<PAGE>
As filed with the Securities and Exchange Commission on February 16, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------
METAWAVE COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
----------------
<TABLE>
<S> <C> <C>
Delaware 3663 91-1673152
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
10735 Willows Road NE
Redmond, WA 98052
(425) 702-5600
(Address, including zip code and telephone number, including area code,
of Registrant's principal executive offices)
----------------
ROBERT H. HUNSBERGER
President and Chief Executive Officer
10735 Willows Road NE
Redmond, WA 98052
(425) 702-5600
(Name, address including zip code and telephone number including area code, of
agent for service)
Copies to:
<TABLE>
<S> <C>
WILLIAM W. ERICSON PATRICK J. SCHULTHEIS
JOHN W. ROBERTSON ROBERT G. DAY
KIRK D. SCHUMACHER ALLISON L. BERRY
Venture Law Group Wilson Sonsini Goodrich & Rosati
A Professional Corporation Professional Corporation
4750 Carillon Point 650 Page Mill Road
Kirkland, WA 98033-7355 Palo Alto, CA 94304-1050
(425) 739-8700 (650) 493-9300
</TABLE>
----------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
----------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Title Of Each Class Of Securities Proposed Maximum Aggregate Amount Of
To Be Registered Offering Price(1) Registration Fee
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<S> <C> <C>
Common Stock, par value $0.001... $86,250,000 $22,770
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</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment 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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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
FEBRUARY 16, 2000
PROSPECTUS
Shares
[METAWAVE LOGO]
Common Stock
-----------
This is Metawave Communications Corporation's initial public offering.
Metawave is selling all of the shares.
We expect the public offering price to be between $ and $ per share.
Currently, no public market exists for the shares. After pricing of the
offering, we expect that the shares will trade on the Nasdaq National Market
under the symbol "MTWV."
Investing in the common stock involves risks that are described in the
"Risk Factors" section beginning on page 6 of this prospectus.
-----------
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public offering price............................... $ $
Underwriting discount............................... $ $
Proceeds, before expenses, to Metawave.............. $ $
</TABLE>
The underwriters may also purchase up to an additional shares at the
public offering price, less the underwriting discount, within 30 days from the
date of this prospectus to cover over-allotments.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The shares will be ready for delivery on or about , 2000.
-----------
Merrill Lynch & Co.
Salomon Smith Barney
U.S. Bancorp Piper Jaffray
------------
The date of this prospectus is , 2000.
<PAGE>
Stylized Metawave logo.
Text on top: Metawave provides spectrum management solutions that
increase the capacity and improve the performance of wireless networks.
Line art depictions of SpotLight 2000 CDMA system and Spotlight GSM
system
Bullet points stating between depictions of systems:
* Add-on capacity enhancement to CDMA and GSM base stations
* Increases efficiency of CDMA or GSM network infrastructure
* Maintains or improves call quality
Graphic of radio frequency spectrum
<PAGE>
Stylized Metawave Logo
Spectrum Management Solutions for Wireless Communications
Left page
Graphic of radio frequency spectrum
Artwork depicting the evolution of wireless technology from analog to CDMA to
spectrum management and graphical depiction of a smart antenna system
Right page
Map of the world depicting the CDMA, GSM and analog wireless standards in
various regions of the world titled "Global Market Opportunity"
Language -- Our current product offerings are for CDMA, GSM and analog
networks.
Graphical depiction of people speaking on wireless phones.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 6
Forward-Looking Statements............................................... 18
Use of Proceeds.......................................................... 18
Dividend Policy.......................................................... 18
Capitalization........................................................... 19
Dilution................................................................. 20
Selected Consolidated Financial Data..................................... 21
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 22
Business................................................................. 27
Management............................................................... 40
Certain Relationships and Related Party Transactions..................... 50
Principal Stockholders................................................... 52
Description of Securities................................................ 54
Shares Eligible for Future Sale.......................................... 57
Underwriting............................................................. 59
Legal Matters............................................................ 62
Experts.................................................................. 62
Where You Can Find Additional Information................................ 62
Index to Financial Statements............................................ F-1
</TABLE>
----------------
You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate only as of the date on
the front cover of this prospectus. Our business, financial condition, results
of operations and prospects may have changed since that date.
<PAGE>
PROSPECTUS SUMMARY
The summary highlights selected information contained elsewhere in the
prospectus. You should read the entire prospectus, including "Risk Factors" and
the financial data and related notes before making an investment decision.
Metawave Communications Corporation
We are a leading provider of smart antenna systems. Our SpotLight systems
provide a solution for wireless network operators facing capacity constraints
within their networks. We believe that wireless operators can increase overall
network capacity, improve or maintain network quality, reduce network operating
costs and better manage network infrastructure by implementing our SpotLight
systems. As the demand for wireless services continues to grow, we will develop
systems based on our proprietary technologies that address the associated
network capacity problems faced by wireless network operators.
The recent increase in demand for wireless services has been driven by an
increased number of subscribers, lower prices and expanded availability of
existing services. In addition to these factors, the emergence of new data and
Internet-oriented wireless services is expected to contribute to the continued
increase in subscriber usage. For example, wireless subscriber usage in the
United States is expected to grow at a compound annual growth rate of 20.9%
through 2003, according to The Strategis Group.
This rapid growth in demand for wireless services and wireless usage has
strained the capacity of wireless networks given the fixed amount of radio
frequency spectrum allocated to wireless network operators. To address the
challenge of increasing capacity while maintaining signal quality, wireless
network operators generally have built additional cell sites or deployed more
efficient digital technologies. However, the high costs and technical
difficulties associated with building new cell sites, as well as the inherent
capacity limitations of digital technologies, have created the need for a cost-
effective solution to manage available spectrum.
We have developed cost-effective smart antenna systems for expanding network
capacity while improving or maintaining overall network performance. Our
SpotLight systems are designed to be compatible with base station equipment for
Code Division Multiple Access, or CDMA, and Global System for Mobile
Communications, or GSM, technologies, as well as analog technologies. Our
SpotLight systems provide solutions to wireless network operators with the
following benefits:
Cost-Effective Capacity Expansion. Our SpotLight systems enable wireless
network operators to increase the capacity of their existing networks and
reduce the need to build and maintain costly new cell sites. Our SpotLight
systems can be deployed selectively within a network in either a single cell
site or multiple cell sites. Based on customer data, current versions of our
SpotLight 2000 system improved CDMA capacity in cell sites from 30% to 50%,
depending on network configuration. In a recent field trial, our SpotLight GSM
system demonstrated that GSM network capacity can be increased by up to 100%
without increasing the number of GSM cell sites. By applying our SpotLight
solutions in these targeted capacity constrained cell sites, overall network
capacity can be correspondingly increased.
Improved Network Performance. Our SpotLight systems allow wireless network
operators to increase capacity while maintaining or improving the level of
service and signal quality. Our SpotLight 2000 systems increase CDMA network
performance by efficiently distributing existing network resources to better
match subscriber usage. Our SpotLight GSM systems are expected to provide
wireless network operators with better signal reception and reduced
interference thereby improving network performance.
3
<PAGE>
Compatibility with Standards and Equipment. Our SpotLight systems are
currently designed to be compatible with most of the widely deployed wireless
standards operating at 800 MHz and 900 MHz and related installed base station
equipment thereby preserving wireless network operators' existing investment in
equipment and technology. Our SpotLight 2000 systems are compatible with
Motorola, Inc., Lucent Technologies and Nortel Networks Corporation 800 MHz
CDMA base stations, which we believe represent substantially all of the 800 MHz
CDMA base stations deployed in North America. We believe our SpotLight GSM
system is also compatible with most 900 MHz GSM base stations deployed
worldwide.
Our objective is to be the leading global provider of smart antenna systems
to the wireless communications market. To accomplish this objective we intend
to:
. Continue to focus on delivering solutions that address the capacity
constraints of wireless network operators;
. Expand our presence and penetration of our current CDMA customers by
leveraging the performance and service of our existing system
deployments;
. Target additional large multi-system 800 MHz CDMA and 900 MHz GSM
wireless network operators around the world that serve substantial
concentrations of customers and have the greatest market share in their
respective markets; and
. Use our technology leadership and intellectual property to develop and
provide new capacity solutions to the existing and emerging wireless
communications markets, including Personal Communications System, or PCS,
operating at 1800 MHz and 1900 MHz.
As of December 31, 1999, we had sold 121 SpotLight systems worldwide to
customers including AirTouch Communications Inc., ALLTEL Communications Inc.,
Bell Atlantic Mobile, GTE Wireless Inc., Grupo IUSACELL S.A.de C.V. of Mexico,
Southwestco Wireless Inc. and Telefonica Servicios Moviles S.A.C. of Peru. Over
the last two years we have sold our SpotLight 2000 system to the four largest
800 MHz CDMA wireless network operators in North America, as measured by
subscriber market share.
Our principal executive offices are located at 10735 Willows Road NE,
Redmond, Washington 98052, and our telephone number is (425) 702-5600. We were
originally incorporated in the state of Washington in January 1995 and
reincorporated in the state of Delaware in July 1995. Our Web site is
www.metawave.com. The information on this Web site does not constitute part of
this prospectus.
Metawave, SpotLight and the Metawave logo are registered trademarks of
Metawave Communications Corporation. This prospectus contains product names,
trade names and trademarks of Metawave Communications Corporation and other
organizations.
---------------
Unless otherwise indicated, the information in this prospectus, including
the outstanding share information below is based on the number of shares
outstanding as of December 31, 1999 and assumes:
. the conversion of 32,027,203 outstanding shares of preferred stock into
an aggregate of 41,959,418 shares of common stock, for further details
please see "Capitalization";
. no exercise of the underwriters' over-allotment option;
. no exercise of outstanding warrants; and
. no exercise of outstanding options under our stock option plans.
4
<PAGE>
The Offering
<TABLE>
<S> <C>
Common stock offered by Metawave........... shares
Shares outstanding after the offering...... shares
Use of proceeds............................ Working capital and general corporate
purposes. See "Use of Proceeds."
Proposed Nasdaq National Market symbol..... MTWV
</TABLE>
---------------
Summary Consolidated Financial Data
The summary consolidated financial data below should be read together with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements of Metawave and related
notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------
1997 1998 1999
-------- -------- --------
(in thousands, except per
share data)
<S> <C> <C> <C>
Consolidated Statement of Operations Data:
Revenues........................................ $ 1,450 $ 15,991 $ 22,596
Gross profit (loss)............................. (278) (2,037) 360
Total operating expenses........................ 22,228 35,728 39,153
Loss from operations............................ (22,506) (37,765) (38,793)
Other income (expense), net..................... 402 (6,563) (3,174)
-------- -------- --------
Net loss........................................ $(22,104) $(44,328) $(41,967)
======== ======== ========
Basic and diluted net loss per share............ $ (8.11) $ (14.59) $ (12.52)
Shares used in computation of basic and diluted
net loss per share............................. 2,724 3,039 3,352
Pro forma basic and diluted net loss per share.. $ (1.25)
Shares used in computation of pro forma net
loss per share................................. 33,562
</TABLE>
The "pro forma" column below gives effect to the conversion of all
outstanding shares of preferred stock upon completion of this offering.
The "pro forma as adjusted" column below gives effect to the sale of the
shares of common stock in this offering at an assumed initial public offering
price of $ per share, after deducting estimated underwriting discounts
and commissions and estimated offering expenses. Please see "Use of Proceeds"
and "Capitalization."
<TABLE>
<CAPTION>
December 31, 1999
---------------------------------
Pro Forma
Actual Pro Forma As Adjusted
--------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents................... $ 20,165 $ 20,165 $ 88,915
Working capital............................. 22,860 22,860 91,610
Total assets................................ 40,946 40,946 109,696
Long-term obligations, net of current
portion.................................... 2,503 2,503 2,503
Convertible and redeemable preferred stock
and warrants............................... 144,102 -- --
Common stock and warrants................... 2,810 146,912 215,662
Accumulated deficit......................... (120,194) (120,194) (126,444)
Stockholders' equity (deficit).............. (117,853) 26,249 94,999
</TABLE>
5
<PAGE>
RISK FACTORS
You should carefully consider carefully the risks described below, as well
as other information contained in this prospectus, before making a decision to
buy our common stock.
We have a limited operating history which makes it difficult for you to
evaluate our business and your investment.
We were incorporated in 1995 and were in the development stage until late
1997, when we commenced shipment for commercial sale of our first SpotLight
smart antenna system. We therefore have a limited operating history upon which
an investor may evaluate our operations and future prospects. The revenue and
profit potential of our business is unproven and our limited operating history
makes our future operating results difficult to predict. Because our smart
antenna systems were introduced relatively recently, we are unable to predict
with any degree of certainty whether our smart antenna systems will achieve
widespread market acceptance. In view of our limited operating history, an
investment in our common stock must be considered in light of the risks and
uncertainties that may be encountered by early stage companies, particularly
those in rapidly developing markets, such as the wireless communications
equipment market. In addition, period-to-period comparisons of operating
results may not be meaningful and operating results from prior periods may not
be indicative of future performance.
Because we expect to continue to incur net losses, we may not be able to
implement our business strategy and the price of our stock may decline.
We have never achieved profitability and as of December 31, 1999, we had an
accumulated net deficit of approximately $120.2 million. We intend to continue
to make significant investments in our operations, particularly to support
product development, to increase manufacturing capacity and to market new smart
antenna systems. Accordingly, we expect to continue to generate substantial
losses in 2000 and beyond, even if revenues increase. To achieve profitability,
we must, among other things:
. successfully scale our current operations;
. introduce new smart antenna systems;
. implement and execute our business and marketing strategies;
. develop and enhance our brand;
. adapt to changes in the marketplace;
. respond to competitive developments in the wireless communications
industry; and
. continue to attract, integrate, retain and motivate qualified personnel.
We might not be successful in achieving any or all of these objectives. Failure
to achieve any or all of these objectives could materially and adversely affect
our business, operating results and financial position. There can be no
assurance that we will ever achieve profitability or significant revenues on a
quarterly or an annual basis. Even if we ultimately do achieve profitability,
we may not be able to sustain or increase profitability on a quarterly or
annual basis.
6
<PAGE>
Our quarterly and annual financial results are subject to significant
fluctuations which may make it difficult to forecast our future performance and
could cause our stock price to decline.
Our operating results have fluctuated significantly in the past, and we
expect that they will continue to fluctuate significantly in the future. We
base our operating expenses on anticipated revenue trends and a high percentage
of our expenses are fixed in the short term. As a result, any delay in
generating or recognizing revenues could cause our operating results to fall
below the expectations of securities analysts and investors, which would likely
cause our share price to decline. Factors that may cause our quarterly results
to fluctuate include:
. gain or loss by us of significant customers;
. our ability to increase sales to our existing customers;
. delays in customer orders;
. delays in installing our smart antenna systems;
. our ability to reduce manufacturing costs;
. our ability to introduce new smart antenna systems;
. market acceptance of any new smart antenna systems;
. introduction and enhancement of competitive or substitute products by our
competitors;
. limitations in our manufacturing capacity; and
. delays or changes in regulatory environments.
We depend on a limited number of wireless network operators for substantially
all of our revenues, so the loss of a customer or a delay in an order from a
customer could harm our business.
We derive our revenues from sales of our SpotLight 2000 system to a limited
number of wireless network operators. Due to the highly concentrated nature of
the wireless industry and industry consolidation, we believe that the number of
potential customers for future systems will be limited. Five customers have
accounted for substantially all of our system sales to date. The U.S. wireless
operations of three of our customers--AirTouch, Bell Atlantic and GTE--are
expected to be consolidated into one entity in 2000. On July 28, 1998, Bell
Atlantic and GTE announced a merger and on September 21, 1999, Bell Atlantic
and Vodaphone AirTouch plc, the parent company of AirTouch announced an
agreement to merge their U.S. wireless operations. Bell Atlantic owns 47.2% of
IUSACELL and Southwestco is a subsidiary of Bell Atlantic. Failure by us to
capture a significant percentage of the wireless network operators as customers
could materially and adversely affect our business and operating results.
Moreover, due to this customer concentration, the loss, or reduced demand from,
any customer could negatively affect our operating results and cause our stock
price to decline.
Our contracts with new customers are subject to satisfying performance criteria
which may result in a longer sales cycle and a delay in revenue recognition
causing the timing of purchases and our operating results of operations to be
difficult to predict.
We believe that the purchase of our SpotLight systems is typically a
strategic decision that requires approval at senior levels of customers'
organizations, significant technical evaluation and a substantial commitment of
customers' personnel, financial and other resources. Our contracts with new
customers typically contain conditional acceptance provisions for the initial
system sales and we delay recognition of revenue until all conditions are
satisfied, which causes our sales cycle to last up to 18 months and to vary
substantially from customer to customer. This variability makes predicting our
revenues difficult. Typically, performance of our systems must be accepted in
an initial cell site or cluster of cell sites in a field trial prior to
completing any additional sales to a particular wireless network operator. This
makes the sales process associated with the
7
<PAGE>
purchase of our systems complex, lengthy and subject to a number of significant
risks. We may incur substantial expenses and expend significant management and
personnel resources in the process of a field trial. If we do not satisfy
conditions in these contracts or if satisfaction of these conditions were
delayed for any reason, revenues in any particular period could fall
significantly below our expectations. In addition, if we fail to satisfy the
performance criteria established by wireless network operators, our reputation
may be damaged and our ability to generate new customers may be significantly
impaired.
In addition, given the regional divisions of many wireless network
operators, an order from one region does not result in subsequent orders from
other regions of the same wireless network operator without substantial efforts
by us. We need to procure orders from the various regional divisions of a
wireless network operator. Entering into a corporate-wide purchase agreement
with a wireless network operator, therefore, does not mean that additional
sales to the wireless network operator's various divisions will be made.
Any delay in customer acceptance or shipment could adversely affect our
operating results.
Delays in shipment or customer acceptance of our antenna systems can happen
for a variety of reasons, including:
. an unanticipated shipment rescheduling;
. cancellation or deferral by a customer;
. competitive or economic factors;
. unexpected manufacturing, installation or other difficulties;
. unavailability or delays in deliveries of components, subassemblies or
services by suppliers; or
. the failure to receive an anticipated order.
Our customers are typically large organizations and make equipment purchases on
their own schedules. We have no influence on their internal budgetary
decisions. Any delay in system shipment could cause revenues and operating
results in a particular period to fall below our expectations as well as below
the expectations of public market analysts or investors. If this occurs, the
trading price of our common stock would likely decline.
Our success depends on widespread acceptance of our SpotLight systems.
Our future success depends upon the degree to which our smart antenna
systems are accepted. We believe that substantially all of our revenues in the
foreseeable future will be derived from sales of our SpotLight systems. If our
SpotLight systems fail to achieve broad market acceptance among our customers
and potential customers, our business would be significantly harmed. In light
of the relatively recent introduction of our SpotLight systems, in particular
our SpotLight GSM system which recently completed its first field trial, and
the rapidly evolving nature of the wireless communications industry, we cannot
predict with any degree of assurance whether our current or future smart
antenna systems will achieve broad market acceptance. We have not yet completed
any commercial sales of our SpotLight GSM system. We must demonstrate that our
systems provide a cost-effective spectrum management solution that expands
wireless network operators' capacity within each operator's unique network
configuration and specifications. If our smart antenna systems do not achieve
widespread acceptance with wireless network operators, our business would be
harmed.
We depend on the capital spending patterns of wireless network operators, and
if capital spending is decreased or delayed our business and operating results
would be harmed.
Since we rely on wireless network operators to purchase our smart antenna
systems, any substantial decrease or delay in capital spending patterns in the
industry would materially and adversely affect our business and operating
results. The demand for our smart antenna systems depends to a significant
degree upon the magnitude and timing of capital spending by these operators for
constructing, rebuilding or upgrading their
8
<PAGE>
systems. The capital spending patterns of wireless network operators depend on
a variety of factors, including access to financing, the status of federal,
local and foreign government regulation and deregulation, changing standards
for wireless technology, overall demand for analog and digital wireless
services, competitive pressures and general economic conditions. In addition,
capital spending patterns in the wireless industry can be subject to some
degree of seasonality, with lower levels of spending in the first calendar
quarter, based on annual budget cycles.
In order to compete with alternative products, we expect that the average
selling prices of our smart antenna systems must decrease. As a result, we must
reduce our costs and introduce new systems in order to achieve and maintain
profitability.
We anticipate that average selling prices for our smart antenna systems will
need to decrease in the future in response to competitive pricing pressures and
new product introductions by competitors. To achieve profitability we will need
to reduce our manufacturing costs. If the price of base station equipment
continues to decrease, the addition of new cell sites may be viewed as a more
cost-effective alternative for wireless network operators seeking increased
capacity. In order to compete, we must lower average selling prices. To lower
average selling prices without adversely affecting gross profits, we will have
to reduce the manufacturing costs of our smart antenna systems through
engineering improvements and economies of scale in production and purchasing.
We may not be able to achieve cost savings at a rate needed to keep pace with
competitive pricing pressures. If we are unable to reduce costs sufficiently to
offset the expected declining average selling prices, we may not achieve
profitability. Further, if we cannot provide our distribution partners with
sufficient financial incentive to distribute our systems without adversely
affecting our profitability, our distribution strategy and our business and
operating results would be harmed.
If we do not succeed in developing new smart antenna systems and system
enhancements in response to changing technology and standards, customers would
not purchase our systems and our business would suffer.
The market for our current smart antenna systems and planned future systems
is subject to rapid technological change, frequent new system introductions and
enhancements, product obsolescence, changes in customer requirements and
evolving industry standards. To be competitive, we must successfully develop,
introduce and sell new smart antenna systems or system enhancements that
respond to changing customer requirements on a timely and cost-effective basis.
Our future success will depend on our ability to develop new smart antenna
systems and system enhancements designed to operate with different digital
technologies and in some cases across other principal manufacturers' base
stations. Our success in developing, introducing and selling new and enhanced
systems will depend on a variety of factors, some of which are beyond our
control. These factors include:
. the timely and efficient completion of system design;
. the timely and efficient implementation of assembly, calibration and
test processes;
. the availability of limited source components;
. the development and completion of related software;
. delays in obtaining regulatory approvals;
. market acceptance of our smart antenna systems; and
. the development and introduction of competitive products by competitors.
There can be no assurance that we will successfully develop and introduce
new smart antenna systems and system enhancements in a timely manner. We have
in the past experienced and may in the future experience delays in development
and introduction of smart antenna systems and system enhancements. We may be
required to obtain licenses to intellectual property rights held by third
parties to develop new smart antenna systems or system enhancements and there
can be no assurance that such licenses will be available on acceptable terms,
if at all. Our inability to introduce new smart antenna systems or system
enhancements that contribute to sales would adversely affect our business and
operating results.
9
<PAGE>
Our smart antenna systems must be compatible with current and future base
station equipment in order to be sold.
Our product strategy relies on ensuring the compatibility of our systems
with base stations sold by wireless equipment manufacturers. If base station
manufacturers change or modify their equipment so that our smart antenna
systems are no longer compatible, we would need to redesign our systems to meet
any changed technology or modified equipment. This may involve substantial
costs and potentially a prolonged development stage for new systems, either of
which could adversely affect our business and operating results. Further, we
may need to rely on the cooperation of customers or base station manufacturers
to ensure that our smart antenna systems remain compatible if base station
equipment is modified. As our systems are designed to reduce the need to
purchase incremental base stations for capacity expansion of wireless networks,
obtaining cooperation from base station manufacturers may prove difficult. If
we are unable to obtain this cooperation and as a result cannot make our
systems compatible with base station equipment, our business and operating
results would be harmed.
Competition in our markets may lead to reduced prices, revenues and market
share.
The market for spectrum management solutions is relatively new but we expect
it to become increasingly competitive. This market is part of the broader
market for wireless infrastructure equipment which is dominated by a number of
large companies including Lucent, Motorola, Ericsson, Nortel, Nokia, Siemens,
Alcatel and others. Our smart antenna systems compete with other solutions to
expand network capacity. These alternative solutions include other smart
antenna systems, additional base stations for capacity, deploying efficient
digital technologies and various enhancements to digital technologies. We
believe that the principal competitive factor is the cost-effective delivery of
increased capacity to wireless network operators. If our systems are not the
most cost-effective solution, our ability to attract and retain customers would
be harmed.
We believe that base station manufacturers, which provide wireless network
capacity through sales of additional base stations or the development of
competitive technologies, represent the most significant competitive threat to
us. Our ability to compete in the future will depend in part on a number of
competitive factors outside our control, including the development by others of
products that are competitive with our systems and the price at which others
offer comparable products. To be competitive, we will need to continue to
invest substantial resources in engineering, research and development and sales
and marketing. We may not have sufficient resources to make these investments
and we may not be able to make the technological advances necessary to remain
competitive. Accordingly, there can be no assurance that we will be able to
compete successfully in the future. For more information on the competitive
risks facing us, please see "Business--Competition."
Our smart antenna systems are complex and may have errors or defects that are
detected only after deployments in complex networks, which may harm our
business.
Our smart antenna systems are highly complex and are designed to be deployed
in complex networks. Although our systems are tested during manufacturing and
prior to deployment, they can only be fully tested when deployed in networks.
Consequently, our customers may discover errors after the systems have been
fully deployed. If we are unable to fix errors or other problems that may be
identified in full deployment, we could experience:
. costs associated with the remediation of any problems;
. loss of or delay in revenues;
. loss of customers;
. failure to achieve market acceptance and loss of market share;
. diversion of deployment resources;
. increased service and warranty costs;
. legal actions by our customers; and
. increased insurance costs.
10
<PAGE>
We have limited experience and expertise in installing, integrating and
optimizing our SpotLight systems, and any problems associated with installing,
integrating and optimizing the SpotLight systems may harm our business.
Our SpotLight systems must be installed, integrated and optimized by trained
field personnel. To date we have performed this service for our customers and
plan to do so in the future. Our smart antenna systems are complex and
installation errors may occur which affect the performance of our systems and
could adversely affect our customers and their business. The integration and
optimization of our systems is complex and difficult. Errors may occur in the
integration or optimization process, which could adversely affect the
performance of our smart antenna systems and could adversely affect our
customers' wireless networks and their business.
Because we are one of the first companies to sell and deploy smart antenna
systems, there is little, if any, established field service expertise for the
installation and optimization of smart antenna systems in general or for the
SpotLight systems in particular. It is difficult to attract and maintain
qualified field service personnel and to train them to install and optimize our
SpotLight systems. Failure to have adequate numbers of trained field service
personnel would adversely affect our business as we would not be able to timely
install and optimize our systems. In addition to our own personnel, we have
used and will continue to use subcontractors for some installation and field
service tasks. We may not be able to find sufficient subcontractors with
adequate experience and expertise and we may not be able to retain their
services on acceptable terms, if at all.
We charge a fixed fee to install and optimize our SpotLight systems. To
date, our costs to install and optimize our systems have significantly exceeded
the revenues associated with this work. There is no assurance that we will be
able to perform these field service tasks at a profit. Failure to do so would
adversely affect our overall profitability.
Our smart antenna systems must be installed, integrated and optimized with
existing equipment installed in our customers' cell sites. This process can be
lengthy causing delays in a customer's commercial deployment of our systems.
These delays may be the result of factors outside of our control, including:
. zoning restrictions on installing additional equipment in a cell site;
. difficulties associated with the topography of the intended coverage area
of a cell site, such as the presence of water and hillsides;
. inability to easily access cell sites; and
. lack of experienced field service crews, particularly for international
deployments.
Field service problems, whether associated with our errors or with factors
beyond our control, could also harm our reputation and competitive position in
the industry.
If we fail to improve our operational systems and controls to manage
anticipated future growth, our business could be seriously harmed.
The growth of our operations has placed, and is expected to continue to
place, a significant strain on our financial and management resources as well
as our system design, manufacturing, sales and customer support capabilities.
We have sales offices in Redmond, Washington and Allen, Texas, and overseas
locations, including Taipei, Taiwan, Shanghai, China and Sao Paulo, Brazil. As
we expand our operations to multiple domestic and international locations,
management of our operations has become and will continue to become
increasingly complex. In order to manage growth effectively, we must implement
and improve our operational, financial and management information systems,
procedures and controls on a timely basis.
From January 1, 1997 to December 31, 1999, we expanded from 107 to 248
employees. Most of our executive officers have no prior experience as executive
officers of publicly traded companies. Our new employees include a number of
key managerial, technical and operations personnel who have not yet been fully
integrated into our operations, and we expect to add additional key personnel
in the near future, including a Chief Financial Officer. If we are unable to
manage growth effectively, our business will be harmed.
11
<PAGE>
We have limited manufacturing experience and facilities, and the inability to
subcontract our manufacturing needs, assemble orders in our manufacturing
facilities or adequately expand our capabilities would hurt our business and
operations.
Our manufacturing operations consist primarily of supplier and commodity
management and assembling finished goods from components and subassemblies
purchased from outside suppliers. We configure each SpotLight system to be
compatible with customer equipment, and our ability to achieve manufacturing
efficiencies by assembling systems before orders are received, therefore, is
limited. We intend to expand our manufacturing capacity and in certain
instances, subcontract additional assembly processes. We may not be successful
in identifying subcontractors with adequate experience or be able to control
the quality of systems by these subcontractors or retain experienced
subcontractors on acceptable terms, if at all.
Due to our limited experience with large scale operations, there can be no
assurance that we will be able to develop internally, or contract with third
parties for, additional manufacturing capacity on acceptable terms. Our success
depends on our ability to significantly increase our production capacity.
Our arrangements with our customers typically require that orders be shipped
within 90 days of the order being placed. There can be no assurance that we
will be able to increase our production capacity at an acceptable cost or
rapidly enough to fill our orders. The failure to assemble and ship systems on
a timely basis could damage relationships with customers and result in
cancellation of orders or lost orders, which would materially and adversely
affect our business and operating results.
We currently assemble and test all of our smart antenna systems in a single
facility in Redmond, Washington. If our facilities or the facilities of our
suppliers were incapable of operating, even temporarily, or were unable to
operate at or near full capacity for any extended period, our business could be
significantly harmed. In connection with our capacity expansion, we intend to
manufacture our SpotLight GSM systems in Taipei, Taiwan and may seek to develop
one or more additional manufacturing facilities. The addition of any facility
will likely increase the complexity of our operations and the risk of
inefficient management of our manufacturing operations. Our manufacturing
facilities are vulnerable to damage or interruption from earthquakes and other
natural disasters, power loss, sabotage, intentional acts of vandalism and
similar events. We do not have a formal disaster recovery plan, and we may not
carry sufficient business interruption insurance to compensate us for losses
that could occur. The occurrence of any of these events could seriously harm
our business.
Our reliance on a limited number of suppliers and the long lead time of
components for our smart antenna systems could impair our ability to
manufacture and deliver our systems on a timely basis.
Some parts and components used in our smart antenna systems are presently
available only from sole sources including linear power amplifiers supplied by
Powerwave Technologies, Inc. and integrated duplexer low-noise amplifiers
supplied by Filtronics Comtek, Ltd. Some other parts and components used in our
systems are available from a limited number of sources. Our reliance on these
sole or limited source suppliers involves certain risks and uncertainties,
including the possibility of a shortage or the discontinuation of certain key
components. Any reduced availability of these parts or components when required
could materially impair our ability to manufacture and deliver our systems on a
timely basis and result in the cancellation of orders, which could
significantly harm our business and operating results.
In addition, the purchase of some key components involves long lead times
and, in the event of unanticipated increases in demand for our smart antenna
systems, we may be unable to obtain such components in sufficient quantities to
meet our customers' requirements. We do not have guaranteed supply arrangements
with any of these suppliers, do not maintain an extensive inventory of parts or
components and customarily purchase sole or limited source parts and components
pursuant to purchase orders. Business disruptions, quality issues, production
shortfalls or financial difficulties of a sole or limited source supplier could
materially and adversely affect us by increasing product costs, or eliminating
or delaying the availability of such parts or components. In
12
<PAGE>
such event, our inability to develop alternative sources of supply quickly and
on a cost-effective basis could materially impair our ability to manufacture
and deliver our systems on a timely basis and could significantly harm our
business and operating results.
Our success is dependent on continuing to hire and retain qualified personnel,
and if we are not successful in attracting and retaining these personnel, our
business may be harmed.
The success of our business depends upon the continued contributions of each
of our key technical and senior management personnel each of whom would be
difficult to replace. We have not entered into employment agreements with any
of our employees other than severance arrangements with Robert H. Hunsberger,
Richard Henderson, Dr. Douglas O. Reudink, Victor K. Liang and Andrew Merrill.
Except for Dr. Reudink, our founder and Chief Technical Officer, we have not
entered into any non-competition agreements with any of our employees. We do
not maintain key-man life insurance on any of our key technical or senior
management personnel. In addition, we anticipate that we will need additional
management personnel, in particular the hiring of a Chief Financial Officer, if
we are to be successful in increasing production capacity and the scale of our
operations as well as operating as a public company. There can be no assurance
that we will be able to obtain and retain personnel on acceptable terms.
To effectively manage our recent growth as well as any future growth, we
will need to attract and retain qualified engineering, financial,
manufacturing, quality assurance, sales, marketing and customer support
personnel. Competition for such personnel, particularly qualified engineers, is
intense. We have experienced difficulties in recruiting sufficient numbers of
qualified engineers in the past and we expect to continue to experience
difficulties in the future. There may be only a limited number of persons with
the requisite skills to serve in these positions, particularly in the market
where we are located, and it may be increasingly difficult for us to hire such
personnel over time. As our product development efforts relate to wireless
standards that are widely deployed in foreign countries, such as GSM, we may be
required to recruit foreign engineers who have expertise in such standards.
Current U.S. immigration laws restrict our ability to hire foreign employees,
which could impair our product development efforts. The loss of any key
employee, the failure of any key employee to perform in his or her current
position, our inability to attract and retain skilled employees as needed or
the inability of our officers and key employees to expand, train and manage our
employee base could harm our business and operating results.
Our success depends on the continued growth of wireless communications services
and any failure of such services to continue to grow at the rates currently
anticipated would seriously harm our business, results of operation and
financial condition.
Our future operating results will depend upon the continued growth and
increased availability and acceptance of wireless communications services.
There can be no assurance that the volume and variety of wireless services or
the markets for and acceptance of such services will grow, or that such growth
will create a demand for our systems. If the wireless communications market
fails to grow, or grows more slowly than anticipated, our business and
operating results may be harmed.
The wireless communications industry has developed different technologies
and standards based on the type of service provided and geographical region.
There is uncertainty as to whether all existing wireless technologies will
continue to achieve market acceptance in the future. If a digital technology
for which we develop a smart antenna system is not widely adopted, the
potential size of the market for this system would be limited, and we may not
recover the cost of development. Further, we may not be able to redirect our
development efforts toward those digital wireless technologies that do sustain
market acceptance in a timely manner, which would harm our business and
operating results.
13
<PAGE>
We may be unable to meet our future capital requirements which would limit our
ability to grow and compete effectively, resulting in substantial harm to our
business and results of operations.
We require substantial working capital to fund our business. Our future
capital requirements will depend upon many factors, including the success or
failure of our efforts to expand our production, sales and marketing efforts,
the status of competitive products, and the requirements of our efforts to
develop new smart antenna systems and system enhancements. We believe that
current capital resources, together with the estimated net proceeds from this
offering, are adequate to fund our operations for at least 12 months.
Thereafter, we may be required to raise additional capital which may not be
available to us on acceptable terms, if at all. We maintain a line of credit
with Imperial Bank with customary commercial rates and restrictions, which we
are currently in the process of renewing and increasing. Any inability to
obtain needed financing by us could have a material adverse effect on our
business and operating results.
Our multinational operations subject us to various economic, political,
regulatory and legal risks.
Approximately 26.0% of our revenues for the twelve months ended December 31,
1999 was from the sale of our SpotLight systems to customers located outside of
the United States. For the quarter ended December 31, 1999, 69.4% of our
revenues was related to the sale of our SpotLight 2000 system to a single
customer in Mexico.
We anticipate that international sales will continue to account for a
significant portion of our revenues for the foreseeable future. Risks and
associated costs inherent in our international business activities include:
. difficulties obtaining foreign regulatory approval for our smart antenna
systems;
. unexpected changes in regulatory requirements;
. complying with foreign laws and treaties;
. legal uncertainties regarding export trade;
. inadequate protection of intellectual property in foreign countries;
. greater difficulties collecting delinquent or unpaid accounts;
. lack of suitable export financing;
. potentially adverse tax consequences;
. foreign exchange fluctuations if we accept non-U.S. dollar revenues;
. dependence upon independent sales representatives and other indirect
channels of distribution;
. difficulties and costs associated with staffing and managing
international operations;
. political and economic instability; and
. enforceability of contracts with foreign customers and distributors
governed by foreign laws.
We expect to begin to derive revenues from the sale of our SpotLight GSM
systems in 2000 in Asia in general and the greater China market in particular.
Changes in political or economic conditions in the region could adversely
affect our operations, in particular any deterioration of political relations
between the United States and the People's Republic of China or the People's
Republic of China and Taiwan could negatively affect our business. If economic
growth rates decline in Asia in general and the greater China market in
particular, expenditures for telecommunications equipment and infrastructure
improvements could decrease, which would negatively affect our business and our
operating results.
14
<PAGE>
We may engage in future acquisitions that dilute our stockholders, cause us to
incur debt or assume contingent liabilities and subject us to other risks.
