by recognized standard or
certification bodies.
1.3 NETWORK CALL BLOCKAGE/QUALITY OBJECTIVES
The following considerations are required concerning network call blockage:
- - Average busy hour blockage within the NextWave network will not exceed
*_____* of all call attempts.
- - The above values are to be met, unless superseded by necessary regulatory
mandates.
- - Emergency calls should be given the highest possible resource priority.
1.4 DROPPED CALLS
The number of dropped calls measured over a period of a month in a Coverage
Area shall not exceed *_____* of the total number of subscriber calls originated
in that Coverage Area.
1.5 NETWORK AVAILABILITY
NextWave will engineer and manage its network to meet the above service and
quality levels established for the Coverage Area. The emphasis of management
activities will be on preventative maintenance, such that potential outages will
be resolved before customers are affected.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 28
A Network Outage is the inability, or a significant degradation in the ability
of a customer to establish and maintain a channel of communication as a result
of failure or degradation in the performance of NextWave's network.
In the event of a major network outage, NextWave will notify COMPANY of the
conditions affecting the customers, including, but not limited to out-of-service
events, and high system traffic loads.
Any FCC-reportable Network Outages, including disruption of 911/E911 and
emergency services will be reported to COMPANY.
1.6 PERFORMANCE VERIFICATION
NextWave will provide to the COMPANY quarterly statistics that define the
performance of the network including blocked calls, dropped calls, and frame
error rates. In addition, NextWave will provide coverage maps that define the
Coverage Area.
<PAGE> 29
ATTACHMENT E
TECHNICAL STANDARDS
NextWave shall be in general compliance with the following standards:
I. WIRELESS NETWORK INTERFACE STANDARDS
A. IS-41REV B CELLULAR RADIO TELECOMMUNICATIONS INTERSYSTEM OPERATIONS
NextWave's Network shall be in general compliance with IS-41 Revision B. This
shall be upgraded to be in general compliance with IS-41 Revision C when IS-41
Revision C is commercially available.
B. EIA/TIA/IS-52: UNIFORM DIALING PROCEDURES AND CALL PROCESSING
TREATMENT FOR CELLULAR RADIO TELECOMMUNICATIONS - NOVEMBER, 1989
C. EIA/TIA/IS-52-A: UNIFORM DIALING PROCEDURES AND CALL PROCESSING
TREATMENT FOR CELLULAR RADIO TELECOMMUNICATIONS - WHEN PUBLISHED
D. EIA/TIA/IS-53: CELLULAR FEATURES DESCRIPTION: - AUGUST, 1991
E. EIA/TIA/IS-53-A: CELLULAR FEATURES DESCRIPTION: - MAY, 1995
F. EIA/TIA/IS-93: CELLULAR RADIO TELECOMMUNICATIONS A-D INTERFACE
STANDARDS - OCTOBER, 1993.
II. SS7 INTERFACE STANDARDS
A. TR-NWT-000246: BELL COMMUNICATIONS RESEARCH SPECIFICATION OF SIGNALING
SYSTEM NUMBER 7, ISSUE 3
B. TR-NWT-000082: SIGNALING TRANSFER POINT GENERIC REQUIREMENTS, ISSUE 5
C. TR-TSY-000317: SWITCHING SYSTEM REQUIREMENTS FOR CALL CONTROL USING
THE INTEGRATED SERVICES DIGITAL NETWORK USER PART (ISDNUP)
D. TR-TSY-000394: SWITCHING SYSTEM REQUIREMENTS FOR INTERCHANGE
CARRIERS USING THE INTEGRATED SERVICES DIGITAL NETWORK USER PART
(ISDNUP)
E. TR-NWT-000444: SWITCHING SYSTEM GENERIC REQUIREMENTS SUPPORTING
ISDN ACCESS USING THE INTEGRATED SERVICES DIGITAL NETWORK USER PART
(ISDNUP)
F. ANSI T1.114 SS7 TRANSACTION CAPABILITIES APPLICATION PART (TCAP)
<PAGE> 30
G. ANSI T1.112: SS7 SIGNALING CONNECTION CONTROL PART (SCCP)
H. ANSI T1.111: SS7 MESSAGE TRANSFER PART (MTP)
III. AIR INTERFACE STANDARDS
A. ANSI-J-STD-008: PERSONAL STATION -BASE STATION COMPATIBILITY
REQUIREMENTS FOR 1.8 TO 2.0 GHZ CDMA PERSONAL COMMUNICATIONS SYSTEMS.
<PAGE> 1
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN SEPARATELY FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.40
NEXTWAVE RESALE AGREEMENT
<PAGE> 2
NEXTWAVE RESALE AGREEMENT
This PCS ("Personal Communications Services") Resale Agreement
("Agreement") is entered into and is in effect as of November 4, 1996, by and
between NEXTWAVE WIRELESS INC. and its Affiliates, a Delaware corporation, with
principal offices located at 9455 Towne Centre Drive, San Diego, California
92121 ("NEXTWAVE") and ONE STOP WIRELESS OF AMERICA, INC. and its Affiliates, a
Delaware corporation, with principal offices located at 6570 South State Street,
Salt Lake City, Utah 84107 ("COMPANY") and the terms of which are contained
herein.
A. NextWave Personal Communications Inc. ("NextWave PCI") is a
wholly owned subsidiary of NextWave Telecom Inc. a Delaware corporation.
NextWave PCI was formed to participate in the Federal Communications
Commission's ("FCC's") PCS auctions;
B. NextWave Wireless Inc. is a wholly owned subsidiary of NextWave
Telecom Inc. organized to construct facilities, deploy PCS network equipment,
and provide PCS in the licensed markets.
C. NextWave PCI has successfully bid for 63 licenses covering
approximately 110 million POPs (based on current census data) in various markets
across the United States (see ATTACHMENT B). NextWave and NextWave PCI intend
to construct facilities, deploy PCS network equipment and provide PCS in those
licensed markets.
D. Subject to the terms and conditions set forth hereto, in the
PCS markets awarded to NextWave in the C-block auction, COMPANY desires to
purchase PCS minutes of use ("MOUs") on a resale basis from NextWave pursuant
to a ten (10) year commitment by COMPANY to purchase digital wireless voice
services from NextWave in all markets where COMPANY desires to resell digital
wireless voice services where NextWave provides service. NextWave desires to
sell PCS minutes of use to COMPANY for resale in those markets under a single
24-hour flat rate service, excluding interconnection charges with no access fee
based upon COMPANY's advance commitment to purchase minutes of use.
WHEREAS, COMPANY will be responsible to provide customer acquisition
(i.e., sales, marketing, advertising and customer activation), billing,
collections, customer service/care, customer retention, handset fulfillment.
THEREFORE, in consideration of the foregoing, and of the mutual
covenants and agreements hereinafter set forth, NextWave and COMPANY agree as
follows:
1. DEFINITIONS.
(a) AFFILIATE means, with respect to any party, any person,
corporation or other legal entity that, directly or indirectly, controls, is
controlled by or is under common control with such party. For purposes of this
definition, "control" (including, with correlative meanings, the terms
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"controlling", "controlled by" and "under common control with"), means the
possession, directly or indirectly, of the power (i) to vote securities having
ordinary voting power sufficient to elect a majority of the directors of such
party or (ii) to direct or cause the direction of the management and policies
(including investment policies) of that party, whether by contract or
otherwise.
(b) FULL MOBILITY SERVICE means the provision of digital wireless
voice airtime with mobile inter-cell (base station) hand-off capability.
(c) LICENSES means PCS licenses held by NextWave or its Affiliates.
(d) PCS AUCTIONS means the auction conducted by the FCC to assign
licenses to the successful bidders for 120 MHz of spectrum as broadband PCS
licenses in the 1850-1990 MHz band. The PCS band has been sub-divided into
three 30 MHz blocks (blocks A, B, and C) and three 10 MHz blocks (blocks D, E
and F). The FCC has allocated a portion of the broadband PCS spectrum (blocks C
and F) to certain entities called "Entrepreneurs". The FCC completed the
C-block auction in July, 1996. Together these two blocks make up the
"Entrepreneurs' Band".