We may make acquisitions of businesses, products or technologies in the
future. Future acquisitions by us could result in potentially dilutive
issuances of equity securities, large write-offs, the incurrence of debt and
contingent liabilities or amortization expenses related to goodwill and other
intangible assets, any of which could materially adversely affect our operating
results or the price of our common stock. Further, acquisitions entail numerous
operational risks, including:
. difficulties in assimilating operations;
. potential loss of key employees, technologies, products and the
information systems of the acquired companies;
. diversion of management's attention from other business concerns; and
. risks of entering geographic and business markets in which we have no or
limited prior experience.
Since we have not made any material acquisitions in the past, no assurance
can be given as to our ability to successfully integrate any businesses,
products, technologies or personnel that might be acquired in the future, and
our failure to do so could significantly affect our business and operating
results. Moreover, we may not be able to locate suitable acquisition
opportunities and this inability could impair our ability to grow as quickly as
possible or obtain access to technology that may be important to the
development of our business.
We may be unable to adequately protect our intellectual property and may be
subject to claims that we infringe the intellectual property of others, either
of which could substantially harm our business.
We rely on a combination of patent, trade secret, copyright and trademark
protection, nondisclosure agreements and other measures to protect our
proprietary rights. We also enter into confidentiality or license agreements
with our employees, consultants, and corporate partners, and control access to
and distribution of our proprietary information. Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy or otherwise
obtain and use our intellectual property or technology. We cannot assure you
that the actions we have taken will adequately protect our intellectual
property rights or that others will not assert their intellectual property
rights against us.
We may not be aware of all patents or patent applications that may
materially affect our ability to make, use or sell any current or future
products. From time to time, third parties have asserted patents, copyrights
and other intellectual property rights with regard to technologies that are
important to us. We expect that we will increasingly be subject to infringement
claims as the number of products and competitors in the spectrum management
market grows and the functionality of products overlaps. Third parties may
assert infringement claims against us in the future, and such assertions could
result in costly litigation or require us to obtain a license to intellectual
property rights of such parties. There can be no assurance that these licenses
would be available on terms acceptable to us, if at all. Any failure to obtain
a license from any third party asserting claims in the future or defense of any
third party lawsuit could have a material adverse effect on our business and
operating results. See "Business--Intellectual Property" for more information
regarding risks relating to protecting our intellectual property rights and
risks relating to claims of infringement of other intellectual property rights.
Our industry is subject to extensive government regulation that could cause
significant delays and expense.
Many of our smart antenna systems are required to comply with numerous
domestic and international government regulations and standards, which vary by
market. As standards for products continue to evolve, we will need to modify
our systems or develop and support new versions of our systems to meet emerging
industry standards, comply with government regulations and satisfy the
requirements necessary to obtain approvals. Compliance with government
regulations and industry standards can each be a lengthy process, taking from
15
<PAGE>
several months to longer than a year. We can offer no assurance that we will be
able to obtain additional necessary regulatory approvals or comply with new
industry standards in a timely manner, if at all. Our inability to obtain
regulatory approval and meet established standards in a timely manner could
delay or prevent entrance into or force our departure from markets and which
would materially adversely affect our business and results of operations.
In addition, our customers' operations are subject to extensive government
regulations. To the extent that our customers are delayed in deploying their
wireless systems as a result of existing or new standards or regulations, we
could experience delays in orders. These delays could have a material adverse
effect on our business and operating results. See "Business--Government
Regulation" for more information regarding the governmental control and
approval of our business.
Our stock price may be volatile and you may be unable to sell your shares at or
above the offering price.
There previously has been no public market for our common stock. We cannot
assure you that an active public market for our common stock will develop or be
sustained after the offering. The initial public offering price for the shares
will be determined by negotiations between us and the representatives of the
underwriters and may not be indicative of prices that will prevail in the
trading market. The market price of our common stock could be subject to wide
fluctuations in response to many risk factors listed in this section, and
others beyond our control, including:
. changes in financial estimates of our operating results by securities
analysts;
. fluctuations in the valuation of companies perceived by investors to be
comparable to us;
. performance of similar companies; and
. share price and volume fluctuations attributable to inconsistent trading
volume levels of our shares.
Furthermore, the stock markets have experienced extreme price and volume
fluctuations that have affected and continue to affect the market prices of
equity securities of many technology companies. These fluctuations often have
been unrelated or disproportionate to the operating performance of those
companies. Market fluctuations as well as general economic, political and
market conditions such as recessions, interest rate changes or international
currency fluctuations, may negatively impact the market price of our common
shares.
Our existing stockholders have significant control of our management and
affairs, which they could exercise against your best interests.
Following the completion of this offering, our officers and directors,
together with entities that may be deemed affiliates of or related to such
persons or entities, will beneficially own approximately % of our
outstanding common stock. As a result, these stockholders, acting together, may
be able to control our management and affairs and matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions. This concentration of ownership may have the effect of
delaying or preventing a change in control of Metawave and might affect the
market price of our common stock.
Because our initial public offering price will be substantially higher than the
book value per share of our outstanding common stock, new investors will incur
immediate and substantial dilution in the amount of $ per share.
Immediately after this offering, the initial public offering price will be
substantially higher than the book value per share based on the total value of
our assets less our total liabilities. Therefore, if you purchase common stock
in this offering, you will experience immediate and substantial dilution of
approximately $ per share in the price you pay for the common stock as
compared to its book value. Furthermore, investors purchasing common stock in
this offering will own only % of our shares outstanding even though they
will have contributed % of the total consideration received by us in
connection with our sales of common stock. To the extent outstanding options to
purchase common stock are exercised, there will be further dilution.
16
<PAGE>
Following this offering, a substantial number of our shares of common stock
will become available for sale in the public market, which could cause the
market price of our stock to decline.
If our stockholders sell substantial amounts of our common stock (including
shares issued upon the exercise of outstanding options and warrants) in the
public market following this offering, the market price of our common stock
could fall. These sales also might make it more difficult for us to sell equity
or equity-related securities in the future at a time and price acceptable to
us. Upon completion of this offering, we will have outstanding shares
of common stock based upon shares outstanding as of December 31, 1999, assuming
no exercise of the underwriters' over-allotment option and no exercise of
outstanding options after December 31, 1999. Of these shares, the
share sold in this offering will be freely transferable without restriction
under the Securities Act, unless held by "affiliates" of Metawave as that term
is used in the Securities Act and the Regulations promulgated thereunder. The
remaining shares of common stock outstanding after this offering will be
available for sale in the public market as follows:
<TABLE>
<CAPTION>
Number
Date of Availability of Sale of Shares
---------------------------- ----------
<S> <C>
Upon the closing of this offering...............................
91 days after the date of this prospectus.......................
181 days after the date of this prospectus...................... 42,274,518
Periodically thereafter upon the expiration of one-year holding
periods........................................................
</TABLE>
Delaware and Washington law and our charter documents contain provisions that
could discourage or prevent a potential takeover, even if the transaction would
benefit our stockholders.
Certain provisions of our certificate of incorporation and bylaws and the
provisions of Delaware and Washington law could have the effect of delaying,
deferring or preventing an acquisition of Metawave, even if an acquisition
would be beneficial to our stockholders. These provisions include:
. authorizing the Board of Directors to issue additional preferred stock;
. prohibiting cumulative voting in the election of directors;
. limiting the persons who may call special meetings of stockholders;
. prohibiting stockholder action by written consent;
. establishing advance notice requirements for nominations for election to
the Board of Directors and for proposing matters that can be acted on by
stockholders at stockholder meetings.
Please see "Description of Securities" for a more complete description of
these issues.
17
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends" and similar expressions to identify forward-
looking statements. This prospectus also contains forward-looking statements
attributed to third parties relating to their estimates regarding the growth of
the wireless communications industry. You should not place undue reliance on
these forward-looking statements, which apply only as of the date of this
prospectus. Our actual results could differ materially from those anticipated
in these forward-looking statements for many reasons, including the risks faced
by us and described in the preceding pages and elsewhere in this prospectus.
USE OF PROCEEDS
We estimate our net proceeds from the sale of shares of our common
stock offered in this offering to be approximately $68.8 million, or
approximately $79.2 million if the underwriters' over-allotment option is
exercised in full, based on an assumed initial public offering price of $
per share and after deducting the estimated underwriting discounts and
commissions and estimated offering expenses.
We intend to use the net proceeds for general corporate purposes, including
working capital to fund anticipated operating losses and capital expenditures.
We may, when and if the opportunity arises, use a portion of the proceeds to
acquire or invest in complimentary businesses, products or technologies.
Pending such uses, we intend to invest such funds in short-term, investment
grade, interest-bearing obligations.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock or
other securities. We currently anticipate that we will retain all of our future
earnings for use in the expansion and operation of our business and do not
anticipate paying cash dividends in the foreseeable future. The terms of our
credit agreement with Imperial Bank restrict our ability to pay dividends and
in the future the terms of other credit agreements may impose restrictions or
limitations on the payment of dividends.
18
<PAGE>
CAPITALIZATION
The actual column in the following table sets forth our actual
capitalization as of December 31, 1999.
The pro forma column in the following table gives effect to:
. The conversion on a one-to-one basis of an aggregate of 8,240,743
outstanding shares of Series A and Series B preferred stock into
8,240,743 shares of common stock upon completion of this offering;
. The conversion on a 1.30786-to-one basis of an aggregate of 2,491,880
outstanding shares of Series C preferred stock into 3,259,030 shares of
common stock upon completion of this offering;
. The conversion on a 1.44144-to-one basis of an aggregate of 3,018,429
outstanding shares of Series D preferred stock into 4,350,884 shares of
common stock upon completion of this offering; and
. The conversion on a 1.42857-to-one basis of an aggregate of 18,276,151
outstanding shares of Series E preferred stock into 26,108,761 shares of
common stock upon completion of this offering;
The pro forma as adjusted column gives effect to the sale by us of the
shares of Common Stock offered hereby at an assumed initial public
offering price of $ per share, and after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us, and
the change in the authorized number of shares following completion of this
offering.
<TABLE>
<CAPTION>
December 31, 1999
---------------------------------
Pro Forma
Actual Pro Forma As Adjusted
--------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Long-term obligations........................ $ 2,503 $ 2,503 $ 2,503
Convertible and redeemable preferred stock... 143,945 -- --
Convertible and redeemable preferred stock
warrants.................................... 157 -- --
Stockholders' equity (deficit):
Preferred stock, actual--37,000,000 shares
authorized, 32,027,203 shares which have
been designated as convertible and
redeemable; pro forma and pro forma as
adjusted--10,000,000 shares authorized,
none outstanding........................... -- -- --
Common stock, actual--50,000,000 shares
authorized, 3,617,714 shares issued and
outstanding; pro forma--50,000,000 shares
authorized, 45,577,132 shares issued and
outstanding; pro forma as adjusted--
150,000,000 shares authorized, shares
issued and outstanding..................... 2,810 146,912 221,912
Deferred stock compensation.................. (488) (488) (488)
Accumulated other comprehensive income....... 19 19 19
Accumulated deficit.......................... (120,194) (120,194) (126,444)
--------- --------- ---------
Total stockholders' equity (deficit)....... (117,853) 26,249 94,999
--------- --------- ---------
Total capitalization....................... $(112,583) $ 31,519 $ 100,269
========= ========= =========
</TABLE>
The information in the table excludes as of December 31, 1999:
. 4,327,942 shares issuable upon exercise of outstanding options at a
weighted average exercise price of $3.50 per share,
. 136,306 shares of common stock issuable upon exercise of outstanding
preferred stock warrants at a weighted average exercise price of $3.55
per share and the conversion to common stock; and
. 31,250 shares issuable upon exercise of an outstanding common stock
warrant at an exercise price of $4.50 per share; and
. an aggregate of 1,704,348 shares available for future issuance of stock
options under our stock plans.
19
<PAGE>
DILUTION
As of December 31, 1999, we had a pro forma net tangible book value of
approximately $26.2 million, or $0.58 per share of common stock. Pro forma net
tangible book value represents total tangible assets less total liabilities
divided by the pro forma number of shares of common stock outstanding, assuming
the conversion of convertible and redeemable preferred stock to common stock
and the conversion of preferred stock warrants to common stock warrants.
Without taking into account any other changes in the pro forma net tangible
book value after December 31, 1999, other than to give effect to the receipt by
us of the net proceeds from the sale of the shares of common stock
offered hereby at an assumed initial public offering price of $ per share,
and after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by us, the pro forma net tangible book
value at December 31, 1999 would have been approximately $ million, or
$ per share. This represents an immediate increase in net tangible book
value of $ per share to existing stockholders and an immediate dilution of
$ per share to new investors purchasing shares in this offering. The
following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................... $
Pro forma net tangible book value per share as of December 31,
1999............................................................. $0.58
Increase per share attributable to new investors..................
-----
Pro forma net tangible book value per share after the offering.....
-----
Dilution per share to new investors................................ $
=====
</TABLE>
The following table summarizes, on a pro forma basis, as of December 31,
1999, the number of shares of common stock purchased from us, the total
consideration paid and the average price per share paid by existing
stockholders and new investors (before deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us):
<TABLE>
<CAPTION>
Total
Shares Purchased Consideration Average
------------------ -------------- Price
Number Percent Amount Percent Per Share
---------- ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders............... 45,577,132
New investors.......................
---------- ----- ----- -----
Total........................... 100.0% 100.0%
========== ===== ===== =====
</TABLE>
The information presented with respect to existing stockholders excludes as
of December 31, 1999:
. 4,327,942 shares issuable upon exercise of outstanding options at a
weighted average exercise price of $3.50 per share;
. 136,306 shares of common stock issuable upon exercise of outstanding
preferred stock warrants at a weighted average exercise price of $3.55
per share; and
. 31,250 shares issuable upon exercise of an outstanding common stock
warrant at an exercise price of $4.50 per share.
. an aggregate of 1,704,548 shares available for future issuance under our
stock plans.
To the extent that any of the options or warrants are exercised, or
additional options are issued and exercised, there will be further dilution to
new investors. For additional information about our capitalization and the
options and warrants described above, see "Description of Securities" and notes
4 and 5 of Notes to Consolidated Financial Statements.
20
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
You should read the following selected financial data in conjunction with
our consolidated financial statements and notes to our consolidated financial
statements and with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which are included elsewhere in this
prospectus. The consolidated statements of operations data for the years ended
December 31, 1997, 1998 and 1999, and the balance sheet data at December 31,
1998 and 1999, are derived from audited consolidated financial statements
included elsewhere in this prospectus. The consolidated statement of operations
data for the period from inception to December 31, 1995 and for the year ended
December 31, 1996 and the balance sheet data as of December 31, 1995, 1996 and
1997 are derived from audited consolidated financial statements not included in
this prospectus. See note 1 and 9 of Notes to Consolidated Financial Statements
for an explanation of the number of shares used to compute shares used in
calculation of basic and diluted net los per share.
<TABLE>
<CAPTION>
Period from
January 19, 1995
(inception) to Year ended December 31,
December 31, --------------------------------------
1995 1996 1997 1998 1999
---------------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenues................ $ -- $ 1,291 $ 1,450 $ 15,991 $ 22,596
Cost of revenues........ -- 1,097 1,728 18,028 22,236
------- -------- -------- -------- --------
Gross profit (loss)..... -- 194 (278) (2,037) 360
Operating expenses:
Research and
development........... 883 7,186 13,083 18,495 22,638
Sales and marketing.... 84 1,704 5,383 11,346 10,973
General and
administrative........ 168 2,434 3,762 5,887 5,542
------- -------- -------- -------- --------
Total operating
expenses............ 1,135 11,324 22,228 35,728 39,153
------- -------- -------- -------- --------
Loss from operations.... (1,135) (11,130) (22,506) (37,765) (38,793)
Other income (expense),
net.................... 135 335 402 (6,563) (3,174)
------- -------- -------- -------- --------
Net loss................ $(1,000) $(10,795) $(22,104) $(44,328) $(41,967)
======= ======== ======== ======== ========
Basic and diluted net
loss per share......... $ (0.36) $ (3.97) $ (8.11) $ (14.59) $ (12.52)
======= ======== ======== ======== ========
Shares used in
computation of basic
and diluted net loss
per share.............. 2,750 2,720 2,724 3,039 3,352
======= ======== ======== ======== ========
Pro forma basic and
diluted net loss per
share.................. $ (1.25)
========
Shares used in
computation of pro
forma net loss per
share.................. 33,562
========
<CAPTION>
December 31,
-------------------------------------------------------
1995 1996 1997 1998 1999
---------------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Consolidated Balance
Sheet Data:
Cash and cash
equivalents............ $ 1,422 $ 19,092 $ 13,334 $ 10,763 $ 20,165
Working capital......... 4,280 17,723 15,577 (17,135) 22,860
Total assets............ 6,135 21,747 22,575 32,510 40,946
Long term obligations,
net of current
portion................ 96 1,758 2,978 4,413 2,503
Convertible and
redeemable preferred
stock and warrants..... 5,500 30,100 49,210 61,595 144,102
Common stock and
warrants............... 10 10 1,968 2,179 2,810
Accumulated deficit..... (1,000) (11,795) (33,899) (78,227) (120,194)
Stockholders' equity
(deficit)............... (990) (11,785) (33,136) (76,596) (117,853)
</TABLE>
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We provide smart antenna systems that address the capacity constraints faced
by wireless network operators. From inception in January 1995 through December
31, 1997, our operating activities related primarily to conducting research and
development, building market awareness, recruiting management and technical
personnel and building an operating infrastructure. Shipment for commercial
sale of our initial SpotLight system began late in the fourth quarter of 1997
and we first recognized revenues for the sale of our SpotLight system in the
first quarter of 1998. Since the beginning of 1998, our operating activities
have been focused on increasing sales, new product development and expanding
manufacturing capacity. Since inception, we have incurred significant losses
and as of December 31, 1999, had an accumulated deficit of $120.2 million.
Our revenues are derived primarily from sales of our SpotLight systems,
which includes the sale of hardware and the licensing of software, and from
related installation and optimization services. We believe that substantially
all of our revenues in the foreseeable future will be derived from sales of our
SpotLight systems. Our sales cycles can be lengthy and the related contracts
typically include performance specifications and customer acceptance conditions
in connection with the sale of each system to a new customer.
Revenues. We recognize system revenues when title to the system and risk of
loss has been transferred to the customer and all customer acceptance
conditions, if any, have been satisfied. We recognize service revenues when the
services have been performed. Our contract terms including pricing and
acceptance criteria, if any, typically vary depending upon the order.
Consequently, our revenues may vary from quarter to quarter depending on the
length of the sales cycle and the applicable contract terms. To date, our
international sales have been denominated in U.S. dollars. However, in the
future, a portion of our international sales may be denominated in foreign
currencies. Sales to ALLTEL, IUSACELL and Southwestco represent substantially
all of our revenues for the year ended December 31, 1999 and we expect a
limited number of customers will account for a substantial percentage of
revenues for the foreseeable future.
Cost of Revenues. Our cost of revenues typically consists of material
components, system assembly and testing, and overhead expenses. Our gross
margins are generally higher for hardware revenues than for service revenues.
We anticipate that our overall gross margins will fluctuate from period-to-
period as a result of shifts in product mix, the proportion of direct and
indirect sales, anticipated decreases in average selling prices and our ability
to reduce costs.
Research and Development. Our research and development expense consists
principally of salaries, related personnel expenses, consultant fees and
prototype expenses related to the design, development, testing and enhancement
of our SpotLight systems. As of December 31, 1999, all of our research and
development costs had been expensed as incurred. We believe that continued
investment in research and development is critical to achieving our strategic
product development and cost reduction objectives and, as a result, expect this
expense to continue to increase significantly in absolute dollars in the
future.
Sales and Marketing. Our sales and marketing expense consists of salaries,
sales commissions and related expenses for personnel engaged in marketing,
sales and field service support for new installations and installed base, as
well as promotional expenditures. We believe that these expenses will increase
in absolute dollars as the marketing campaigns for our SpotLight 2000 and
SpotLight GSM systems expand and we increase our sales personnel.
General and Administrative. Our general and administrative expense consists
primarily of salaries and personnel related expenses, recruiting and relocation
expenses, professional and consulting fees, and other general corporate
expenses. We expect this expense to increase as we add personnel and incur
additional costs related to our operation as a public company.
22
<PAGE>
Stock compensation expense. We have recorded stock-based compensation
expense of $2.3 million related to stock options granted below fair market
value for accounting purposes through December 31, 1999. Of this amount, we
amortized approximately $1.8 million through that same period. This amount
represents the difference between the exercise price of these stock option
grants and the deemed fair value of the common stock at the time of grant. The
remaining $488,000 will be amortized over the remaining vesting period of the
options, generally four years. As a result, the amortization of stock-based
compensation will impact our reported results of operations through fiscal
2002. The stock-based compensation expense has been allocated to research and
development expense, sales and marketing expense and general and administrative
expense, as appropriate.
Results of Operations
Years Ended December 31, 1999 and 1998
Revenues. Revenues were $22.6 million in 1999 and $16.0 million in 1998, an
increase of 41.3%. This increase was primarily due to increased unit sales of
our SpotLight systems, increased revenues per unit sold and the introduction of
a new version of our SpotLight 2000 CDMA system in July 1999. International
sales of our systems accounted for 26.0% of revenues in 1999 and 23.5% in 1998.
Cost of Revenues. Our cost of revenues was $22.2 million in 1999 and $18.0
million in 1998, an increase of 23.3%. The increase in cost of revenues was
primarily the result of increased units sold and change in product mix from
analog systems to our SpotLight 2000 CDMA system. Also, in 1999 we began to
include in cost of revenues the personnel expenses related to field
installation and engineering services. This change was made to properly align
direct costs and overhead with revenues.
Our cost of revenues and gross profit may be affected by the mix of systems
sold, the mix of distribution channels used by us, the mix of services
provided, and the average order size. We expect to realize higher gross margins
on direct channel sales relative to indirect channel sales. If sales through
indirect channels increase as a percentage of total revenues our gross margins
will likely decrease.
Research and Development. Research and development expense was $22.6 million
in 1999 and $18.5 million in 1998, an increase of 22.4%. The increase was
primarily due to increased personnel related to the development and testing of
our SpotLight GSM system and our SpotLight 2000 CDMA system.
Sales and Marketing. Sales and marketing expense was $11.0 million in 1999
and $11.3 million in 1998, a decrease of 3.3%. The decrease was primarily due
to including in cost of revenues the personnel of expenses associated with
field installation and engineering services.
General and Administrative. General and administrative expense was $5.5
million in 1999 and $5.9 million in 1998, a decrease of 5.9%. The decrease was
primarily due to the reduction of administrative personnel and reductions in
outside professional services.
Other Income (Expense), Net. Our total other income (expense), net amounted
to an expense of $3.2 million in 1999 compared to an expense of $6.6 million in
1998. The decreased expense was primarily the result of reduced interest
expense as a result of the repayment of our $29.0 million Senior Secured Bridge
Notes bearing interest at 13.75% in April 1999. Other income increased by $1.0
million from 1998 to 1999 due to income from short-term investments in 1999
made with the proceeds from the Series E preferred stock financing.
Years Ended December 31, 1998 and 1997
Revenues. Revenues were $16.0 million in 1998 and $1.5 million in 1997. This
increase reflected our first full year of revenues resulting from the
commercial deployment of our SpotLight systems. Our revenues for 1997 consisted
primarily of services provided by the Network Services division which was
discontinued and sold in March 1998.
23
<PAGE>
Cost of Revenues. Our cost of revenues was $18.0 million in 1998 and $1.7
million in 1997. The increase was primarily related to costs associated with
introducing our analog system and the first version of our SpotLight CDMA
system.
Research and Development. Research and development expense was $18.5 in 1998
and $13.1 million in 1997, an increase of 41.4%. The increase was primarily
attributable to increased personnel related to the introduction of our analog
system, development of the first version of our SpotLight CDMA system, and
start up costs related to the development of our GSM system.
Sales and Marketing. Sales and marketing expense was $11.3 million in 1998
and $5.4 million in 1997, an increase of 110.8%. The increase was primarily
attributable to expansion of our direct sales force, marketing and service
support staff. Also in 1998, we increased expenses associated with initial
field trials, marketing communications, and training and documentation.
General and Administrative. General and administrative expense was $5.9
million in 1998 and $3.8 million in 1998, an increase of 56.5%. The increase
reflected the addition of administrative staff, new facilities in Redmond,
Washington and Allen, Texas, increased outside professional services associated
with financings and expenses associated with the implementation of our
enterprise resource planning system.
Other Income (Expense), Net. Our total other income (expense), net amounted
to an expense of $6.6 million in 1998 compared to income of $402,000 in 1997.
The increased interest expense was primarily the result of issuing the $29.0
million Senior Secured Bridge Notes in May 1998, bearing interest at 13.75% per
annum.
Selected Quarterly Results of Operations
The following table sets forth certain unaudited quarterly consolidated
statement of operations data for the eight quarters ended December 31, 1999.
This unaudited information has been prepared substantially on the same basis as
the annual audited financial statements appearing elsewhere in this prospectus,
and includes all necessary adjustments that we consider necessary to present
fairly the financial information for the periods presented. The quarterly data
should be read in conjunction with the audited consolidated financial
statements and the notes thereto appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
Quarter ended
--------------------------------------------------------------------------------
March 31, June 30, Sept. 30, Dec. 31, March 31, June 30, Sept. 30, Dec. 31,
1998 1998 1998 1998 1999 1999 1999 1999
--------- -------- --------- -------- --------- -------- --------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenues................ $ 2,538 $ 3,963 $ 6,557 $ 2,933 $ 6,834 $ 1,553 $ 5,725 $ 8,484
Cost of revenues........ 2,910 3,486 6,374 5,258 7,059 1,860 5,768 7,549
------- ------- -------- -------- -------- -------- ------- -------
Gross profit............ (372) 477 183 (2,325) (225) (307) (43) 935
Operating expenses:
Research and
development........... 3,575 4,450 5,525 4,945 5,392 5,651 5,301 6,294
Sales and marketing.... 1,996 2,091 3,347 3,912 2,694 2,722 2,434 3,123
General and
administrative........ 1,044 1,385 1,177 2,281 1,280 1,654 1,360 1,248
------- ------- -------- -------- -------- -------- ------- -------
Total operating
expenses.............. 6,615 7,926 10,049 11,138 9,366 10,027 9,095 10,665
------- ------- -------- -------- -------- -------- ------- -------
Loss from operations.... (6,987) (7,449) (9,866) (13,463) (9,591) (10,334) (9,138) (9,730)
Other income (expense),
net.................... 54 (1,719) (2,202) (2,696) (3,108) (614) 293 255
------- ------- -------- -------- -------- -------- ------- -------
Net loss................ $(6,933) $(9,168) $(12,068) $(16,159) $(12,699) $(10,948) $(8,845) $(9,475)
======= ======= ======== ======== ======== ======== ======= =======
</TABLE>
Our revenues increased significantly over the last two quarters primarily as
a result of increased unit sales of our SpotLight systems and expanding
customer base. Our revenues in the last quarter of 1998 decreased compared to
the previous quarter due to delays in receiving orders from a significant
customer. Our revenues in
24
<PAGE>
the second quarter of 1999 declined compared to the previous quarter primarily
due to delays in orders associated with the transition from analog to CDMA
systems.
Research and development expense has generally remained constant on a
quarterly basis but increased in the last quarter of 1999 due to expenses
associated with costs of prototype systems and write off of certain capital
assets associated with research and development. Sales and marketing expense
has fluctuated with the number of personnel in sales, marketing and customer
support and changes in classifications to cost of revenues in 1999. General and
administrative expense has fluctuated with the number of personnel. The
increase in the fourth quarter of 1998 was the result of the establishment of a
bad debt reserve and expenses associated with the cancellation of a public
offering. As a result of our reduction in force in the third quarter of 1999,
general and administrative expense declined.
Our limited operating history makes the prediction of future operating
results difficult. In view of our limited operating history and the rapidly
evolving nature of our business, we believe that period-to-period comparisons
of our operating results, particularly among the quarters, are not meaningful
and should not be relied upon as an indication of future performance. Our
business prospects must be considered in light of the risks and uncertainties
often encountered by early-stage companies in the wireless communications
market. We may not be successful in addressing these risks and uncertainties.
We have experienced significant percentage growth in revenues in recent
periods; however, we do not believe that prior growth rates are indicative of
future growth rates. It is likely that in some future quarter our operating
results may fall below the expectations of securities analysts and investors.
In this event, the trading price of our common stock may fall significantly.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through private
sales of preferred stock and common stock and the issuance of debt instruments,
and to a lesser extent, capital leases arrangements and borrowings under
various lines of credit. Net proceeds from these transactions totaled $182.2
million as of December 31, 1999.
For the twelve months ended December 31, 1999, we used net cash in operating
activities of $37.8 million. Our operating activities included major uses of
cash to fund our net loss of $42.0 million. We also used cash by increasing
accounts receivable by $6.0 million and reduced accounts payable and accrued
liabilities by $1.5 million. We partially offset cash uses by lowering
inventories by $3.8 million, increasing deferred revenues by $1.6 million. Our
net cash used in the fourth quarter 1999 amounted to $3.8 million. Our net cash
used in operating activities in 1998 amounted to $34.9 million.
Our net cash used in investing activities in 1999 was $1.3 million. Our 1998
net cash used in investing activities was $2.5 million.
Net cash provided by financing activities was $48.5 million for year ended
December 31, 1999. This primarily consisted of net proceeds from the sale of
Series E preferred stock of $82.5 million. In April 1999, we repaid $29.0
million in Senior Secured Bridge Notes plus interest of $2.8 million. Our 1998
net cash from financing activities was $34.8 million consisting of $29.0
million from the sale of Senior Secured Bridge Notes at 13.75% interest and
$7.2 million from the sale of Series E preferred stock.
As of December 31, 1999, we had $20.2 million in cash and cash equivalents,
$7.5 million under a revolving line of credit with Imperial Bank and $3.0
million under a equipment lease arrangement with Transamerica Business Credit,
of which $1.8 million remained available. The Imperial Bank revolving line of
credit matures on March 14, 2000 and no amount is presently outstanding under
this facility, other than a $2.5 million standby letter of credit to support
our obligations under the lease for our Redmond, Washington facility. We are
currently discussing with Imperial Bank a renewal and increase of the amount
available under the line of credit. Borrowings under the Transamerica equipment
lease are secured by the equipment financed thereunder. The Transamerica
equipment lease terms vary from 24 to 36 months with an effective interest rate
25
<PAGE>
of 12.26% per annum for domestic equipment leases and 12.86% for foreign
equipment leases, and interest is payable monthly. We have several capital
leases with terms ranging from 24 to 48 months. At December 31, 1999, our
outstanding capital lease obligations were $5.2 million, accruing interest at
rates ranging from 7.25% to 14.50%. Please see note 5 to the financial
statements for a more complete description of the credit facilities.
We believe that current capital resources, together with the estimated net
proceeds from this offering, are adequate to fund our operations for at least
12 months. Thereafter, we may be required to raise additional capital which may
not be available to us on acceptable terms, if at all. Any inability to obtain
needed financing by us could have a material adverse effect on our business and
operating results.
Year 2000 Compliance
We have found no major effects on our computer operating systems due to the
change in the century. We rely on our systems, applications and devices in
operating and monitoring all major aspects of our business, including financial
and accounting systems, customer services, networks and telecommunications
equipment and end products. We also rely, directly and indirectly, on external
systems of business enterprises such as customers, suppliers, creditors,
financial organizations, and of governmental entities, both domestic and
international, for accurate exchange of data. Although we believe that our
internally developed systems and applications are designed to be year 2000
compliant, we utilize third party equipment and software that may not be year
2000 compliant. Failure of such third party systems to properly process data
related to the year 2000 could still cause interruptions in our operations and
could require us to incur unanticipated expenses to remedy any problems. In
addition, if our customers or suppliers experience difficulties with year 2000
issues, it could adversely impact sales of our smart antenna systems to such
customers or disrupt the supply of necessary components to us by such
suppliers. Any year 2000 compliance problems of that our customers, our
suppliers, or of our own could have a material adverse effect on our business,
results of operations and financial condition.
Market Risk
We do not use derivative financial instruments. We generally place our
marketable security investments in high credit quality instruments, primarily
U.S. Government obligations and corporate obligations with contractual
maturities of less than one year. We do not expect any material loss from our
marketable security investments and therefore believe that our potential
interest rate exposure is not material; however, these investments are subject
to interest rate risk.
Recent Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivatives and
Hedging Activities, which requires that all derivative instruments be recorded
on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designed as part of a hedge
transaction and, if it is, the type of hedge transaction. SFAS No. 133 is
effective for fiscal years beginning after June 15, 2000. We do not anticipate
that the adoption of this new standard will have a material effect on our
earnings or our financial position, but we continue to evaluate the impact of
SFAS No. 133.
26
<PAGE>
BUSINESS
Overview
We are a leading provider of smart antenna systems for the wireless
communications industry. We believe that our SpotLight systems enable wireless
network operators to increase overall network capacity, improve or maintain
network quality, reduce network operating costs and better manage their network
infrastructure. As the demand for wireless services has grown in recent years,
we have developed products based on our proprietary technologies that address
the associated network capacity problems faced by wireless network operators.
Our SpotLight systems can reduce the need for more costly infrastructure
upgrades and additional cell site deployments, allowing wireless network
operators to more cost-effectively keep pace with subscriber growth and
increased demand for digital services. These smart antenna systems utilize
proprietary hardware and software to enable a more efficient utilization of the
finite amount of radio frequency spectrum, or "wireless bandwidth." Our
technology is designed to be implemented in a variety of market segments in the
wireless communications industry and currently supports CDMA, GSM and analog
standards. Our customers include AirTouch, ALLTEL, Bell Atlantic, GTE,
IUSACELL, Southwestco and Telefonica Peru. As of December 31, 1999, we had sold
121 SpotLight systems worldwide.
Industry Background
Growth in Wireless Usage
The demand for wireless communications services has grown significantly in
recent years. According to The Strategis Group, U.S. subscriber usage was
expected to increase from approximately 174 billion minutes of use in 1999 to
approximately 372 billion minutes of use by 2003, representing an expected
compound annual growth rate of 20.9%. This increase in usage has been driven by
an increased number of subscribers, lower prices and expanded availability of
existing services. In addition to these factors, the emergence of new data and
Internet-oriented wireless services is expected to contribute to the increase
in subscriber usage in the future.
Increased Subscribers. The number of wireless subscribers has increased
significantly in recent years. According to International Data Corporation, or
IDC, there were approximately 303 million wireless subscribers around the world
in 1998 and that number was expected to reach approximately 1.1 billion
subscribers in 2003, representing an expected compound annual growth rate of
28.9%. According to IDC, in 1998, there were approximately 64 million wireless
subscribers in the United States and that number was expected to grow to
approximately 118 million by 2003, representing an expected compound annual
growth rate of 12.9%.
Lower Price. The price of wireless services has decreased significantly in
recent years. According to data provided by The Strategis Group, the average
price per wireless minute in the United States was expected to decline from
$0.25 per minute in 1999 to $0.12 per minute in 2003. With multiple wireless
network operators competing in most U.S. markets, competitive pricing
strategies, such as discounting and fixed rate plans, have resulted in a
greater number of wireless subscribers, as well as a substantial increase in
subscriber usage. In addition, the greater supply of commercially available
wireless frequency due to increased government allocation of spectrum to
wireless network operators has resulted in increased competition among existing
and new wireless network operators, further reducing costs to subscribers.
Expanded Availability of Existing Services. Due to the high initial fixed
costs involved, early wireless deployments were limited to urban centers and
major traffic corridors. However, to meet increased demands for ubiquitous
wireless services, wireless network operators accelerated the buildout and
upgrade of their networks. This increased coverage has enabled these wireless
network operators to reach new subscribers and provide a higher level of
service to existing subscribers.
New Wireless Services. Consumer demand for "any time, anywhere" access to
the Internet and data services, such as email and instant messaging, has
created a demand for delivery of these services over a
27
<PAGE>
wireless network. Devices with wireless access, such as mobile phones, palm
computers and laptop computers with wireless modems, continue to evolve,
providing applications and ease of use that increase wireless data usage.
Additionally, standard protocols such as Wireless Application Protocol, or WAP,
have emerged and are designed to create interoperability of wireless equipment
and Internet-based products. These protocols are expected to further drive
consumer demand for wireless access to the Internet and data services.
Strains on Wireless Network Capacity
Increased subscriber usage and the demand for ubiquitous wireless access
place a significant strain on wireless network operators given the fixed amount
of radio frequency spectrum that is available. Wireless spectrum is allocated
to individual wireless network operators in fixed amounts by governments in the
U.S. and foreign markets. Thus, the fundamental challenge for wireless network
operators is to increase capacity, while maintaining signal quality, within a
fixed amount of wireless bandwidth. Wireless network operators generally have
used two alternatives to address capacity problems: building additional cell
sites or deploying more efficient digital technologies.
Additional cell sites. Operators of wireless networks often address capacity
problems by building new cell sites. This alternative has three major
disadvantages. First, we believe the cost of constructing a new standard 800
MHz CDMA cell site, including land, building and equipment, can be
approximately $500,000. Second, building cell sites closer together increases
signal interference in the network, which can reduce capacity and call quality,
exacerbating the very problems that the additional cell sites were built to
resolve. Third, wireless network operators face significant community
resistance arising from environmental and zoning concerns and objections to the
appearance of additional cell site towers.
More efficient digital technologies. In addition to building more cell
sites, wireless network operators have deployed more spectrum-efficient digital
technologies such as CDMA, GSM and TDMA to increase capacity. These digital
technologies offer many improvements to wireless network operators and their
customers, including more cost-effective infrastructure, smaller phones with
improved battery life and value-added features, such as the capability to
support data services. According to IDC, 69.2% of subscribers worldwide were
using digital handsets in 1998 and this number was expected to increase to
96.8% by 2003. Despite the improvement offered by digital technologies,
wireless network operators continue to find that portions of their networks
still face capacity limitations. For instance, CDMA lacks the ability to
efficiently add incremental capacity in localized heavy traffic areas of a
network. Consequently, wireless network operators must either deploy new cells,
or dedicate more spectrum to CDMA in significant portions of their network to
resolve isolated capacity constraints. In GSM networks, the capacity is limited
by interference between cell sites within the network. This interference
prevents GSM network operators from adding additional capacity to the network.
The growing demand for wireless services, coupled with the high costs and
technical difficulties associated with increasing network capacity, create the
need for more cost-effective solutions. As wireless network operators seek to
provide ubiquitous wireless service and support increased subscriber usage,
they must address the fundamental challenge of achieving maximum capacity from
the finite spectrum they have been allocated.
The Metawave Solution
We provide smart antenna systems to wireless network operators. Our
SpotLight systems are a cost-effective solution to expanding network capacity
while improving or maintaining overall network performance. Our SpotLight
systems are compatible with CDMA, GSM and analog base station equipment. Our
smart antenna systems provide wireless network operators with the following
benefits:
Cost-Effective Capacity Expansion. Our SpotLight systems enable wireless
network operators to increase the capacity of their existing networks and
reduce the need to build and maintain costly new cell sites. Our SpotLight
systems can be deployed selectively within a network in either a single cell
site or multiple cell sites. Based on customer data, current versions of our
SpotLight 2000 system improved CDMA capacity in cell sites from 30% to 50%,
depending on network configuration. Additionally, in a recent field trial, our
SpotLight GSM
28
<PAGE>
system demonstrated that, when deployed in a network of cell sites, GSM network
capacity can be increased by 100% without increasing the number of GSM cell
sites. By applying our SpotLight solutions in these targeted capacity
constrained cell sites, overall network capacity can be correspondingly
increased.
Improved Network Performance. Our SpotLight systems allow wireless network
operators to increase capacity while maintaining or improving the level of
service and signal quality. Our SpotLight 2000 systems increase CDMA network
performance by efficiently distributing existing network resources to better
match subscriber usage. We believe our SpotLight GSM systems will provide
wireless network operators with better signal reception and reduced
interference thereby improving network performance.
Compatibility with Standards and Equipment. Our SpotLight systems are
designed to be compatible with most existing wireless standards and currently
installed cell site equipment thereby preserving the wireless network
operators' existing investment in equipment and technology. Our smart antenna
systems are compatible with the Motorola, Lucent and Nortel 800 MHz CDMA base
stations, which we believe represent substantially all of the 800 MHz CDMA base
stations deployed in North America. We believe our spectrum management
solutions are also compatible with most 900 MHz GSM base stations deployed
worldwide.
Strategy
Our objective is to be the leading provider of smart antenna systems to the
worldwide wireless communications market. Key elements of our strategy include:
Deliver Solutions to Capacity Constrained Wireless Network Operators. We
will continue to focus on developing solutions to increase capacity for those
wireless network operators facing capacity constraints. To date, we have
developed SpotLight systems to address the capacity and system quality problems
facing 800 MHz CDMA and 900 MHz GSM wireless network operators. According to
IDC, as of 1998, U.S. wireless network operators at these frequencies serviced
more than 75% of wireless subscribers. As capacity issues emerge in wireless
networks using different frequencies, we intend to develop smart antenna
systems that address capacity problems in these wireless networks.
Further Penetrate Existing CDMA Customers. We believe that the 800 MHz CDMA
market will continue to represent a significant opportunity for us. Over the
last two years we have sold SpotLight 2000 systems to the four largest 800 MHz
CDMA wireless network operators in North America, as measured by subscriber
market share data provided by the Radio Communications Review. We intend to
leverage the performance and service of our existing system deployments to
expand our presence and penetration within these wireless network operators.
Target Additional Strategic Customers. With our products today, we are able
to target additional large multi-system 800 MHz CDMA and 900 MHz GSM wireless
network operators around the world that serve substantial concentrations of
customers and have the greatest market share in their respective markets. We
intend to target these markets by expanding our manufacturing, installation,
sales and service capabilities in the regions served by these wireless network
operators.
Leverage Technology Leadership To Expand Markets. We intend to use our
technology leadership and intellectual property to develop and provide new
capacity solutions to the existing and emerging wireless communications
markets. Our core technology can be used to address spectrum management issues
in many large wireless networks. Currently, the principal areas of our product
development are the following:
. Integrating our technology into equipment provided by wireless base
station manufacturers;
. Developing smart antenna products for use by wireless network operators
at 1800 MHz and 1900 MHz PCS spectrum;
. Exploring the development of products for the TDMA wireless standard; and
. Exploring the development of products for the broadband wireless market.
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Markets
In wireless communications networks, there are several wireless standards
that use different technologies to process calls and divide allocated spectrum.
These wireless standards fall into two broad categories, analog and digital.
Advanced Mobile Phone System, or AMPS, is the leading analog standard. Digital
standards are further subdivided into two general schemes, time division and
code division. Time Division Multiple Access, or TDMA, and Global Systems for
Mobile Communications, or GSM, are the leading time division standards. Code
Division Multiple Access, or CDMA, is the leading code division standard. We
have developed smart antenna systems that increase capacity for CDMA, GSM and
analog based networks.
The terms cellular and PCS are often used interchangeably by the popular
press when discussing wireless communications networks. However, within the
wireless industry the distinction between the two is important. Cellular
describes networks operating in the 800 MHz and 900 MHz frequency bands, using
both analog and digital standards. Analog, CDMA, GSM and TDMA are the most
widely deployed cellular standards across the globe. PCS typically describes
networks operating in the 1800 MHz and 1900 MHz frequency bands. CDMA, GSM and
TDMA the most widely deployed PCS standards.
CDMA Market. The CDMA wireless market consists of wireless network operators
at both cellular and PCS frequencies. We believe that approximately half of the
cellular networks in North America have adopted CDMA as their digital
technology. Wireless network operators are overlaying CDMA networks on top of
existing analog networks thereby allocating spectrum between CDMA and analog.
We also believe that CDMA is the most widely deployed PCS digital technology in
North America.
The CDMA Development Group, a trade association, estimated there were 50
million CDMA subscribers worldwide at year end 1999, accessing both the 800 MHz
and 1900 MHz networks. Roughly 90% of these are in North America and Asia.
Frost and Sullivan estimated there were 46,716 CDMA 800 MHz base stations in
operation in 1999, up from 26,200 in 1998. These base stations represent the
target market for our CDMA systems. Frost and Sullivan also estimated 38,082
CDMA PCS base stations were in operation in 1999, up from 20,730 in 1998.
GSM Market. The GSM market consists of wireless network operators at both
cellular and PCS frequencies. According to the GSM Association, GSM is the most
widely deployed digital standard worldwide and has been deployed in 142
countries, with more than 250 million subscribers, predominantly in Europe and
Asia, at year end 1999. According to Frost and Sullivan, there were 98,133 GSM
base stations in operation at 900 MHz in 1999, up from 46,515 in 1998. These
base stations represent the market for our GSM systems. Frost and Sullivan also
estimated there were 55,711 PCS base stations using GSM were in operation in
1999, up from 31,690 in the prior year.
TDMA Wireless Market. The TDMA market consists of wireless network operators
at both cellular and PCS frequencies. According to the Universal Wireless
Communication Consortium, there were an estimated 30 million TDMA wireless and
PCS subscribers worldwide as of September 30, 1999.
Third Generation Standards. Over the next several years, CDMA, GSM and TDMA
wireless network operators may begin to migrate their systems to third
generation, or 3G, standards. Although the specifications for 3G are not
complete, we believe that they will be based on CDMA technologies and that our
smart antenna systems will be applicable to the evolving 3G technologies. We
intend to develop 3G compatible products.
Broadband Fixed Wireless In fixed, broadband wireless networks, no
predominant standards currently exist. This market is often described under the
umbrella term, broadband wireless access, or BWA. The BWA market services both
mobile and fixed end users. Services range from high speed internet access, to
combined high capacity data and voice offerings.
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Metawave Products
We have developed spectrum management solutions, consisting of smart antenna
systems, applications software and engineering services, that enable wireless
network operators to increase overall network capacity, improve or maintain
network quality, reduce network operating costs and better manage their network
infrastructure.
SpotLight 2000 Platform. Our SpotLight smart antenna system was initially
designed for use in analog networks and was first shipped for commercial sale
in November 1997. The second generation SpotLight 2000 system was designed to
support both analog and CDMA wireless standards. Our SpotLight 2000 connects to
Motorola HDII, SC2400, SC4812 and SC9600 base stations, Lucent Series II base
stations, and Nortel Metrocell base stations.
We have analyzed data from numerous CDMA networks and have found that the
distribution of traffic within a network and even within a cell varies
considerably. Thus, wireless network operators are faced with the challenge of
allocating spectrum resources to uneven and varied subscriber traffic. CDMA
lacks the ability to efficiently add incremental capacity in localized areas.
Consequently, to resolve isolated capacity constraints, wireless network
operators must either deploy new cells or dedicate more spectrum to CDMA in
significant portions of their network.
Cells are most often divided into three sectors. Because of imbalanced
traffic, one sector is often utilized to its maximum capacity, while the
neighboring sectors have unused or excess capacity. When a sector's capacity is
fully utilized, new calls cannot be originated within the sector without
negatively affecting network performance despite call servicing capability
remaining unused in adjacent sectors. In addition, subscriber calls cannot be
transferred into the overloaded sector when moving from an adjacent cell or
sector. This results in either calls being blocked or calls being terminated.
Our proprietary SpotLight 2000 system balances the traffic load within a
cell, reducing the problem of having one sector overloaded while the other
sectors are underutilized. As traffic varies throughout the day, our SpotLight
System can accommodate these variations and balance the traffic accordingly.
This load balancing increases network efficiency and capacity.
Load Balancing Through Sector Synthesis
Load Balancing Through Sector Synthesis
Graphical depiction with 2 cell sites demonstrating the load balancing
capability of the SpotLight 2000 CDMA system through sector synthesis.
Language under the cell site graphic on the left states:
Before SpotLight 2000
Peak traffic loading strains capacity in one sector, while capacity remains
idle in others.
Language under the cell site graphic on the right states:
After SpotLight 2000
Load balancing by reorienting and resizing sectors increases cell site
capacity.
As illustrated above, our SpotLight 2000 system addresses traffic loading by
controlling the transmission and reception of CDMA radio signals by base
stations through a process called sector synthesis. Our SpotLight 2000 system
adapts the sector coverage of the base stations' CDMA radios to the local
traffic patterns around
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cell sites. The system's phased-array antenna makes it possible to dynamically
adjust sector antenna patterns through a software-driven process. As a result,
wireless network operators can optimize their CDMA networks with increased
flexibility and precision, thereby enhancing network capacity and performance
in response to changing traffic patterns taking into account local terrain and
variable radio frequency conditions.
The SpotLight 2000 system can be deployed in three different configurations
depending on customer network requirements. The CDMA-only configuration uses
our SpotLight system to support only the CDMA interface. This is the baseline
SpotLight system for customers who are interested in improving the capacity of
their CDMA system without changing their analog network. The second available
configuration is CDMA with Analog Pass Through, or CDMA/APT. This system
provides capacity benefits to the CDMA interface while "passing" the analog
signals through our SpotLight system without changing the analog network. The
CDMA/APT system allows the service provider to support both CDMA and analog
networks with a single antenna and set of power amplifiers. The third system
configuration is the dual mode system which provides capacity improvements to
both the CDMA and analog wireless standards, configuring and optimizing each
wireless standard separately, while using only a single set of antennas.
Each of the three configurations described above can be deployed in three-
sector cell sites or can be used to increase the sectorization of a CDMA cell
site from three sectors to four, five or six sectors. In cell sites where more
than a single sector is heavily loaded, the wireless network operator may use
the SpotLight 2000 system to increase the sectorization of the cell site and
gain additional capacity over the original three-sector cell site. The
SpotLight system enables wireless network operators to use our software-
controlled antenna patterns to reduce handoff overhead and optimization
problems normally associated with four, five or six sector deployments. At the
same time, the SpotLight system provides an efficient way to increase the
sectorization of the cell site without having to add additional antennas,
cables, duplexers, filters or power amplifiers.
Our SpotLight 2000 system can be administered and monitored locally or
remotely through our Windows-based software application called SiteSculptor.
SiteSculptor allows real time monitoring of system performance through
graphical displays. Further, we offer networked access to our SpotLight 2000
system with our SiteNet network application. SiteNet utilizes our SiteSculptor
software package to provide a means for remote SpotLight configuration and
centralized collection of performance statistics in analog and CDMA networks.
SpotLight for GSM. Our SpotLight GSM system is designed to increase GSM
network capacity by reducing cell site and network interference levels using a
beam-switching technology. Currently the capacity of dense urban GSM networks
is limited by interference between cell sites within the network. This
interference prevents wireless network operators from adding additional
capacity to the network.
Our SpotLight system segments the normal three sector coverage area into
twelve narrow beam patterns. Our SpotLight GSM system tracks the location of
each subscriber within the sector coverage area and then assigns a single
narrow beam to them. As the subscriber moves through the sector coverage area,
our SpotLight GSM system continues to track the position of the subscriber and
switches the correct narrow beam to them. As illustrated below, the
interference received by and transmitted from the host cell site can be
significantly reduced, allowing the wireless network operator to increase
capacity while maintaining signal quality.
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Interference Reduction Through Switched Beam Technology
Graphical depiction with two cell sites demonstrating the switched beam
capability of the SpotLight GSM system.
Language under the cell site on the left states:
Before SpotLight GSM
Conventional sectors cause interference to be received by and transmitted
for the cell site over a large area
Language under the cell site on the right states:
After SpotLight 2000
Narrow beams reduce the interference received by and transmitted from the
cell site
Our SpotLight GSM system is designed to be compatible with most existing
900 MHz GSM base station equipment. We intend to develop systems to be
compatible with 1800 MHz base station equipment. Our SpotLight GSM system can
be configured to support one, two or three sectors within the cell site,
allowing the wireless network operator to use our SpotLight GSM system to
reduce interference only in the capacity limited sectors. Based on a recent
field trial, our SpotLight GSM system, when deployed in a network of cell
sites, can increase GSM network capacity by up to 100% without increasing the
number of cell sites. To date, we have not completed any commercial sales of
our SpotLight GSM system.
Core Technology
We believe that one of our key competitive advantages is our investment and
expertise in the core technologies that enable efficient spectrum management
of wireless networks. Spectrum management encompasses a number of technical
components, including advanced antenna concepts, radiowave propagation models,
network performance monitoring tools, wireless standards knowledge and
communications systems hardware implementations. These core competencies, when
applied in combination, allow wireless network operators to optimize capacity,
coverage and quality across their networks. We have developed, and continue to
expand upon, the following fundamental technical elements:
Phased-Array Antenna Systems. We have developed phased-array antenna
systems that provide compact beam-forming within a single structure. The
antenna systems make use of uniform linear or cylindrical arrays with a
combination of both ground-based and tower-based feed networks. We have
designed antennas to synthesize multiple narrow fixed-beams, which can be used
to track individual users within a cell site. In addition, we have developed
beam-forming techniques to allow the coverage area of a cell site to be
customized. The phased-array antenna technology can be scaled to a variety of
gains and to span a broad range of frequencies. The basic implementations are
wireless standard independent, and can therefore be applied to many wireless
environments, including cellular, PCS, enhanced specialized mobile radio, two-
way paging, multi-channel multipoint distribution service, or MMDS, other
broadband wireless markets, and emerging satellite-based wireless services. We
continue to develop and focus on improving the functionality and quality
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of our antenna systems as well as reducing the costs and time associated with
manufacturing and deploying our antennas in the field.
Multibeam Hardware Architectures. We have developed cost-effective hardware
implementations of the complex circuitry necessary to support the operation of
multibeam systems on high-traffic cell sites. The hardware architecture can be
organized into several key subsystems: beam switching matrices, ultra-linear
amplification, beam-forming feed structures, array calibration circuitry and
performance measuring receivers.
Our beam-switching technology allows us to effectively switch the call from
beam to beam within a cell while maintaining call quality. It is adaptable to
GSM, TDMA and analog wireless standards, where rapid beam switching is
required. Additionally, we have developed proprietary hardware techniques to
dynamically adjust CDMA sector patterns and maintain call quality by
calibrating phased-array antenna configurations. To monitor the radio
environment and adjust the sector coverage patterns for both our CDMA and GSM
systems, we have developed scanning receivers designed to accurately operate
over various channel bandwidths. Our spatial technology allows the simultaneous
operation of multiple wireless standards, currently CDMA/analog, through the
same physical antenna structure, while maintaining independent optimization of
the performance for each wireless standard.
Real Time Network Control Algorithms. We have developed algorithms to
control beam switching hardware in real world radio environments. These
algorithms make real time decisions about which beams best serve each user, how
often to update beam selections and how to mitigate interference from other
users on the same or adjacent channels. In addition, we have developed
expertise in the optimization of wireless network performance for CDMA, GSM and
analog wireless standards. This expertise allows network control algorithms to
be customized based on the specific wireless standard and network deployment
scenario. We have also developed internal software tools for performance
modeling wireless networks, allowing us to further customize systems for
wireless network operators based on their specific needs.
Adaptive Beam-Forming Techniques. We design and build antenna systems with a
broad range of standard and custom beam types and shapes using adaptive beam-
forming technology. Adaptive beam-forming systems can monitor traffic loading
and interference levels and then respond by implementing changes designed to
equalize traffic loads and reduce interference. With respect to CDMA, our
system makes use of phased-array antennas to create custom sector antenna
patterns through a software-driven process known as sector synthesis.
Applications Software. We develop applications software that allow wireless
network operators to analyze network performance and make appropriate
modifications to manage their spectrum more efficiently. We have designed the
SiteSculptor application software to allow users of our SpotLight system to
quickly and easily simulate antenna patterns and implement those patterns
through software configuration of our SpotLight systems. The antenna pattern
editor allows the wireless network operator to load per-sector traffic data
into our SpotLight system for analysis. SiteSculptor analyzes the data and
provides the operator with suggested sectorization patterns. SiteSculptor also
allows the user to modify the antenna pattern as required, view a simulation of
the pattern, and then load the pattern directly into our SpotLight system.
Research and Development
Our success depends on a number of factors, which include our ability to
identify and respond to emerging technological trends in our target markets,
develop and maintain competitive systems, enhance our existing systems by
adding features and functionality that differentiate them from those of our
direct and indirect competitors and bring systems to market on a timely basis
and at competitive prices. As a result, we have made, and we intend to continue
to make, significant investments in research and product development. Our
research and development expenses were $22.6 million in 1999, and $18.5 million
in 1998. As of December 31, 1999, we had 127 employees engaged in research and
product development, 91 of whom are engineers, and we continue to recruit
additional skilled personnel to enhance our research and development
department.
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Our development efforts in the near term will be focused on using our
technology to develop capacity solutions to the existing and emerging wireless
communications markets. Our core technology can be used to address spectrum
management issues in many large wireless networks. Principal areas of focus
include the following: integrating our technology into wireless base station
equipment; developing smart antenna systems for use by wireless network
operators at 1800 MHz and 1900 MHz PCS spectrum; exploring the development of
systems for TDMA wireless standard technology; and exploring the development of
systems for the broadband wireless market.
Customers
Our customers are wireless network operators worldwide who face network
capacity constraints. As of December 31, 1999, we had sold 121 SpotLight
systems. These sales have been to customers located in the United States,
Mexico, Russia and Paraguay.
We have master supply agreements with five of the six largest 800 MHz CDMA
wireless network operators in North America, as measured by subscriber market
share. These customers are AirTouch, ALLTEL, Bell Atlantic, GTE, and IUSACELL.
We have also sold systems to Millicom-St. Petersburg Telecom and Millicom-
Telefonica Celular. The wireless operations of three of our customers--
AirTouch, Bell Atlantic and GTE--are expected to be consolidated into one
entity in 2000. On July 28, 1998, Bell Atlantic and GTE announced a merger and
on September 21, 1999, Bell Atlantic and Vodaphone AirTouch plc, the parent
company of AirTouch announced an agreement to merge their U.S. wireless
operations. Bell Atlantic owns 47.2% of IUSACELL and Southwestco is a
subsidiary of Bell Atlantic.
We completed a field trial of our SpotLight GSM system with Shanghai Telecom
in the fourth quarter of 1999 and we have entered into a conditional sales
agreement with Telefonica Peru, under which the purchase of two SpotLight 2000
systems is subject to the achievement of certain performance criteria.
During the twelve months ended December 31, 1999, sales to ALLTEL, IUSACELL
and Southwestco accounted for 44.8%, 26.0% and 20.9% of revenues, respectively.
Sales to these customers are expected to continue to account for a significant
amount of our revenues in 2000. During the twelve months ended December 31,
1998, sales to Millicom-St. Petersburg Telecom, Millicom-Telfonica Celular,
ALLTEL and GTE accounted for 13.4%, 10.1%, 61.8% and 13.4% of revenues,
respectively.
International sales of our systems accounted for 26.0% of revenues for the
fiscal year ended December 31, 1999, and 23.5% for the fiscal year ended
December 31, 1998. We expect sales to foreign customers, such as IUSACELL and
others to continue to account for a significant proportion of our revenues in
fiscal year 2000.
As of December 31, 1999, our backlog of orders was approximately $12.8
million, compared to backlog of $2.6 million as of December 31, 1998. We only
include in backlog customer commitments which are scheduled to be shipped in
the next six months. System orders in our current backlog are subject to
changes in delivery schedules or to cancellation at the option of the purchaser
without significant penalty. Accordingly, although useful for internal
scheduling of production resources, backlog as of any particular date may not
be a reliable measure of sales for any future period.
Sales, Marketing and Customer Support
We sell our smart antenna systems in the United States through a direct
sales force supported by systems engineers. Our international sales and
marketing efforts are conducted through distributors, our direct sales force
and agents. Sales personnel are assigned on a customer account basis and are
responsible for generating system sales, providing system and customer support
and soliciting customer feedback for system development. In addition, sales
personnel receive support from our marketing communications organization which
is responsible for the branding and marketing of our products and services.
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Our sales and marketing efforts are primarily focused on establishing and
developing long-term relationships with potential customers. A relationship
with a new customer typically begins with a field trial or conditional sale in
a particular market of a customer. These are designed to satisfy performance
conditions prior to the completion of the sale. We generally only have one
field trial or conditional sale per customer and the results of the field trial
or conditional performance period must be approved at the senior level of our
customers' management. Consequently, the sales process associated with the
initial purchase of our systems is typically complex and lengthy, lasting in
some cases up to 18 months. However, once the system successfully meets the
applicable performance criteria, we typically negotiate and enter into
corporate-wide master supply agreements. After this agreement is in place,
purchasing decisions are generally made on a market-by-market basis pursuant to
purchase orders placed under the master supply agreement which are not subject
to the satisfaction of performance criteria. Consequently, the sales cycle for
subsequent purchases by individual markets or regions is generally much
shorter.
Our customer support organization performs network design, system
installation, network optimization, training, consulting and repair and
maintenance services to support our SpotLight systems. Recent improvements to
our pre-shipment integration and testing processes at our manufacturing
facility in Redmond, Washington, combined with the integration of experienced
subcontractors into our installation teams, has significantly reduced
installation times for our systems.
Our customer services organization also offers services to optimize the
network following the installation of a SpotLight system. These services
utilize our expertise in radio frequency network design, knowledge of
individual network configurations and knowledge of our SpotLight system
capabilities.
We generally warranty our systems for 12 months. Warranty support and
extended maintenance services for our CDMA/analog systems are performed at our
headquarters in Redmond, Washington and will be performed for GSM systems at
our offices in Taipei, Taiwan.
Manufacturing
We rely to a substantial extent on outside suppliers to manufacture many of
the components and subassemblies used in our SpotLight systems. Our
manufacturing operations at our Redmond, Washington facility consist primarily
of supplier and commodity management and the assembling and testing of finished
systems from the components and subassemblies purchased from these outside
suppliers. We monitor quality at each stage of the production process,
including the selection of component suppliers, the assembly of finished goods
and final testing, packaging and shipping. We have been certified as ISO 9001
compliant since September 1998. We expect to begin manufacturing the SpotLight
GSM systems in Taipei, Taiwan beginning in late fiscal year 2000.
We rely on detailed sales forecasts to determine our production requirements
and manage our inventory. Our assembly and testing processes have been designed
to facilitate configuration of our systems tailored to the specific needs of
our customers. We have programs focusing on material cost reduction and supply
base management designed to reduce costs and reduce inventory exposures.
Certain parts and components used in our smart antenna systems, including
linear power amplifiers supplied by Powerwave Technologies, Inc. and integrated
duplexer low noise amplifiers and filters supplied by Filtronic Comtek Ltd.,
are presently only available from a single source. We have a supply agreement
with Powerwave Technologies, Inc. pursuant to which they have agreed to supply
all linear power amplifiers ordered by us. Certain other parts and components
are available from a limited number of sources. For a more detailed discussion
of the risks associated with having a limited source of suppliers see the risk
factor titled "Our reliance on a limited number of suppliers and the long lead
time of our systems could impair our ability to manufacture and deliver our
systems on a timely basis."
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Competition
The market for spectrum management solutions is part of the broader market
for wireless infrastructure equipment which is dominated by a number of large
companies including Lucent, Motorola, Ericsson, Nortel, Nokia, Siemens, Alcatel
and others. Our smart antenna systems compete with other solutions to expand
network capacity. These alternative solutions include other smart antenna
systems, additional base stations for capacity, deploying efficient digital
technologies and various enhancements to digital technologies.
Other smart antenna systems are offered by various competitors. Alcatel,
Hazeltine, E-Systems, Boeing and Raytheon have offered smart antenna systems
for analog networks. Adaptive Telecom has offered a CDMA smart antenna product
that is integrated into a CDMA base station in cooperation with the base
station manufacturer. Arraycomm has offered a smart antenna product that is
integrated into a Personal Handyphone System standard base station in Japan.
Ericsson has announced a GSM smart antenna system called GSM Capacity Booster
that includes an Ericsson base station as well as the smart antenna system.
Nortel has offered a smart antenna equipped GSM base station in the past. Most
of the large wireless infrastructure equipment providers, including Lucent,
Motorola, Nortel, Ericsson, Nokia, Siemens, Alcatel, Samsung and NEC have large
development organizations and have either announced their intention to examine
smart antenna technologies, or have the core technology competence to do so for
the CDMA, GSM, TDMA and 3G standards. If base station manufacturers
successfully develop and integrate smart antenna solutions into their product
offerings, it may materially and adversely affect our business.
The addition of more cell sites often will provide more capacity to wireless
networks and therefore is a substitute for our systems and, therefore, the cost
of base station equipment contained in these cell sites has decreased in recent
years and affects our ability to compete effectively. Other related costs for
new cell sites including real estate, towers, and building construction
generally have not declined. Base stations are sold by wireless infrastructure
equipment manufacturers such as the companies listed above.
Efficient digital technologies and enhancements to these technologies will
provide more capacity to wireless networks and, therefore, are substitutes for
our systems. These digital technologies include existing technologies, such as
CDMA, GSM and TDMA, as well as emerging 3G standards, such as CDMA 2000 and
WCDMA. There are enhancements to the existing CDMA and GSM standards, commonly
referred to as 2.5G standards, which provide additional capacity. There are
also various enhancements, such as improved voice coding for CDMA and various
frequency hopping techniques for GSM, which are designed to increase the
capacity of these standards. These digital technologies and various
enhancements are also offered by the large wireless infrastructure equipment
providers listed above. We believe that our smart antenna technology can be
compatible with these digital technologies and their various enhancements. Our
technology, and its ability to enhance capacity, is additive to the capacity
enhancement provided by these digital technologies. Customers, however, may
delay or cancel deployment of our smart antenna systems while they deploy these
more efficient digital technologies and other enhancements which would harm our
business.
We believe the principal competitive factors in the spectrum management
solutions market include:
. expertise in the core technologies needed for radio frequency
communication systems;
. system performance, features and reliability;
. price and performance characteristics;
. timeliness of new system introductions;
. customer service and support;
. established customer relationships; and
. size of installed customer base.
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We believe we will be competitive with respect to many of these factors;
however most of our existing and potential competitors have longer operating
histories, greater name recognition, larger installed customer bases, greater
financial, technical, sales, marketing and other resources, and more
established customer relationships. To be competitive we must invest
significant resources to address these competitive factors and achieve customer
satisfaction. If we fail to do so our smart antenna systems will not compete
favorably with our competitors which will materially and adversely affect our
business.
Intellectual Property
We rely on patent, copyright, trademark and trade secret laws and
restrictions on disclosure to protect our intellectual property rights. We
currently have 18 issued U.S. patents and 35 pending U.S. patent applications.
In addition, we are seeking patent protection for our inventions in foreign
countries. The patent positions of companies in the worldwide wireless
communications industry are generally uncertain and involve complex legal and
factual questions. We cannot be certain that patents will be issued with
respect to pending or future patent applications or that our patents will be
upheld as valid or will be sufficient to prevent the development of competitive
products. While we believe that our patents will make it more difficult for
competitors to develop and market similar products, our patents may be
invalidated, circumvented or challenged. Our patent rights may fail to provide
us with competitive advantages.
We have received two registered federal copyrights for our software and four
more copyright applications are pending. The source code for our proprietary
software is also protected as a trade secret. In addition, we enter into
confidentiality agreements with our employees, customers, vendors and strategic
partners, and control access to, and the distribution of our software,
documentation and other confidential and proprietary information. Our primary
trademarks are registered with the U.S. Patent and Trademark Office and certain
other foreign jurisdictions. We have applied for trademark protection for a
number of other marks which are pending in the United States and in foreign
countries.
Despite these efforts, it may be possible for unauthorized third parties to
copy certain portions of our intellectual property contained in our systems,
design around our patents, or to reverse-engineer or otherwise obtain and use
our proprietary information. In addition, the laws of some countries do not
protect our proprietary rights to the same extent as the laws of the United
States. Accordingly, we may not be able to protect our proprietary rights
against unauthorized third-party copying or use, which could significantly harm
our business. We may have to pursue litigation in the future to enforce our
proprietary rights or to defend against claims of infringement. These claims,
regardless of their merits, may require us to enter into license arrangements
or may result in protracted and costly litigation.
In addition, we cannot be certain that others will not develop substantially
equivalent or superceding proprietary technology, or that equivalent products
will not be marketed in competition with our smart antenna systems, thereby
substantially reducing the value of our proprietary rights.
Patents and patent applications relating to products used in the wireless
communications industry are numerous. Current and potential competitors and
other third parties may have been issued or in the future may be issued
patents, or may obtain additional proprietary rights relating to products used
or proposed to be used by us. We may not be aware of all patents or patent
applications that may materially affect our ability to make, use or sell any
current or future products. From time to time, third parties have asserted
patent, copyright and other intellectual property rights to technologies that
are important to us. We expect that we will increasingly be subject to
infringement claims as the number of products and competitors in the spectrum
management market grows and the functionality of products overlaps. Third
parties may assert infringement claims against us in the future, and such
assertions could result in costly litigation, the diversion of management and
engineering resources and require us to obtain a license to intellectual
property rights of such parties. There can be no assurance that these licenses
would be available on terms acceptable to us, if at all. Any failure to obtain
a license from any third party asserting claims in the future or defense of any
third party lawsuit could materially and adversely affect our business and
operating results.
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Government Regulation
Our smart antenna systems must obtain regulatory approval to be used. In the
United States, our systems must be certified by the Federal Communications
Commission before sales to customers may commence. Other countries have similar
regulations that must be complied with before our systems can be used. These
governmental approval processes frequently involve substantial delay, which
could result in the cancellation, postponement or rescheduling of systems by
our customers. Any event like this in turn may adversely affect our ability to
sell systems to these customers. Because of the expenses associated with
government approvals of our systems in some countries, we only plan to seek
product approval in those countries once we have a customer who intends to
purchase our systems. This practice may take several months and may deter
customers or contribute to delays in receiving or filling orders.
In addition, our customers' operations are subject to extensive government
regulations. To the extent that our customers are delayed in deploying their
wireless networks as a result of existing or new standards or regulations, we
could experience delays in orders. These delays could materially and adversely
affect on our business and operating results.
We are also subject to U.S. government export controls. Our sales and
distributorship agreements require that the export or resale of our systems to
end users located in other countries must be in compliance with U.S. export
controls.
Employees
As of December 31, 1999, we had 248 employees, of which, 127 were primarily
engaged in research, development and product management, 33 in manufacturing,
56 in sales, marketing and customer support and 32 in general and
administration. We have no collective bargaining agreement with our employees
and we have never experienced a work stoppage. We believe that our employee
relations are good.
Facilities
We are headquartered in Redmond, Washington, where we lease an aggregate of
approximately 96,000 square feet, housing our principal administrative, sales
and marketing, customer support and manufacturing facilities. Our lease for
this facility expires on May 31, 2005 and we have an option to renew this lease
for two additional five year terms. We sublease approximately 13,000 square
feet of this space. We have a three-year lease for sales, service and
manufacturing facilities totaling approximately 6,500 square feet in Taipei,
Taiwan and a five-year lease for a sales and engineering support office in
Dallas, Texas. We also have representative offices in Sao Paulo, Brazil and
Shanghai, China that are subject to short-term leases.
Legal Proceedings
We may become involved in legal proceedings from time to time in the
ordinary course of business. As of the date of this prospectus, we are not
involved in any pending material legal proceedings.
39
<PAGE>
MANAGEMENT
Executive Officers and Directors
Our executive officers and directors and their ages as of December 31, 1999
are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Douglas O. Reudink.............. 60 Chairman of the Board and Chief
Technical Officer
Robert H. Hunsberger............ 53 President, Chief Executive Officer and
Director
Victor K. Liang................. 48 Senior Vice President, GSM Products
Group
Martin J. Feuerstein............ 37 Vice President, Product Development
Richard Henderson............... 38 Vice President, Sales and Marketing
Andrew Merrill.................. 40 Vice President, Customer Operations
John R. Schaller................ 56 Controller and Treasurer
Bandel L. Carano(1)............. 38 Director
Bruce C. Edwards................ 46 Director
David R. Hathaway(1)............ 55 Director
Scot B. Jarvis(1)(2)............ 38 Director
Jennifer Gill Roberts(2)........ 36 Director
David A. Twyver(2).............. 53 Director
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Robert H. Hunsberger has served as our president and chief executive officer
since July 1997. From 1995 to July 1997, Mr. Hunsberger served as senior vice
president and general manager of Siemens Business Communications Systems, Inc.,
a telecommunications company and a wholly owned subsidiary of Siemens. From
1981 to 1995, Mr. Hunsberger held various executive positions at Nortel, a
telecommunications company, including vice president of sales and marketing of
its wireless networks division from 1993 to 1995 and vice president of market
development of its wireless networks division and vice president of cellular
systems from 1991 to 1993. Mr. Hunsberger holds a B.S. from the University of
Virginia and an M.B.A. from Arizona State University.
Douglas O. Reudink, a co-founder, has served as our chief technical officer
since our inception and as chairman of the board of directors since April 1997.
From 1991 to 1995, Dr. Reudink served as director of wireless planning at US
WEST NewVector Group, Inc., a wireless telecommunications company. From 1986 to
1991, he served as the director of Laboratories of the High Technology Center
at The Boeing Company, an aerospace company. Prior to 1986, Dr. Reudink served
20 years at the Bell Laboratories division of AT&T Corporation, a
telecommunications company, in various research and management positions.
Dr. Reudink holds a B.S. from Linfield College and a Ph.D. from Oregon State
University.
Victor K. Liang has served as our senior vice president, GSM products group
since July 1998 and general manager of Metawave Communications Taiwan Ltd., a
subsidiary since October 1998. From 1989 until March 1998, Mr. Liang held
various senior executive positions with Siemens and its subsidiaries, most
recently serving as managing director of two Siemens' joint ventures in China,
Siemens Shanghai Mobile Communications and Siemens Shanghai Communication
Terminals. From 1995 to 1998, Mr. Liang served as vice president of wireless
products group at Siemens Stromberg-Carlson. From 1994 to 1995, he served as
Senior Director at Siemens A.G., Munich, Germany and from 1989 through 1994 he
served as vice president product development of Siemens Telecommunications Ltd.
in Taiwan. Mr. Liang holds a B.S. from Chiao Tung University in Taiwan and a
degree in Business Administration from Cheng Chih University.
40
<PAGE>
Martin J. Feuerstein has served as our vice president of product development
since August 1998 and director of research from March 1997 to July 1998. From
1995 to March 1997, Dr. Feuerstein served as technical manager at Lucent. From
1992 to 1995, he served as a senior member technical staff at US WEST. Mr.
Feuerstein holds a B.E. from Vanderbilt University, an M.S. from Northwestern
University and a Ph.D. from Virginia Polytechnic Institute.