(e) MINUTE OF USE ("MOU") means the particular use interval
provided by NextWave for digital mobile voice service for resale to end-users
and is measured from time of seizure to the time of termination.
(f) BASE MOU PRICE means NextWave's MOU price prior to any
discounts. Usage is billed in 60 second intervals and partial minutes are
rounded up to the next full minute.
(g) BTA (Basic Trading Area) means a particular market boundary as
defined by Rand McNally & Company and the FCC.
(h) ROAMING AGREEMENTS means any agreement whereby NextWave or its
Affiliates has the ability to purchase airtime from, interconnect with and/or
use the wireless network facilities of another operator of a wireless network.
(i) TERM has the meaning set forth in ARTICLE 9.
2. PROVISION OF AIRTIME.
2.1 PROVISION OF SERVICES. NextWave and its Affiliates shall sell
Full Mobility Services to COMPANY in each BTA for which NextWave or any of its
Affiliates is awarded or otherwise obtains a License, or enters into a Roaming
Agreement.
2.2 SERVICES DESCRIPTION. Full Mobility Services shall involve
the establishment and maintenance of wireless circuits for the continuous
transmission of digital voice signals.
2.3 COMPANY FORECAST. Ninety (90) days prior to the offering of
commercial Full Mobility Service in any BTA, as communicated to COMPANY by
NextWave at least One Hundred and Twenty-Days (120) prior to the offering of
such commercial Service, COMPANY will provide NextWave with a forecast of
anticipated Full Mobility Service requirements, on a quarterly basis, for that
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BTA for the remainder of the calendar year and for each year thereafter.
COMPANY will provide NextWave with quarterly updates to its initial and annual
forecasts.
2.4 NETWORK FEATURE FUNCTIONALITY. As practicable, NextWave is
committed to maintain its infrastructure with the most recent commercial
releases of vendor software available that implements the standards and
protocols described in the J-STD-008 air interface and associated standards and
new feature functionality that operates with such standards and protocols. For
those capabilities that affect end users or subscribers, NextWave will share
with COMPANY its timeline and schedule of infrastructure upgrades as they become
available.
2.5 ROAMING ARRANGEMENTS. NextWave will make reasonable efforts to
negotiate favorable roaming agreements and rates with other wireless licensees
in the United States, and wireless operators in Canada, Mexico, and other
countries that may provide for roaming from PCS networks in the United States
for traffic to and from each other's wireless licensed markets. NextWave will
make available, at NextWave's sole discretion, rapid roaming clearing
capabilities through either a direct interface to other networks with which it
has roaming arrangements or via industry clearing houses.
2.6 INTERCONNECTION.
(a) LEC INTERCONNECTION. NextWave has the responsibility to negotiate
interconnect agreements with the other local carriers. COMPANY and NextWave
agree on the need to minimize interconnect charges for MOUs originating and
terminating on NextWave's network. NextWave will continue its efforts to
influence lower interconnect rates through the regulatory agencies and
processes. MOU pricing is exclusive of interconnection fees for both originating
and terminating traffic from and to non-NextWave networks, which shall be
charged to COMPANY at the negotiated base rate.
(b) IXC INTERCONNECTION. NextWave intends to interconnect with the
major interexchange carriers (e.g., AT&T, MCI, Sprint) via trunk connections
with their points of presence at the expense of the IXC. Similarly, as COMPANY
requires, NextWave will use reasonable efforts to interconnect with other long
distance services under similar conditions. NextWave's price for MOUs includes
origination for direct interconnection with IXCs for mobile-to-land calls to the
extent that the costs of such interconnection are borne by the IXC. If the IXC
does not bear the cost of such interconnection or if direct interconnection with
the IXC is not feasible or practicable, then any interconnection charges shall
be borne by COMPANY on a pass-through basis.
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2.7 NUMBER OWNERSHIP.
(a) PURCHASE AND ALLOCATION OF NUMBERS. COMPANY shall obtain
numbers ("Numbers") from North American Numbering Plan Administration ("NANPA")
for activation by NextWave on the Network. In the event COMPANY is not
authorized or is otherwise unable to obtain Numbers, NextWave shall obtain
Numbers, in entire block increments, on a pass-through cost basis. In the
event there is a shortage of Numbers and an allocation of Number blocks is
required, NextWave may allocate Number blocks pro rata among its airtime
customers based on the relative number of subscribers.
(b) NUMBER TRANSFERS. COMPANY will pay a nominal fee for the
engineering and administrative charges associated with the moving of COMPANY's
numbers to another network. COMPANY will be charged a comparable rate to other
carriers' rates and industry practices, a standard rate per number and all
non-recurring charges associated with forwarding COMPANY's traffic to any
number on a non-NextWave network.
(c) TRANSFER SUPPORT. NextWave will support COMPANY's move of the
numbers to the new wireless network, for a nominal charge, ensuring proper
addressing and recording for the Local Exchange Routing Guide ("LERG").
2.8 RESELLER SWITCH INTERFACE.
(a) NON-FACILITIES BASED. NextWave will make available to COMPANY,
at a mutually agreed upon fee, access to customer care capabilities including,
but not limited to, home location register services (i.e., customer profile
management and customer features service management), authentication, and if
practicable, call detail recording ("CDR") access. COMPANY will be responsible
for providing personnel and all other resources required to deliver customer
care services to COMPANY's subscribers.
(b) FACILITIES BASED. NextWave will make available a T1/T3
interface to a COMPANY owned and operated switch for the delivery of COMPANY's
calls to and from the Public Switched Telephone Network (the "PSTN"). COMPANY's
numbers must be activated on NextWave's switch to allow NextWave to properly
provide mobility to those customers. The demarcation point will be at
NextWave's switch and COMPANY will be responsible for the provisioning and
costs, both recurring and non-recurring, of all circuits between COMPANY's
switch and demarcation point at NextWave's switch. If COMPANY desires, NextWave
will engineer and maintain these circuits at a mutually agreed fee.
2.9 SERVICE ACTIVATIONS, DE-ACTIVATIONS AND CHARGES.
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(a) SERVICE ACTIVATION PLATFORM. NextWave will offer COMPANY a
direct datalink interface to NextWave's service activation platform to allow
COMPANY an automated mechanism to perform customer on-line activations,
de-activations, and service change orders. NextWave reserves the right to set
the interface standard for connections to its service activation platform.
NextWave's service activation platform will collect COMPANY service orders,
format the requests, and download them into NextWave's switches and appropriate
sub-systems in as near real time as practicable. COMPANY will be responsible
for all of the costs associated with providing and maintaining its own on-site
computer terminal, software and modem/datalink connection.
(b) NUMBER REMOVAL CHARGES. COMPANY's service activation for each
customer is free of any activation fee as long as COMPANY purchases its PCS
numbers directly from NANPA. COMPANY will be charged a $10 removal fee for
those situations when a number is removed from a NextWave switch. The fee is
required to cover administrative expenses.
2.10 HANDSET SOURCING AND FULFILLMENT.
(a) VOLUME PURCHASE ORDERS AND DELIVERY. If COMPANY desires,
NextWave, through its association with specific strategic partners and
suppliers, will use reasonable efforts to allow COMPANY to participate in any
NextWave volume purchase arrangements. NextWave will make arrangements for the
ordering of the handsets and accessories and the equipment will be drop shipped
by the manufacturer to COMPANY. COMPANY and supplier will be responsible for
making shipping, delivery, and payment arrangements.