Richard Henderson has served as our vice president of sales and marketing
since December 1997. From 1984 to 1997, Mr. Henderson held various sales and
marketing positions at Nortel, most recently serving as vice president of
marketing operations from 1996 to 1997 and sales account director from 1992 to
1995. Mr. Henderson holds a B.E. from Texas A&M University and an M.B.A. from
the University of Dallas.
Andrew Merrill has served as our vice president of customer operations since
August 1999. From 1984 to August 1999, Mr. Merrill worked at Motorola, Inc., an
electronics company, in several positions, most recently serving as engineering
manager from 1994 to 1999, program manager from 1992 to 1994 and international
cellular infrastructure manufacturing manager from 1984 to 1992. Mr. Merrill
studied communications electronics and nuclear power in the U.S. Navy.
John Schaller has served as our corporate controller and treasurer since
June 1998 and October 1999, respectively. From October 1997 to June 1998, he
served as the chief financial officer of Superconducting Core Technologies,
Inc., a telecommunications equipment company. From May 1996 to October 1997, he
served as vice president and chief financial officer of AirNet Communication
Corp., a telecommunications company. From June 1978 to April 1996, he served in
various senior financial positions, including chief financial officer of a
Motorola-Nortel wireless communications joint venture and director of finance
and administration for the wireless networks division of Nortel. Mr. Schaller
holds a B.S. from Philadelphia College of Textiles and Science and an M.B.A.
from University of Texas.
Bandel L. Carano has served as one of our directors since 1995. Mr. Carano
has been a general partner of Oak Investment Partners, a venture capital firm,
since 1987. Mr. Carano serves as a member of the Investment advisory board of
the Stanford University Engineering Venture Fund. Mr. Carano also serves as a
member of the board of directors of Netopia, Inc., a telecommunications
equipment provider, Polycom, Inc., a telecommunications equipment provider and
PulsePoint Communications, an information systems company, as well as several
private companies. Mr. Carano holds a B.S. and an M.S. from Stanford
University.
Bruce C. Edwards has served as one of our directors since May 1998. Mr.
Edwards has served as president, chief executive officer and a director of
Powerwave Technologies, Inc., a telecommunications equipment company, since
February 1996. Mr. Edwards was executive vice president, chief financial
officer and a director of AST Research, Inc., a personal computer company, from
1994 to December 1995 and senior vice president of finance and chief financial
officer of AST from 1988 to 1994. Mr. Edwards also serves as a director of HMT
Technology Corporation, a computer equipment company. Mr. Edwards holds a B.S.
from Rider University and an M.B.A. from the New York Institute of Technology.
David R. Hathaway has served as one of our directors since 1995. Mr.
Hathaway has been a general partner of the venture capital firms Venrock
Associates and Venrock Associates II, L.P. since 1980 and 1995, respectively.
Mr. Hathaway serves as a director of several private companies. Mr. Hathaway
holds a B.A. from Yale University.
Scot B. Jarvis has served as one of our directors since February 1998. Mr.
Jarvis is a co-founder and managing member of Cedar Grove Partners, LLC, a
privately owned investment company. From 1994 to 1997, Mr. Jarvis was co-
founder and executive vice president of NEXTLINK Communications, Inc., a
wireless service operator. Mr. Jarvis serves as a director of Wireless
Facilities, Inc., a wireless telecommunications company, Point.com, Inc., an
internet services company, Leap Wireless International, Inc., a wireless
communications company and Cricket Communications, Inc. a wireless
communications company. Mr. Jarvis holds a B.A. from the University of
Washington.
41
<PAGE>
Jennifer Gill Roberts has served as one of our directors since 1995. Ms.
Roberts has been a general partner of Sevin Rosen Funds, a venture capital
firm, since 1994. Ms. Roberts serves as a director of several private
companies. Ms. Roberts holds a B.S. and an M.B.A. from Stanford University and
an M.S. from the University of Texas.
David A. Twyver has served as one of our directors since May 1998. He is
currently chief executive officer of Ensemble Communications Inc, a wireless
communications equipment company. From 1996 to 1997, Mr. Twyver served as chief
executive officer of Teledesic Corporation, a satellite telecommunications
company. From 1974 to 1996, Mr. Twyver served in several management positions
at Nortel, most recently serving as president of the wireless networks group
from 1993 to 1996. Mr. Twyver serves as a director of several private
companies. Mr. Twyver holds a B.S. from the University of Saskatchewan.
Board Composition
Our bylaws currently provide for a board of directors consisting of nine
members. All directors hold office until the next annual meeting of our
stockholders and until their successors have been duly elected and qualified.
Our officers are appointed annually and serve at the discretion of the board of
directors.
Committees of the Board of Directors
The members of the audit committee are Scot Jarvis, Jennifer Gill Roberts
and David Twyver. The audit committee reviews the results and scope of the
audit and other services provided by our independent accountants.
The members of the compensation committee are Bandel Carano, David Hathaway
and Scot Jarvis. The compensation committee reviews and approves the
compensation and benefits for our executive officers, administers our stock
purchase and stock option plans and makes recommendations to the board of
directors regarding such matters.
Board Compensation
Except for reimbursement for reasonable travel expenses relating to
attendance at board meetings and the grant of stock options, directors are not
compensated for their services as directors, except for Bruce Edwards, Scot
Jarvis and David Twyver who each receive $1,000 for each board meeting attended
and $500 for each committee meeting attended. Directors who are our employees
are eligible to participate in the 1995 Stock Option Plan, the 1998 Stock
Option Plan, the 2000 Stock Option Plan and the 2000 Employee Stock Purchase
Plan. Directors who are not our employees are eligible to participate in the
1998 Amended and Restated Directors' Stock Option Plan. See "Stock Plans."
Compensation Committee Interlocks and Insider Participation
No member of the compensation committee has at any time been an officer or
employee of ours or any subsidiary of ours. See "Certain Relationships and
Related Transactions" for a description of certain transactions and
relationships between us and Bandel Carano, Bruce Edwards, David Hathaway,
Jennifer Gill Roberts and Scot Jarvis and entities affiliated with them.
42
<PAGE>
Executive Compensation
The following table sets forth information concerning compensation awarded
to, earned by or paid to our chief executive officer and our four other most
highly compensated executive officers whose total cash compensation exceeded
$100,000 during the year ended December 31, 1999 (collectively, our "Named
Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual
Compensation Long-Term Compensation
------------------ ---------------------------
Securities
Underlying All Other
Name and Principal Position Salary Bonus (1) Options Compensation (2)
- --------------------------- -------- --------- ---------- ----------------
<S> <C> <C> <C> <C>
Robert H. Hunsberger, President
and Chief
Executive Officer............. $270,766 $12,150 100,000 $ 912
Richard Henderson, Vice
President of Sales
and Marketing................. 159,539 80,686 15,000 262
Victor K. Liang, Senior Vice
President, GSM
Products Group................ 190,263 4,309 130,000 567
Douglas O. Reudink, Chairman
and Chief
Technology Officer............ 175,488 7,875 50,000 2,364
Martin J. Feuerstein, Vice
President of
Product Development........... 139,604 21,075 45,000 251
</TABLE>
- --------
(1) Bonus represents the amount earned by the employee in 1999 and includes
commissions.
(2) Consists of life insurance premiums paid by us.
The following table sets forth information for each of our Named Executive
Officers concerning stock options granted to them during the fiscal year ended
December 31, 1999.
Option Grants in Fiscal Year 1999
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Percentage of Annual Rates of Stock
Shares Total Options Price Appreciation for
Underlying Granted to Exercise Option Term(5)
Options Employees Price per Expiration -----------------------
Name Granted(1) in 1999(2) Share(3) Date(4) 5% 10%
- ---- ---------- ------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Hunsberger.... 100,000 4.8% $4.50 6/22/09 $ 283,003 $ 717,184
Richard Henderson....... 15,000 0.7% 4.50 6/22/09 42,450 107,578
Victor K. Liang......... 40,000 1.9% 4.50 6/22/09 113,201 286,874
45,000 2.1% 4.50 5/19/09 127,351 322,733
45,000 2.1% 4.50 5/19/09 127,351 322,733
Douglas O. Reudink...... 50,000 2.4% 4.50 6/22/09 141,502 358,592
Martin J. Feuerstein.... 15,000 0.7% 4.50 5/19/09 42,450 107,578
30,000 1.4% 4.50 6/22/09 84,900 215,155
</TABLE>
- --------
(1) Each of the above options was granted pursuant to our 1998 Stock Option
plan.
(2) In the last fiscal year, we granted options to employees to purchase an
aggregate of 2,095,105 shares.
(3) In determining the fair market value of our common stock, our board of
directors considered factors such as our financial condition and business
prospects, our operating results, the absence of a market for our common
stock and the risks normally associated with companies comparable to us.
(4) Options granted on June 22, 1999 and expiring on June 22, 2009 vest 50%
upon the effectiveness of this offering and the remaining 50% vests one
year from the effective date of this offering. Those options granted on
May 19, 1999 vest 25% one year from date of grant and the remaining 75%
vest monthly over three years.
(5) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent our estimate or projection of our future common stock prices.
43
<PAGE>
Option Exercises in Last Fiscal Year and Year-End Option Values
There were no option exercises by our Named Executive Officers in 1999. The
following table provides information concerning the number and value of
unexercised options held by each of our Named Executive Officers as of December
31, 1999.
<TABLE>
<CAPTION>
Value of
Unexercised
Number of Securities In-the-Money
Underlying Options at
Unexercised Options at December 31,
December 31, 1999(1) 1999(2)
------------------------ ---------------
Name Vested Unvested Vested Unvested
- ---- ----------- ------------ ------ --------
<S> <C> <C> <C> <C>
Robert H. Hunsberger.................... 543,750 456,250
Richard Henderson....................... 83,332 91,668
Victor K. Liang......................... 69,061 360,939
Douglas O. Reudink...................... -- 50,000
Martin J. Feuerstein.................... 52,666 92,334
</TABLE>
- --------
(1) Certain options granted under the 1998 Stock Option Plan and the 1995 Stock
Option Plan may be exercised immediately upon grant and prior to full
vesting, subject to the optionee's entering into a restricted stock
purchase agreement with us with respect to any unvested shares. The
unvested shares are subject to a right of first refusal in favor of
Metawave which lapses over time.
(2) Based on an assumed initial public offering price of $ per share,
multiplied by the number of shares underlying the option.
Severance Arrangements
We have entered into severance arrangements with Douglas O. Reudink, chief
technical officer, Robert H. Hunsberger, president and chief executive officer,
Richard Henderson, vice president of sales and marketing, Victor K. Liang,
senior vice president, GSM products group, and Andrew Merrill, vice president
of customer operations.
On July 7, 1995, in connection with the Series A preferred stock financing,
we entered into an agreement with Dr. Reudink which provides that if we were to
terminate his employment without cause after July 7, 1996, we would be
obligated to make a lump-sum payment to Dr. Reudink equal to six months of his
then-current base salary and to provide benefits for six months following
termination. In connection with this agreement, Dr. Reudink entered into a one-
year non-competition agreement effective upon the termination of his employment
with us.
On June 27, 1997, in connection with the employment of Mr. Hunsberger, we
entered into an arrangement with Mr. Hunsberger which provides that if we were
to terminate his employment without cause, we would be obligated to make a
lump-sum payment to Mr. Hunsberger equal to twelve months of his then-current
base salary and provide benefits for twelve months following termination.
On October 29, 1997, in connection with the employment of Mr. Henderson, we
entered into an arrangement with Mr. Henderson which provides that if we were
to terminate his employment without cause, we would be obligated to make a
lump-sum payment to Mr. Henderson equal to six months of his then-current base
salary.
On July 23, 1998, in connection with the employment of Mr. Liang, we entered
into an arrangement with Mr. Liang that provides that if we were to terminate
his employment without cause within the first two years of his employment, we
would be obligated to make a lump-sum payment to Mr. Liang equal to six months
of his then-current base salary.
44
<PAGE>
On July 12, 1999, in connection with the employment of Mr. Merrill, we
entered into an agreement with Mr. Merrill that provides that if we were to
terminate his employment without cause, we would be obligated to pay Mr.
Merrill six months of his then-current base salary.
Stock Plans
2000 Stock Plan. Our 2000 stock option plan provides for the grant of
incentive stock options to employees, including employee directors, and of
nonstatutory stock options and stock purchase rights to employees, directors
and consultants. The purposes of the 2000 stock plan are to attract and retain
the best available personnel, to provide additional incentives to our employees
and consultants and to promote the success of our business. The 2000 plan was
originally adopted by our board of directors in February 2000 and will be
approved by our stockholders prior to completion of this offering. The 2000
plan provides for this issuance of options and rights to purchase up to
2,000,000 shares of our common stock, plus an automatic annual increase on the
first day of each of our fiscal years beginning in 2001 through 2009 equal to
the lesser of 3,000,000 shares, 5% of our outstanding common stock on the last
day of the immediately preceding fiscal year, or a lesser number of shares as
our board of directors determines. Unless terminated earlier by the board of
directors, the 2000 plan will terminate in February 2010.
The 2000 plan may be administered by the board of directors or a committee
of the board, each known as the administrator. The administrator determines the
terms of options and stock purchase rights granted under the 2000 plan,
including the number of shares subject to the award, the exercise or purchase
price, and the vesting and/or exercisability of the award and any other
conditions to which the award is subject. No employee may receive awards for
more than 2,000,000 shares under the 2000 plan in any fiscal year. Incentive
stock options granted under the 2000 plan must have an exercise price of at
least 100% of the fair market value of the common stock on the date of grant.
The plan does not impose restrictions on the exercise or purchase price
applicable to nonstatutory stock options and stock purchase rights, although we
expect that nonstatutory stock options and stock purchase rights granted to our
Chief Executive Officer and our four other most highly compensated officers
will generally equal at least 100% of the grant date fair market value. Payment
of the exercise or purchase price may be made in cash or any other
consideration allowed by the administrator.
With respect to options granted under the 2000 plan, the administrator
determines the term of options, which may not exceed 10 years. Generally, an
option is nontransferable other than by will or the laws of descent and
distribution, and may be exercised during the lifetime of the optionee only by
such optionee. In certain circumstances, the administrator has the discretion
to grant nonstatutory stock options with limited transferability rights. Stock
options are generally subject to vesting, meaning that the optionee earns the
right to exercise the option over a specified period of time only if he or she
continues to provide services to Metawave over that period. Shares of stock
issued pursuant to stock purchase rights granted under the 2000 plan are
generally subject to a repurchase right exercisable by Metawave upon the
termination of the holder's employment or consulting relationship with us for
any reason (which lapses in accordance with the terms of the stock purchase
right determined by the administrator at the time of grant). In addition, the
2000 stock plan provides that options to purchase vested shares will terminate,
and we will have the right to repurchase vested shares issued under the plan,
if we terminate a participant's employment or consulting relationship with us
for cause.
If we are acquired, we would expect that options and stock purchase rights
outstanding under the 2000 plan at the time of the transaction would be assumed
or replaced with substitute options by our acquiror. If our acquiror did not
assume or replace outstanding awards, then the vesting of these awards would
accelerate so that the holder of an outstanding award would be able to exercise
and retain the number of shares that he or she would have vested in had he or
she continued working for us for another 12 months (if the holder had been
employed by us for less than 2 years at the time of the acquisition) or for
another 24 months (if the holder had been employed for us for 2 years or more
at the time of the acquisition) from the acquisition date. In addition, if our
acquiror assumed or replaced outstanding awards at the time of the acquisition
and a plan participant
45
<PAGE>
holding assumed or replaced awards experienced an involuntary termination of
his or her employment or consulting relationship within six months following
the transaction, then the vesting of outstanding options or stock held by any
such person who is not a Section 16 reporting person at the time of the
acquisition would accelerate as to 12 or 24 months (depending upon the duration
of the person's service relationship with us and our acquiror as described
above), and as to all the shares underlying an award held by a person who is a
Section 16 reporting officer at the time of the acquisition. Outstanding
awards, the number of shares remaining available for issuance under the 2000
plan, the maximum number of shares subject to awards that may be granted to an
employee during a year and the fixed number in the plan's evergreen formula
will adjust in the event of a stock split, stock dividend or other similar
change in our capital stock. The administrator has the authority to amend or
terminate the 2000 plan, but no action may be taken that impairs the rights of
any holder of an outstanding option or stock purchase right without the
holder's consent. In addition, we must obtain stockholder approval of
amendments to the plan as required by applicable law.
1995 and 1998 Stock Option Plans. In addition to our 2000 stock plan, we
have two prior employee stock plans, our Third Amended and Restated 1995 Stock
Option Plan and our 1998 Stock Option Plan. These plans provide for the grant
of incentive stock options to employees, including employee directors, and the
grant of nonstatutory stock options to employees, consultants and directors.
Our 1995 stock plan was originally adopted by our board of directors in
August 1995 and approved by our stockholders in January 1996. It has been
amended and restated three times since its adoption such that there are
currently 4,150,000 shares of common stock reserved for issuance under this
plan. As of December 31, 1999, options to purchase 3,044,943 shares of common
stock at a weighted average exercise price of $2.85 were outstanding, 1,062,156
shares with a weighted average purchase price of $0.45 have been issued upon
exercise of options and 42,901 shares remain available for issuance under our
1995 plan. Unless terminated earlier, the 1995 plan will terminate in August
2005.
Our 1998 stock option plan was originally adopted by our board of directors
in May 1998 and approved by our stockholders in September 1998. An aggregate of
2,645,053 shares of common stock has been reserved for issuance under the 1998
plan. As of December 31, 1999, options to purchase 1,057,999 shares of common
stock at a weighted average exercise price of $5.21 were outstanding, 607
shares with a weighted average exercise price of $4.50 have been issued upon
exercise of options and 1,586,447 shares remain available for future grant.
Unless terminated earlier, this plan will terminate in September 2008.
The terms of awards issued under our 1995 and 1998 plans are generally the
same as those that may be issued under our 2000 stock plan, except with respect
to the following features. Neither the 1995 plan nor the 1998 plan provides for
the issuance of stock purchase rights to employees and consultants. The 1998
plan provides that, as of our first stockholders meeting following the third
calendar year after the year in which this offering takes place, the maximum
number of shares that may be granted to any individual employee during a fiscal
year is 850,000 shares. The 1995 plan does not impose an annual limitation on
the number of shares of stock subject to options that may be granted to any
individual employee during a fiscal year. Under both plans, generally an option
is nontransferable other than by will or the laws or descent or distribution.
In addition, neither plan provides for forfeiture of vested options or stock
upon a termination of the holder's service relationship with us for cause.
2000 Employee Stock Purchase Plan. Our 2000 employee stock purchase plan was
adopted by the board of directors in February 2000 and will be submitted for
approval by our stockholders prior to completion of this offering. A total of
350,000 shares of common stock has been reserved for issuance under the 2000
purchase plan, none of which have been issued as of the date of this offering.
The number of shares reserved for issuance under the 2000 purchase plan will be
subject to an automatic annual increase on the first day of each of our fiscal
years beginning in 2001 through 2009 equal to the lesser of 400,000 shares, 1%
of our outstanding common stock on the last day of the immediately preceding
fiscal year or a lesser number of shares as the board of directors determines.
The 2000 purchase plan becomes effective upon the date of this offering. Unless
terminated earlier by the board of directors, this plan will terminate in
February 2020.
46
<PAGE>
The 2000 purchase plan, which is intended to qualify under Section 423 of
the Internal Revenue Code, will be implemented by a series of overlapping
offering periods of approximately 24 months' duration, with new offering
periods (other than the first offering period) commencing on May 1 and November
1 of each year. Each offering period will generally consist of four consecutive
purchase periods of six months' duration, at the end of which an automatic
purchase will be made for participants. The initial offering period is expected
to commence on the date of this offering and end on April 30, 2002; the initial
purchase period is expected to begin on the date of this offering and end on
October 31, 2000, with subsequent purchase periods ending on April 30, 2001,
October 31, 2001 and April 30, 2002. The 2000 purchase plan will be
administered by the board of directors or by a committee appointed by the
board. Our employees (including officers and employee directors), or of any
majority-owned subsidiary designated by the board, are eligible to participate
in the 2000 purchase plan if they are employed by us or a designated subsidiary
for at least 20 hours per week and more than five months per year. The 2000
purchase plan permits eligible employees to purchase common stock through
payroll deductions at a rate of not more than 15% of an employee's
compensation. The purchase price is equal to the lower of 85% of the fair
market value of the common stock at the beginning of each offering period or at
the end of each purchase period, subject to certain adjustments as provided in
the plan. Employees may end their participation in the 2000 purchase plan at
any time during an offering period, and participation ends automatically on
termination of employment. No employee may purchase more than 2,000 shares of
common stock under the 2000 Purchase Plan in any one purchase period.
If we merge or consolidate with or into another corporation or sell all or
substantially all of our assets, each right to purchase stock under the 2000
purchase plan will be assumed or an equivalent right substituted by our
acquiror. If our acquiror did not agree to assume or substitute stock purchase
rights, any offering period and purchase period then in progress would be
shortened and a new exercise date occurring prior to the closing of the
transaction would be set. Outstanding awards, shares remaining available for
issuance under the plan, the fixed number in the plan's evergreen formula, and
the maximum number of shares that may be purchased during a six-month purchase
period will each adjust in the event of a stock split, stock dividend or other
similar change in our capital stock. Our board of directors has the power to
amend or terminate the 2000 purchase plan and to change or terminate offering
periods as long as such action does not adversely affect any outstanding rights
to purchase stock thereunder. However, the board of directors may amend or
terminate the 2000 purchase plan or an offering period even if it would
adversely affect outstanding options in order to avoid our incurring adverse
accounting charges.
Amended and Restated 1998 Directors' Stock Option Plan. The 1998 directors'
stock option was adopted by the board of directors in February 1998 and
approved by our stockholders in April 1998. It was amended in February 2000 by
our board of directors to increase the total number of shares of common stock
reserved for issuance under the plan from 300,000 to 700,000 shares. This
amendment will be submitted to our stockholders for approval prior to the date
of this offering. As of December 31, 1999, options to purchase 225,000 shares
of common stock with a weighted average exercise price of $4.33 were
outstanding and no shares had been purchased upon exercise of options issued
under the plan. We expect that a total of 475,000 shares of common stock will
be available for issuance as of the date of this offering.
47
<PAGE>
The directors' plan provides for the grant of nonstatutory stock options to
our nonemployee directors. Prior to the date of this offering, option grants
made under the 1998 directors' plan were made on a discretionary basis by our
board of directors. Following this offering, the plan provides for automatic
formula grants to our nonemployee directors. The directors' plan is designed to
work after the date of this offering automatically without administration;
however, to the extent administration is necessary, it will be performed by our
board of directors. To the extent they arise, it is expected that conflicts of
interest will be addressed by abstention of any interested director from both
deliberations and voting regarding matters in which a director has a personal
interest. Unless terminated earlier, the directors' plan will terminate in
February 2008.
The directors' plan provides that each person who becomes a nonemployee
director after the completion of this offering will be granted a nonstatutory
stock option to purchase 25,000 shares of common stock on the date on which
such individual first becomes a member of our board of directors. In addition,
on the date of each annual stockholders meeting, each nonemployee director who
will continue serving on the board following the meeting and who has been a
director of Metawave for at least six months prior to the meeting date will be
granted an option to purchase 10,000 shares of common stock.
All options granted under the directors' plan will have a term of ten years
and an exercise price equal to the fair market value of on the date of grant
and will be transferable only to members of a directors' immediate family and
to trusts and other entities for the benefit their family members. Options
granted under the directors' plan to new nonemployee directors following this
offering will vest as to 25% of the shares underlying the option on the first
anniversary of the date of the option grant and as to 1/48th of the shares each
month after the first anniversary so that these options will be fully vested on
the fourth anniversary of the grant date. Options granted to our nonemployee
directors at the time of each annual stockholders meeting following this
offering will vest as to 1/36th of the shares underlying the option so that
these options will be fully vested on the third anniversary of the grant date.
If Metawave determines that a director has engaged in fraud, embezzlement or
similar acts against us, or if a director has disclosed information that is
confidential to Metawave or engaged in any conduct constituting unfair
competition against us, we have the right to suspend or terminate that
director's right to exercise an option under the directors' plan.
If we are acquired by another corporation, we would expect each option
outstanding under our 1998 directors' plan to be assumed or replaced with
equivalent options by our acquiror. If our acquiror did not assume or replace
outstanding options, then the vesting of outstanding awards would accelerate so
that nonemployee directors holding options would be able to exercise and retain
the number of shares that he or she would have vested in had he or she
continued serving as a member of our board of directors for us for another 12
months (if the director had been a member of our board us for less than 2 years
at the time of the acquisition) or for another 24 months (if he or she had been
a member of our board for 2 years or more at the time of the acquisition)
following the acquisition date. Outstanding awards, the number of shares
remaining available for grant under the plan, and the number of shares subject
to the automatic director grants described above will each adjust in the event
of a stock split, stock dividend or other similar change in our capital stock.
Our board of directors may amend or terminate the directors' plan as long as
such action does not adversely affect any outstanding option. We will obtain
stockholder approval for any amendment to the plan to the extent required by
applicable law.
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<PAGE>
Limitation of Liability and Indemnification Matters
Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by the Delaware General Corporation Law. Delaware law
provides that a director of a corporation will not be personally liable for
monetary damages for breach of such individual's fiduciary duties as a director
except for liability for:
. any breach of the director's duty of loyalty to Metawave or to our
stockholders,
. acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law,
. unlawful payments of dividends or unlawful stock repurchases or
redemptions, or
. any transaction from which a director derives an improper personal
benefit.
Our bylaws provide that we shall indemnify our directors and officers and
may indemnify our other employees and agents to the fullest extent permitted by
law. We believe that indemnification under our bylaws covers at least
negligence and gross negligence on the part of an indemnified party. Our bylaws
also permit us to advance expenses incurred by an indemnified party in
connection with the defense of any action or proceeding arising out of such
party's status or service as a director, officer, employee or other agent of
Metawave upon an undertaking by such party to repay such advances if it is
ultimately determined that such party is not entitled to indemnification. This
advancement of expenses is subject to authorization by the board of directors
in the case of non-executive officers, employees and agents.
We have entered into separate indemnification agreements with each of our
directors and officers. These agreements require us, among other things, to
indemnify the director or officer against expenses, including attorney's fees,
judgments, fines and settlements paid by the individual in connection with any
action, suit or proceeding arising out of his or her status or service as one
of our directors or officers other than liabilities arising from willful
misconduct or conduct that is knowingly fraudulent or deliberately dishonest
and to advance expenses incurred by such individual in connection with any
proceeding against such individual with respect to which such individual may be
entitled to indemnification by us. We believe that our certificate of
incorporation and bylaw provisions and indemnification agreements are necessary
to attract and retain qualified persons as directors and officers. We also
maintain directors' and officers' liability insurance.
At present we are not aware of any pending litigation or proceeding
involving any of our directors, officers, employees or agents where
indemnification will be required or permitted. We are not aware of any
threatened litigation or proceeding that might result in a claim for such
indemnification.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Sales of Equity Securities
Certain stock option grants to our directors and executive officers are
described herein under the caption "Management--Executive Compensation."
Since July 1995, we have issued, in private placement transactions, shares
of preferred stock as follows:
. an aggregate of 5,500,000 shares of Series A preferred stock at $1.00 per
share in July 1995,
. an aggregate of 2,711,113 shares of Series B preferred stock at $3.375
per share in May 1996,
. an aggregate of 2,491,880 shares of Series C preferred stock at $6.16 per
share in October and November 1996,
. an aggregate of 2,397,727 shares of Series D preferred stock at $8.00 per
share in August 1997, and
. an aggregate of 18,276,151 shares of Series E preferred stock at $5.00
per share in December 1998, January, April and June 1999.
Upon completion of this offering, each outstanding share of Series A and
Series B preferred stock will convert into one share of our common stock. Each
share of Series C preferred stock will convert into 1.30786 shares of our
common stock, each share of Series D preferred stock will convert into 1.44144
shares of our common stock and each share of Series E preferred stock will
convert into 1.42857 shares of our common stock.
Listed below are those directors, executive officers and five percent
stockholders who have made equity investments in Metawave during the last
three fiscal years. We believe that the shares issued in these transactions
were sold at the then fair market value and that the terms of these
transactions were no less favorable than we could have obtained from
unaffiliated third parties.
<TABLE>
<CAPTION>
Series A Series B Series C Series D Series E
Common Preferred Preferred Preferred Preferred Preferred
Investor(1) Stock Stock Stock Stock(2) Stock(2) Stock(2)
- ----------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Entities affiliated with
Venrock Associates(3).. -- 1,833,334 888,889 424,629 263,481 883,746
Entities affiliated with
Oak Investment
Partners(4)............ -- 1,833,333 888,889 424,629 263,481 8,026,596
Entities affiliated with
The Sevin Rosen
Funds(5)............... -- 1,828,333 875,556 424,629 263,481 883,747
Entities affiliated with
MeriTech Capital
Partners L.P........... -- -- -- -- -- 7,142,850
General Motors
Investment Management
Corporation............ -- -- -- -- -- 4,999,995
Entities associated with
Merrill Lynch, Pierce,
Fenner & Smith
Incorporated........... -- -- -- -- -- 3,571,425
Douglas O. Reudink...... 1,359,230 -- -- -- -- --
Jennifer Gill
Roberts(5)............. -- 5,000 7,480 -- -- --
</TABLE>
- --------
(1) Shares held by affiliated persons and entities have been aggregated. See
"Principal Stockholders."
(2) Shown on an as-converted basis.
(3) David R. Hathaway, a director, is a general partner of Venrock Associates.
(4) Bandel L. Carano, a director, is a general partner of Oak Investment
Partners.
(5) Jennifer Gill Roberts, a director, is a general partner of the Sevin Rosen
Funds. In addition to the equity investment made by entities affiliated
with Sevin Rosen Funds, (i) Ms. Roberts purchased 5,000 shares of Series A
preferred stock and 7,480 shares of Series B preferred stock for her own
account and (ii) Steven L. Domenik, a general partner of Sevin Rosen,
purchased 5,926 shares of Series B preferred stock for his own account.
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<PAGE>
On April 3, 1998, Dr. Reudink sold 30,770 shares of common stock at a price
of $6.50 per share to Cedar Grove Investment L.L.C., a limited liability
corporation which is managed by Mr. Scot Jarvis, one of our directors. On April
17, 1998, Dr. Reudink sold 20,000 shares of common stock at a price of $6.50
per share to Spinnaker Offshore Founders Fund, an entity affiliated with Bowman
Capital Management and related entities which are holders of Series D preferred
stock.
On April 28, 1998, we issued an aggregate principal amount of $29.0 million
13.75% Senior Secured Bridge Notes due April 28, 2000 to certain institutional
investors, including Powerwave Technologies, Inc. of which Bruce Edwards, one
of our directors, is president and chief executive officer. In addition, we
issued warrants to purchase an aggregate of 542,335 shares of our Series D
preferred stock at a purchase price of $0.01 per share. The number of shares of
Series D preferred stock issuable upon exercise of these warrants was adjusted
in December 1998 in connection with our sale of Series E preferred stock. On
April 28, 1999 all outstanding principal and accrued interest on these notes
were repaid in full. On April 26, 1999 all of the warrants issued in connection
with these notes were exercised and 620,702 shares of Series D preferred stock
were issued. Powerwave purchased $2,500,000 in aggregate principal amount of
the 13.75% Senior Secured Bridge Notes and was issued a warrant to purchase up
to an aggregate of 46,336 shares of Series D preferred stock at an exercise
price of $0.01 per share which was exercised in full in April 1999 for 53,509
shares of Series D preferred stock as a result of certain adjustments.
Powerwave Technologies, Inc. is currently our sole supplier of linear power
amplifiers, a component in our smart antenna systems. From January 1, 1999 to
December 31, 1999, we purchased a total of $6.1 million of linear power
amplifiers and related components from Powerwave. Pursuant to a manufacturing
agreement, Powerwave will manufacture and sell to us 100% of our requirements
for linear power amplifiers that Powerwave manufactures.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information known to us regarding beneficial
ownership of our common stock as of December 31, 1999, after giving effect to
the conversion of all outstanding shares of preferred stock, and as adjusted to
reflect the sale of common stock offered by this prospectus, as to:
. each person, or group of affiliated or associated persons, who owns
beneficially more than 5% of the outstanding shares of our common stock,
. each of our directors,
. each of our Named Executive Officers, and
. all of our directors and executive officers as a group.
Unless otherwise indicated, the address of each stockholder is: c/o Metawave
Communications Corporation, 10735 Willows Road NE, P.O. Box 97069, Redmond, WA
98073-9769.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options or warrants held by that person that
are currently exercisable or will become exercisable within 60 days after
December 31, 1999 are deemed outstanding, while such shares are not deemed
outstanding for purposes of computing percentage ownership of any other person.
The percent of beneficial ownership for each stockholder is based on 45,545,882
shares of common stock outstanding prior to this offering, on an as converted
basis, and shares of common stock outstanding after this offering.
Unless otherwise indicated in the footnotes below, the persons and entities
named in the table have sole voting and investment power with respect to all
shares beneficially owned, subject to community property laws where applicable.
<TABLE>
<CAPTION>
Percent of Shares
Outstanding
Shares -----------------
Beneficially Prior to After
Name and Address Owned Offering Offering
- --------------------------------------------- ------------ -------- --------
<S> <C> <C> <C>
Oak Investment Partners(1)................... 11,558,596 25.4%
525 University Avenue, Suite 1300
Palo Alto, CA 94301-1902
Venrock Associates(2)........................ 4,406,744 9.7
30 Rockefeller Plaza
New York, NY 10112-0184
The Sevin Rosen Funds(3)..................... 4,397,412 9.7
550 Lytton Avenue, Suite 200
Palo Alto, CA 94301-1542
MeriTech Capital Partners(4)................. 7,142,850 15.7
428 University Avenue, 2nd Floor
Palo Alto, CA 94301
General Motors Investment Management
Corporation................................. 4,999,995 11.0
767 Fifth Avenue(5)
New York, New York 10153
Merrill Lynch, Pierce, Fenner & Smith
Incorporated(6)............................. 3,571,425 7.8
World Financial Center, South Tower
New York, New York 10080-6123
Douglas O. Reudink(7)........................ 1,384,230 3.0
Robert H. Hunsberger(8)...................... 900,000 1.9
Victor K. Liang(9)........................... 390,000 *
Richard Henderson(10)........................ 160,000 *
Martin J. Feuerstein(11)..................... 97,000 *
Bandel L. Carano(1).......................... 11,558,596 25.4
Jennifer Gill Roberts(12).................... 4,409,820 9.7
David R. Hathaway(2)......................... 4,406,744 9.7
Scot B. Jarvis(13)........................... 92,228 *
Bruce C. Edwards(14)......................... 9,895 *
David A. Twyver(15).......................... 9,895 *
All directors and executive officers as a
group (13 persons)(16)...................... 23,571,408 51.8
</TABLE>
- --------
* Represents less than 1% ownership.
Footnotes continued on following page.
52
<PAGE>
(1) Includes 4,315,065 shares held by Oak Investment Partners VI, L.P.,
7,007,136 shares held by Oak Investment Partners VIII, L.P., 100,680
shares held by Oak VI Affiliates Fund, L.P. and 135,715 shares held by Oak
VIII Affiliates Fund, L.P. Bandel L. Carano, one of our directors, is a
Managing Member of Oak Associates VI, L.L.C., a general partner of Oak
Investment Partners VI, L.P., a General Partner of Oak VI Affiliates and a
general partner of Oak VI Affiliates Fund, and as such may be deemed to
share voting and investment power with respect to such shares. Mr. Carano
disclaims beneficial ownership of such shares, except to the extent of his
pecuniary interest in such shares.
(2) Includes 2,572,947 shares held by Venrock Associates and 1,833,797 shares
held by Venrock Associates II, L.P. David R. Hathaway, a director, is a
general partner of Venrock Associates and Venrock Associates II, L.P., and
as such, may be deemed to share voting and investment power with respect
to such shares. Mr. Hathaway disclaims beneficial ownership of such
shares, except to the extent of his pecuniary interest in such shares.
(3) Includes 15,220 shares held by Sevin Rosen Bayless Management Co.,
2,998,417 shares held by Sevin Rosen Fund IV L.P., 1,327,042 shares held
by Sevin Rosen Fund V L.P., 56,733 shares held by Sevin Rosen V Affiliates
Fund L.P.
(4) Includes 7,028,564 shares held by MeriTech Capital Partners and 114,286
shares held by MeriTech Capital Affiliates, L.P.
(5) Includes 4,999,995 shares held by Chase Manhattan Bank, as trustee for
First Plaza Group Trust, General Motors Investment Management Corporation.
(6) Includes 1,428,570 shares held by ML IBK Positions, Inc, 889,999 shares
held by Merrill Lynch KECALP L.P. 1997, 985,713 shares held by Merrill
Lynch KECALP L.P. 1999, 171,428 shares held by Merrill Lynch KECALP
International L.P. 1997 and 85,714 shares held by Merrill Lynch KECALP
International L.P. 1999.
(7) Includes 25,000 shares held in trust for Matthew Reudink, Dr. Reudink's
son.
(8) Includes 900,000 shares issuable upon the exercise of immediately
exercisable options held by Mr. Hunsberger within 60 days of December 31,
1999, 356,250 shares of which are subject to our right of repurchase that
lapses over time.
(9) Includes 390,000 shares issuable upon the exercise of immediately
exercisable options held by Mr. Liang within 60 days of December 31, 1999,
320,939 shares of which are subject to our right of repurchase that lapses
over time.
(10) Includes 160,000 shares issuable upon the exercise of immediately
exercisable options held by Mr. Henderson within 60 days of December 31,
1999, 76,668 shares of which are subject to our right of repurchase that
lapses over time.
(11) Includes 97,000 shares issuable upon the exercise of immediately
exercisable options held by Mr. Feuerstein within 60 days of December 31,
1999, 44,344 shares of which are subject to our right of repurchase that
lapses over time.
(12) Includes the shares referenced in footnote (3) and 12,408 shares held by
Ms. Roberts. Jennifer Gill Roberts, one of our directors, is a general
partner of Sevin Rosen Fund IV L.P., Sevin Rosen Fund V L.P. and Sevin
Rosen V Affiliates Fund L.P., and as such, may be deemed to share voting
and investment power with respect to such shares. Ms. Roberts disclaims
beneficial ownership of the shares referenced in footnote (3), except to
the extent of her pecuniary interest in such shares.
(13) Includes 80,770 shares owned by Cedar Grove Investments, LLC, Cedar Grove,
and 11,458 shares issuable upon the exercise of immediately exercisable
options held by Mr. Jarvis within 60 days of December 31, 1999. Mr.
Jarvis, a managing member of Cedar Grove, disclaims beneficial ownership
of such shares, except to the extent of his pecuniary interest in such
shares.
(14) Includes shares issuable upon the exercise of vested options held by Mr.
Edwards within 60 days of December 31, 1999.
(15) Includes shares issuable upon the exercise of vested options held by Mr.
Twyver within 60 days of December 31, 1999.
(16) Includes shares referred to in footnotes (1) (3), (7)-(15) and 153,000
shares issuable upon exercise of outstanding options exercisable within 60
days of December 31, 1999 held by other officers.
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<PAGE>
DESCRIPTION OF SECURITIES
Following the closing of the sale of the shares of common stock offered
hereby, our authorized capital stock will consist of 150,000,000 shares of
common stock, $0.001 par value, and 10,000,000 shares of preferred stock,
$0.001 par value. As of December 31, 1999, there were 3,586,464 shares of
common stock outstanding that were held of record by approximately 115
stockholders. There will be shares of common stock outstanding
(assuming no exercise of outstanding options after December 31, 1999) after
giving effect to the sale of the shares of common stock offered hereby and
conversion of all outstanding preferred shares.
Common Stock
The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may
be applicable to any outstanding preferred stock, the holders of common stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by the board of directors out of funds legally available therefor.
In the event of a liquidation, dissolution or winding up of Metawave, the
holders of common stock are entitled to share ratably in all assets remaining
after payment of liabilities, subject to prior rights of preferred stock, if
any, then outstanding. The common stock has no preemptive or conversion rights
or other subscription rights. There are no redemption or sinking fund
provisions available to the common stock. All outstanding shares of common
stock are fully paid and non-assessable.
Preferred Stock
Upon the closing of this offering, the board of directors is authorized to
issue up to 10,000,000 shares of preferred stock in one or more series and to
determine the powers, preferences and rights and the qualifications,
limitations or restrictions granted to or imposed upon any wholly unissued
series of undesignated preferred stock, including dividend rights, dividend
rates, conversion rights, voting rights, terms of redemption, redemption
prices, liquidation preferences and the number of shares constituting any
series or the designation of such series, without any further vote or action by
the stockholders.
The issuance of preferred stock may have the effect of delaying, deferring
or preventing a change in control of Metawave without further action by the
stockholders and may adversely affect the voting and other rights of the
holders of common stock. In certain circumstances, such issuance could have the
effect of decreasing the market price of the common stock. As of the closing of
this offering, no shares of preferred stock will be outstanding and we
currently have no plans to issue any shares of preferred stock.
Warrants
As of December 31, 1999, we had warrants outstanding to purchase an
aggregate of 31,250 shares of common stock, 65,416 shares of Series A preferred
stock, 19,999 shares of Series B preferred stock, 44,585 shares of Series C
preferred stock and 6,306 shares of Series D preferred stock.
In connection with a equipment lease line entered into with Transamerica
Business Credit Corporation in May 1999, we issued a warrant to purchase up to
an aggregate of 31,250 shares of common stock at an exercise price of $4.50 per
share. The warrant expires on May 19, 2004.
In connection with an equipment lease line entered into in December 1995, we
issued a warrant to purchase up to an aggregate of 48,750 shares of Series A
preferred stock to Comdisco, Inc. at an exercise price of $2.1875 per share.
The warrant expires on December 13, 2002. In connection with a second equipment
lease line entered into in April 1996, we issued a warrant to purchase up to an
aggregate of 16,666 shares of Series A preferred stock to Comdisco at an
exercise price of $2.1875 per share. The warrant expires on April 9, 2003. In
connection with a third equipment lease line entered into in August 1996, we
issued a warrant to purchase up to an aggregate of 19,999 shares of Series B
preferred stock to Comdisco at an exercise price of
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<PAGE>
$4.7675 per share. The warrant and the extension expire on the later of August
20, 2003 or three years following the effective date of this offering. In
connection with a fourth equipment lease line entered into in June 1997, we
issued a warrant to purchase up to an aggregate of 34,090 shares of Series C
preferred stock to Comdisco at an exercise price of $6.16 per share. The
warrant expires on the later of June 9, 2004 or 18 months following the
effective date of this offering.
In connection with an equipment lease line entered into with Insight
Investments Corporation in April 1998, we issued a warrant to purchase up to an
aggregate of 4,375 shares of Series D preferred stock at an exercise price of
$8.00 per share. The warrant expires on the closing of this offering.
Registration Rights of Certain Holders
The holders of 43,318,648 shares of common stock or certain of their
transferees are entitled to rights with respect to the registration of such
shares under the Securities Act. These rights are provided under the terms of
an agreement between us and the holders of registrable securities. Subject to
certain limitations in the agreement, certain holders of the registrable
securities may require, on two occasions at any time after six months from the
effective date of this offering, that we use our best efforts to register the
registrable securities for public resale, provided that the proposed aggregate
offering price is at least $7,500,000. If we register any of our common stock
either for our own account or for the account of other security holders, the
holders of registrable securities are entitled to include their shares of
common stock in the registration. A holder's right to include shares in an
underwritten registration is subject to the ability of the underwriters to
limit the number of shares included in the underwritten public offering.
Subject to certain conditions, all fees, costs and expenses of such
registrations must be borne by us and all selling expenses, including
underwriting discounts, selling commissions and stock transfer taxes, relating
to registrable securities must be borne by the holders of the securities being
registered. In addition, we have agreed to indemnify the holders of
registration rights against liabilities under the Securities Act.
Anti-Takeover Provisions of Delaware and Washington Law and Charter Documents
We are subject to the provisions of Section 203 of the Delaware General
Corporate Law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date that the person became
an interested stockholder unless, with certain exceptions, the business
combination or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a "business
combination" includes a merger, asset or stock sale or other transaction
resulting in a financial benefit to the stockholder, and an "interested
stockholder" is a person who, together with affiliates and associates, owns, or
within three years prior, did own, 15% or more of the corporation's outstanding
voting stock. This provision may have the effect of delaying, deferring or
preventing a change in control of Metawave without further action by the
stockholders.
The laws of the State of Washington, where our principal executive offices
are located, impose restrictions on certain transactions between certain
foreign corporations and significant stockholders. Chapter 23B.19 of the
Washington Business Corporation Act, or the WBCA, prohibits a "target
corporation," with certain exceptions, from engaging in certain "significant
business transactions" with a person or group of persons who beneficially own
10% or more of the voting securities of the target corporation, an "acquiring
person", for a period of five years after such acquisition, unless the
transaction or acquisition of such shares is approved by a majority of the
members of the target corporation's board of directors prior to the time of
acquisition. Such prohibited transactions include, among other things, a merger
or consolidation with, disposition of assets to, or issuance or redemption of
stock to or from, the acquiring person, termination of 5% or more of the
employees of the target corporation as a result of the acquiring person's
acquisition of 10% or more of the shares or allowing the acquiring person to
receive disproportionate benefit as a stockholder. After the five-year period,
a significant business transaction may take place as long as it complies with
certain fair price provisions of the statute. A target corporation includes a
foreign corporation if:
. the corporation has a class of voting stock registered pursuant to
Section 12 or 15 of the Exchange Act,
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<PAGE>
. the corporation's principal executive office is located in Washington,
and
. any of (a) more than 10% of the corporation's stockholders of record are
Washington residents, (b) more than 10% of its shares are owned of record
by Washington residents, (c) 1,000 or more of its stockholders of record
are Washington residents, (d) a majority of the corporation's employees
are Washington residents or more than 1,000 Washington residents are
employees of the corporation, or (e) a majority of the corporation's
tangible assets are located in Washington or the corporation has more
than $50.0 million of tangible assets located in Washington.
A corporation may not "opt out" of this statute and, therefore, we
anticipate this statute will apply to us. Depending upon whether we meet the
definition of a target corporation, Chapter 23B.19 of the WBCA may have the
effect of delaying, deferring or preventing a change in control of Metawave.
In addition, upon completion of this offering, certain provisions of our
charter documents, including a provision eliminating the ability of
stockholders to take actions by written consent, may have the effect of
delaying or preventing changes in control or management of Metawave, which
could have an adverse effect on the market price of our common stock. Our stock
option and purchase plans generally provide that upon a change in control or
similar event optionees are entitled to accelerated vesting credit equal to
either twelve months or twenty-four months of additional vesting beyond that
otherwise scheduled, based on whether he or she has been employed by Metawave
less than two years, or two years or more, respectively, as of the date of such
event unless in connection with the change in control or similar event,
outstanding options are assumed or substituted for equivalent options of a
successor corporation. The board of directors has authority to issue up to
10,000,000 shares of preferred stock and to fix the rights, preferences,
privileges and restrictions, including voting rights, of these shares without
any further vote or action by the stockholders. The rights of the holders of
the common stock will be subject to, and may be adversely affected by, the
rights of the holders of any preferred stock that may be issued in the future.
The issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire a majority
of our outstanding voting stock, thereby delaying, deferring or preventing a
change in control of Metawave. Furthermore, such preferred stock may have other
rights, including economic rights senior to the common stock, and, as a result,
the issuance of such preferred stock could have a material adverse effect on
the market value of the common stock. We have no present plan to issue shares
of preferred stock.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services L.L.C. and their number is (206) 674-3030.
Listing
We have applied to list our common stock on the Nasdaq National Market under
the trading symbol "MTWV."
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have outstanding shares of
common stock, assuming no exercise of options after December 31, 1999. Of these
shares, the shares sold in this offering will be freely tradable without
restriction or further registration under the Securities Act unless purchased
by our "affiliates" as that term is defined in Rule 144 of the Securities Act.
The remaining 45,545,882 shares outstanding upon completion of this offering
will be "restricted securities" as that term is defined under Rule 144 and may
not be sold publicly unless they are registered under the Securities Act or are
sold pursuant to Rule 144 or another exemption from registration. All of our
directors and executive officers and certain other stockholders, holding in the
aggregate of the shares of common stock outstanding prior to this
offering, are contractually obligated not to sell or otherwise dispose of any
shares of common stock for a period of 180 days after the date of this
prospectus without the prior written consent of Merrill Lynch, Pierce, Fenner &
Smith Incorporated or us. The number of shares of common stock available for
sale in the public market is further limited by restrictions under the
Securities Act.
Because of the restrictions noted above, on the date of this prospectus and
until 180 days after the date of this prospectus, assuming no release of the
lockup period by us or by Merrill Lynch, Pierce, Fenner & Smith Incorporated,
shares in addition to the shares offered hereby will be eligible for
sale in the public market. Beginning 90 days after the effective date of this
offering, approximately restricted shares will be eligible for sale in the
public market. Beginning 180 days after the effective date of this offering,
approximately 42,474,518 restricted shares, will be eligible for sale in the
public market, subject in some cases to certain volume limitations. Upon the
expiration of one-year minimum holding periods, an additional shares will
be eligible for sale.
<TABLE>
<CAPTION>
Shares
Days after Date Eligible for
of this Prospectus Sale Comment
-------------------- ------------ -------------------------------------------
<C> <C> <S>
Upon effectiveness.. Shares sold in offering
Upon effectiveness.. Freely tradable shares salable under Rule
144(k) that are not subject to the lockup
91 days............. Shares salable under Rules 701 and 144 and
not subject to the lockup
181 days............ 42,274,518 Lockup released; shares salable under Rules
144 and 701
</TABLE>
In general, under Rule 144 as currently in effect, a person, or persons
whose shares are aggregated, who has beneficially owned restricted shares for
at least one year, including persons who may be deemed our "affiliates", would
be entitled to sell within any three-month period a number of shares that does
not exceed the greater of 1% of the number of shares of common stock then
outstanding or the average weekly trading volume of the common stock as
reported through the Nasdaq National Market during the four calendar weeks
preceding the filing of a Form 144 with respect to such sale. Sales under Rule
144 are also subject to certain manner of sale provisions and notice
requirements and to the availability of current public information about us. In
addition, a person who is not deemed to have been an affiliate of us at any
time during the 90 days preceding a sale, and who has beneficially owned for at
least two years the shares proposed to be sold, would be entitled to sell such
shares under Rule 144(k) without regard to the requirements described above.
In general, Rule 701 permits resales of shares issued pursuant to certain
compensatory benefit plans and contracts commencing 90 days after the issuer
becomes subject to the reporting requirements of the Exchange Act in reliance
upon Rule 144 but without compliance with certain restrictions, including the
holding period requirements, contained in Rule 144. During the lockup period,
we intend to file a registration statement under the Securities Act to register
shares to be issued pursuant to our employee benefit plans. As a result, any
options exercised under the 1995 stock option plan, the 1998 stock option plan,
the 2000 stock option plan, the
57
<PAGE>
2000 director option plan, the 2000 employee stock purchase plan or any other
benefit plan after the effectiveness of such registration statement will also
be freely tradable in the public market, except that shares held by affiliates
will still be subject to the volume limitation, manner of sale, notice and
public information requirements of Rule 144 unless otherwise resalable under
Rule 701. As of December 31, 1999, there were outstanding options for the
purchase of 4,327,942 shares of our common stock under our employee benefit
plans.
Prior to this offering, there has been no public market for our securities.
No prediction can be made as to the effect, if any, that market sales of shares
or the availability of shares for sale will have on the market price prevailing
from time to time. Nevertheless, sales of substantial amounts of our common
stock in the public market after the lapse of the restrictions described above
could adversely affect the prevailing market price and our ability to raise
equity capital in the future at a time and price which we deem appropriate. In
addition, after this offering, the holders of the registrable securities will
be entitled to certain demand and piggyback rights with respect to registration
of their shares under the Securities Act. Registration of those shares under
the Securities Act would result in such shares becoming freely tradable without
restriction under the Securities Act (except for shares purchased by our
affiliates) immediately upon the effectiveness of such registration. If such
holders, by exercising their demand registration rights, cause a larger number
of securities to be registered and sold in the public market, such sales could
have an adverse effect on the market price for our common stock. If we were to
include in a registration initiated by us, any registrable securities pursuant
to the exercise of piggyback registration rights, such sales may have an
adverse effect on our ability to raise needed capital.
58
<PAGE>
UNDERWRITING
General
We intend to offer our common stock through a number of underwriters.
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney and
U.S. Bancorp Piper Jaffray are acting as representatives of the underwriters
named below. Subject to the terms and conditions described in a purchase
agreement among us and the underwriters, we have agreed to sell to the
underwriters, and each of the underwriters severally and not jointly has agreed
to purchase from our company, the number of shares of common stock set forth
opposite its name below.
<TABLE>
<CAPTION>
Number of
Underwriter Shares
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..............................................
Salomon Smith Barney...............................................
U.S. Bancorp Piper Jaffray Inc.....................................
Total.........................................................
====
</TABLE>
The underwriters have agreed to purchase all of the shares sold under the
purchase agreement if any of these shares are purchased. If an underwriter
defaults, the purchase agreement provides that the purchase commitments of the
nondefaulting underwriters may be increased or the purchase agreement may be
terminated. The closings for the sales of shares to be purchased by the
underwriters are conditioned on one another.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
the underwriters may be required to make in respect of those liabilities.
The underwriters are offering the shares, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of legal matters by
their counsel, including the validity of the shares, and other conditions
contained in the purchase agreements, such as the receipt by the underwriters
of officer's certificates and legal opinions. The underwriters reserve the
right to withdraw, cancel or modify offers to the public and to reject orders
in whole or in part.
Commissions and Discounts
The representatives have advised us that the underwriters propose initially
to offer the shares of common stock to the public at the initial public
offering price set forth on the cover page of this prospectus, and to certain
dealers at a price less a concession not in excess of $ per share of common
stock. The underwriters may allow, and such dealers may reallow, a discount not
in excess of $ per share of common stock to certain other dealers. After
the initial public offering, the public offering price, concession and discount
may change.
The following table shows the per share and total public offering price, the
underwriting discount to be paid by us to the underwriters and the proceeds
before expenses to us. The information is presented assuming either no exercise
or full exercise by the underwriters of their over-allotment option.
<TABLE>
<CAPTION>
Without With
Per Share Option Option
--------- ------- ------
<S> <C> <C> <C>
Public offering price.................................. $ $ $
Underwriting discount..................................
Proceeds, before expenses, to Metawave.................
</TABLE>
The expenses of the offering, not including the underwriting discount, are
estimated at $1,000,000 and are payable by Metawave.
59
<PAGE>
Over-allotment Option
We have granted to the underwriters an option, exercisable no later than
days after the date of this prospectus, to purchase up to an aggregate of
additional shares of common stock at the public offering price less
the underwriting discounts and commissions set forth on the cover page of this
prospectus. To the extent that the underwriters exercise such option, each of
the underwriters will have a firm commitment to purchase approximately the same
percentage of such additional shares as the number set forth next to such
underwriters name in the above table bears to the total number of shares of
common stock offered hereby, and we will be obligated, pursuant to the option,
to sell shares to the underwriters to the extent the option is exercised. The
underwriters may exercise such option only to cover over-allotments made in
connection with the sale of shares of common stock offered hereby. If
purchased, the underwriters will offer such additional shares on the same terms
as those on which the shares are being offered.
Reserved Shares
At our request, the underwriters have reserved for sale, at the initial
public offering price, up to 5% of the shares offered by this prospectus for
sale to some of our employees, distributors, suppliers, business associates and
related persons. If these persons purchase reserved shares, this will reduce
the number of shares available for sale to the general public. Any reserved
shares that are not orally confirmed for purchase within one day of the pricing
of this offering will be offered by the underwriters to the general public on
the same terms as the other shares offered by this prospectus.
No Sales of Similar Securities
We, our executive officers and directors and most of our existing
stockholders have agreed not to directly or indirectly:
. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of, lend or otherwise dispose of or
transfer any shares of our common stock or securities convertible into
or exchangeable or exercisable for or repayable with our common stock,
whether now owned or later acquired by the person executing the
agreement or with respect to which the person executing the agreement
later acquires the power of disposition, or file any registration
statement under the Securities Act relating to any shares of our common
stock (other than shares sold in this offering or hereafter acquired in
the public market), or
. enter into any swap or other agreement or any other agreement that
transfers, in whole or in part, the economic consequence of ownership of
our common stock whether any such swap or transaction is to be settled
by delivery of our common stock or other securities, in cash or
otherwise,
without the prior written consent of Merrill Lynch Pierce, Fenner & Smith
Incorporated on behalf of the underwriters for a period of 180 days after the
date of the prospectus. See "Shares Eligible for Future Sale."
Quotation on the Nasdaq National Market
We expect the shares to be approved for quotation on the Nasdaq National
Market, subject to notice of issuance, under the symbol "MTWV."
Before this offering, there has been no public market for our common stock.
The initial public offering price will be determined through negotiations among
us and the representatives and the lead managers. In addition to prevailing
market conditions, the factors to be considered in determining the initial
public offering price are:
. the valuation multiples of publicly traded comparisons that the
representatives and the lead managers believe to be comparable to us,
. our financial information,
60
<PAGE>
. the history of, and the prospects for, our company and the industry in
which we compete,
. an assessment of our management, its past and present operations, and
the prospects for, and timing of, our future revenues,
. the present state of our development and
. the above factors in relation to market values and various valuation
measures of other companies engaged in activities similar to ours.
Other Relationships
ML IBK Positions, Inc. and other investment funds which are associated with
Merrill Lynch, Pierce, Fenner & Smith Incorporated purchased an aggregate of
3,571,425 shares of our Series E preferred stock. Merrill Lynch, Pierce, Fenner
& Smith Incorporated has in the past provided and may in the future provide,
investment banking services for which they have received, and may receive,
customary fees.
Price Stabilization and Short Positions
Until the distribution of our common stock is completed, rules of the
Commission may limit the ability of the underwriters to bid for and purchase
our common stock. As an exception to these rules, the underwriters are
permitted to engage in transactions that stabilize the price of our common
stock. Stock transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of our common stock.
The underwriters may create a short position in our common stock in
connection with the offering. This means that if they sell more shares of our
common stock than are set forth on the cover page of this prospectus, the
underwriters may reduce that short position by purchasing our common stock in
the open market. The underwriters may also elect to reduce any short position
by exercising all or part of the over-allotment option described above.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our common stock. In addition, neither
we nor any of the underwriters makes any representation that the underwriters
will engage in such transactions or that such transactions, once commenced,
will not be discontinued without notice.
61
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by our counsel, Venture Law Group, a Professional Corporation, Kirkland,
Washington. Certain legal matters will be passed upon for the underwriters by
Wilson Sonsini Goodrich & Rosati, a Professional Corporation, Palo Alto,
California.
EXPERTS
The financial statements and schedule of Metawave Communications Corporation
as of December 31, 1997, 1998 and 1999 and the related statements of
operations, shareholders' equity (deficit), and cash flows for the years then
ended and the period from January 19, 1995 (inception) to December 31, 1995
appearing in this prospectus and registration statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
appearing elsewhere herein, and are included in reliance upon such reports,
given on the authority of such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act. This prospectus, which is a
part of the registration statement, does not contain all of the information set
forth in the registration statement, including items contained in the exhibits
to the registration statement. For further information about our company and
the common stock being offered by this prospectus, you should see the
registration statement and the exhibits, financial statements and notes filed
with the registration statement. Statements made in this prospectus concerning
other documents are not necessarily complete. Copies of the registration
statement, including exhibits, financial statements and notes, may be inspected
without charge at the SEC principal office in Washington, D.C. or obtained at
prescribed rates from the public reference room of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain information regarding the
public reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a
World Wide Web site on the Internet at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
companies that file electronically with the SEC. We have filed the registration
statement, including the exhibits and schedules, electronically with the SEC
via the SEC EDGAR system.
62
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors..................... F-2
Consolidated Balance Sheets........................................... F-3
Consolidated Statements of Operations................................. F-4
Consolidated Statements of Stockholders' Deficit...................... F-5
Consolidated Statements of Cash Flows................................. F-6
Notes to Consolidated Financial Statements............................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
Metawave Communications Corporation
We have audited the accompanying consolidated balance sheets of Metawave
Communications Corporation as of December 31, 1998 and 1999, and the related
consolidated statements of operations, stockholders' deficit, and cash flows
for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Metawave
Communications Corporation at December 31, 1998 and 1999, and the consolidated
results of its operations and its cash flows for the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.
Ernst & Young LLP
Seattle, Washington
February 11, 2000
F-2
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
Pro Forma
Stockholders'
December 31, Equity at
------------------- December 31,
1998 1999 1999
-------- --------- -------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents................. $ 10,763 $ 20,165
Accounts receivable, less allowances of
$908 ($693 in 1998)...................... 4,329 10,127
Inventories............................... 7,929 4,149
Debt issuance costs, net of amortization
of $6,491 ($4,170 in 1998)............... 2,321 --
Prepaid expenses and other assets......... 621 613
-------- ---------
Total current assets.................... 25,963 35,054
Property and equipment, net................. 6,355 5,701
Other noncurrent assets..................... 192 191
-------- ---------
Total assets............................ $ 32,510 $ 40,946
======== =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
Current liabilities:
Accounts payable.......................... $ 5,412 $ 3,758
Accrued liabilities....................... 2,334 2,392
Accrued compensation...................... 1,461 1,511
Senior secured notes...................... 31,704 --
Current portion of notes payable.......... 134 75
Current portion of capital lease
obligations.............................. 1,908 2,692
Deferred revenues......................... 145 1,766
-------- ---------
Total current liabilities............... 43,098 12,194
Capital lease obligations, less current
portion.................................... 4,326 2,479
Notes payable, less current portion......... 87 8
Other long-term liabilities................. -- 16
Commitments:
Convertible and redeemable preferred stock,
issued and outstanding shares--14,029,088
in 1998, 32,027,203 in 1999, and none pro
forma, at liquidation value................ 56,472 143,945
Convertible and redeemable preferred stock
warrants................................... 5,123 157
Stockholders' equity (deficit):
Preferred stock, $.0001 par value:
Authorized shares--37,000,000, of which
32,027,203 have been designated as
convertible and redeemable at December
31, 1999.................................
Common stock, $.0001 par value:
Authorized shares--50,000,000; issued and
outstanding shares--3,168,442 in 1998,
3,617,714 in 1999 and 45,577,132
pro forma................................ 2,179 2,810 $ 146,912
Deferred stock compensation............... (554) (488) (488)
Accumulated other comprehensive income ... 6 19 19
Accumulated deficit....................... (78,227) (120,194) (120,194)
-------- --------- ---------
Total stockholders' equity (deficit).... (76,596) (117,853) $ 26,249
-------- --------- =========
Total liabilities and stockholders'
equity................................. $ 32,510 $ 40,946
======== =========
</TABLE>
See accompanying notes.
F-3
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Revenues..................................... $ 1,450 $ 15,991 $ 22,596
Cost of revenues............................. 1,728 18,028 22,236
--------- --------- ---------
Gross profit (loss).......................... (278) (2,037) 360
Operating expenses:
Research and development................... 13,083 18,495 22,638
Sales and marketing........................ 5,383 11,346 10,973
General and administrative................. 3,762 5,887 5,542
--------- --------- ---------
Total operating expenses................. 22,228 35,728 39,153
--------- --------- ---------
Operating loss............................... (22,506) (37,765) (38,793)
Other income, net............................ 851 790 1,165
Interest expense............................. (449) (7,353) (4,339)
--------- --------- ---------
Other income (expense), net.............. 402 (6,563) (3,174)
--------- --------- ---------
Net loss..................................... $ (22,104) $ (44,328) $ (41,967)
========= ========= =========
Basic and diluted net loss per share......... $ (11.59) $ (14.59) $ (12.52)
========= ========= =========
Shares used in computation of basic and
diluted net loss per share.................. 2,724,000 3,038,611 3,352,197
========= ========= =========
</TABLE>
See accompanying notes.
F-4
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the Years Ended December 31, 1997, 1998 and 1999
(in thousands, except share data)
<TABLE>
<CAPTION>
Accumulated
Common Stock Deferred Other Total
----------------- Stock Comprehensive Accumulated Stockholders'
Shares Amount Compensation Income Deficit Deficit
--------- ------ ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1997................... 2,651,101 $ 10 $ 0 $ 0 $ (11,795) $ (11,785)
Exercise of stock
options............... 282,092 77 -- -- -- 77
Deferred stock
compensation.......... -- 1,881 (1,881) -- -- --
Stock compensation
expense............... -- -- 676 -- -- 676
Net loss for the year
ended December 31,
1997.................. -- -- -- -- (22,104) (22,104)
--------- ------ ------- --- --------- ---------
Balance at December 31,
1997................... 2,933,193 1,968 (1,205) 0 (33,899) (33,136)
Repurchased restricted
stock................. (138,400) (5) -- -- -- (5)
Exercise of stock
options............... 362,649 106 -- -- -- 106
Issuance of common
stock warrants........ 11,000 110 -- -- -- 110
Stock compensation
expense............... -- -- 651 -- -- 651
Comprehensive income
(loss):
Foreign exchange
translation gain...... -- -- -- 6 -- 6
Net loss for the year
ended December 31,
1998.................. -- -- -- -- (44,328) (44,328)
Comprehensive loss..... (44,322)
--------- ------ ------- --- --------- ---------
Balance at December 31,
1998................... 3,168,442 2,179 (554) 6 (78,227) (76,596)
Exercise of stock
options............... 418,022 137 -- -- -- 137
Issuance of common
stock warrants........ 31,250 88 -- -- -- 88
Deferred stock
compensation.......... -- 406 (406) -- -- --
Stock compensation
expense............... -- -- 472 -- -- 472
Comprehensive income
(loss):
Foreign exchange
translation gain...... -- -- -- 13 -- 13
Net loss for the year
ended December 31,
1999.................. -- -- -- -- (41,967) (41,967)
---------
Comprehensive loss..... (41,954)
--------- ------ ------- --- --------- ---------
Balance at December 31,
1999................... 3,617,714 $2,810 $ (488) $19 $(120,194) $(117,853)
========= ====== ======= === ========= =========
</TABLE>
See accompanying notes.
F-5
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------
1997 1998 1999
--------- --------- --------
<S> <C> <C> <C>
Operating activities
Net loss....................................... $(22,104) $(44,328) $(41,967)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization expense........ 1,841 2,623 3,035
Loss on disposal of assets................... -- 8 208
Stock compensation expense................... 676 651 472
Reserve for loss on assets................... 425 -- --
Accrued interest expense on senior notes..... -- 2,704 --
Debt financing amortization.................. -- 2,673 2,321
Noncash warrant expense........................ -- 110 88
Changes in operating assets and liabilities:
Decrease in accounts receivable............ (1,323) (2,885) (5,798)
Increase (decrease) in inventories......... (4,080) (3,849) 3,780
Increase (decrease) in other assets........ (34) (502) 8
Increase (decrease) in accounts payable,
accrued liabilities, and other
liabilities............................... 926 7,915 (1,542)
Increase in other long-term liabilities.... -- (5) --
Increase in deferred revenues.............. 114 30 1,621
--------- --------- --------
Net cash provided by (used in) operating
activities.................................... (23,559) (34,855) (37,774)
Investing activities
Proceeds on sale of assets..................... -- 78 --
Purchases of equipment......................... (621) (2,593) (1,317)
--------- --------- --------
Net cash provided by (used in) investing
activities.................................... (621) (2,515) (1,317)
Financing activities
Proceeds from issuance of preferred stock...... 19,182 7,190 82,507
Proceeds from issuance of common stock......... 77 101 138
Proceeds from notes payable.................... -- 29,000 --
Payments on notes payable...................... (115) (182) (31,841)
Principal payments on capital lease
obligations................................... (722) (1,317) (2,319)
--------- --------- --------
Net cash provided by financing activities...... 18,422 34,792 48,485
--------- --------- --------
Net increase (decrease)in cash................. (5,758) (2,578) 9,394
Effect of exchange rate changes on cash........ -- 7 8
Cash and cash equivalents at beginning of
period........................................ 19,092 13,334 10,763
--------- --------- --------
Cash and cash equivalents at end of period..... $ 13,334 $ 10,763 $ 20,165
========= ========= ========
Noncash transactions and supplemental
disclosures
Capital lease obligations incurred to purchase
assets........................................ $ 2,665 $ 3,104 $ 1,256
Inventories reclassified to property and
equipment..................................... -- 171 --
Interest paid.................................. 450 596 1,653
Non cash conversion of warrants to preferred
stock......................................... -- -- 620
Deferred stock compensation.................... 1,881 -- 406
</TABLE>
See accompanying notes.
F-6
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Description of Business
Metawave Communications Corporation (the "Company") designs, develops,
manufactures and markets smart antenna systems for the wireless communications
industry. The Company believes that its spectrum management solutions,
consisting of smart antenna systems, applications software and engineering
services, enable wireless network operators to increase overall network
capacity, improve or maintain network quality and reduce network operating
costs and better manage network infrastructure. Using its proprietary
technologies, the Company has developed systems that address the capacity,
coverage and call quality problems faced by wireless network operators.
On September 2, 1998, the Company formed Metawave International
Communications Corporation ("MICC"), a wholly owned Delaware subsidiary. On
October 5,1998, the Company formed a Hong Kong subsidiary, Metawave
Communications (Asia) Limited, which is now owned by Metawave Communications
(Cayman Islands). On December 7, 1998, the Company formed Metawave
Communications (Cayman Islands), a wholly owned subsidiary of MICC. On April 2,
1999 Metawave Communications (Cayman Islands) formed a Taiwan subsidiary,
Metawave Communications Taiwan Co. Ltd.
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All intercompany accounts and transactions
have been eliminated in consolidation.
In 1998, the Company adopted a 52 week fiscal year ending on the Sunday
closest to December 31, 1999. The 1999 fiscal year ends on January 2, 2000,
with each of the fiscal quarters representing a 13-week period. For convenience
of presentation, all fiscal periods in these financial statements are treated
as ending on a calendar month end.
The Company experienced net losses of $44,328,000 and $41,942,000 for the
years ended December 31, 1998 and 1999, respectively. These losses are the
result of intense product development efforts and the costs associated with the
development of the Company's manufacturing and sales operations. Management
believes that the Company will experience substantial losses in 2000, even if
commercial sales of the Company's systems continue to grow. Management believes
that existing cash, unused credit facilities, and revenues from system sales,
will be sufficient to fund operations through 2000. If necessary, management
would delay and or curtail planned increases in costs and expenses to meet its
liquidity needs.
Foreign Currency Translation
The functional currency of the Company's foreign subsidiaries is the local
currency in the country in which the subsidiary is located. Assets and
liabilities denominated in foreign currencies are translated to U.S. dollars at
the exchange rate in effect on the balance sheet date. Revenues and expenses
are translated at the average rates of exchange prevailing during the year. The
translation adjustment resulting from this process is shown within accumulated
other comprehensive income (loss) as a component of stockholders' equity. Gains
and losses on foreign currency transactions are included in the consolidated
statement of operations as incurred. To date, gains and losses on foreign
currency transactions have not been significant.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial
F-7
<PAGE>
statements and accompanying notes. Accordingly, actual results may differ from
those estimates. The Company has used estimates in determining certain
provisions, including the allowance for doubtful accounts receivable, inventory
reserves, useful lives for property and equipment, and warranty accruals.
Revenue Recognition
The Company generates revenues through the sales of smart antenna systems
and related installation and optimization services. System revenues are
recognized when title to the system and risk of loss has been transferred to
the customer and all customer acceptance conditions, if any, have been
satisfied, and when collection is probable.
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1. Significant Accounting Policies--(continued)
Service revenues, generally for installation and optimization, are
recognized when the services have been performed and all customer acceptance
conditions, if any, have been satisfied. Revenues from maintenance contracts
are deferred and recognized ratably over the term of the agreement (which is
typically one year). Any billings in excess of revenues are classified as
deferred revenues and related systems are recorded as inventory.
Concentration of Credit Risk and Major Customers
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash equivalents and trade receivables.
The carrying value of financial instruments approximates market value.
The Company's customers are primarily wireless network operators in the
United States and certain international markets. As such, the Company's primary
market is made up of a limited number of customers operating within the same
industry, thereby subjecting the Company to business risks associated with
potential downturns of the industry. Export sales represented 26.0% of revenues
in the year ended December 31, 1999, 23.5% in 1998 and none in 1997. During
1998, one customer, Alltel Communications Inc., represented 88% of the
Company's trade accounts receivable. In 1999, two customers, AirTouch
Communications Inc. and Grupo Iusacell S.A. de C.V., represented 28% and 53% of
the Company's trade accounts receivable, respectively.
The Company performs ongoing credit evaluations of its customers' financial
condition and generally does not require collateral. The Company maintains
reserves, which to date have not been material, for potential credit losses,
and such losses have been within management's expectations.
Net Loss per Share
Basic net loss per share is computed by dividing net loss available to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted net loss per share reflects the potential dilution of
securities by including other common stock equivalents, including stock options
and redeemable convertible preferred stock, in the weighted average number of
common shares outstanding as if such shares were converted to common stock at
the time of issuance. Common stock equivalents, including stock options and
warrants, are excluded from the computation as their effect is anti-dilutive.
For the periods presented, there is no difference between the basic and diluted
net loss per share.
Pro forma loss per share (unaudited) is computed by dividing net loss by the
weighted average number of shares of common stock outstanding and the weighted
average number of shares of convertible and redeemable preferred stock
outstanding as if such shares were converted to common stock at the time of
issuance.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents. The Company
invests with various high-quality institutions and, in accordance with Company
policy, limits the amount of credit exposure to any one institution.
The Company accounts for its marketable securities under the provisions of
Statement of Financial Accounting Standards ("SFAS") Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." All
marketable securities are classified as available-for-sale and are carried at
fair value, with the unrealized gains and losses, net of tax, reported as a
separate component of stockholders' equity. As of December 31, 1998 and 1999
all marketable securities were cash equivalents and unrealized holdings gains
and losses were not significant.
F-8
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1. Significant Accounting Policies--(continued)
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of purchased parts, subassemblies and finished goods.
Property and Equipment
Property, equipment and leasehold improvements are recorded at cost.
Depreciation and amortization is provided using the straight-line method over
the estimated useful lives of the related assets for financial statement
purposes over estimated useful lives of two to seven years. Leasehold
improvements are amortized over the lesser of the lease term or the estimated
useful life.
Warranty
The Company generally provides a 12 month warranty, which may vary depending
upon specific contractual terms, on all systems and records a related provision
for estimated warranty costs at the date of sale.