(b) PRICING AND THIRD-PARTY EQUIPMENT. Pricing of the services in
(a) above is not available at this time, but will be determined and shared with
COMPANY in advance of NextWave's commercial service introduction. Further,
COMPANY is free to purchase any licensed subscriber equipment directly from
equipment manufacturers as long as purchased subscriber equipment is in full
compliance with the established TIA, CTIA and NextWave's network air-interface
and performance standards.
2.11 ENHANCED SERVICES.
(a) COMPANY PROVIDED SERVICES. NextWave will offer COMPANY the
opportunity to provide its own enhanced services platform. If COMPANY desires
to provide additional vertical services to its customers through its own or
through a third-party's enhanced services platform and if such addition to
NextWave's network is practicable, COMPANY and NextWave will make reasonable
efforts to jointly develop and mutually agree to the technical procedures and
lockdown requirements to properly test the service prior to its introduction on
the NextWave network. NextWave reserves its right to set its interface
standard for any connections to NextWave's switches. Engineering and set-up
fees for such service configurations will be determined on a case-by-case basis
and mutually agreed to prior to service introduction. The interconnection to
COMPANY's enhanced services platform will be based upon NextWave's standard
interface. The demarcation point will be at NextWave's switch. COMPANY will
be responsible for all of the recurring and non-recurring interconnection costs
associated with providing and maintaining the connection to COMPANY's enhanced
services platform.
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Hardware, software and tangible resources (i.e., switching, processing or
storage of data) on NextWave's master switching center and network that are
required to support features and functionality provided by COMPANY's enhanced
services platform shall be made available by NextWave, to the extent
practicable, at prices based on NextWave's reasonable, direct and allocable
expenses relating to such hardware, software or tangible resources utilization.
(b) NEXTWAVE PROVIDED SERVICES. NextWave plans to offer a family
of enhanced services which may include voice mail, enhanced voice (with
out-dial-to-a-pager capability), short messaging, custom calling features (i.e.,
call waiting, three-way calling, call forwarding, no answer transfer, etc.),
single number service, fax store and forward, e-mail, star features and
information services. These services will be offered to COMPANY on an
individual and/or package basis on terms to be agreed upon.
(c) ENHANCED SERVICES PRICING. The Parties agree that service
features, enhanced services, and their associated pricing must be competitive.
Pricing for NextWave's features and enhanced services will be competitive with
prevailing retail pricing. NextWave will price services either individually or
provide bulk pricing for global feature activation in a market. NextWave
recognizes that switch-based features and enhanced services will increasingly be
packaged at retail with airtime and become a "tablestakes" for the business.
Prior to commercial availability, the Parties agree to develop a plan for
enhanced services to identify COMPANY's needs, refine NextWave implementation
approaches that might include use of COMPANY AIN platforms, and agree on
wholesale pricing for such services. For situations where COMPANY purchases
enhanced services from NextWave and subsequently migrates to another enhanced
services platform, the parties will develop a plan to minimize COMPANY's
subscriber churn and recover NextWave's capital investment.
2.12 NETWORK SERVICE TRAINING AND TROUBLE REPORTING.
(a) SCOPE OF SERVICES. NextWave will provide COMPANY network
service training and documentation prior to COMPANY's introduction of any
NextWave enhanced services offering in any market. Scheduling for such
training will be mutually agreed upon by both Parties.
(b) NOTIFICATION OF SERVICE. NextWave will promptly notify
COMPANY's customer care department or COMPANY's assigned point of contact of
service enhancements, network expansions, and major services outages. NextWave
and COMPANY will mutually agree to the notification procedures prior to
NextWave's commercial service offering. Additionally, NextWave will routinely
provide COMPANY with updated NextWave service maps as service is expanded.
2.13 NETWORK ACCESS TO LOCAL CUSTOMER CARE. NextWave, at no cost to
COMPANY, will provide COMPANY with one (1) customer care "star feature" (e.g.,
*CARE) that will directly connect COMPANY's customer to COMPANY's local
customer care center. COMPANY will be responsible for any network access
charges related to interconnection and
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transport of such calls from NextWave's switches to COMPANY's customer care
center. For the situation where these star feature customer service calls
originate in a roaming market and are routed directly to COMPANY's customer care
center, COMPANY will be responsible for local network interconnection and
transport charges.
3. PURCHASE COMMITMENT.
3.1 Subject to the terms and conditions hereof, COMPANY agrees to
purchase on an exclusive basis from NextWave a minimum of Five Billion
(5,000,000,000) minutes of Full Mobility Service during the Term in all of the
BTAs in which NextWave has a License (the "Commitment"). The term "exclusive"
means, for the purpose of this Agreement, that NextWave will be the sole
provider of digital wireless voice MOU's for COMPANY in markets where NextWave
provides Full Mobility Service.
3.2 COMPANY shall purchase at least 5% of its Commitment (the
"Initial Purchase Commitment") within the three (3) year period following the
date NextWave first offers Full Mobility Service on a commercial basis in
either NextWave's New York City or Los Angeles BTAs ("Commercial Service Date")
and 25% of its Commitment within the five (5) year period following the
Commercial Service Date.
In the event COMPANY fails to satisfy the Initial Purchase Commitment
by the third anniversary of the Commercial Service Date (the "Third Anniversary
Date"), COMPANY shall remit to NextWave, within five (5) business days thereof,
an amount in cash equal to the difference between the Initial Purchase
Commitment and the actual number of minutes of Full Mobility Service purchased
by COMPANY prior to the Third Anniversary Date multiplied by the then applicable
purchase price per minute being charged to COMPANY in accordance with SECTION
4 hereof.
In the event COMPANY fails to satisfy the Secondary Purchase Commitment
by the fifth anniversary of the Commercial Service Date (the "Fifth Anniversary
Date"), COMPANY shall remit to NextWave, within five (5) business days thereof,
an amount in cash equal to the difference between the Secondary Purchase
Commitment and the actual number of minutes of Full Mobility Service purchased
by COMPANY prior to the Fifth Anniversary Date multiplied by the then applicable
purchase price per minute being charged to COMPANY in accordance with SECTION
4 hereof.
3.3 In addition to the amount of any purchase price to be paid by
COMPANY under this Agreement, COMPANY agrees to pay to NextWave, and NextWave
will in turn regularly
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remit to a third-party escrow agent designated by NextWave, the amount of two
cents ($0.02) per minute (the "Incentive Payment") for the first Four Billion
(4,000,000,000) minutes used by COMPANY under this Agreement to ensure the
purchase of the full Commitment by COMPANY. NextWave will include such two
cents per minute on its regular invoices to COMPANY for billable MOUs. If and
when COMPANY purchases and NextWave receives all payments for the full
Commitment, then the aggregate amount of the Incentive Payments in escrow,
together with accrued interest, if any, less the reasonable costs of the escrow
agent, shall be promptly returned to COMPANY. If COMPANY fails to purchase the
full Commitment within the time required by this Agreement, or if this Agreement
otherwise expires or is terminated (other than for the convenience of or breach
by NextWave) prior to COMPANY's purchase of the full Commitment, then the
aggregate amount of the Incentive Payments in escrow, together with accrued
interest, if any, shall be permanently retained by NextWave. Nothing contained
herein shall release COMPANY from its obligations under SECTION 3.2 above nor
shall it limit NextWave's remedies, rights or relief under this Agreement or at
law or equity.
4. PRICING AND PAYMENT TERMS.
4.1 FULL MOBILITY PRICING. Pricing for Full Mobility Service,
measured in one minute increments, for each BTA will be as set forth for in the
Pricing Schedule attached hereto as ATTACHMENT C. NextWave's pricing
illustrated in ATTACHMENT C is exclusive of the interconnection fees and
enhanced services that are listed in Section 2.
4.2 RESALE TO FACILITIES-BASED CARRIERS. If COMPANY resells Full
Mobility Service to facilities-based carriers and in connection therewith
requires NextWave to implement a PIC/CIC code, then COMPANY shall pay NextWave
an additional fee of *______* per minute of Full Mobility Service sold to each
such carrier of management of PIC/CIC and associated databases.