Research and Development Costs
Research and development costs are expensed as incurred.
Advertising Costs
Advertising costs are charged to expense as incurred. Advertising expense of
$535,000, $692,000 and $1,387,000 was recorded for the years ended December 31,
1997, 1998 and 1999, respectively.
Stock-Based Compensation
The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB No. 25), and related
interpretations, in accounting for its employee stock options rather than the
alternative fair value accounting allowed by Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation (SFAS No. 123). APB
No. 25 provides that the compensation expense relative to the Company's
employee stock options is measured based on the intrinsic value of the stock
option. SFAS No. 123 requires companies that continue to follow APB No. 25 to
provide a pro forma disclosure of the impact of applying the fair value method
of SFAS No. 123 (refer to Note 6). The Company recognizes compensation expense
for options and warrants granted to non-employees in accordance with the
provisions of SFAS No. 123 and Emerging Issues Task Force Consensus 96-18.
Other Comprehensive Income
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income,
which establishes standards for reporting and display of comprehensive income
and its components in the financial statements. The other comprehensive income
(loss) which the Company currently reports is foreign currency translation
adjustments.
Business Segments
In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which establishes standards for reporting
information about operating segments in annual financial
F-9
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
1. Significant Accounting Policies--(continued)
statements. The Company operates in one segment as a provider of certain
wireless telecommunication equipment. SFAS No. 131 also establishes standards
for related disclosures about systems and services, geographic areas and major
customers. Information related to segment disclosures is contained in Notes 13
and 14.
New Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivatives and
Hedging Activities, which requires that all derivative instruments be recorded
on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designed as part of a hedge
transaction and, if it is, the type of hedge transaction. SFAS No. 133 is
effective for fiscal years beginning after June 15, 2000. The Company does not
anticipate that the adoption of this new standard will have a material effect
on earnings or the financial position of the Company, but continues to evaluate
the impact of SFAS No. 133.
2. Inventories
<TABLE>
<CAPTION>
December 31,
-------------
1998 1999
------ ------
(in
thousands)
<S> <C> <C>
Purchased parts.............................................. $4,922 $2,251
Subassemblies................................................ 2,332 1,144
Finished goods............................................... 675 754
------ ------
$7,929 $4,149
====== ======
</TABLE>
Purchased parts include purchased components and partially assembled units.
Subassemblies primarily represent components that are assembled and ready for
final configuration pending the detailed requirements for the specific
customer. Finished goods are units representing projects-in-process at customer
locations.
F-10
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. Property and Equipment
<TABLE>
<CAPTION>
December 31,
---------------
1998 1999
------- -------
(in thousands)
<S> <C> <C>
Equipment................................................. $ 9,384 $10,100
Furniture and fixtures.................................... 869 976
Leasehold improvements.................................... 920 910
------- -------
11,173 11,986
======= =======
</TABLE>
<TABLE>
<S> <C> <C>
Accumulated depreciation and amortization................. (4,818) (6,285)
------ -------
$6,355 $ 5,701
====== =======
</TABLE>
Included in property and equipment are assets acquired under capital lease
obligations with an original cost of $9,591,000 and $8,920,000 as of December
31, 1998 and 1999, respectively. Accumulated amortization on the leased assets
was $3,357,000 and $3,749,000 as of December 31, 1998 and 1999, respectively.
4. Notes Payable
<TABLE>
<CAPTION>
December 31,
------------
1998 1999
------- ----
(in
thousands)
<S> <C> <C>
Senior Secured Notes, repaid in April 1999........................ $31,704 $--
Note payable to U.S. Bank with monthly payments of $217, maturing
in July 2000, bearing interest at 11%............................ 4 --
Note payable to Comdisco, with monthly payments of $12,126,
maturing in February 2000, bearing interest at 8%, with a
residual payment of $50,000 due February 28, 2000, secured by the
underlying equipment............................................. 202 72
Notes payable to Chrysler Financial with monthly payments
aggregating $347, bearing interest at 10%........................ 15 11
------- ----
31,925 83
Less current portion.............................................. 31,838 75
------- ----
Long term portion................................................. $ 87 $ 8
======= ====
</TABLE>
Senior Secured Notes
On April 28, 1998, the Company issued $29.0 million aggregate principal
amount of Senior Secured Notes ("Senior Notes"), with a maturity date of April
28, 2000. The Senior Notes accrue interest at 13.75%, payable semiannually at
the option of the Company in either additional Senior Notes or cash. In October
1998, the Company issued additional Senior Notes of approximately $2.7 million
in connection with the related accrued interest.
In connection with the Senior Notes, the noteholders received warrants to
purchase 537,500 shares of Series D Preferred Stock at $.01 per share. The
Company recorded debt issuance fees of approximately $4.3 million related to
the estimated fair value of these warrants. The debt issuance fees were
amortized over the period during which the Senior Notes were outstanding.
F-11
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
4. Notes Payable--(continued)
On December 21, 1998, the Company issued an additional 83,202 warrants at
$0.01 per share to the Senior Noteholders in connection with certain
antidilution provisions. The fair value of these additional warrants was
estimated to be approximately $671,000 which has been amortized over the
remaining term of the Senior Notes.
In April 1999, the Company retired all of the principal and accrued interest
on the Senior Notes aggregating $33,124,570. In addition, the warrants issued
in connection with the Senior Notes were exercised by the noteholders for an
aggregate 620,702 shares of Series D Preferred Stock. Amortization of debt
issuance costs, which has been included in interest expense, aggregated
$4,170,000 in 1998 and $2,321,000 in 1999.
Line of Credit Agreement
The Company has a credit facility with a commercial bank. The facility
provides for a revolving credit line of $7.5 million to support working capital
with a $3.0 million sublimit for issuance of trade-related commercial and
standby letters of credit, and expires on March 14, 2000. Outstanding balances
on the credit line bear interest at the bank's prime rate (8.5% as of December
31, 1998 and 1999), and are secured by the Company's accounts receivable. At
December 31, 1998 and 1999, $2.5 million was outstanding related to the
issuance of a standby letter of credit. The Company is required to comply with
certain covenants set forth in the line of credit agreement. The Company is
currently in compliance with these covenants.
5. Convertible and Redeemable Preferred Stock
In July 1995, the Company issued 5,500,000 shares of Series A Preferred
Stock ("Series A") through a private offering. Proceeds from the financing
amounted to $5,500,000, or $1.00 per share.
In May 1996, the Company issued 2,711,113 shares of Series B Preferred Stock
("Series B") through a private offering. Proceeds from the financing amounted
to $9,150,006. An additional 29,630 shares of Series B were issued in November
1996 with proceeds of $100,002, or $3.375 per share.
In October and November 1996, the Company issued 2,491,880 shares of Series
C Preferred Stock ("Series C") through a private offering. Proceeds from the
financing amounted to $15,349,980, or $6.16 per share.
In August 1997, the Company issued 2,397,727 shares of Series D Preferred
Stock ("Series D") through a private offering. Proceeds from the financing
amounted to $19,181,816, or $8.00 per share.
In December 1998, the Company issued 898,738 shares of Series E Preferred
Stock ("Series E") through a private offering. Proceeds from the initial round
of Series E financing amounted to $7,189,904, or $8.00.
In January 1999, the Company issued 726,264 additional shares of Series E at
$8.00 per share with gross proceeds of $5,810,112. In April and June 1999, the
Company issued 15,676,153 additional shares of Series E at $5.00 per share with
gross proceeds of $78,380,765. Upon issuance of the Series E at $5.00 per share
in April, the existing Series E shareholders were issued 974,996 additional
Series E shares effectively, adjusting the price per share from $8.00 to $5.00,
as a result of certain antidilution provisions.
Holders of Series A, B, C, D and E have preferential rights to dividends
($.08, $.27, $.49, $.64 and $.40 per share per annum, respectively) when and if
declared by the Board of Directors. Dividends are not cumulative until January
1, 2002. The holders are entitled to the number of votes equal to the number of
shares of common stock into which the preferred stock could be converted. Each
share of Series A and B is convertible into one share of common stock at the
option of the holder. In July 1999, in accordance with
F-12
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
5. Convertible and Redeemable Preferred Stock--(continued)
certain adjustment provisions of the Amended and Restated Certificate of
Incorporation, the Series C, D, and E conversion rate to common stock was
amended to 1.30786, 1.44144 and 1.42857, respectively. Each share of preferred
stock automatically converts to common stock upon the vote or written consent
of the holders of the majority of the shares of Series A, B, C, D and E
originally issued or upon the closing of an initial public offering of the
Company's common stock at a price of $10 per share from which the aggregate
proceeds are not less than $40 million. The conversion rate is subject to
adjustment, as provided by the Company's Amended and Restated Certificate of
Incorporation.
In the event of liquidation, the holders of Series A, B, C, D and E have
preferential rights to liquidation payments of $1.00, $3.375, $6.16, $8.00 and
$5.00 per share, respectively, plus any declared but unpaid dividends. The
preferred stock has redemption rights for a six-month period beginning on
December 31, 2002 upon the election of at least 50% of the holders. The
redemption price is equal to the original purchase price plus any declared but
unpaid dividends.
Convertible and Redeemable Preferred Stock Warrants
In connection with certain leasing agreements, the Company has issued
warrants providing for the purchase of 48,750 shares and 16,666 shares of
Series A at an exercise price of $2.1875 per share, subject to adjustment as
provided in the Warrant Agreements. The Warrant Agreements expire after seven
years or 18 months to three years from the effective date of an initial public
offering, whichever comes later. During 1996, the Company entered into an
additional lease line to the Master Lease Agreement. The new lease included the
issuance of a warrant to purchase 19,999 shares of Series B with an exercise
price of $4.77. During 1997, the Company entered into an additional lease line
to this Master Lease Agreement. The new lease included the issuance of a
warrant to purchase 34,090 shares of Series C with an exercise price of $6.16.
The value of the warrants, determined using the Black-Scholes valuation model,
was recorded as additional debt issuance cost and is being amortized using the
interest method over the term of the related Master Lease Agreement. In
connection with lease agreements entered into 1998, the Company issued warrants
to purchase 4,375 shares of Series D Preferred Stock with an exercise price of
$8.00.
6. Stockholders' Equity
Initial Public Offering
In February 2000, the Board of Directors authorized management to file a
registration statement with the Securities and Exchange Commission to permit
the Company to offer up to 12,000,000 shares of common stock to the public. In
February 2000, the Board of Directors authorized an increase in the
capitalization of the Company to 160,000,000 authorized shares with 150,000,000
shares of common stock, par value $.0001 per share and 10,000,000 shares
designated as preferred stock, par value $.0001 per share upon the effective
date of the Company's public offering. If the offering is consummated under
terms presently anticipated, all outstanding shares of redeemable convertible
preferred stock will convert into 41,959,418 shares of common stock. Unaudited
pro forma stockholders' equity reflects the assumed conversion of the
redeemable convertible preferred stock outstanding at December 31, 1999 into
common stock.
Stock Repurchases
On January 10, 1998, the Company repurchased 137,775 shares of common stock
from one of its founders for $501 pursuant to the terms of a stock repurchase
agreement with the founder. In addition, the Company caused one of its founders
to surrender 100,000 shares of common stock in 1996 for no consideration.
In December 1998, the Company also repurchased 625 shares from one of its
employees for $ 5,000.
F-13
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. Stockholders' Equity--(continued)
Stock Option Plans
The Company's 1995 Stock Option Plan (the "1995 Plan") provides for the
granting of incentive stock options and nonqualified stock options to
employees, officers, directors and consultants. Options under the 1995 Plan
have been granted at fair market value on the date of grant and expire ten
years after the date of the grant. Options granted under the 1995 Plan
generally become exercisable at the rate of 25% of the total number of shares
subject to the option after the first anniversary following the date of grant,
with 2.083% vesting monthly thereafter, with all shares becoming fully vested
on the fourth anniversary date of the date of grant. The Company has reserved
4,150,000 shares of common stock for issuance under the 1995 Plan.
In May 1998, the Board of Directors approved the 1998 Stock Option Plan (the
"1998 Plan"). Options granted under the 1998 Plan generally vest on the same
terms as the 1995 Plan and are exercisable for a period of ten years. On the
first trading day of each of the five calendar years beginning in 1999 and
ending in 2003, the number of shares reserved for issuance under the 1998 Plan
automatically increase by an amount equal to three percent of the Company's
outstanding common stock, up to a maximum of 1,000,000 shares in any calendar
year, or such lower amount as approved by the Board of Directors. The Company
initially reserved 850,000 shares under the 1998 Plan, and was increased to
2,645,053 shares in April 1999 by the Board of Directors.
In June 1999, the Board of Directors approved the adoption of the Employee
Option Incentive Program (the "Incentive Program") under the 1998 Plan. Options
granted under the Incentive Program vest five years from the date of grant,
however, vesting shall accelerate for 50% of such options upon the effective
date of an initial public offering ("IPO") of the Company's shares, and the
remaining 50% of the options shall vest upon the twelve-month anniversary of
the effective date of the IPO. Options under the Incentive Program were granted
at estimated fair value on the date of grant and expire ten years after the
date of the grant. The Board of Directors issued 505,000 shares under this
program.
In February 2000, the Board approved the 2000 Employee Stock Purchase Plan
(ESSP), subject to shareholder approval. The Company will implement the ESSP
upon the effective date of the Registration Statement on Form S-1 for the
initial public offering and continue until April 30, 2020. The ESSP, subject to
certain limitations, permits eligible employees of the Company to purchase
common stock through payroll deductions of up to 15% of their compensation. The
Company has authorized the issuance of up to 350,000 shares of common stock
under the ESSP, plus an automatic annual increase, to be added on the first day
of the fiscal year beginning in 2001, equal to the lesser of 400,000 shares, 1%
of the common stock outstanding on the last day of the preceding fiscal year,
or a lesser number of shares as determined by the Board of Directors.
The 1998 Directors' Stock Option Plan (Directors' Plan) was adopted by the
Board of Directors in February 1998 and approved by the stockholders on April
20, 1998. A total of 300,000 shares of common stock have been reserved for
issuance under the Directors' Plan. The Directors' Plan provides for
discretionary grants of nonstatutory stock options to nonemployee directors of
the Company. Following the effectiveness of an initial public offering of the
Company's common stock, the Plan provides automatic formula based grants to the
nonemployee directors. In February 2000, the Board of Directors amended the
Directors' Plan, subject to shareholders approval. The amended plan becomes
effective upon the effectiveness of the initial public offering. An automatic
grant is made to each non-employee director who joins the Board after the
closing of the initial public offering for an option to purchase 25,000 shares
of common stock. Additionally, at each annual shareholder meeting, each non-
employee director is granted an additional option to purchase 10,000 shares of
common stock provided that the director continues serving on the Board and has
served as a
F-14
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. Stockholders' Equity--(continued)
director six months prior to grant date. The amended Directors' Plan increases
the issuance of options under the plan to 700,000. Initial options granted
under the directors' plan to new nonemployee directors following the IPO will
vest as to 25% of the shares underlying the option on the first anniversary of
the date of the option grant and as to 1/48th of the shares each month after
the first anniversary so that these options will be fully vested on the fourth
anniversary of the grant date. Options granted to our nonemployee directors at
the time of each annual stockholders meeting following this offering will vest
as to 1/36th of the shares underlying the option so that these options will be
fully vested on the third anniversary of the grant date. The exercise price of
all stock options granted under the Directors' Plan shall be equal to the
estimated fair value of a share of the Company's common stock on the date of
grant of the option. Options granted under the Directors' Plan have a term of
ten years.
Deferred stock compensation is calculated as the difference between the
exercise price and the deemed fair value of the Company's common stock at the
date of grant. The deferred stock compensation is amortized over the vesting
period of the related options. In 1997 and 1999, deferred stock compensation of
$1,881,282 and $406,224 was recorded for options granted under the various
stock option plans. Amortized stock compensation of $676,000, $651,000 and
$472,000 was recorded during each of the years ended December 31, 1997, 1998
and 1999, respectively.
In January and February 2000, the Company granted 743,689 additional stock
options for common stock. In connection with these grants, the Company has
recorded approximately, $1,319,000 of additional deferred stock compensation in
the first quarter of year 2000.
Had the stock compensation expense for the Company's stock option plan been
determined based on the estimated fair value using the minimum value option
pricing model at the date of grant, the Company's net loss would have been
increased to these pro forma amounts (in thousands):
<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Net loss:
As reported.................................. $(22,104) $(44,328) $(41,967)
Pro forma.................................... (22,109) (44,728) (42,968)
Basic and diluted net loss per share:
As reported.................................. (11.59) (14.59) (12.52)
Pro forma.................................... (11.59) (14.72) (12.82)
</TABLE>
The fair value for these options was estimated at the date of grant using
minimum value option pricing models that take into account: (1) the estimated
fair value of the common stock at the grant date, (2) the exercise prices, (3)
a one-year expected life beyond the vest date, (4) no dividends, and (5) a
risk-free interest rate of between 5.42% and 6.43% during 1996 through 1999
over the expected life of the options. Compensation expense recognized in
providing pro forma disclosures may not be representative of the effects on pro
forma net income for future years because the amounts above include only the
amortization for the fair value of 1997, 1998 and 1999 grants.
F-15
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. Stockholders' Equity--(continued)
A summary of the Company's stock option activity and related information
follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1998 December 31, 1999
-------------------- --------------------- ---------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
--------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of period.............. 1,942,854 $ .24 3,148,794 $.79 3,797,994 $3.04
Granted at deemed fair
value................ 671,983 1.95 2,217,820 8.68 1,970,405 4.12
Granted at above
deemed fair value.... -- 25,000 4.50
Granted at below
deemed fair value.... 1,359,285 .68 -- -- 91,700 3.50
Canceled.............. (543,236) .29 (1,205,971) 8.37 (1,139,135) 4.35
Exercised............. (282,092) .27 (362,649) .29 (418,022) .33
--------- ---------- ----------
Outstanding at end of
period................. 3,148,794 .79 3,797,994 3.04 4,327,942 3.50
========= ========== ==========
Exercisable at end of
period................. 2,140,002 .97 3,320,932 3.42 4,255,854 3.55
========= ========== ==========
Weighted-average fair
value of options
granted during the
period:
Granted at value.... 1.95 8.56 8.47
Granted at below
value.............. 1.89 -- --
</TABLE>
The following information is provided for options outstanding and
exercisable at December 31, 1999:
<TABLE>
<CAPTION>
Outstanding Exercisable
----------------------------------------- -------------------------
Average
Weighted- Remaining Weighted-
Range of Average Contractual Average
Exercise Number of Exercise Life Number of Exercise
Price Options Price (Years) Options Price
- ---------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
$0.10-0.35 342,616 $0.17 6.12 321,662 $0.16
0.62-1.20 1,166,543 0.64 7.48 1,115,409 0.64
2.00-3.36 842,925 2.82 9.02 842,925 2.82
3.50-4.50 982,762 4.41 8.96 982,762 4.41
5.00-8.00 993,096 7.69 8.06 993,096 7.69
--------- ---------
4,327,942 3.50 8.47 4,255,854 3.55
========= =========
</TABLE>
Stock options available for future grants under the Company's stock option
plans total 1,704,348 as of December 31, 1999.
Common Stock Warrants
During 1999, the Company entered into an additional leasing agreement. The
new lease included the issuance of a warrant to purchase 31,250 shares of
common stock with an exercise price of $4.50. The value of the warrants,
determined using the Black-Scholes valuation model, was recorded as additional
interest expense over the term of the lease agreement.
F-16
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. Stockholders' Equity--(continued)
Common Shares Reserved for Future Issuance
The Company has reserved shares of common stock as follows:
<TABLE>
<CAPTION>
December 31,
1999
------------
<S> <C>
Stock options outstanding..................................... 4,327,942
Stock option available for future grant....................... 2,767,111
----------
7,095,053
Conversion of:
Series A Preferred Stock.................................... 5,500,000
Series B Preferred Stock.................................... 2,740,743
Series C Preferred Stock.................................... 3,259,030
Series D Preferred Stock.................................... 4,350,884
Series E Preferred Stock.................................... 26,108,761
----------
41,959,418
Convertible redeemable preferred stock warrants............... 136,306
Common stock warrants......................................... 31,250
----------
49,222,027
==========
</TABLE>
7. Income Taxes
As of December 31, 1999, the Company had federal net operating loss
carryforwards (NOL) of approximately $107.5 million and research and
development tax credit carryforwards of approximately $1.9 million. The federal
net operating loss carryforwards will begin to expire in the year 2009 if not
utilized. As a result of changes in ownership coincident with the recent equity
financing, the utilization of a portion of the net operating loss carryforward
will be limited, pursuant to Section 382 of the Internal Revenue Code of 1986,
as amended. Approximately $83.1 million of the NOL is limited to approximately
$4.0 million per year. The remaining NOL is not subject to limitation as of
December 31, 1999.
F-17
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7. Income Taxes--(continued)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The Company has
recognized a valuation allowance equal to the deferred tax assets due to the
uncertainty of realizing the benefits of the assets. Significant components of
the Company's deferred tax assets are as follows:
<TABLE>
<CAPTION>
December 31,
------------------
1998 1999
-------- --------
(in thousands)
<S> <C> <C>
Deferred tax liabilities:
Prepaid assets........................................ $ 47 $ 57
Deferred tax assets:
Net operating loss carryforwards.................... 22,664 36,146
Research and development tax credit carryforwards... -- 1,872
Accrued compensation................................ 380 335
Fixed assets........................................ 90 175
Accrued expenses and reserves....................... 1,146 2,195
Deferred revenues................................... -- 564
Stock compensation.................................. 80 82
-------- --------
Total deferred tax assets............................. 24,360 41,369
-------- --------
24,313 41,312
Less valuation reserve................................ (24,313) (41,312)
-------- --------
Net deferred taxes.................................... $ -- $ --
======== ========
</TABLE>
8. Commitments
The Company leases its facilities under noncancelable operating lease
agreements that expire on various dates through 2005. The Company leases
certain equipment under noncancelable capital leases that expire on various
dates through 2002.
In June 1998, the Company moved into a new building. The lease on this
building expires on May 31, 2005. The Company, at its option, may extend the
term of this lease for two successive periods of five years each. The option
must be elected 12 months prior to the expiration of the initial lease term. In
connection with this arrangement, the Company has issued letters of credit to
the landlord aggregating $2.5 million.
F-18
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. Commitments--(continued)
Following is a summary of future minimum payments under capital leases and
operating leases, including the principal facility, that have initial or
remaining noncancelable lease terms in excess of one year at December 31, 1999
(in thousands):
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------- ---------
<S> <C> <C>
2000..................................................... $3,015 $ 2,001
2001..................................................... 2,238 2,089
2002..................................................... 620 1,969
2003..................................................... -- 2,108
2004 and thereafter...................................... -- 2,867
------ -------
5,873 $11,034
=======
Less interest............................................ 645
------
5,228
Less current portion..................................... 2,322
$2,906
======
</TABLE>
Rental expense for operating leases was $667,939, $1,304,007 and $2,041,328
for the years ended December 31, 1997, 1998 and 1999, respectively.
The Company entered into agreements with certain leasing companies to
provide up to $3.0 million in 1997, $3.5 million in December 31, 1998 and $3.0
million at December 31, 1999 of financing to allow the Company to lease
additional equipment. Pursuant to these agreements, equipment leases would
generally have a term of three years and an implicit interest rate of 7.25% in
1997, 14.5% at December 31, 1998 and 12.25% at December 31, 1999. The leases
are secured by the underlying equipment. In connection with these lease
agreements, warrants were issued to purchase preferred stock (see Note 5).
9. Net Loss Per Share
Basic and diluted loss per share is calculated using the average number of
shares of common stock outstanding. The effect of stock options, warrants and
convertible and redeemable preferred stock have not been included in the
calculation of diluted net loss per share as their effect is antidilutive. Pro
forma basic and diluted loss per share is computed on the basis of the average
number of shares of common stock outstanding plus the effect of convertible
preferred shares as if such shares were converted to common stock at the time
of issuance as follows:
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------
1997 1998 1999
-------- -------- --------
(In thousands, except per
share data)
<S> <C> <C> <C>
Net loss (A)................................. $(22,104) $(44,328) $(41,967)
======== ======== ========
Weighted average outstanding:
Common stock (B)........................... 1,907 3,039 3,352
Convertible and redeemable preferred
stock..................................... 8,169 13,205 31,303
-------- -------- --------
Pro forma weighted average shares outstanding
(C) ........................................ 10,076 16,243 34,655
======== ======== ========
Basic and diluted net loss per share (A/B)... $ (11.59) $ (14.59) $ (12.52)
======== ======== ========
Pro forma net loss per share (A/C)........... $ (2.19) $ (2.73) $ (1.21)
======== ======== ========
</TABLE>
F-19
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
10. Retirement Plans
The Company has a salary deferral 401(k) plan for its employees. The plan
allows employees to contribute a percentage of their pretax earnings annually,
subject to limitations imposed by the Internal Revenue Service. The plan also
allows the Company to make a matching contribution, subject to certain
limitations. To date, the Company has made no contributions to the plan.
11. Related-Party Transactions
In October 1997, the Board authorized a secured loan of $162,500 and an
unsecured loan of $75,000 to the Company's former Chief Financial Officer
("CFO"). Both loans bear interest at 5.5%. The secured loan was payable in full
on October 28, 2002, or earlier, based upon certain events specified in the
agreement. Under the original terms of the unsecured loan, $50,000 of the
principal amount of the loan was to be forgiven over a three-year period
provided that the CFO remained employed with the Company, with the remaining
balance of $25,000 plus interest due on the earlier of October 22, 2000 or the
date on which his employment terminated. In accordance with the loan agreement,
a total of $16,665 was forgiven in 1998 and was expensed as compensation.
The CFO resigned from the Company in January 1999. The Board authorized an
extension of due dates on the secured loan of $162,500 and the unsecured loan
and accrued interest balance of $62,460 to the earlier of January 30, 2000, or
190 days after an IPO of the Company. The Board authorized an amendment to the
Security Agreement securing the obligations of the former CFO under the secured
and unsecured promissory notes that provide for an acceleration of the notes
based upon certain events specified in the Agreement. These notes were repaid
in full in February 2000.
Powerwave Technologies, Inc. ("Powerwave"), whose chief executive officer is
a director of the Company, is the Company's sole supplier of linear power
amplifiers, a component in the Company's systems. Pursuant to a manufacturing
agreement with Powerwave (which agreement was approved by a majority of the
Company's disinterested directors), Powerwave will manufacture and sell to the
Company 100% of the Company's requirements for linear power amplifiers that
Powerwave manufactures. The initial term of the agreement is 18 months with an
automatic 18-month extension, unless either party otherwise terminates the
agreement. The Company's purchases from Powerwave totaled $2,203,217,
$8,047,401 and $6,427,026 in 1997, 1998, and 1999, respectively.
In December 1997, the Company determined that it would discontinue the
Company's Network Services division. In March 1998, the Company sold the assets
of this division for an aggregate purchase price of $78,000 to Advanced
Wireless Engineering ("AWE"), a company that was majority-owned by an
individual who at that time was the Company's Vice President, Network Services.
This individual resigned from the Company in March 1998 to run AWE on a full-
time basis.
12. Revenues and Operations
In December 1997, the Company determined that it would discontinue the
Network Services division. Accordingly, the carrying value of these fixed
assets has been adjusted to net realizable value, thereby resulting in an
impairment loss of $200,000, which is included in other expenses in the
accompanying 1997 Statement of Operations. These assets were sold in March
1998. Included in revenues for the year ended December 31, 1997 and 1998 were
revenues of $1,450,000 and $200,000 respectively, relating to the Network
Services division and the cost of revenues were $1,728,000 and $242,000,
respectively.
In June 1998, in connection with certain patent licenses, the Company paid
$250,000 in cash and issued 11,000 common stock warrants for an aggregate
amount of $360,000. The common stock warrants had an
F-20
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
12. Revenues and Operations--(continued)
exercise price of $.01 per share and were immediately exercised. The value of
these warrants, using the Black-Scholes valuation model, of $110,000 and cash
of $250,000 was recorded as research and development expense in 1998.
Revenues from customers representing more than 10% of annual sales in each
year were as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
AirTouch Communications, Inc....................... 27.0% -- --
Alltel Communications Inc. ........................ -- 61.8% 44.8%
Cox Communications Inc. ........................... 63.0% -- --
GTE Wireless....................................... -- 13.4% --
Grupo Iusacell S.A. de C.V. ....................... -- -- 26.0%
OJSC St. Petersburg Telecom........................ -- 13.4% --
Southwestco Wireless............................... -- -- 20.9%
Telfonica Servicios Moveles S.A. .................. -- 10.1% --
</TABLE>
13. International Operations
Metawave sells its smart antenna systems and services throughout the world,
and operates in a single industry segment. While certain expenses for sales and
marketing activities are incurred in various geographical regions,
substantially all of Metawave's assets are located and the majority of its
operating expenses are incurred at its corporate headquarters. Revenue
information by geographic region is the only segment information presented as
follows:
<TABLE>
<CAPTION>
Year Ended December
31,
----------------------
1997 1998 1999
------ ------- -------
(in thousands)
<S> <C> <C> <C>
United States....................................... $1,450 $12,233 $16,717
Rest of World....................................... -- 3,758 5,879
------ ------- -------
Total............................................... $1,450 $15,991 $22,596
====== ======= =======
</TABLE>
F-21
<PAGE>
Map of the world depicting customer deployments by commercial sales and field
trials
<PAGE>
[METAWAVE LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of Common Stock being registered. All amounts are estimates except the SEC
registration fee, the NASD filing fee and the Nasdaq National Market Listing
Fee.
<TABLE>
<CAPTION>
Amount
----------
To Be Paid
----------
<S> <C>
SEC Registration Fee............................................. $ 22,770
NASD Filing Fee.................................................. 9,125
Nasdaq National Market Listing Fee............................... 1,000
Printing Fees and Expenses....................................... 200,000
Legal Fees and Expenses.......................................... 300,000
Accounting Fees and Expenses..................................... 200,000
Blue Sky Fees and Expenses....................................... 5,000
Transfer Agent and Registrar Fees................................ 10,000
Miscellaneous.................................................... 252,105
----------
Total.......................................................... $1,000,000
==========
</TABLE>
Item 15. Recent Sales of Unregistered Securities
(a) Since January 1, 1997, we have issued and sold (without payment of any
selling commission to any person except as noted below) the following
unregistered securities (as adjusted to reflect the automatic conversion of our
outstanding preferred stock into common stock upon completion of this
offering):
(1) In August 1997, we issued and sold shares of Series D preferred
stock convertible into an aggregate of 3,456,180 shares of common stock to
22 investors for an aggregate purchase price of $19,181,865.
(2) In April and June 1999, we issued and sold shares of Series E
Preferred Stock convertible into an aggregate of 26,108,761 shares of
common stock to 25 investors for an aggregate purchase price of
$91,380,781. We paid an aggregate of $1,650,322.17 in commissions in
connection with the sale of Series E preferred stock.
(3) We issued to an equipment lease provider in June 1997, a warrant to
purchase shares of Series C preferred stock convertible into 44,584 shares
of common stock for an aggregate purchase price of $209,994.
(4) In April 1998, we issued an aggregate principal amount of $29.0
million 13.75% Senior Secured Bridge Notes due April 28, 2000 to certain
institutional investors. In connection with the issuance of such notes, we
issued warrants to purchase shares of Series D preferred stock convertible
into 542,335 shares of common stock for an aggregate purchase price of
$5,375. We paid an aggregate of $1,450,000 in commissions in connection
with the issuance of the Senior Secured Bridge Notes.
(5) In May 1998, we issued to an equipment lease provider a warrant to
purchase shares of Series D preferred stock convertible into 6,306 shares
of common stock for an aggregate purchase price of $35,000.
(6) In June 1998, in connection with certain patent licenses, we issued
the licensor a warrant to purchase 7,700 shares of common stock for an
aggregate purchase price of $110. Such licensor subsequently exercised the
warrant and purchased 7,700 shares of common stock for an aggregate
purchase price of $110.
(7) In May 1999, we issued to an equipment lease provider a warrant to
purchase 31,250 shares of common stock for an aggregate purchase price of
$140,625.
II-1
<PAGE>
(8) As of December 31, 1999, an aggregate of 1,062,763 shares of common
stock had been issued upon exercise of options under our stock option
plans.
(b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).
The issuances described in Items 15(a)(1) through 15(a)(7) were deemed to be
exempt from registration under the Securities Act in reliance upon Section 4(2)
thereof as transactions by an issuer not involving any public offering. The
recipients of securities in each such transaction represented their intentions
to acquire the securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate legends where
affixed to the securities issued in such transactions. All recipients had
adequate access, through their relationships with us, to information about the
Registrant. The issuances described in Items 15(a)(8) were deemed to be exempt
from registration under the Securities Act in reliance upon Rule 701
promulgated thereunder in that they were offered and sold either pursuant to
written compensatory benefit plans or pursuant to a written contract relating
to compensation, as provided by Rule 701. In addition, such issuances were
deemed to be exempt from registration under Section 4(2) of the Securities Act
as transactions by an issuer not involving any public offering.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<C> <S>
1.1* Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant.
3.2 Bylaws of the Registrant.
3.3* Form of Amended and Restated Certificate of Incorporation of the
Registrant, to be effected prior to the effective date of the
offering.
3.4* Form of Amended and Restated Certificate of Incorporation of the
Registrant, to be filed and effective upon completion of this
offering.
5.1* Opinion of Venture Law Group, A Professional Corporation.
10.1 Form of Indemnification Agreement.
10.2* 1995 Stock Option Plan, as amended.
10.3* 1998 Stock Option Plan, as amended.
10.4 2000 Employee Stock Purchase Plan.
10.5* 1998 Amended and Restated Director Stock Option Plan.
10.6 Series E Preferred Stock Purchase Agreement dated April 28, 1999.
10.7 Fifth Amended and Restated Investors Rights Agreement dated April 28,
1999 by and among the Registrant and certain holders of the
Registrant's capital stock.
10.8+ Lease for Willow Creek Corporate Center dated September 29, 1997 by
and between the Registrant and Carr America Realty Corporation.
10.9+ Purchase Agreement dated March 4, 1998 by and between the Registrant
and ALLTEL Supply Inc.
10.10 Loan Agreement dated October 14, 1997 by and between Registrant and
Imperial Bank, and amendments thereto.
10.11+ Manufacturing Agreement between the Registrant and Powerwave
Technologies, Inc. dated as of September 3, 1998.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.12+ Purchase Agreement between the Registrant and GTE Wireless
Incorporated dated as of September 8, 1998.
10.13+ Technical Cooperation Agreement between the Registrant and Shanghai
Telecom dated as of December 17, 1998.
10.14+* Purchase Agreement between the Registrant and Southwestco Wireless,
L.P. dated as of February 24, 1999.
10.15+ Value Added Reseller Agreement between the Registrant and CommVerge
Solutions (Asia), Inc. dated as of December 4, 1999.
10.16+ Distribution Agreement between the Registrant and SeeNode Co., Ltd.
dated as of February 10, 2000.
10.17+ Purchase Agreement between the Registrant and AirTouch Support
Services, Inc. dated as of January 1, 2000.
10.18+* Purchase Agreement between the Registrant and Grupo IUSACELL S.A.,
de C.V. dated as of December 17, 1999.
10.19+ Purchase Agreement between the Registrant and Cellco, L.P., dba Bell
Atlantic dated as of December 20, 1999.
10.20 Employment Agreement with Mr. Douglas O. Reudink dated July 7, 1995.
10.21 Employment Agreement with Mr. Robert H. Hunsberger dated July 27,
1997.
10.22 Employment Agreement with Mr. Andy Merrill dated July 12, 1999.
10.23 Employment Agreement with Mr. Richard Henderson dated October 29,
1997.
10.24 Employment Agreement with Mr. Victor K. Liang dated July 23, 1998.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-4).
27.1 Financial Data Schedule.
99.1 Report of Ernst & Young LLP, Independent Auditors on Financial
Statement Schedule.
99.2 Financial Statement Schedule.
</TABLE>
- --------
*To be filed by subsequent amendment.
+ Certain information in these exhibits has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a confidential
treatment request under 17 C.F.R. Sections 200.80(b)(4), 200.83 and 230.406.
(b) Financial Statement Schedules
The following financial statement schedule is filed herewith:
Schedule II--Valuation and Qualifying Accounts (see Exhibit 99.2).
Other financial statement schedules are omitted because the information
called for is not required or is shown either in the financial statements or
the notes thereto.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Redmond, State of Washington, on February 16, 2000.
METAWAVE COMMUNICATIONS CORPORATION
/s/ Robert H. Hunsberger
By: _________________________________
Robert H. Hunsberger
President and Chief Executive
Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints, jointly and severally, Robert H.