4.3 ROAMING AGREEMENTS. Pricing for Full Mobility Service
provided pursuant to a Roaming Agreement will be the greater of (i) the Full
Mobility Service price set forth in the Pricing Schedule or (ii) NextWave's
incremental cost of usage under the Reciprocal Agreement (including any
interconnection charges or fees) plus *_____* per minute.
4.4 E911 SERVICE. Emergency (911 and E911) and Lawful Intercept
calls will be handled by NextWave, unless otherwise required by regulatory
authorities. Each airtime invoice shall include a monthly charge (calculated on
a per subscriber basis in the maximum amount allowed by applicable regulatory
authority), for the provision of Emergency and Lawful Intercept services.
COMPANY shall pay such charges within the timeframe specified for payment of
Full Mobility Services. If regulatory authorities shall subsequently change the
requirements for Emergency or Lawful Intercept calls or mandate the provision
of other services, the Parties shall cooperate in the provision of such
services with associated fees and charges to be handled in a similar manner to
the Emergency and Lawful Intercept Services.
4.5 INVOICES.
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(a) NextWave will offer COMPANY either (i) a datalink interface to
electronically deliver COMPANY's monthly billing data or (ii) a magnetic tape
version of the same. Magnetic billing tapes are NextWave's standard means of
delivering COMPANY's billing data. If COMPANY desires a datalink interface,
COMPANY will be responsible for all costs of providing and maintaining the
datalink.
(b) NextWave's billing data to COMPANY will include the customer's
mobile number, electronic serial number and peak/off-peak indicators, dialed
number, originating and terminating cell site identification, and/or time
stamps on a call-by-call basis.
(c) If COMPANY desires its billing data transferred in shorter
intervals other than monthly (i.e., bi-monthly, etc.), NextWave and COMPANY
will negotiate in good faith, the terms and conditions of providing billing
data in shorter intervals.
(d) NextWave will offer multiple billing cycles from which COMPANY
can choose to allow COMPANY flexibility as to when it will be billed. COMPANY
must formally request its selected billing cycle in writing (or by some
mutually agreed to means). Absent a formal request, NextWave will assign
COMPANY a billing cycle.
(e) NextWave's standard payment terms is net thirty (30) days upon
receipt of bill. A 1.5% late payment fee per month or partial month will be
added to COMPANY's total bill if payment is not received in the time specified.
4.6 DISPUTED CHARGES. COMPANY shall provide NextWave with written
notice of any disputed MOU or service charges within thirty (30) days after the
mailing date of the invoice containing such charges. Any disputed charges will
be handled under the dispute resolution process described in Section 8 herein.
If a disputed amount is not resolved and the Parties seek resolution in
accordance with SECTION 8.2, then the disputed amounts shall be placed into an
escrow account pending resolution. Any earned interest accrued on these amounts
will pass to the Party being awarded the disputed amounts. If the disputed
amounts are shared in any
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manner between the Parties, the accrued interest will be shared in the same
proportion as the disputed amounts.
4.7 TAXES. The prices paid by COMPANY for MOUs are exclusive of
any applicable sales, use, personal property or other taxes attributable to
periods during the Term based upon or measured by the MOUs and any associated
services provided or used by NextWave in performing its obligations under this
Agreement. COMPANY shall reimburse NextWave on a pass-through basis for those
taxes paid by NextWave that are attributable to COMPANY pursuant to this SECTION
4.7. Each Party shall provide and make available to the other any resale
certificates, information regarding out-of-state sales or use of equipment,
materials or services, and other exemption certificates or information
reasonably requested by the other Party. The Parties will also work together to
segregate into separate payment streams, any taxable, nontaxable or items for
which a sales, use or similar tax has already been paid by NextWave.
4.8 RETAIL BAD DEBT AND FRAUD RESPONSIBILITY; DETECTION AND
PREVENTION.
(a) RETAIL BAD DEBT AND SUBSCRIPTION FRAUD. Retail bad debt and
fraudulent usage as a result of subscription fraud is COMPANY's sole
responsibility. COMPANY will be responsible for all originating and
terminating fees, long distance and roaming charges, and MOUs used on
NextWave's network incurred from retail bad debt and subscription fraud.
(b) CLONING FRAUD. NextWave will make reasonable efforts to limit or
eliminate cloning fraud on its network. NextWave's development of CDMA
technology and its "coding of each call" is anticipated to reduce exposure to
cloning fraud. Additionally, NextWave will make reasonable efforts to deploy
systems to monitor usage patterns, traffic patterns and the like to quickly
detect fraudulent use on a number. Upon detection of suspected cloning
activity, NextWave will promptly notify COMPANY to investigate the number
further and take proper action. COMPANY will have 24 hours to substantiate the
customer's usage or to suspend service and correct the situation. If COMPANY
determines fraud was committed, NextWave will credit COMPANY for the local
airtime usage prior to NextWave's notice to COMPANY. COMPANY will be
responsible for all local access and long distance usage prior to and after
NextWave's notice to COMPANY; NextWave and COMPANY will work together in good
faith to curtail fraud, and will follow customer-industry practice for billing
and reimbursement of fraudulent usage. In the event that COMPANY, its employees
or Affiliates were negligent for cloning fraud, COMPANY will be responsible for
all local airtime, as well as local access, long distance and other charges
(including costs associated with the number change) prior to and after
NextWave's notice to COMPANY.
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4.9 AUDITS OF FINANCIAL RECORDS. NextWave and COMPANY each shall
keep adequate books and records in sufficient detail to enable the amounts to
be paid under ARTICLE 4 of this Agreement. Each Party shall be entitled to have
an accounting firm of national recognition reasonably acceptable to the other
Party audit the relevant books and records of the other Party for the purpose
of confirming the accuracy of the calculation of the amounts due under ARTICLE
4. The auditor will disclose to the reviewing party only the information
necessary to verify the calculation of the amounts due under ARTICLE 4 and not
any confidential information of the other Party, including but not limited to
any customer lists of the other Party. Any such audit shall be performed at the
requesting Party's expense (except if such audit reveals an overcharge of more
than five percent (5%) of the correct amount due under ARTICLE 4, then such
audit shall be at the expense of the other Party), during normal business hours
after reasonable notice and, at the request of the audited Party, shall be
subject to the independent agent's execution of a reasonable confidentiality
agreement. Such audits shall be conducted no more frequently than once every
year. In no event may a Party commence an inspection of any statement later
than two (2) years from the date of such statement. Prior to any inspection by
a Party, the Parties will in good faith meet, discuss and attempt to resolve
any objection or discrepancy claimed by the Party requesting the audit.
5. CONFIDENTIALITY.
5.1 CONFIDENTIAL INFORMATION. By virtue of this Agreement, the
Parties may have access to, or desire to exchange confidential or proprietary
information. As used in this Agreement, the term "Confidential Information"
shall mean only such information of the other Party that may be reasonably
understood from legends, the nature of such information itself and/or the
circumstances of such information's disclosure, to be confidential and/or
proprietary to the other Party or to third-parties to which the other Party owes
a duty of non-disclosure. Confidential Information shall include, without
limitation: (i) COMPANY Subscriber lists and numbers, account information,
usage, and information regarding business planning and operations of COMPANY and
COMPANY's administrative, financial information, forecasts, predictions or
marketing reports or activities; (ii) all Subscriber and other customer
information; and (iii) COMPANY network and Intelligent Network capabilities,
interconnection arrangements, architecture, strategies, development and
implementation plans, and vendor relationships. Confidential Information shall
also include, without limitation: information concerning NextWave's network,
network performance trials, equipment requirements, network system engineering
and design specifications, cell-site location planning strategies, network usage
and performance data, development plans for its intelligent network and enhanced
features and services, financial, accounting or marketing reports, and business
plans, analyses, forecasts, and predictions.
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5.2 RESTRICTIONS ON DISCLOSURE AND USE. Each of the Parties
agrees that as to any Confidential Information relating to one Party
("Discloser") obtained in any manner by the other Party ("Recipient")
hereunder:
(a) to use such Confidential Information only in the
performance of this Agreement or as otherwise expressly permitted by this
Agreement or by the Discloser;
(b) not to make copies of any such Confidential
Information or any part thereof except to the extent required to fulfill the
Party's obligations under this Agreement;
(c) not to disclose any such Confidential Information to
any third-party, using the same degree of care used to protect Recipient's own
confidential or proprietary information of like importance, but in any case
using no less than reasonable degree of care; provided, however, that Recipient
may disclose Confidential Information received hereunder to (i) its Affiliates
who are bound to protect the received Confidential Information from unauthorized
use and disclosure under the terms of a written agreement (including without
limitation a pre-existing written agreement), and (ii) to its employees,
consultants and agents, and it Affiliates' employees, consultants and agents,
who have a need to know to perform or exercise rights under this Agreement, and
who are bound to protect the received Confidential Information from unauthorized
use and disclosure under the terms of a written agreement (including without
limitation a pre-existing written agreement). Confidential Information shall
not otherwise be disclosed to any third-party without the prior written consent
of the Discloser; and
(d) to return to the other Party, or destroy, all of such
Party's Confidential Information received hereunder, whether in any tangible
medium of expression or electronic or other form or format, promptly upon the
expiration or termination this Agreement.
5.3 EXCEPTIONS. The restrictions set forth in this ARTICLE 5 on
the use and disclosure of Confidential Information shall not apply to
information that:
(a) was publicly known at the time of Discloser's
communication thereof to Recipient;
(b) becomes publicly known through no fault of Recipient
subsequent to the time of Discloser's communication thereof to Recipient;
(c) is in Recipient's possession free of any obligation
of confidence at the time of Discloser's communication thereof to Recipient;
(d) is developed by Recipient independently of and
without use of any of Discloser's Confidential Information or other information
that Discloser disclosed in confidence to any third-party;
(e) is rightfully obtained by Recipient without
restriction from third-parties authorized to make such disclosure; or
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(f) is identified by Discloser in writing as no longer
proprietary or confidential.
5.4 DISCLOSURE PURSUANT TO LEGAL REQUIREMENT. In the event
Recipient is required by law, regulation or court order to disclose any of
Discloser's Confidential Information, Recipient will promptly notify Discloser
in writing prior to making any such disclosure in order to facilitate Discloser
seeking a protective order or other appropriate remedy from the proper
authority. Recipient agrees to cooperate with Discloser in seeking such order
or other remedy. Recipient further agrees that if Discloser is not successful
in precluding the requesting legal body from requiring the disclosure of the
Confidential Information, it will furnish only that portion of the Confidential
Information which is legally required and will exercise all reasonable efforts
to obtain reliable assurances that confidential treatment will be accorded the
Confidential Information.
5.5 PUBLICITY. The Parties expressly agree that the terms and
conditions of this Agreement, and any activities contemplated hereby or
performed hereunder, are the Confidential Information of the Parties and shall
not be disclosed in any manner without the prior written approval of the other
Party (which shall not be unreasonably withheld); provided, however, that (i)
COMPANY and NextWave agree that NextWave shall have the right to issue a news
release to announce the transaction contemplated herein and (ii) the Parties
acknowledge that NextWave has filed a registration statement with the
Securities and Exchange Commission and will be required to disclose the
existence of this Agreement and describe the material terms contained herein.
To the extent any information has been disclosed to the public pursuant to this
SECTION 5.5, such information shall not be deemed Confidential Information.
Notwithstanding the foregoing, each Party agrees that the Airtime pricing terms
contained in ATTACHMENT C are confidential and shall not be disclosed, except
as may be required by law or pursuant to any legal proceeding, in which case
the provisions of SECTION 5.4 shall apply. The Parties acknowledge that
NextWave will be required to file this Agreement with the Securities and
Exchange Commission as an exhibit to its registration statement. NextWave
shall seek confidential treatment of the Airtime pricing terms.
5.6 PROPRIETARY NOTICES. Each Party shall reproduce and maintain
on any copies of the other Party's Confidential Information received or made
hereunder such proprietary legends or notices (whether of the Party providing
the Confidential Information or of a third-party) as are contained in or on
the original.
5.7 RETURN OF CONFIDENTIAL INFORMATION. Each Party agrees to
return to the other Party or destroy all of such other Party's Confidential
Information promptly upon the termination of this Agreement. Neither Party
shall thereafter retain any such Confidential information or any copies thereof
fixed in any tangible medium of expression in whatever form or format.
5.8 COOPERATION. In the event either Party becomes aware that any
person (including, without limitation, any employee or agent of a Party) is
taking or threatens to take any action which would violate any of the foregoing
provisions, such Party shall promptly and fully advise the other Party (with
written confirmation as soon as practicable thereafter) of all facts known to
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<PAGE> 15
it concerning such action or threatened action. Neither Party shall in any way
aid, abet or encourage any such action or threatened action. Each Party agrees
to cooperate in all reasonable ways to prevent such action or threatened
action, including, without limitation, assigning any cause of action it may
have, related to the violation of the foregoing provisions, to the other Party,
and each Party agrees to do all reasonable things and cooperate in all
reasonable ways as may be requested by the other Party to protect the trade
secret and proprietary rights of such other Party in and to the Confidential
Information. A Party shall also be liable for any breach of the terms of this
ARTICLE 5 in the event that Confidential Information received from the other
Party is disclosed by an employee, agent or consultant of such Party or a
third-party to whom such Party has disclosed such information and such
disclosure would violate the terms of this ARTICLE 5 were such employee, agent,
consultant or third-party a Party hereto.
5.9 NO USE OF NEXTWAVE INTELLECTUAL PROPERTY RIGHTS. Nothing herein
shall be deemed to grant to COMPANY any right, license or other interest in or
under, or right to use, and COMPANY shall not use, any patents, copyrights,
trade secrets, trademarks, service marks, trade names or other similar
designation, or any other intellectual property rights of NextWave or any of
its Affiliates.
6. LIMITED LIABILITY.
6.1 IN NO EVENT WILL EITHER PARTY AND/OR ANY OF ITS AFFILIATES BE
LIABLE TO OR THROUGH THE OTHER PARTY FOR ANY OF THE FOLLOWING:
(a) DAMAGES CAUSED BY OTHER PARTY'S AND/OR ITS AFFILIATES' OR
SUPPLIERS' FAILURE TO PERFORM THEIR OBLIGATIONS OR RESPONSIBILITIES;
(b) CLAIMS OR DEMANDS BROUGHT AGAINST THE OTHER PARTY BY
THIRD PARTIES OTHER THAN THOSE THIRD PARTY CLAIMS IN RESPECT OF WHICH SUCH
PARTY IS EXPRESSLY OBLIGATED TO INDEMNIFY THE OTHER PARTY PURSUANT TO A
PROVISION OF THIS AGREEMENT; OR
(c) ANY LOST PROFITS, LOSS OF BUSINESS, LOSS OF USE (OR
INTERRUPTIONS OF BUSINESS), LOST SAVINGS, LOST OPPORTUNITIES OR OTHER
CONSEQUENTIAL, SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY OR PUNITIVE DAMAGES;
ANY OR ALL OF WHICH ARISE FROM OR IN CONNECTION WITH THE DELIVERY,
USE, OR PERFORMANCE OF SERVICE GOVERNED BY THIS
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<PAGE> 16
AGREEMENT, AND EVEN IF A PARTY AND/OR ANY OF ITS AFFILIATES HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH LOSS.
6.2 The limitations of remedies and liabilities set forth in this
Section 6 shall not apply to any obligation of one Party to pay the other Party
all amounts due and owing under this Agreement.