Hunsberger and John R. Schaller, and each of them, as his or her attorneys-in-
fact, each with full power of substitution, for him or her in any and all
capacities, to sign any and all amendments to this Registration Statement
(including post-effective amendments), and any and all Registration Statements
filed pursuant to Rule 462 under the Securities Act of 1933, as amended, in
connection with or related to this Offering contemplated by this Registration
Statement and its amendments, if any, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof. This Power of Attorney may be signed in several counterparts.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert H. Hunsberger President, Chief Executive February 16, 2000
_________________________________ Officer and Director (Principal
Robert H. Hunsberger Executive Officer)
/s/ John R. Schaller Controller (Principal Financial February 16, 2000
_________________________________ and Accounting Officer)
John R. Schaller
/s/ Douglas O. Reudink Chief Technical Officer and February 16, 2000
_________________________________ Chairman of the Board of
Douglas O. Reudink Directors
/s/ Bandel L. Carano Director February 16, 2000
_________________________________
Bandel L. Carano
/s/ Bruce C. Edwards Director February 16, 2000
_________________________________
Bruce C. Edwards
/s/ David R. Hathaway Director February 16, 2000
_________________________________
David R. Hathaway
/s/ Scot B. Jarvis Director February 16, 2000
_________________________________
Scot B. Jarvis
/s/ Jennifer Gill Roberts Director February 16, 2000
_________________________________
Jennifer Gill Roberts
/s/ David A. Twyver Director February 16, 2000
_________________________________
David A. Twyver
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
1.1* Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant.
3.2 Bylaws of the Registrant.
3.3* Form of Amended and Restated Certificate of Incorporation of the
Registrant, to be effected prior to the effective date of the
offering.
3.4* Form of Amended and Restated Certificate of Incorporation of the
Registrant, to be filed and effective upon completion of this
offering.
5.1* Opinion of Venture Law Group, A Professional Corporation.
10.1 Form of Indemnification Agreement.
10.2* 1995 Stock Option Plan, as amended.
10.3* 1998 Stock Option Plan, as amended.
10.4 2000 Employee Stock Purchase Plan.
10.5* 1998 Amended and Restated Director Stock Option Plan.
10.6 Series E Preferred Stock Purchase Agreement dated April 28, 1999.
10.7 Fifth Amended and Restated Investors Rights Agreement dated April
28, 1999 by and among the Registrant and certain holders of the
Registrant's capital stock.
10.8+ Lease for Willow Creek Corporate Center dated September 29, 1997 by
and between the Registrant and Carr America Realty Corporation.
10.9+ Purchase Agreement dated March 4, 1998 by and between the Registrant
and ALLTEL Supply Inc.
10.10 Loan Agreement dated October 14, 1997 by and between Registrant and
Imperial Bank, and amendments thereto.
10.11+ Manufacturing Agreement between the Registrant and Powerwave
Technologies, Inc. dated as of September 3, 1998.
10.12+ Purchase Agreement between the Registrant and GTE Wireless
Incorporated dated as of September 8, 1998.
10.13+ Technical Cooperation Agreement between the Registrant and Shanghai
Telecom dated as of December 17, 1998.
10.14+* Purchase Agreement between the Registrant and Southwestco Wireless,
L.P. dated as of February 24, 1999.
10.15+ Value Added Reseller Agreement between the Registrant and CommVerge
Solutions (Asia), Inc. dated as of December 4, 1999.
10.16+ Distribution Agreement between the Registrant and SeeNode Co., Ltd.
dated as of February 10, 2000.
10.17+ Purchase Agreement between the Registrant and AirTouch Support
Services, Inc. dated as of January 1, 2000.
10.18+ Purchase Agreement between the Registrant and Grupo IUSACELL S.A.,
de C.V. dated as of December 17, 1999.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.19+ Purchase Agreement between the Registrant and Cellco, L.P., dba Bell
Atlantic dated as of December 20, 1999.
10.20 Employment Agreement with Mr. Douglas O. Reudink dated July 7, 1995.
10.21 Employment Agreement with Mr. Robert H. Hunsberger dated July 27,
1997.
10.22 Employment Agreement with Mr. Andy Merrill dated July 12, 1999.
10.23 Employment Agreement with Mr. Richard Henderson dated October 29,
1997.
10.24 Employment Agreement with Mr. Victor K. Liang dated July 23, 1998.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-4).
27.1 Financial Data Schedule.
99.1 Report of Ernst & Young LLP, Independent Auditors on Financial
Statement Schedule.
99.2 Financial Statement Schedule.
</TABLE>
- --------
*To be filed by subsequent amendment.
+ Certain information in these exhibits has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a confidential
treatment request under 17 C.F.R. Sections 200.80(b)(4), 200.83 and 230.406.
<PAGE>
EXHIBIT 3.1
FIFTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
METAWAVE COMMUNICATIONS CORPORATION,
a Delaware Corporation
The undersigned, Larry Culver, hereby certifies that:
1. He is the duly elected Senior Vice President and Chief Financial
Officer of Metawave Communications Corporation, a Delaware corporation.
2. The Certificate of Incorporation of this corporation was originally
filed with the Secretary of State of Delaware on July 11, 1995.
3. The Certificate of Incorporation of this corporation shall be amended
and restated to read in full as follows:
ARTICLE I
The name of this Corporation is Metawave Communications Corporation.
ARTICLE II
The address of the registered office of this Corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
A. Classes of Stock. This Corporation is authorized to issue two classes
----------------
of stock to be designated, respectively, "Common Stock" and "Preferred Stock"
The total number of shares that this Corporation is authorized to issue is
eighty-seven million (87,000,000) shares. Fifty million (50,000,000) shares
shall be Common Stock, par value $.0001 per share, and thirty-seven million
(37,000,000) shares shall be Preferred Stock, par value $.0001 per share.
B. Rights, Preferences and Restrictions of Preferred Stock. The
-------------------------------------------------------
Preferred Stock authorized by this Fifth Amended and Restated Certificate of
Incorporation may be issued from time to time in one or more series. The
rights, preferences, privileges, and restrictions granted to
<PAGE>
and imposed on the Series A Preferred Stock, which series shall consist of
5,565,416 shares, and the Series B Preferred Stock, which series shall consist
of 2,760,742 shares, and the Series C Preferred Stock, which series shall
consist of 2,700,000 shares, the Series D Preferred Stock, which series shall
consist of 4,000,000 shares and the Series E Preferred Stock, which series shall
consist of 20,500,000 shares, are as set forth below in this Article IV(B). The
Board of Directors is hereby authorized to fix or alter the rights, preferences,
privileges and restrictions granted to or imposed upon additional series of
Preferred Stock, and the number of shares constituting any such series and the
designation thereof, or of any of them. Subject to compliance with applicable
protective voting rights that have been or may be granted to the Preferred Stock
or series thereof in Certificates of Determination or this Corporation's Fifth
Amended and Restated Certificate of Incorporation ("Protective Provisions"), but
notwithstanding any other rights of the Preferred Stock or any series thereof,
the rights, privileges, preferences and restrictions of any such additional
series may be subordinated to, pari passu with (including, without limitation,
inclusion in provisions with respect to dividends, liquidation and acquisition
preferences, redemption and/or approval of matters by vote or written consent),
or senior to any of those of any present or future class or series of Preferred
or Common Stock. Subject to compliance with applicable Protective Provisions and
unless otherwise specifically provided in the resolution establishing any
series, the Board of Directors shall further have the authority, after the
issuance of shares of a series whose number it has designated, to amend the
resolution establishing such series to decrease the number of shares of that
series, but not below the number of shares of such series then outstanding. In
case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status that they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
1. Dividend Provisions. Subject to the rights of other series of
-------------------
Preferred Stock that may from time to time come into existence, the holders of
shares of Series A, Series B, Series C, Series D and Series E Preferred Stock
shall be entitled to receive dividends, when, as and if declared by the Board of
Directors, out of any assets legally available therefor, prior and in preference
to any declaration or payment of any dividend (payable other than in Common
Stock or other securities and rights convertible into or entitling the holder
thereof to receive, directly or indirectly, additional shares of Common Stock of
this Corporation) on the Common Stock of this Corporation, (a) at the rate of
$.08 per share of Series A Preferred Stock, $.27 per share of Series B Preferred
Stock, $.49 per share of Series C Preferred Stock, $.64 per share of Series D
Preferred Stock and $.40 per share of Series E Preferred Stock, per annum (each
of such amounts being subject to equitable adjustment to reflect the effects of
any stock dividends, stock splits, combinations, reverse splits,
reclassifications or recapitalizations (herein referred to as "Adjustment
Events")), or (b) if a dividend is paid on the Common Stock in an amount per
share which, when multiplied by the respective numbers of shares of Common Stock
into which shares of the Series A, Series B, Series C, Series D or Series E
Preferred Stock are then convertible (the "Alternate Rate"), exceeds the
preferential dividend per share which holders of shares of such series would
otherwise be entitled to receive under clause (a) of this Section 1, then
holders of shares of such series shall be entitled to receive the Alternate Rate
per share of such series in lieu of the preferential dividend set forth in
clause (a) of this Section 1. Such dividends shall not be cumulative until the
calendar quarter beginning January 1, 2002. Such
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dividends shall accrue on each share from January 1, 2002, if declared by the
Board of Directors. Such dividends shall be cumulative so that, if such
dividends in respect of any previous or current annual dividend period, at the
annual rate specified above, shall have been declared but not paid, the
deficiency shall first be fully paid before any dividend or other distribution
shall be paid on or declared and set apart for the Common Stock. Any
accumulation of dividends on the Series A, Series B, Series C, Series D and
Series E Preferred Stock shall not bear interest. Cumulative dividends with
respect to a share of Series A, Series B, Series C, Series D or Series E
Preferred Stock that are accrued, payable and/or in arrears shall, upon
conversion of such share to Common Stock, subject to the rights of other series
of Preferred Stock that may from time to time come into existence, be paid to
the extent assets are legally available therefor either in cash or in Common
Stock (valued at the fair market value on the date of payment as determined by
the Board of Directors of this Corporation). Any amounts for which assets are
not legally available shall be paid promptly as assets become legally available
therefor. Any partial payment will be made pro rata among the holders of such
shares.
2. Liquidation Preference
----------------------
(a) In the event of any liquidation, dissolution or winding up
of this Corporation, either voluntary or involuntary, subject to the rights of
other series of Preferred Stock that may from time to time come into existence,
the holders of Series E Preferred Stock shall be entitled to receive, prior and
in preference to any distribution of any of the assets of this Corporation to
the holders of Series A, Series B, Series C and Series D Preferred Stock and
Common Stock by reason of their ownership thereof, an amount per share equal to
the sum of (i) $5.00 for each outstanding share of Series E Preferred Stock (the
"Original Series E Issue Price") (such amount being subject to adjustment for
Adjustment Events), and (ii) an amount equal to declared but unpaid dividends
and accrued cumulative dividends on the Series E Preferred Stock (collectively,
the "Initial Payment"). After the Initial Payment has been made, the holders of
Series A, Series B, Series C and Series D Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any of the assets of
this Corporation to the holders of Common Stock by reason of their ownership
thereof, an amount per share equal to the sum of (i) $1.00 for each outstanding
share of Series A Preferred Stock (the "Original Series A Issue Price"), $3.375
for each outstanding share of Series B Preferred Stock (the "Original Series B
Issue Price"), $6.16 for each outstanding share of Series C Preferred Stock (the
"Original Series C Issue Price") and $8.00 for each outstanding share of Series
D Preferred Stock (the "Original Series D Issue Price") (each such amount being
subject to adjustment for Adjustment Events), and (ii) an amount equal to
declared but unpaid dividends and accrued cumulative dividends on each such
share of Series A, Series B, Series C and Series D Preferred Stock. If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A, Series B, Series C, Series D and Series E Preferred
Stock shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then, subject to the rights of other series of
Preferred Stock that may from time to time come into existence, the entire
assets and funds of this Corporation legally available for distribution shall be
distributed first to the holders of the Series E Preferred Stock an amount equal
to the Initial Payment per share and then ratably among the holders of the
Series A, Series B, Series C and
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Series D Preferred Stock in proportion to the preferential amount each such
holder is otherwise entitled to receive.
(b) For purposes of subsections (b), (c), (d), (e), (f) and (g) of
this Section 2, the following definitions shall apply:
"Series A Investment Amount" shall mean the Original Series A
Issue Price multiplied by the number of shares of Series A Preferred Stock
outstanding.
"Series B Investment Amount" shall mean the Original Series B
Issue Price multiplied by the number of shares of Series B Preferred Stock
outstanding.
"Series C Investment Amount" shall mean the Original Series C
Issue Price multiplied by the number of shares of Series C Preferred Stock
outstanding.
"Series D Investment Amount" shall mean the Original Series D
Issue Price multiplied by the number of shares of Series D Preferred Stock
outstanding.
"Series E Investment Amount" shall mean the Original Series E
Issue Price multiplied by the number of shares of Series E Preferred Stock
outstanding.
"Total Preferred Stock Investment Amount" shall mean the sum of
the Series A Investment Amount, Series B Investment Amount, Series C Investment
Amount, Series D Investment Amount and Series E Investment Amount.
"Series A Percentage" shall mean the Series A Investment Amount
divided by the Total Preferred Stock Investment Amount.
"Series B Percentage" shall mean the Series B Investment Amount
divided by the Total Preferred Stock Investment Amount.
"Series C Percentage" shall mean the Series C Investment Amount
divided by the Total Preferred Stock Investment Amount.
"Series D Percentage" shall mean the Series D Investment Amount
divided by the Total Preferred Stock Investment Amount.
"Series E Percentage" shall mean the Series E Investment Amount
divided by the Total Preferred Stock Investment Amount.
(c) Upon the completion of the distributions required by subsection
(a) of this Section 2 and any other distribution that may be required with
respect to other series of Preferred Stock that may from time to time come into
existence, the remaining assets of this Corporation available for distribution
to stockholders shall be distributed as follows: (i) an aggregate amount (the
"First Distribution Amount") equal to the product of $1.50 multiplied by the
number of shares of Series A, Series B, Series C, Series D and Series E
Preferred Stock then
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outstanding (as adjusted for Adjustment Events) shall be distributed, on a pari
passu basis, in an amount equal to the Series A Percentage multiplied by the
First Distribution Amount, ratably among the holders of Series A Preferred
Stock, the Series B Percentage multiplied by the First Distribution Amount,
ratably among the holders of Series B Preferred Stock, the Series C Percentage
multiplied by the First Distribution Amount, ratably among the holders of Series
C Preferred Stock, the Series D Percentage multiplied by the First Distribution
Amount, ratably among the holders of Series D Preferred Stock, and the Series E
Percentage multiplied by the First Distribution Amount, ratably among the
holders of Series E Preferred Stock, and (ii) an amount per share equal to $1.50
for each outstanding share of Common Stock (as adjusted for Adjustment Events)
shall be distributed ratably among the holders of Common Stock. If the assets
and funds thus distributed among the holders of the Series A, Series B, Series
C, Series D and Series E Preferred Stock and the holders of the Common Stock
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then, subject to the rights of other series of
Preferred Stock that may from time to time come into existence, the entire
assets and funds of this Corporation legally available for distribution pursuant
to this subsection (c) shall be distributed ratably among the holders of the
Series A, Series B, Series C, Series D and Series E Preferred Stock and the
holders of the Common Stock in proportion to the preferential amount each such
holder is otherwise entitled to receive under this subsection (c).
(d) Upon the completion of the distributions required by subsections
(a) and (c) of this Section 2 and any other distribution that may be required
with respect to other series of Preferred Stock that may from time to time come
into existence, the remaining assets of this Corporation available for
distribution to stockholders shall be distributed as follows: (i) an aggregate
amount (the "Second Distribution Amount") equal to the product of $3.5625
multiplied by the number of shares of Series B, Series C, Series D and Series E
Preferred Stock then outstanding (as adjusted for Adjustment Events) shall be
distributed, on a pari passu basis, in an amount equal to the Series A
Percentage multiplied by the Second Distribution Amount, ratably among the
holders of Series A Preferred Stock, the Series B Percentage multiplied by the
Second Distribution Amount, ratably among the holders of Series B Preferred
Stock, the Series C Percentage multiplied by the Second Distribution Amount,
ratably among the holders of Series C Preferred Stock, the Series D Percentage
multiplied by the Second Distribution Amount, ratably among the holders of
Series D Preferred Stock, and the Series E Percentage multiplied by the Second
Distribution Amount, ratably among the holders of Series E Preferred Stock, and
(ii) an amount per share equal to $3.5625 for each outstanding share of Common
Stock (as adjusted for Adjustment Events), in addition to the amounts paid
pursuant to subsection (c) of this Section 2, shall be distributed ratably among
the holders of Common Stock. If the assets and funds thus distributed among the
holders of the Series A, Series B, Series C, Series D and Series E Preferred
Stock and the holders of the Common Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then,
subject to the rights of other series of Preferred Stock that may from time to
time come into existence, the entire assets and funds of this Corporation
legally available for distribution pursuant to this subsection (d) shall be
distributed ratably among the holders of the Series A, Series B, Series C,
Series D and Series E Preferred Stock and the holders of the Common Stock in
proportion to the preferential amount each such holder is otherwise entitled to
receive under this subsection (d).
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(e) Upon the completion of the distributions required by subsections
(a), (c) and (d) of this Section 2 and any other distribution that may be
required with respect to other series of Preferred Stock that may from time to
time come into existence, the remaining assets of this Corporation available for
distribution to stockholders shall be distributed as follows: (i) an aggregate
amount (the "Third Distribution Amount") equal to the product of $2.4375
multiplied by the number of shares of Series C, Series D and Series E Preferred
Stock then outstanding (as adjusted for Adjustment Events) shall be distributed,
on a pari passu basis, in an amount equal to the Series A Percentage multiplied
by the Third Distribution Amount, ratably among the holders of Series A
Preferred Stock, the Series B Percentage multiplied by the Third Distribution
Amount, ratably among the holders of Series B Preferred Stock, the Series C
Percentage multiplied by the Third Distribution Amount, ratably among the
holders of Series C Preferred Stock, the Series D Percentage multiplied by the
Third Distribution Amount, ratably among the holders of Series D Preferred
Stock, and the Series E Percentage multiplied by the Third Distribution Amount,
ratably among the holders of Series E Preferred Stock, and (ii) an amount per
share equal to $2.4375 for each outstanding share of Common Stock (as adjusted
for Adjustment Events), in addition to the amounts paid pursuant to subsections
(c) and (d) of this Section 2, shall be distributed ratably among the holders of
Common Stock. If the assets and funds thus distributed among the holders of the
Series A, Series B, Series C, Series D and Series E Preferred Stock and the
holders of the Common Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amounts, then, subject to the rights
of other series of Preferred Stock that may from time to time come into
existence, the entire assets and funds of this Corporation legally available for
distribution pursuant to this subsection (e) shall be distributed ratably among
the holders of the Series A, Series B, Series C, Series D and Series E Preferred
Stock and the holders of the Common Stock in proportion to the preferential
amount each such holder is otherwise entitled to receive under this subsection
(e).
(f) Upon the completion of the distributions required by subsections
(a), (c), (d) and (e) of this Section 2 and any other distribution that may be
required with respect to other series of Preferred Stock that may from time to
time come into existence, the remaining assets of this Corporation available for
distribution to stockholders shall be distributed as follows: (i) an aggregate
amount (the "Fourth Distribution Amount") equal to the product of $1.74
multiplied by the number of shares of Series C and Series D Preferred Stock then
outstanding (as adjusted for Adjustment Events) shall be distributed, on a pari
passu basis, in an amount equal to the Series A Percentage multiplied by the
Fourth Distribution Amount, ratably among the holders of Series A Preferred
Stock, the Series B Percentage multiplied by the Fourth Distribution Amount,
ratably among the holders of Series B Preferred Stock, the Series C Percentage
multiplied by the Fourth Distribution Amount, ratably among the holders of
Series C Preferred Stock, the Series D Percentage multiplied by the Fourth
Distribution Amount, ratably among the holders of Series D Preferred Stock, and
the Series E Percentage multiplied by the Fourth Distribution Amount, ratably
among the holders of Series E Preferred Stock, and (ii) an amount per share
equal to $1.74 for each outstanding share of Common Stock (as adjusted for
Adjustment Events), in addition to the amounts paid pursuant to subsections (c),
(d) and (e) of this Section 2, shall be distributed ratably among the holders of
Common Stock. If the assets and funds thus distributed among the holders of the
Series A, Series B, Series C, Series D and Series
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<PAGE>
E Preferred Stock and the holders of the Common Stock shall be insufficient to
permit the payment to such holders of the full aforesaid preferential amounts,
then, subject to the rights of other series of Preferred Stock that may from
time to time come into existence, the entire assets and funds of this
Corporation legally available for distribution pursuant to this subsection (f)
shall be distributed ratably among the holders of the Series A, Series B, Series
C, Series D and Series E Preferred Stock and the holders of the Common Stock in
proportion to the preferential amount each such holder is otherwise entitled to
receive under this subsection (f).
(g) Upon the completion of the distributions required by subsections
(a), (c), (d), (e) and (f) of this Section 2 and any other distribution that may
be required with respect to other series of Preferred Stock that may from time
to time come into existence, the remaining assets of this Corporation available
for distribution to stockholders shall be distributed as follows: (i) an
aggregate amount (the "Fifth Distribution Amount") equal to the product of $2.76
multiplied by the number of shares of Series D Preferred Stock then outstanding
(as adjusted for Adjustment Events) shall be distributed, on a pari passu basis,
in an amount equal to the Series A Percentage multiplied by the Fifth
Distribution Amount, ratably among the holders of Series A Preferred Stock, the
Series B Percentage multiplied by the Fifth Distribution Amount, ratably among
the holders of Series B Preferred Stock, the Series C Percentage multiplied by
the Fifth Distribution Amount, ratably among the holders of Series C Preferred
Stock, the Series D Percentage multiplied by the Fifth Distribution Amount,
ratably among the holders of Series D Preferred Stock, and the Series E
Percentage multiplied by the Fifth Distribution Amount, ratably among the
holders of Series E Preferred Stock, and (ii) an amount per share equal to $2.76
for each outstanding share of Common Stock (as adjusted for Adjustment Events),
in addition to the amounts paid pursuant to subsections (c), (d), (e) and (f) of
this Section 2, shall be distributed ratably among the holders of Common Stock.
If the assets and funds thus distributed among the holders of the Series A,
Series B, Series C, Series D and Series E Preferred Stock and the holders of the
Common Stock shall be insufficient to permit the payment to such holders of the
full aforesaid preferential amounts, then, subject to the rights of other series
of Preferred Stock that may from time to time come into existence, the entire
assets and funds of this Corporation legally available for distribution pursuant
to this subsection (g) shall be distributed ratably among the holders of the
Series A, Series B, Series C, Series D and Series E Preferred Stock and the
holders of the Common Stock in proportion to the preferential amount each such
holder is otherwise entitled to receive under this subsection (g).
(h) Upon the completion of the distributions required by subsections
(a), (c), (d), (e), (f) and (g) of this Section 2 and any other distribution
that may be required with respect to other series of Preferred Stock that may
from time to time come into existence, if assets remain in this Corporation, the
holders of Series A, Series B, Series C, Series D and Series E Preferred Stock
shall receive no further distributions and the holders of the Common Stock of
this Corporation shall receive all of the remaining assets of this Corporation
pro rata based on the number of shares of Common Stock held by each.
(i) (i) For purposes of this Section 2, a liquidation, dissolution
or winding up of this Corporation shall be deemed to be occasioned by, or to
include, (A) the
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acquisition of this Corporation by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation) that results in the transfer of fifty
percent (50%) or more of the outstanding voting power of this Corporation; or
(B) a sale of all or substantially all of the assets of this Corporation.
(ii) In any of such events, if the consideration
received by this Corporation is other than cash, the value of such consideration
will be deemed its fair market value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter
or other similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or
through the NASDAQ National Market, the value shall be deemed to be the average
of the closing prices of the securities on such quotation system over the thirty
(30) day period ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty (30) day period ending three (3) days
prior to the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by this
Corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Series A, Series B, Series C, Series D and Series E
Preferred Stock.
(B) The method of valuation of securities subject
to investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a stockholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A)(1), (2) or (3) to reflect the approximate fair
market value thereof as mutually determined by this Corporation and the holders
of at least a majority of the voting power of all then outstanding shares of
Series A, Series B, Series C, Series D and Series E Preferred Stock.
(iii) In the event the requirements of this subsection
2(i) are not complied with, this Corporation shall forthwith either:
(A) cause such closing to be postponed until such
time as the requirements of this Section 2(i) have been complied with; or
(B) cancel such transaction, in which event the
rights, preferences and privileges of the holders of the Series A, Series B,
Series C, Series D and Series E Preferred Stock shall revert to and be the same
as such rights, preferences and privileges existing immediately prior to the
date of the first notice referred to in subsection 2(i)(iv) hereof.
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(iv) This Corporation shall give each holder of record
of Series A, Series B, Series C, Series D and Series E Preferred Stock written
notice of such impending transaction not later than twenty (20) days prior to
the stockholders' meeting called to approve such transaction, if any, or twenty
(20) days prior to the closing of such transaction, whichever is earlier, and
shall also notify such holders in writing of the final approval of such
transaction. The first of such notices shall describe the material terms and
conditions of the impending transaction and the provisions of this Section 2,
and this Corporation shall thereafter give such holders prompt notice of any
material changes. The transaction shall in no event take place sooner than
twenty (20) days after this Corporation has given the first notice provided for
herein or sooner than ten (10) days after this Corporation has given notice of
any material changes provided for herein; provided, however, that such periods
may be shortened upon the written consent of the holders of Preferred Stock that
are entitled to such notice rights or similar notice rights and that represent
at least a majority of the voting power of all then outstanding shares of Series
A, Series B, Series C, Series D and Series E Preferred Stock.
3. Redemption
----------
(a) Subject to the rights of other series of Preferred Stock
that may from time to time come into existence, upon receipt by this
Corporation, within the six (6) month period commencing December 31, 2002, of a
written request (the "Redemption Request") from the holders of not less than
fifty percent (50%) of the then outstanding shares of Series A, Series B, Series
C, Series D and Series E Preferred Stock (voting together as a single class and
not as a separate series, and on an as converted basis) that all or, if less
than all, a specified percentage of such holders' shares of such series (which
percentage shall be the same for the Series A, Series B, Series C, Series D and
Series E Preferred Stock) be redeemed, and concurrently with surrender by such
holders of the certificates representing such shares, this Corporation shall, to
the extent it may lawfully do so, redeem (i) in four (4) equal annual
installments commencing no later than the first anniversary of the receipt of
the Redemption Request (each such payment date being referred to herein as a
"Redemption Date"), or (ii) at the Corporation's election, in fewer annual
installments, including without limitation, a single lump sum payment, the
shares specified in such request by paying in cash therefor a sum per share
equal to $1.00 per share of Series A Preferred Stock (as adjusted for Adjustment
Events) to be redeemed plus all declared but unpaid dividends and accrued
cumulative dividends on such share (the "Series A Redemption Price"), a sum per
share equal to $3.375 per share of Series B Preferred Stock (as adjusted for
Adjustment Events) to be redeemed plus all declared but unpaid dividends and
accrued cumulative dividends on such share (the "Series B Redemption Price"), a
sum per share equal to $6.16 per share of Series C Preferred Stock (as adjusted
for Adjustment Events) to be redeemed plus all declared but unpaid dividends and
accrued cumulative dividends on such share (the "Series C Redemption Price"), a
sum per share equal to $8.00 per share of Series D Preferred Stock (as adjusted
for Adjustment Events) to be redeemed plus all declared but unpaid dividends and
accrued cumulative dividends on such share (the "Series D Redemption Price") and
a sum per share equal to $5.00 per share of Series E Preferred Stock (as
adjusted for Adjustment Events) to be redeemed plus all declared but unpaid
dividends and accrued cumulative dividends on such share (the "Series E
Redemption Price"). The holders of the
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Series A, Series B, Series C, Series D and Series E Preferred Stock may exercise
their redemption rights pursuant to this subsection 3(a) only during the six (6)
month period commencing December 31, 2002, and any redemption payments shall be
made on a pro rata basis among the holders of all shares of Series A, Series B,
Series C, Series D and Series E Preferred Stock to be redeemed in proportion to
the aggregate redemption payments due to each such holder.
(b) Subject to the rights of other series of Preferred Stock
that may from time to time come into existence, at least fifteen (15) but no
more than thirty (30) days prior to each Redemption Date, written notice shall
be mailed, first class postage prepaid, to each holder of record (at the close
of business on the business day next preceding the day on which notice is given)
of the Series A, Series B, Series C, Series D and Series E Preferred Stock to be
redeemed on the Redemption Date, at the address last shown on the records of
this Corporation for such holder, notifying such holder of the redemption to be
effected, specifying the number of shares to be redeemed from such holder, the
Redemption Date or Dates, the Redemption Price (as applicable), the place at
which payment may be obtained and calling upon such holder to surrender to this
Corporation, in the manner and at the place designated, his, her or its
certificate or certificates representing the shares to be redeemed (the
"Redemption Notice") on such Redemption Date or Dates. Except as provided in
subsection 3(c), on or after each Redemption Date, each holder of Series A,
Series B, Series C, Series D and Series E Preferred Stock to be redeemed shall
surrender to this Corporation the certificate or certificates representing such
shares, in the manner and at the place designated in the Redemption Notice, and
thereupon the applicable Redemption Price of such shares shall be payable to the
order of the person whose name appears on such certificate or certificates as
the owner thereof and each surrendered certificate shall be canceled. In the
event less than all the shares represented by any such certificate are redeemed
on a Redemption Date, a new certificate shall be issued representing the
unredeemed shares. Any certificate issued after the date of the Redemption
Request shall bear a legend indicating that such shares are subject to
redemption by the Company pursuant to the Redemption Request. Shares subject to
redemption by the Company pursuant to the Redemption Request shall be
transferable (subject to redemption by the Company) but shall not be convertible
into Common Stock except as provided in subsection 4(a) of Division B of this
Article IV.
(c) From and after each Redemption Date, unless there shall have
been a default in payment of the Redemption Price, all rights of the holders of
shares of Series A, Series B, Series C, Series D or Series E Preferred Stock
designated for redemption on such Redemption Date, as holders of Series A,
Series B, Series C, Series D or Series E Preferred Stock (except the right to
receive the applicable Redemption Price without interest upon surrender of their
certificate or certificates), shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of this Corporation or
be deemed to be outstanding for any purpose whatsoever. Subject to the rights of
other series of Preferred Stock that may from time to time come into existence,
if the funds of this Corporation legally available for redemption of shares of
Series A, Series B, Series C, Series D and Series E Preferred Stock on any
Redemption Date are insufficient to redeem the total number of shares of Series
A,
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Series B, Series C, Series D and Series E Preferred Stock to be redeemed on such
date, those funds that are legally available will be used to redeem the maximum
possible number of such shares ratably among the holders of such shares to be
redeemed such that each holder of a share of Series A, Series B, Series C,
Series D and Series E Preferred Stock receives the same percentage of the
applicable Series A Redemption Price, Series B Redemption Price, Series C
Redemption Price, Series D Redemption Price or Series E Redemption Price. The
shares of Series A, Series B, Series C, Series D and Series E Preferred Stock
not redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein. Subject to the rights of other series of Preferred
Stock that may from time to time come into existence, at any time thereafter
when additional funds of this Corporation are legally available for the
redemption of such shares of Series A, Series B, Series C, Series D and Series E
Preferred Stock, such funds will immediately be used to redeem the balance of
the shares that this Corporation has become obligated but has failed to redeem
on any Redemption Date.
(d) On or prior to each Redemption Date, this Corporation shall
deposit the Redemption Price of all shares of Series A, Series B, Series C,
Series D and Series E Preferred Stock designated for redemption in the
Redemption Notice and not yet redeemed or converted with a bank or trust
corporation having aggregate capital and surplus in excess of $100,000,000 as a
trust fund for the benefit of the respective holders of the shares designated
for redemption and not yet redeemed, with irrevocable instructions and authority
to the bank or trust corporation to publish the notice of redemption thereof and
pay the Redemption Price for such shares to their respective holders on or after
the Redemption Date, upon receipt of notification from this Corporation that
such holder has surrendered his, her or its share certificate to this
Corporation pursuant to subsection 3(b) above. As of the date of such deposit
(even if prior to the Redemption Date), the deposit shall constitute full
payment of the shares to their holders, and from and after the date of the
deposit the shares so called for redemption shall be redeemed and shall be
deemed to be no longer outstanding, and the holders thereof shall cease to be
stockholders with respect to such shares and shall have no rights with respect
thereto except the rights to receive from the bank or trust corporation payment
of the Redemption Price of the shares, without interest, upon surrender of their
certificates therefor, and the right to convert such shares as provided in
Article IV(B)(4) hereof. Such instructions shall also provide that any moneys
deposited by this Corporation pursuant to this subsection 3(d) for the
redemption of shares thereafter converted into shares of this Corporation's
Common Stock pursuant to Article IV(B)(4) hereof prior to the Redemption Date
shall be returned to this Corporation forthwith upon such conversion. The
balance of any money deposited by this Corporation pursuant to this subsection
3(d) remaining unclaimed at the expiration of two (2) years following each
Redemption Date shall thereafter be returned to this Corporation upon its
request expressed in a resolution of its Board of Directors.
4. Conversion. The shares of Series A, Series B, Series C, Series D
----------
and Series E Preferred Stock shall be subject to conversion as follows (the
"Conversion Rights"):
(a) Right to Convert. Each share of Series A, Series B, Series
----------------
C, Series D and Series E Preferred Stock shall be convertible, at the option of
the holder thereof, at
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any time after the date of issuance of such share and on or prior to the fifth
day prior to the first Redemption Date, if any, as may have been fixed in any
Redemption Notice with respect to such share, at the office of this Corporation
or any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the Original
Series A Issue Price, Original Series B Issue Price, Original Series C Issue
Price, Original Series D Issue Price or Original Series E Issue Price, as the
case may be, by the respective Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The initial Conversion Price per share for shares of
Series A Preferred Stock shall be the Original Series A Issue Price, the initial
Conversion Price per share for shares of Series B Preferred Stock shall be the
Original Series B Issue Price, the initial Conversion Price per share for shares
of Series C Preferred Stock shall be the Original Series C Issue Price, the
initial Conversion Price per share for shares of Series D Preferred Stock shall
be the Original Series D Issue Price and the initial Conversion Price per share
for shares of Series E Preferred Stock shall be the Original Series E Issue
Price; provided, however, that the Conversion Price for the Series A, Series B,
Series C, Series D and Series E Preferred Stock shall be subject to adjustment
as set forth in subsection 4(d).
(b) Automatic Conversion. Each share of the Series A, Series B,
--------------------
Series C, Series D and Series E Preferred Stock shall automatically be converted
into shares of Common Stock at the respective Conversion Price at the time in
effect for such Series A, Series B, Series C, Series D or Series E Preferred
Stock immediately upon the earlier of (i) the closing of a sale of the
Corporation's Common Stock in a firm commitment underwritten public offering
pursuant to a registration statement under the Securities Act of 1933, as
amended, the public offering price of which was not less than $10.00 per share
(adjusted to reflect Adjustment Events) and $40,000,000 in the aggregate (the
"Initial Public Offering"), or (ii) the date specified by written consent or
agreement of the holders of two-thirds (2/3) of the aggregate number of shares
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock then outstanding (voting
together as a single class and not as a separate series, and on an as converted
basis).
(c) Mechanics of Conversion. Before any holder of Series A, Series B,
-----------------------
Series C, Series D or Series E Preferred Stock shall be entitled to convert the
same into shares of Common Stock, he or she shall surrender the certificate or
certificates therefor, duly endorsed, at the office of this Corporation or of
any transfer agent for the Series A, Series B, Series C, Series D or Series E
Preferred Stock, and shall give written notice to this Corporation at its
principal corporate office of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares of
Common Stock are to be issued. This Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A, Series
B, Series C, Series D or Series E Preferred Stock, or to the nominee or nominees
of such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series A, Series B, Series C, Series D
or Series E Preferred Stock to be converted, and the person or persons entitled
to receive the shares of Common Stock issuable upon such conversion
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<PAGE>
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock as of such date. If the conversion is in connection with an
underwritten offering of securities registered pursuant to the Securities Act of
1933, as amended, the conversion may, at the option of any holder tendering
Series A, Series B, Series C, Series D or Series E Preferred Stock for
conversion, be conditioned upon the closing with the underwriters of the sale of
securities pursuant to such offering, in which event the person(s) entitled to
receive the Common Stock upon conversion of the Series A, Series B, Series C,
Series D or Series E Preferred Stock shall not be deemed to have converted such
Series A, Series B, Series C, Series D or Series E Preferred Stock until
immediately prior to the closing of such sale of securities.
(d) Conversion Price Adjustments of Preferred Stock for Certain
-----------------------------------------------------------
Dilutive Issuances, Splits and Combinations. The Conversion Price of the Series
- -------------------------------------------
A, Series B, Series C, Series D and Series E Preferred Stock shall be subject to
adjustment from time to time as follows:
(i) (A) If this Corporation shall issue, after the date
upon which any shares of Series A, Series B, Series C, Series D or Series E
Preferred Stock were first issued (the "Purchase Date" with respect to such
series), any Additional Stock (as defined below) without consideration or for a
consideration per share less than the respective Conversion Price for the Series
A, Series B, Series C, Series D or Series E Preferred Stock in effect
immediately prior to the issuance of such Additional Stock, the Conversion Price
for such series in effect immediately prior to the issuance shall forthwith
(except as otherwise provided in this clause (i)) be adjusted to a price
determined by multiplying the Conversion Price of such series in effect
immediately prior to such issuance by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issuance (including shares of Common Stock deemed to be issued pursuant to
subsection 4(d)(i)(E)) plus the number of shares of Common Stock that the
aggregate consideration received by this Corporation for such issuance would
purchase at such Conversion Price; and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issuance
(including shares of Common Stock deemed to be issued pursuant to subsection
4(d)(i)(E)) plus the number of shares of such Additional Stock. Notwithstanding
the foregoing, no such Conversion Price adjustment shall occur pursuant to this
subsection 4(d)(i) if prior to the issuance of the Additional Stock this
Corporation shall have obtained a written waiver of the adjustment provided for
in this subsection, which waiver shall have been approved by the holders of not
less than sixty-five percent (65%) of each series of Preferred Stock that would
otherwise be entitled to adjustment of its Conversion Price hereunder.