7. INDEMNIFICATION.
7.1 NextWave shall indemnify, defend and hold harmless COMPANY,
and all of COMPANY's and its Affiliates' officers, directors, partners,
employees and agents, from and against any and all losses, claims, damages,
liabilities or expenses of any kind (including, but not limited to, reasonable
attorneys fees and costs) arising out of any claim, action or proceeding by a
third-party against any of them to the extent it is based on (i) a claim for
personal injury (including death) or damage to personal property for which
NextWave or any of its Affiliates is legally responsible, or (ii) NextWave or
its Affiliate's failure to comply with all applicable laws, regulations and
orders in the performance of its obligations under this Agreement.
7.2 COMPANY shall indemnify, defend and hold harmless NextWave,
and all of NextWave's and its Affiliates' officers, directors, partners,
employees and agents, from and against any and all losses, claims, damages,
liabilities or expenses of any kind (including, but not limited to, reasonable
attorneys fees and costs) arising out of any claim, action or proceeding by a
third party against any of them to the extent it is based on (i) a claim for
personal injury (including death) or damage to personal property for which
COMPANY or any of its Affiliates is legally responsible, or (ii) a claim by a
customer of COMPANY, or (iii) COMPANY or its Affiliate's failure to comply with
all applicable laws, regulations and orders in the performance of its
obligations under this Agreement.
7.3 The party seeking indemnity under the foregoing provisions
shall notify the indemnifying Party of any such claim, action or proceeding,
and the indemnifying party shall promptly and at its sole cost undertake the
defense thereof, except for claims by a customer of COMPANY, for which COMPANY
shall at its sole cost undertake the defense thereof for itself, and upon
demand thereof, NextWave and/or its Affiliates. No such claim shall be
compromised or settled without the prior written consent of the indemnified
party if the settlement would restrict or adversely affect the indemnified
party. Such consent shall not be unreasonably withheld. After the indemnified
party tenders the defense of any such claim, action or proceeding, the
indemnified Party shall have the right to participate at its own cost and
expense in such claim, action, or proceeding using counsel of its own choosing.
8. DISPUTE RESOLUTION
8.1 DISPUTE RESOLUTION. Either Party may identify a dispute that
has arisen in performance of this Agreement by notifying the other Party's
account manager in writing, setting forth the dispute with reasonable
specificity. The account managers shall promptly attempt to resolve such
dispute by negotiation. If within ten (10) calendar days of written notice of
a
15
<PAGE> 17
dispute the account managers have been unable to resolve it, then either Party
may escalate resolution of the dispute to an appropriate senior executive of
NextWave or to an appropriate senior executive of COMPANY by notifying them in
writing, setting forth the dispute with reasonable specificity. The senior
executives shall attempt to resolve such dispute by negotiation. If within ten
(10) calendar days of such escalation of a dispute the senior executives have
been unable to resolve it, then either Party may seek resolution of the dispute
by arbitration in accordance with SECTION 8.2 below.
8.2 ARBITRATION. Without prejudice to either Party's right to
seek equitable relief (including, but not limited to, injunction) from a court,
any dispute arising out of or related to this Agreement, which cannot be
resolved by negotiation, shall be settled by binding arbitration in accordance
with the J.A.M.S./ENDISPUTE arbitration rules and procedures ("Endispute
Rules") and in accordance with the terms of this ARTICLE 8. The costs of
arbitration, including the fees and expenses of the arbitrator, shall be shared
equally by the Parties unless the arbitration award provides otherwise. Each
Party shall bear the cost of preparing and presenting its case. The Parties
agree that this provision and the Arbitrator's authority to grant relief shall
be subject to the United States Arbitration Act, 9 U.S.C. 1-16 et seq.
("USAA"), the provisions of this Agreement, and the ABA-AAA Code of Ethics for
Arbitrators in Commercial Disputes. The Parties agree that the arbitrator
shall have no power or authority to make awards or issue orders of any kind
except as expressly permitted by this Agreement, and in no event shall the
arbitrator have the authority to make any award that provides for punitive or
exemplary damages. The arbitrator's decision shall follow the plain meaning of
the relevant documents, and shall be final and binding. The award may be
confirmed and enforced in any court of competent jurisdiction. All post-award
proceedings shall be governed by the USAA.
9. TERM.
This Agreement shall be effective when executed. The Term of this
Agreement shall be ten (10) years with one (1) renewal option for COMPANY to
renew for an additional five (5) years; provided that, if COMPANY elects to
renew the Agreement, the Parties shall review and adjust the pricing. The Term
shall commence upon the first day of commercial availability of Full Mobility
Service in any NextWave BTA, where the conditions in SECTIONS 11.3 below are
met. One (1) year prior to the expiration of the initial ten-year Term, the
Parties will meet to determine the pricing for the five-year renewal period. If
the Parties are unable to reach agreement six (6) months prior to the expiration
of the initial ten-year Term, the then existing terms and conditions, including
pricing shall continue for a transition period of six (6) months after the
expiration of the initial ten-year Term. If, in the event that COMPANY exceeds
five (5) billion billable MOU during the Term, then the Parties will meet to
determine the pricing for volume breaks above five (5) billion MOU for the
Airtime table in ATTACHMENT C.
10. TERMINATION PROVISION.
10.1 NextWave may terminate this Agreement without liability by
written notice to COMPANY in the event that:
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<PAGE> 18
(i) COMPANY fails to pay any amounts due hereunder within
fifteen (15) days after notice from NextWave;
(ii) COMPANY's use of NextWave's services or network (a)
violates any laws, rules or regulations (b) is in non compliance with services
standards established by NextWave; or
(iii) COMPANY commits a material breach of this Agreement
and it is not cured within sixty (60) days of notice from NextWave.
11. MISCELLANEOUS.
11.1 GOVERNING LAW AND CHOICE OF FORUM. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
other than the laws thereof that would require reference to the laws of any
other jurisdiction. For all purposes for which resort to a court may be had,
the Parties irrevocably consent to the exclusive jurisdiction and venue of the
federal and state courts located in the State of New York.
11.2 NOTICES. All notices, demands, requests, or other
communications which may be or are required to be given or made by any Party,
to the other Party pursuant to this Agreement shall be in writing and shall be
hand delivered, mailed first-class registered or certified mail, return receipt
requested, postage pre-paid, delivered by overnight air courier, or transmitted
by telegram, telex, or facsimile transmission addressed as follows:
If to COMPANY:
One Stop Wireless of America, Inc.
6570 South State Street
Salt Lake City, Utah 84107
Attn: Thomas E. Repke, President
Fax: (801) 269-1974
If to NEXTWAVE:
NextWave Wireless Inc.
9455 Towne Centre Drive
17
<PAGE> 19
San Diego, CA 92121
Attn: Bob Klass
Fax: (619) 597-4041
with a copy to:
NextWave Wireless Inc.
9455 Towne Centre Drive
San Diego, CA 92121
Attn: General Counsel
Fax: (619) 642-1912
Each Party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be given, served or
sent. Each notice, demand, request or communication which shall be mailed,
delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent or received for all purposes at such time as
it is delivered to the addressees (with the return receipt, the delivery
receipt or affidavit of messenger, or the facsimile answer back being deemed
conclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
11.3 CONDITIONS. COMPANY's Commitment to purchase Airtime from
NextWave is subject to each of the following conditions being satisfied: (a)
NextWave shall offer commercial mobility service in Markets covering at least 40
million POPs by December 31, 1998, and at least 70 million POPs by December 31,
2001; (b) NextWave provides Airtime in its Markets meeting jointly agreed to
technical specifications (to be agreed to within sixty (60) days of the date
hereof) including those for availability, capacity, coverage, hand-off,
interconnection and service quality; and (c) NextWave provides COMPANY and its
affiliates interconnection as specified in SECTION 2.6.
11.4 FORCE MAJEURE. Neither Party shall be liable for delays in
delivery or performance, or for failure to provide service, deliver or perform
when caused by any of the following which are beyond the reasonable control of
the delayed Party:
(i) Acts of God, acts of the public enemy, acts or
failures to act by the other Party, acts of civil or military authority,
governmental priorities, strikes or other labor disturbances, hurricanes,
earthquakes, fires, floods, epidemics, embargoes, war, riots, delays in
transportation, and loss or damage to goods in transit; or
(ii) Inability on account of causes beyond the reasonable
control of the delayed Party to obtain products, components, services or
facilities.
In the event of such delay, the date of delivery or performance shall
be extended for a period equal to the effect of the time lost by reason of the
delay.
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<PAGE> 20
11.5 ASSIGNMENT. This Agreement may not be assigned, in whole or in
part, by any Party without the prior written consent of the other Party, except
that COMPANY may assign this Agreement to any of its Affiliates without the
consent of NextWave and either Party may assign this Agreement to a successor in
connection with the acquisition of the Party; provided that the successor
confirms by written agreement its agreement to assume the acquired Party's
obligations under this Agreement. For purposes of this subsection only, the
term "Affiliates" shall mean an entity under common control, controlling or
controlled by a Party; provided that "control" as used herein shall mean the
ownership, directly or indirectly, of at least eighty percent (80%) of the
aggregate of all voting interests in such entity. Any other attempt to assign
this Agreement shall be null, void and of no force or effect.
11.6 AUTHORIZATION AND ENFORCEABILITY. Each Party hereby
represents that:
(a) it has all requisite corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby;
(b) the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the Party of each Party; and
(c) this Agreement has been duly executed and delivered by
such Party and is valid and binding obligation of such Party, enforceable
against it in accordance with its terms.
11.7 SEVERABILITY. If any provision of this Agreement shall be
found by any court or administrative body of competent jurisdiction to be
invalid or unenforceable, the invalidity or unenforceability of such provision
shall not affect the other provisions of this Agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full force and
effect. The Parties hereby agree to attempt to substitute for any invalid or
unenforceable provision a valid and enforceable provision which achieves to the
greatest extent possible the economic, legal and commercial objectives of the
invalid and unenforceable provision.
11.8 SURVIVAL. The following provisions shall survive the
termination of this Agreement, and shall continue in full force and effect
along with any other provisions of this Agreement which by their nature or in
accordance with the terms, whether or not listed, shall survive such
termination: ARTICLES 3, 5, 6, 7, 8 and 9 and ARTICLES 4.9, 11.1, 11.2, 11.7,
11.8, 11.13, 11.14, 11.16 and 11.17.
11.9 ENTIRE AGREEMENT. This Agreement, which includes the attached
Schedules, constitutes the entire agreement and understanding between the
Parties hereto in connection with subject matter hereof, and supersedes and
cancels all previous negotiations, commitments and writings with respect
thereto.
11.10 COUNTERPARTS. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each Party, or the
signatures of all persons required to bind Party, appear on each
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<PAGE> 21
counterpart; but it shall be sufficient that the signature of, or on behalf of,
each Party, or the signatures of the persons required to bind any Party, appear
on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement.
11.11 CAPTIONS FOR CONVENIENCE ONLY. The captions used in this
Agreement are included for convenience only and shall not be considered part of
this Agreement for any purpose. Unless expressly stated otherwise, all
references herein to "Articles" or "Sections" are to the relevant portions of
this Agreement, and all references to "Schedules" are to the attachments to
this Agreement.
11.12 AMENDMENT. This Agreement shall not be amended, modified or
rescinded in any manner, except by an instrument in writing signed by duly
authorized representatives of each of the Parties hereto.
11.13 NO THIRD-PARTY BENEFICIARY. Nothing in this Agreement,
whether expressed or implied, is intended to confer any rights or remedies
under or by reason of this Agreement on any persons other than the Parties and
their respective successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of any
third person to any Party, nor shall any provision give any third person any
right of subrogation or action against any Party.
11.14 EXPENSES. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated hereby are consummated,
each Party will pay its own costs and expenses incurred in connection with the
negotiation and execution of this Agreement and the transactions contemplated
hereby (including executing all such documents and doing such acts and things
as may reasonably be required for the purpose of giving full effect to this
Agreement).
11.15 WAIVER. Any term or condition of this Agreement may be waived
at any time by the Party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the Party waiving such term or condition. No
waiver by any Party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by law or otherwise afforded, will be
cumulative and not alternative.
11.16 BINDING. This Agreement is binding upon, inures to the
benefit of and is enforceable by the Parties hereto and their respective
permitted successors and assigns.
11.17 SPECIFIC PERFORMANCE. The obligations of the Parties under
ARTICLE 5 of this Agreement are unique. If any Party should be in Default
under ARTICLE 5 of this Agreement, the Defaulting Party acknowledges that it
would be extremely impracticable to measure the resulting damages.
Accordingly, in addition to any other available rights or remedies, the
Non-Defaulting Party may sue inequity for specific performance and the
Defaulting Party expressly waives the defense that a remedy in damages would be
adequate.
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<PAGE> 22
11.18 REGULATORY COMPLIANCE. Notwithstanding any provision in this
Agreement to the contrary, NextWave shall not be obligated to furnish COMPANY
with Full Mobility Services under rates, charges, terms or conditions that
violate any applicable provisions of the Communications Act of 1934, as
amended, the applicable rules, regulations or policies of the FCC or any other
federal or state agency with jurisdiction over NextWave's services.
[Remainder of Page Intentionally Left Blank]
21
<PAGE> 23
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective and delivered as of the date set forth below.
ONE STOP WIRELESS OF AMERICA INC., NEXTWAVE WIRELESS INC.,
A DELAWARE CORPORATION A DELAWARE CORPORATION
Date: November 7, 1996 Date: November 7, 1996
---------------------------- --------------------------------
/s/ THOMAS E. REPKE /s/ JAMES MADSEN
---------------------------- --------------------------------
(Signature) (Signature)
By: Thomas E. Repke By: James Madsen
------------------------------ ----------------------------------
Title: President Title: Senior VP, Business Development
---------------------------- --------------------------------
22
<PAGE> 24
ATTACHMENT A
NextWave's Network Elements and Functionality
The following are the network elements and functionality NextWave will make
available, to the extent practicable and pursuant to pricing specified in the
Agreement, in each PCS market either directly or indirectly through a third
party:
a.) ADVANCED INTELLIGENT NETWORK ("AIN") PLATFORM. The AIN
platform is the platform from which COMPANY will store and offer its and
customers all of their non-switched based vertical services. As an option, when
available NextWave may provide its AIN platform.
b.) THIRD PARTY INTERCONNECTION ACCESS. The physical
interconnection to the Public Switching Telephone Network ("PSTN"). The
responsibility for the associated monthly and usage-sensitive costs for such
circuits carrying COMPANY's customers' mobile-to-landline and landline-to-mobile
traffic to and from NextWave's network is COMPANY's.
c.) BACKHAUL INTERCONNECTION. In BTA markets where COMPANY is a
local access provider of facilities, COMPANY will make available to NextWave
standard T1 and T3 facilities at COMPANY's most favorable rate for like terms,
quantities, and conditions. These facilities may be used by NextWave for
switch-to-base station, switch-to-base station controller, base station-to-base
controller and switch-to-switch connections.
d.) SS-7 BACKBONE. The SS-7 signaling backbone network carrying
standard IS-41 message sets between NextWave's network and COMPANY's HLR
database access.
e.) FCC LICENSE TO PROVIDE PCS. The Federal Communications
Commission's ("FCC") license to provide Personal Communication Service ("PCS")
in the markets of interest.
f.) RADIO COVERAGE AND ACCESS. The deployment of competitive
coverage at a predetermined and mutually agreed to minimum level/grade of PCS
access service.
g.) MOBILE SWITCHING CENTER. The switching capability to
provide the end customer with the proper mobility and roaming capability. AIN
software for standard IS-41 interconnection to COMPANY's AIN platform and PSTN
interconnection.
h.) SWITCH-BASED VERTICAL SERVICES. These end customer
vertical software services provided at the Mobile Switching Center for example,
but not limited to, Call Waiting, Call Forwarding, Three-Way Calling, and Caller
ID.
i.) LOCAL WIRELESS OPERATIONS AND MANAGEMENT OF THE NETWORK.
NextWave will design, engineer, construct, and maintain the PCS network in each
BTA and maintain a minimum service availability level.
<PAGE> 25
ATTACHMENT B
NextWave's PCS Markets
<TABLE>
<CAPTION>
- --------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
COLONIAL REGION LONE STAR REGION OHIO VALLEY REGION
Boston, MA Austin, TX Cincinnati, OH
Manchester/Nashua, NH Bryan-College Station, TX Columbus, OH
New London, CT Houston, TX Dayton, OH
Portland/Brunswick, ME San Antonio, TX
Providence, RI Temple-Killeen, TX
Worcester, MA HOOSIER REGION
Bloomington, IN
AMIGO REGION Columbus, IN
HOLLYWOOD REGION Brownsville, TX Evansville, IN
Los Angeles, California El Paso, TX Indianapolis, IN
Las Cruces, NM Lafayette, IN
McAllen, TX
DOLPHIN REGION
San Diego, California SOONER REGION
NY-METRO REGION Oklahoma City, OK
Albany, NY
Allentown, PA
CAPITAL REGION New Haven, CT THOROUGHBRED REGION
Baltimore, MD Poughkeepsie, NY Lexington, KY
Hagerstown, MD Scranton, PA Louisville, KY
Norfolk, VA
Richmond, VA
Washington, DC BIG APPLE REGION TWIN CITIES REGION
NYC BTA Minneapolis, MN
GREENGRASS REGION
Asheville, NC STEELER REGION ROCKY MOUNTAIN REGION
Charlotte, NC Pittsburgh, PA Denver
Greensboro, NC
Hickory, NC
Roanoke, VA SUNSHINE REGION PACIFIC NORTHWEST REGION
Gainsville, FL Bellingham, WA
Jacksonville, FL Longview, WA
MID. AMERICA Lakeland-Winter Haven, FL Olympia, WA
Joplin, MO Melbourne, FL Portland, OR
Kansas City, MO Orlando, FL Seattle, WA
Springfield, MO Sarasota, FL
Tampa, FL
BUCKEYE REGION
Cleveland, OH
- --------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
<PAGE> 26
ATTACHMENT C
PRICING SCHEDULE
*_____________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________*
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 27
ATTACHMENT D
SYSTEM PERFORMANCE CRITERIA
1.1 COVERAGE AREA
The Coverage Area shall be that minimal signal strength necessary to provide
service such that calls are successful *______* of the time averaged along the
Coverage Area boundary, irrespective of the direction of the call (land-mobile,
mobile-land) with no greater than *_____* frame error rate (FER) on average.
1.2 HANDSET COMPATIBILITY
NextWave shall demonstrate the full compatibility of its network with handsets
of COMPANY's choice that have been certified as compliant with domestic PCS
interface standards, so long as these handsets have been demonstrated to be
fully compatible with one other domestic IS-95 (CDMA) compliant 1.9 GHz network
and certified as IS-95, 1.9 GHz compliant by recognized standard or
certification bodies.
1.3 NETWORK CALL BLOCKAGE/QUALITY OBJECTIVES
The following considerations are required concerning network call blockage:
- - Average busy hour blockage within the NextWave network will not exceed
*_____* of all call attempts.
- - The above values are to be met, unless superseded by necessary regulatory
mandates.
- - Emergency calls should be given the highest possible resource priority.
1.4 DROPPED CALLS
The number of dropped calls measured over a period of a month in a Coverage
Area shall not exceed *_____* of the total number of subscriber calls originated
in that Coverage Area.
1.5 NETWORK AVAILABILITY
NextWave will engineer and manage its network to meet the above service and
quality levels established for the Coverage Area. The emphasis of management
activities will be on preventative maintenance, such that potential outages will
be resolved before customers are affected.
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 28
A Network Outage is the inability, or a significant degradation in the ability
of a customer to establish and maintain a channel of communication as a result
of failure or degradation in the performance of NextWave's network.
In the event of a major network outage, NextWave will notify COMPANY of the
conditions affecting the customers, including, but not limited to out-of-service
events, and high system traffic loads.
Any FCC-reportable Network Outages, including disruption of 911/E911 and
emergency services will be reported to COMPANY.
1.6 PERFORMANCE VERIFICATION
NextWave will provide to the COMPANY quarterly statistics that define the
performance of the network including blocked calls, dropped calls, and frame
error rates. In addition, NextWave will provide coverage maps that define the
Coverage Area.
<PAGE> 29
ATTACHMENT E
TECHNICAL STANDARDS
NextWave shall be in general compliance with the following standards:
I. WIRELESS NETWORK INTERFACE STANDARDS
A. IS-41REV B CELLULAR RADIO TELECOMMUNICATIONS INTERSYSTEM OPERATIONS
NextWave's Network shall be in general compliance with IS-41 Revision B. This
shall be upgraded to be in general compliance with IS-41 Revision C when IS-41
Revision C is commercially available.
B. EIA/TIA/IS-52: UNIFORM DIALING PROCEDURES AND CALL PROCESSING
TREATMENT FOR CELLULAR RADIO TELECOMMUNICATIONS - NOVEMBER, 1989
C. EIA/TIA/IS-52-A: UNIFORM DIALING PROCEDURES AND CALL PROCESSING
TREATMENT FOR CELLULAR RADIO TELECOMMUNICATIONS - WHEN PUBLISHED
D. EIA/TIA/IS-53: CELLULAR FEATURES DESCRIPTION: - AUGUST, 1991
E. EIA/TIA/IS-53-A: CELLULAR FEATURES DESCRIPTION: - MAY, 1995
F. EIA/TIA/IS-93: CELLULAR RADIO TELECOMMUNICATIONS A-D INTERFACE
STANDARDS - OCTOBER, 1993.
II. SS7 INTERFACE STANDARDS
A. TR-NWT-000246: BELL COMMUNICATIONS RESEARCH SPECIFICATION OF SIGNALING
SYSTEM NUMBER 7, ISSUE 3
B. TR-NWT-000082: SIGNALING TRANSFER POINT GENERIC REQUIREMENTS, ISSUE 5
C. TR-TSY-000317: SWITCHING SYSTEM REQUIREMENTS FOR CALL CONTROL USING
THE INTEGRATED SERVICES DIGITAL NETWORK USER PART (ISDNUP)
D. TR-TSY-000394: SWITCHING SYSTEM REQUIREMENTS FOR INTERCHANGE
CARRIERS USING THE INTEGRATED SERVICES DIGITAL NETWORK USER PART
(ISDNUP)
E. TR-NWT-000444: SWITCHING SYSTEM GENERIC REQUIREMENTS SUPPORTING
ISDN ACCESS USING THE INTEGRATED SERVICES DIGITAL NETWORK USER PART
(ISDNUP)
F. ANSI T1.114 SS7 TRANSACTION CAPABILITIES APPLICATION PART (TCAP)
<PAGE> 30
G. ANSI T1.112: SS7 SIGNALING CONNECTION CONTROL PART (SCCP)
H. ANSI T1.111: SS7 MESSAGE TRANSFER PART (MTP)
III. AIR INTERFACE STANDARDS
A. ANSI-J-STD-008: PERSONAL STATION -BASE STATION COMPATIBILITY
REQUIREMENTS FOR 1.8 TO 2.0 GHZ CDMA PERSONAL COMMUNICATIONS SYSTEMS.