(B) No adjustment of the Conversion Price for the
Series A, Series B, Series C, Series D or Series E Preferred Stock shall be made
in an amount less than one cent per share, provided that any adjustments that
are not required to be made by reason of this sentence shall be carried forward
and shall be either taken into account in any subsequent adjustment made prior
to three (3) years from the date of the event giving rise to the adjustment
being carried forward, or shall be made at the end of the three (3) years from
the date of the event giving rise to the adjustment being carried forward.
Except to the limited extent
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<PAGE>
provided for in subsections 4(d)(i)(E)(3), (E)(4) and (E)(5), no adjustment of
such Conversion Price pursuant to this subsection 4(d)(i) shall have the effect
of increasing the Conversion Price above the Conversion Price in effect
immediately prior to such adjustment.
(C) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
before deducting any reasonable discounts, commissions or other expenses
allowed, paid or incurred by this Corporation for any underwriting or otherwise
in connection with the issuance and sale thereof.
(D) In the case of the issuance of the Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined by the
Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance (whether before, on or
after the Purchase Date) of options to purchase or rights to subscribe for
Common Stock, securities by their terms convertible into or exchangeable for
Common Stock or options to purchase or rights to subscribe for such convertible
or exchangeable securities, the following provisions shall apply for all
purposes of this subsection 4(d)(i) and subsection 4(d)(ii):
(1) The aggregate maximum number of shares of
Common Stock deliverable upon exercise (assuming the satisfaction of any
conditions to exercisability, including without limitation, the passage of time,
but without taking into account potential antidilution adjustments) of such
options to purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided in
subsections 4(d)(i)(C) and 4(d)(i)(D)), if any, received by this Corporation
upon the issuance of such options or rights plus the minimum exercise price
provided in such options or rights (without taking into account potential
antidilution adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability, including,
without limitation, the passage of time, but without taking into account
potential antidilution adjustments) for any such convertible or exchangeable
securities or upon the exercise of options to purchase or rights to subscribe
for such convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time such securities
were issued or such options or rights were issued and for a consideration equal
to the consideration, if any, received by this Corporation for any such
securities and related options or rights, plus the minimum additional
consideration, if any, to be received by this Corporation (without taking into
account potential antidilution adjustments) upon the conversion or exchange of
such securities or the exercise of any related options or rights (the
consideration in each case to be determined in the manner provided in
subsections 4(d)(i)(C) and 4(d)(i)(D)).
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<PAGE>
(3) In the event of any change in the number of
shares of Common Stock deliverable or in the consideration payable to this
Corporation upon exercise of such options or rights or upon conversion of or in
exchange for such convertible or exchangeable securities (excluding a change
pursuant to subsection 4(d)(i) in the number of shares of Common Stock issuable
upon conversion of shares of Preferred Stock) (unless such options or rights or
convertible or exchangeable securities were merely deemed to be included in the
numerator and denominator for purposes of determining the number of shares of
Common Stock outstanding for purposes of subsection 4(d)(i)(A)), the Conversion
Price of the Series A, Series B, Series C, Series D or Series E Preferred Stock,
to the extent in any way affected by or computed using such options, rights or
securities, shall be recomputed to reflect such change, but no further
adjustment shall be made for the actual issuance of Common Stock or any payment
of such consideration upon the exercise of any such options or rights or the
conversion or exchange of such securities.
(4) Upon the expiration of any such options or
rights, the termination of any such rights to convert or exchange, or the
expiration of any options or rights related to such convertible or exchangeable
securities, the Conversion Price of the Series A, Series B, Series C, Series D
or Series E Preferred Stock, to the extent in any way affected by or computed
using such options, rights or securities or options or rights related to such
securities (unless such options or rights were merely deemed to be included in
the numerator and denominator for purposes of determining the number of shares
of Common Stock outstanding for purposes of subsection 4(d)(i)(A)) shall be
recomputed to reflect the issuance of only the number of shares of Common Stock
(and convertible or exchangeable securities that remain in effect) actually
issued upon the exercise of such options or rights, upon the conversion or
exchange of such securities, or upon the exercise of the options or rights
related to such securities.
(5) The number of shares of Common Stock deemed
issued and the consideration deemed paid therefor pursuant to subsections
4(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any change,
termination or expiration of the type described in either subsection
4(d)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of Common
Stock issued (or deemed to have been issued pursuant to subsection 4(d)(i)(E))
by this Corporation after the Purchase Date other than:
(A) shares of Common Stock issued pursuant to a
transaction described in subsection 4(d)(iii) hereof;
(B) shares of Common Stock issuable or issued to
employees, consultants or directors of this Corporation, or affiliates of any
such persons, pursuant to a stock option plan, restricted stock plan or grant
approved by the Board of Directors of this Corporation;
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<PAGE>
(C) shares of Common Stock issuable or issued to
vendors, suppliers, equipment lessors or lenders to this Corporation, or
affiliates of any such persons, where such issuance is not principally for the
purpose of raising additional equity capital for this Corporation;
(D) shares of Common Stock issuable or issued upon
conversion or exercise of convertible or exercisable securities of this
Corporation outstanding as of the date of this Fifth Amended and Restated
Certificate of Incorporation;
(E) shares of Common Stock issued pursuant to the
acquisition of another corporation or entity, or any product line, intellectual
property or technology, by this Corporation or any subsidiary of this
Corporation by means of merger, consolidation, purchase of assets or other
transaction of series of related transactions approved by the Board of Directors
of this Corporation and, in the case of an acquisition of another corporation or
entity, whereby this Corporation or its shareholders own a majority of the
voting power of such other corporation or entity following such acquisition; and
(F) shares of Common Stock issued to corporate
partners or in connection with other strategic alliances approved by the Board
of Directors of this Corporation.
(iii) In the event this Corporation should at any time or
from time to time after the Purchase Date fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the respective
Conversion Prices of the Series A, Series B, Series C, Series D and Series E
Preferred Stock shall be appropriately decreased so that the number of shares of
Common Stock issuable on conversion of each share of each such series shall be
increased in proportion to such increase of the aggregate of shares of Common
Stock outstanding and those issuable with respect to such Common Stock
Equivalents with the number of shares issuable with respect to Common Stock
Equivalents determined from time to time in the manner provided for deemed
issuances in subsection 4(d)(i)(E).
(iv) If the number of shares of Common Stock outstanding at
any time after the Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the respective Conversion Prices for the Series A, Series B, Series
C, Series D and Series E Preferred Stock shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of
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<PAGE>
each share of each such series shall be decreased in proportion to such decrease
in outstanding shares.
(e) Performance-Based Conversion Price Adjustments. Unless
----------------------------------------------
waived in writing by holders of seventy-five percent (75%) of the then-
outstanding Series E Preferred Stock, if the Corporation does not recognize (in
accordance with the Corporation's existing revenue recognition policy, which is
in accordance with GAAP) net revenue of at least $8 million for the second
quarter of the calendar year 1999 or net revenue of at least $14 million for
third quarter of the calendar year 1999, as the case may be, the Series E
Conversion Price will be automatically adjusted down ten days following the end
of such quarter, if necessary, so that the Series E Conversion Price shall be
$3.50 per share.
(f) Other Distributions. In the event this Corporation shall
-------------------
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this Corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 4(d)(iii), then,
in each such case for the purpose of this subsection 4(f), the holders of the
Series A, Series B, Series C, Series D and Series E Preferred Stock shall be
entitled to a proportionate share of any such distribution as though they were
the holders of the number of shares of Common Stock of this Corporation into
which their shares of Series A, Series B, Series C, Series D and Series E
Preferred Stock are convertible as of the record date fixed for the
determination of the holders of Common Stock of this Corporation entitled to
receive such distribution.
(g) Recapitalization. If at any time or from time to time
----------------
there shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4 or in Section 2) provision shall be made so that the holders of
the Series A, Series B, Series C, Series D and Series E Preferred Stock shall
thereafter be entitled to receive upon conversion of the Series A, Series B,
Series C, Series D and Series E Preferred Stock the number of shares of stock or
other securities or property of this Corporation or otherwise to which a holder
of Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of the Series A, Series B, Series C, Series D and Series E Preferred
Stock after the recapitalization to the end that the provisions of this Section
4 (including adjustment of the Conversion Price then in effect and the number of
shares purchasable upon conversion of the Series A, Series B, Series C, Series D
and Series E Preferred Stock) shall be applicable after that event as nearly
equivalent as may be practicable.
(h) No Impairment. This Corporation will not, by amendment of
-------------
its Fifth Amended and Restated Certificate of Incorporation or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by this Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 4 and in the
taking of all such
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<PAGE>
action as may be necessary or appropriate in order to protect the Conversion
Rights of the holders of the Series A, Series B, Series C and Series D Preferred
Stock against impairment.
(i) No Fractional Shares and Certificate as to Adjustments
------------------------------------------------------
(i) No fractional shares shall be issued upon the
conversion of any share or shares of the Series A, Series B, Series C, Series D
or Series E Preferred Stock, and the number of shares of Common Stock to be
issued shall be rounded to the nearest whole share. Whether or not fractional
shares are issuable upon such conversion shall be determined on the basis of the
total number of shares of Series A, Series B, Series C, Series D or Series E
Preferred Stock the holder is at the time converting into Common Stock and the
number of shares of Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment
of the Conversion Price of Series A, Series B, Series C, Series D or Series E
Preferred Stock pursuant to this Section 4, this Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series A, Series B,
Series C, Series D and Series E Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. This Corporation shall, upon the written
request at any time of any holder of Series A, Series B, Series C, Series D or
Series E Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price for such series of Preferred Stock at the time in effect, and
(C) the number of shares of Common Stock and the amount, if any, of other
property that at the time would be received upon the conversion of a share of
such series of Preferred Stock.
(j) Notices of Record Date. In the event of any taking by this
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
Corporation shall mail to each holder of Series A, Series B, Series C, Series D
or Series E Preferred Stock, at least 20 days prior to the date specified
therein, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right.
(k) Reservation of Stock Issuable Upon Conversion. This
---------------------------------------------
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A, Series B, Series C, Series D and
Series E Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of the Series A, Series B, Series C, Series D and Series E Preferred
Stock; and if at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all then outstanding
shares of the Series A, Series B, Series C, Series D and Series
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<PAGE>
E Preferred Stock, in addition to such other remedies as shall be available to
the holder of such Preferred Stock, this Corporation will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including, without limitation, engaging in best
efforts to obtain the requisite stockholder approval of any necessary amendment
to this Fifth Amended and Restated Certificate of Incorporation.
(l) Notices. Any notice required by the provisions of this
-------
Section 4 to be given to the holders of shares of Series A, Series B, Series C,
Series D and Series E Preferred Stock shall be deemed given if deposited in the
United States mail, postage prepaid, and addressed to each holder of record at
his address appearing on the books of this Corporation.
5. Voting Rights
-------------
(a) General Voting Rights. The holder of each share of Series
---------------------
A, Series B, Series C, Series D and Series E Preferred Stock shall have the
right to one vote for each share of Common Stock into which such Series A,
Series B, Series C, Series D and Series E Preferred Stock could then be
converted, and with respect to such vote, such holder shall have full voting
rights and powers equal to the voting rights and powers of the holders of Common
Stock, and shall be entitled, notwithstanding any provision hereof, to notice of
any stockholders' meeting in accordance with the bylaws of this Corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote.
Fractional votes shall not, however, be permitted and any fractional voting
rights available on an as converted basis (after aggregating all shares into
which shares of Series A, Series B, Series C, Series D and Series E Preferred
Stock held by each holder could be converted) shall be rounded to the nearest
whole number (with one-half being rounded upward).
(b) Voting for the Election of Directors. As long as an
------------------------------------
aggregate of at least seventy-five percent (75%) of the shares of Series A,
Series B, Series C, Series D and Series E Preferred Stock (which number of
shares reflecting this percentage shall be equitably adjusted to reflect
Adjustment Events) remain outstanding, the holders of shares of Series A, Series
B, Series C, Series D and Series E Preferred Stock (voting together as a single
class and not as a separate series, and on an as converted basis), shall be
entitled to elect three (3) directors of this Corporation at each annual
election of directors. If the aggregate number of shares of Series A, Series B,
Series C, Series D and Series E Preferred Stock that remain outstanding shall be
between fifty percent (50%) and seventy-five percent (75%), inclusive, of all of
the outstanding Series A, Series B, Series C, Series D and Series E Preferred
Stock (which number of shares reflecting this percentage shall be equitably
adjusted to reflect Adjustment Events), the holders of shares of Series A,
Series B, Series C, Series D and Series E Preferred Stock (voting together as a
single class and not as a separate series, and on an as converted basis), shall
be entitled to elect two (2) directors of this Corporation at each annual
election of directors. If the aggregate number of shares of Series A, Series B,
Series C, Series D and Series E Preferred Stock that remain outstanding shall be
between fifty percent (50%) and twenty-five percent (25%), inclusive, of all of
the outstanding Series A, Series B, Series C, Series D and Series E
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<PAGE>
Preferred Stock (which number of shares reflecting this percentage shall be
equitably adjusted to reflect Adjustment Events), the holders of shares of
Series A, Series B, Series C, Series D and Series E Preferred Stock(voting
together as a single class and not as a separate series, and on an as converted
basis), shall be entitled to elect one (1) director of this Corporation at each
annual election of directors. The holders of outstanding Common Stock shall be
entitled to elect two (2) directors of this Corporation at each annual election
of directors. The holders of Series A, Series B, Series C, Series D and Series E
Preferred Stock and Common Stock (voting together as a single class and not as
separate classes, and on an as-converted basis) shall be entitled to elect any
remaining directors of this Corporation.
In the case of any vacancy (other than a vacancy caused by removal) in the
office of a director occurring among the directors elected by the holders of a
class or series of stock pursuant to this Section 5(b), the remaining directors
so elected by that class or series may by affirmative vote of a majority thereof
(or the remaining director so elected if there be but one, or if there are no
such directors remaining, by the affirmative vote of the holders of a majority
of the shares of that class or series), elect a successor or successors to hold
office for the unexpired term of the director or directors whose place or places
shall be vacant. Any director who shall have been elected by the holders of a
class or series of stock or by any directors so elected as provided in the
immediately preceding sentence hereof may be removed during the aforesaid term
of office, either with or without cause, by, and only by, the affirmative vote
of the holders of the shares of the class or series of stock entitled to elect
such director or directors, given either at a special meeting of such
stockholders duly called for that purpose or pursuant to a written consent of
stockholders, and any vacancy thereby created may be filled by the holders of
that class or series of stock represented at the meeting or pursuant to
unanimous written consent.
6. Protective Provisions. Subject to the rights of other series of
---------------------
Preferred Stock that may from time to time come into existence, this Corporation
shall not take any of the following actions without first obtaining the approval
(by vote or written consent, as provided by law) of the holders of at least a
majority of the shares of Series A, Series B, Series C, Series D and Series E
Preferred Stock then outstanding, voting together as a single class and not as
separate series on an as converted basis, provided, however, that in the event
that the aggregate number of shares of Series A, Series B, Series C, Series D
and Series E Preferred Stock then outstanding represent less than twenty percent
(20%) of the sum of the aggregate number of all shares of Preferred Stock then
outstanding on an as-converted basis (i.e., after aggregating all shares into
which shares of Preferred Stock could be converted) plus Common Stock then
outstanding, then the protective provisions of this Section 6 shall cease to be
of any force or effect and shall not bind this Corporation:
(a) sell, convey, or otherwise dispose of all or substantially
all of its property or business or merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary corporation) or effect any
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of this Corporation is disposed of;
(b) dissolve, wind-up or liquidate this Corporation;
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<PAGE>
(c) alter, change or reclassify the rights, preferences or
privileges of the shares of Series A, Series B, Series C, Series D or Series E
Preferred Stock so as to affect adversely the shares;
(d) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series A, Series B, Series
C, Series D or Series E Preferred Stock provided, however, that the Board of
Directors may amend the terms of any series to decrease the number of shares of
that series (but not below the number of shares of such series then
outstanding), and the number of shares constituting the decrease shall
thereafter constitute authorized but undesignated shares;
(e) authorize or issue, or obligate itself to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security having a preference over or being on a parity with the
Series A, Series B, Series C, Series D or Series E Preferred Stock with respect
to voting, dividends or upon liquidation;
(f) enter into any transaction or series of related transactions
in which this Corporation borrows more than $5,000,000;
(g) amend this Corporation's Fifth Amended and Restated
Certificate of Incorporation or Bylaws (excluding an amendment to this
Corporation's Fifth Amended and Restated Certificate of Incorporation, which
amendment does no more than authorize for issuance an equity security not
covered by subsection 6(e) above);
(h) change the authorized number of directors of this
Corporation;
(i) pay any dividends on its Common Stock; or
(j) redeem, purchase or otherwise acquire (or pay into or set
funds aside for a sinking fund for such purpose) any share or shares of
Preferred Stock or Common Stock; provided, however, that this restriction shall
-------- -------
not apply to the repurchase of shares of Common Stock (up to a maximum of
$500,000) from employees, officers, directors, consultants or other persons
performing services for the Company or any subsidiary.
7. Additional Series C Preferred Stock Protective Provisions.
---------------------------------------------------------
Subject to the rights of other series of Preferred Stock that may from time to
time come into existence, this Corporation shall not take any of the following
actions without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of at least a majority of the voting power of
all then outstanding shares of Series C Preferred Stock:
(a) alter or change the rights, preferences or privileges of the
shares of Series C Preferred Stock so as to affect adversely the shares; or
(b) amend the automatic conversion provisions applicable to the
Preferred Stock as set forth in subsection (4)(b) of Division B of this Article
IV.
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<PAGE>
8. Additional Series D Preferred Stock Protective Provisions.
---------------------------------------------------------
Subject to the rights of other series of Preferred Stock that may from time to
time come into existence, this Corporation shall not take any action, without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least a majority of the voting power of all then outstanding
shares of Series D Preferred Stock, that would alter, change or reclassify the
rights, preferences or privileges of the shares of Series D Preferred Stock so
as to affect adversely the shares in a manner different from the Series A,
Series B and Series C Preferred Stock.
9. Additional Series E Preferred Stock Protective Provisions.
---------------------------------------------------------
Subject to the rights of other series of Preferred Stock that may from time to
time come into existence, this Corporation shall not take any action, without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least a majority of the voting power of all then outstanding
shares of Series E Preferred Stock, that would alter, change or reclassify the
rights, preferences or privileges of the shares of Series E Preferred Stock so
as to affect adversely the shares in a manner different from the Series A,
Series B, Series C and D Preferred Stock.
10. Status of Converted or Redeemed Stock. In the event any shares
-------------------------------------
of Series A, Series B, Series C, Series D or Series E Preferred Stock shall be
redeemed or converted pursuant to Section 3 or Section 4 hereof, the shares so
converted or redeemed shall be canceled and shall not be issuable by this
Corporation. The Fifth Amended and Restated Certificate of Incorporation of
this Corporation shall be appropriately amended to effect the corresponding
reduction in this Corporation's authorized capital stock.
C. Common Stock
------------
1. Dividend Rights. Subject to the prior rights of holders of all
---------------
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of this Corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding
------------------
up of this Corporation, the assets of this Corporation shall be distributed as
provided in Section 2 of Division B of this Article IV.
3. Voting Rights. The holder of each share of Common Stock shall
-------------
have the right to one vote, and shall be entitled to notice of any stockholders'
meeting in accordance with the bylaws of this Corporation, and shall be entitled
to vote upon such matters in such manner as may be provided by law.
ARTICLE V
Except as otherwise provided in this Fifth Amended and Restated Certificate
of Incorporation, in furtherance and not in limitation of the powers conferred
by statute, the Board
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<PAGE>
of Directors is expressly authorized to make, repeal, alter, amend and rescind
any or all of the Bylaws of this corporation.
ARTICLE VI
The number of directors of this Corporation shall be fixed from time to
time by a bylaw or amendment thereof duly adopted by the Board of Directors or
by the stockholders.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws of
this Corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of this Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this Corporation.
ARTICLE IX
Each director and each officer of this Corporation shall, to the full
extent permitted by the Delaware General Corporation Law as it now exists or as
it may hereafter be amended, not be liable to this Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director or
officer. Neither any amendment or repeal of this Article IX, nor the adoption
of any provision of this Fifth Amended and Restated Certificate of Incorporation
inconsistent with this Article IX, shall eliminate or reduce the effect of this
Article IX in respect of any matter occurring, or any cause of action, suit or
claim that, but for this Article IX, would accrue or arise, prior to such
amendment, repeal or adoption of any inconsistent provision.
ARTICLE X
This Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Fifth Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
ARTICLE XI
This Corporation shall not take any of the following actions without first
obtaining the approval (by vote or written consent, as provided by law) of at
least sixty-six and two-thirds percent (66 2/3%) of the directors of this
Corporation;
(a) sell, convey, or otherwise dispose of all or substantially all of its
property or business or merge into or consolidate with any other corporation
(other than a wholly-owned
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<PAGE>
subsidiary corporation) or effect any transaction or series of related
transactions in which more than fifty percent (50%) of the voting power of this
Corporation is disposed of;
(b) change the authorized number of directors of this Corporation; or
(c) consummate any financing pursuant to which the holders of Series A,
Series B, Series C, Series D and Series E Preferred Stock are entitled to
exercise the right of first offer set forth in Section 2.4 of the Fifth Amended
and Restated Investors' Rights Agreement, dated on or about April __, 1999, by
and among this Corporation and certain investors and founders, as amended from
time to time, unless the existing stockholders of this Corporation purchase less
than sixty-six and two-thirds percent (66 2/3%) of the shares sold in such
financing.
***
The foregoing Fifth Amended and Restated Certificate of Incorporation has
been duly adopted by this Corporation's Board of Directors and stockholders in
accordance with the applicable provisions of Sections 228, 242 and 245 of the
General Corporation Law of the State of Delaware.
[signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this certificate on April
__, 1999.
/S/ Larry Culver
--------------------------------------------
Larry Culver
Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
METAWAVE COMMUNICATIONS CORPORATION
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I - CORPORATE OFFICES....................................... 1
1.1 Registered Office.......................................... 1
1.2 Other Offices.............................................. 1
ARTICLE II - MEETINGS OF STOCKHOLDERS............................... 1
2.1 Place Of Meetings.......................................... 1
2.2 Annual Meeting............................................. 1
2.3 Special Meeting............................................ 1
2.4 Manner Of Giving Notice; Affidavit Of Notice............... 2
2.5 Advance Notice Of Stockholder Nominees..................... 2
2.6 Quorum..................................................... 4
2.7 Adjourned Meeting; Notice.................................. 4
2.8 Conduct Of Business........................................ 4
2.9 Voting..................................................... 4
2.10 Waiver Of Notice.......................................... 4
2.11 Record Date For Stockholder Notice;
Voting; Giving Consents................................... 5
2.12 Proxies................................................... 5
ARTICLE III - DIRECTOR.............................................. 6
3.1 Powers..................................................... 6
3.2 Number Of Directors........................................ 6
3.3 Election, Qualification And Term Of
Office Of Directors........................................ 6
3.4 Resignation And Vacancies.................................. 6
3.5 Place Of Meetings; Meetings By Telephone................... 7
3.6 Regular Meetings........................................... 8
3.7 Special Meetings; Notice................................... 8
3.8 Quorum..................................................... 8
3.9 Waiver Of Notice........................................... 8
3.10 Board Action By Written Consent Without A Meeting......... 9
3.11 Fees And Compensation Of Directors........................ 9
3.12 Approval Of Loans To Officers............................. 9
3.13 Removal Of Directors...................................... 9
3.14 Chairman Of The Board Of Directors........................ 10
ARTICLE IV - COMMITTEES............................................. 10
4.1 Committees Of Directors.................................... 10
4.2 Committee Minutes.......................................... 11
4.3 Meetings And Action Of Committees.......................... 11
ARTICLE V - OFFICERS................................................ 11
5.1 Officers................................................... 11
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<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
5.2 Appointment Of Officers.................................... 11
5.3 Subordinate Officers....................................... 11
5.4 Removal And Resignation Of Officers........................ 12
5.5 Vacancies In Offices....................................... 12
5.6 Chief Executive Officer.................................... 12
5.7 President.................................................. 12
5.8 Vice Presidents............................................ 13
5.9 Secretary.................................................. 13
5.10 Chief Financial Officer................................... 13
5.11 Chief Technical Officer................................... 14
5.12 Representation Of Shares Of Other Corporations............ 14
5.13 Authority And Duties Of Officers.......................... 14
ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES, AND OTHER AGENTS............................ 14
6.1 Indemnification Of Directors And Officers.................. 14
6.2 Indemnification Of Others.................................. 15
6.3 Payment Of Expenses In Advance............................. 15
6.4 Indemnity Not Exclusive.................................... 15
6.5 Insurance.................................................. 15
6.6 Conflicts.................................................. 16
ARTICLE VII - RECORDS AND REPORTS................................... 16
7.1 Maintenance And Inspection Of Records...................... 16
7.2 Inspection By Directors.................................... 16
7.3 Annual Statement To Stockholders........................... 17
ARTICLE VIII - GENERAL MATTERS...................................... 17
8.1 Checks..................................................... 17
8.2 Execution Of Corporate Contracts And Instruments........... 17
8.3 Stock Certificates; Partly Paid Shares..................... 17
8.4 Special Designation On Certificates........................ 18
8.5 Lost Certificates.......................................... 18
8.6 Construction; Definitions.................................. 18
8.7 Dividends.................................................. 19
8.8 Fiscal Year................................................ 19
8.9 Seal....................................................... 19
8.10 Transfer Of Stock......................................... 19
8.11 Stock Transfer Agreements................................. 19
8.12 Registered Stockholders................................... 19
ARTICLE IX - AMENDMENTS............................................. 20
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<PAGE>
BYLAWS
OF
METAWAVE COMMUNICATIONS CORPORATION
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE.
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company.
1.2 OTHER OFFICES.
The Board of Directors may at any time establish other offices at any place
or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS.
Meetings of stockholders shall be held at any place, within or outside the
State of Delaware, designated by the Board of Directors. In the absence of any
such designation, stockholders' meetings shall be held at the registered office
of the corporation.
2.2 ANNUAL MEETING.
The annual meeting of stockholders shall be held on such date, time and
place, either within or without the State of Delaware, as may be designated by
resolution of the Board of Directors each year. At the meeting, directors shall
be elected and any other proper business may be transacted.
2.3 SPECIAL MEETING.
(a) A special meeting of the stockholders may be called at any time
by the Board of Directors, the chairman of the board , the president or by one
or more stockholders holding shares in the aggregate entitled to cast not less
than sixty six and two-thirds percent (66 2/3%) of the votes at that meeting.
(b) If a special meeting is called by any person or persons other
than the Board of Directors, the chairman of the board or the president, the
request shall be in writing,
<PAGE>
specifying the time of such meeting and the general nature of the business
proposed to be transacted, and shall be delivered personally or sent by
registered mail or by telegraphic or other facsimile transmission to the
chairman of the board, the president, any vice president, or the secretary of
the corporation. No business may be transacted at such special meeting otherwise
than as specified in such notice. The officer receiving the request shall cause
notice to be promptly given to the stockholders entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.5 of this Article II, that a meeting
will be held at the time requested by the person or persons calling the meeting,
not less than thirty-five (35) nor more than sixty (60) days after the receipt
of the request. If the notice is not given within twenty (20) days after the
receipt of the request, the person or persons requesting the meeting may give
the notice. Nothing contained in this paragraph of this Section 2.3 shall be
construed as limiting, fixing, or affecting the time when a meeting of
stockholders called by action of the Board of Directors may be held.
(c) Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
notice of meeting given in accordance with Section 2.2(b). Nominations of
persons for election to the board of directors may be made at a special meeting
of stockholders at which directors are to be selected pursuant to such notice of
meeting (i) by or at the direction of the board of directors or (ii) by any
stockholder of the corporation who is a stockholder of record at the time of
giving of notice provided for in this paragraph, who shall be entitled to vote
at the meeting and who complies with the notice procedures set forth in Section
2.5.
2.4 NOTICE OF STOCKHOLDER'S MEETINGS; AFFIDAVIT OF NOTICE.
All notices of meetings of stockholders shall be in writing and shall be
sent or otherwise given in accordance with this Section 2.4 of these Bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting (or such longer or shorter
time as is required by Section 2.5 of these Bylaws, if applicable). The notice
shall specify the place, date, and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called.
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES.
Only persons who are nominated in accordance with the procedures set forth
in this Section 2.5 shall be eligible for election as directors. Nominations of
persons for election to the board of directors of the corporation may be made at
a meeting of stockholders by or at the direction of the board of directors or by
any stockholder of the corporation entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
this Section 2.5. Such nominations, other than those made by or at the direction
of the board of directors, shall be made pursuant to timely notice in writing to
the secretary of the corporation.
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<PAGE>
To be timely, a stockholder's notice shall be delivered to or mailed and
received at the principal executive offices of the corporation not less than
sixty (60) days nor more than ninety (90) days prior to the meeting; provided,
however, that in the event that less than sixty (60) days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a Director, (i) the name,
age, business address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of shares of
the corporation which are beneficially owned by such person and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including, without limitation, such person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected); and (b) as to the stockholder giving the notice (i) the name and
address, as they appear on the corporation's books, of such stockholder and (ii)
the class and number of shares of the corporation which are beneficially owned
by such stockholder. At the request of the Board of Directors any person
nominated by the Board of Directors for election as a director shall furnish to
the secretary of the corporation that information required to be set forth in a
stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth in this Section 2.5. The Chairman of
the meeting shall, if the facts warrant, determine and declare to the meeting
that a nomination was not made in accordance with the procedures prescribed by
the Bylaws, and if he or she should so determine, he or she shall so declare to
the meeting and the defective nomination shall be disregarded.
2.6 QUORUM.
The holders of a majority of the stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the certificate of incorporation.
If, however, such quorum is not present or represented at any meeting of the
stockholders, then either (a) the chairman of the meeting or (b) the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.
2.7 ADJOURNED MEETING; NOTICE.
When a meeting is adjourned to another time or place, unless these Bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the
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<PAGE>
corporation may transact any business that might have been transacted at the
original meeting. If the adjournment is for more than thirty (30) days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
2.8 CONDUCT OF BUSINESS.
The chairman of any meeting of stockholders shall determine the order
of business and the procedure at the meeting, including the manner of voting and
the conduct of business.
2.9 VOTING.
(a) The stockholders entitled to vote at any meeting of stockholders
shall be determined in accordance with the provisions of Section 2.11 of these
Bylaws, subject to the provisions of Sections 217 and 218 of the General
Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors
and joint owners of stock and to voting trusts and other voting agreements).
(b) Except as may be otherwise provided in the certificate of
incorporation, each stockholder shall be entitled to one vote for each share of
capital stock held by such stockholder.
2.10 WAIVER OF NOTICE.
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these Bylaws.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING.
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action. If the Board
of Directors does not so fix a record date:
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<PAGE>
(a) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held.
(b) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
2.12 PROXIES.
Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for such stockholder by a written
proxy, signed by the stockholder and filed with the secretary of the
corporation, but no such proxy shall be voted or acted upon after three (3)
years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, typewriting, telegraphic transmission or otherwise) by the
stockholder or the stockholder's attorney-in-fact. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(e) of the General Corporation Law of Delaware.
ARTICLE III
DIRECTORS
3.1 POWERS.
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the certificate of incorporation or these Bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the Board of Directors.
3.2 NUMBER OF DIRECTORS.
Upon the adoption of these Bylaws, the number of directors constituting the
entire Board of Directors shall be nine (9). Thereafter, this number may be
changed by a resolution of the Board of Directors or of the stockholders,
subject to Section 3.4 of these Bylaws. No reduction of the authorized number of
directors shall have the effect of removing any director before such director's
term of office expires.
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<PAGE>
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.
Except as provided in Section 3.4 of these Bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these Bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his or her successor is elected and qualified
or until his or her earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES.
Any director may resign at any time upon written notice to the attention of
the Secretary of the corporation. When one or more directors so resigns and the
resignation is effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office as provided in this section in the filling of other vacancies. A vacancy
created by the removal of a director by the vote of the stockholders or by court
order may be filled only by the affirmative vote of a majority of the shares
represented and voting at a duly held meeting at which a quorum is present
(which shares voting affirmatively also constitute a majority of the quorum.
Each director so elected shall hold office until the next annual meeting of the
stockholders and until a successor has been elected and qualified.
Unless otherwise provided in the certificate of incorporation or these
Bylaws:
(a) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(b) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of the
certificate of incorporation, vacancies and newly created directorships of such
class or classes or series may be filled by a majority of the directors elected
by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these Bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
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<PAGE>
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten (10) percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office as aforesaid, which
election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.
The Board of Directors of the corporation may hold meetings, both regular
and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 REGULAR MEETINGS.
Regular meetings of the Board of Directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.
3.7 SPECIAL MEETINGS; NOTICE.
Special meetings of the Board of Directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
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<PAGE>
3.8 QUORUM.
At all meetings of the Board of Directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the Board of
Directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.
3.9 WAIVER OF NOTICE.
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these Bylaws.
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the Board
of Directors, or of any committee thereof, may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee. Written consents representing actions taken by the board
or committee may be executed by telex, telecopy or other facsimile transmission,
and such facsimile shall be valid and binding to the same extent as if it were
an original.
3.11 FEES AND COMPENSATION OF DIRECTORS.
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, the Board of Directors shall have the authority to fix the compensation
of directors. No such compensation shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
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<PAGE>
3.12 APPROVAL OF LOANS TO OFFICERS.
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.13 REMOVAL OF DIRECTORS.
Unless otherwise restricted by statute, by the certificate of incorporation
or by these Bylaws, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors; provided, however, that if the
stockholders of the corporation are entitled to cumulative voting, if less than
the entire Board of Directors is to be removed, no director may be removed
without cause if the votes cast against his removal would be sufficient to elect
him if then cumulatively voted at an election of the entire Board of Directors.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of such director's term of office.
3.14 CHAIRMAN OF THE BOARD OF DIRECTORS.
The corporation may also have, at the discretion of the Board of Directors,
a chairman of the Board of Directors who shall not be considered an officer of
the corporation.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS.
The Board of Directors may, by resolution passed by a majority of the whole
board, designate one or more committees, with each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board of Directors or in the Bylaws of the corporation, shall
have and may exercise all the powers and authority of the Board
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of Directors in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to all papers that
may require it; but no such committee shall have the power or authority to (a)
amend the certificate of incorporation (except that a committee may, to the
extent authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the Board of Directors as provided in Section 151(a)
of the General Corporation Law of Delaware, fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), (b) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (c) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (d) recommend
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or (e) amend the Bylaws of the corporation; and, unless the board
resolution establishing the committee, the Bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 COMMITTEE MINUTES.
Each committee shall keep regular minutes of its meetings and report the
same to the Board of Directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES.
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Section 3.5 (place of meetings and
meetings by telephone), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice), and
Section 3.10 (action without a meeting) of these Bylaws, with such changes in
the context of such provisions as are necessary to substitute the committee and
its members for the Board of Directors and its members; provided, however, that
the time of regular meetings of committees may be determined either by
resolution of the Board of Directors or by resolution of the committee, that
special meetings of committees may also be called by resolution of the Board of
Directors and that notice of special meetings of committees shall also be given
to all alternate members, who shall have the right to attend all meetings of the
committee. The Board of Directors may adopt rules for the government of any
committee not inconsistent with the provisions of these Bylaws.
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ARTICLE V
OFFICERS
5.1 OFFICERS.
The officers of the corporation shall be a chief executive officer, a
president, a secretary, a chief financial officer and a chief technical officer.
The corporation may also have, at the discretion of the Board of Directors, one
or more vice presidents, one or more assistant secretaries, one or more
assistant treasurers, and any such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these Bylaws. Any number of
offices may be held by the same person.
5.2 APPOINTMENT OF OFFICERS.
The officers of the corporation, except such officers as may be appointed
in accordance with the provisions of Sections 5.3 or 5.5 of these Bylaws, shall
be appointed by the Board of Directors, subject to the rights, if any, of an
officer under any contract of employment.
5.3 SUBORDINATE OFFICERS.
The Board of Directors may appoint, or empower the chief executive officer
or the president to appoint, such other officers and agents as the business of
the corporation may require, each of whom shall hold office for such period,
have such authority, and perform such duties as are provided in these Bylaws or
as the Board of Directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS.
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the Board of Directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
Board of Directors, by any officer upon whom such power of removal may be
conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the
attention of the Secretary of the corporation. Any resignation shall take effect
at the date of the receipt of that notice or at any later time specified in that
notice; and, unless otherwise specified in that notice, the acceptance of the
resignation shall not be necessary to make it effective. Any resignation is
without prejudice to the rights, if any, of the corporation under any contract
to which the officer is a party.
5.5 VACANCIES IN OFFICES.
Any vacancy occurring in any office of the corporation shall be filled by
the Board of Directors.
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5.6 CHIEF EXECUTIVE OFFICER.
Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the chairman of the board, if any, the chief executive officer of
the corporation shall, subject to the control of the Board of Directors, have
general supervision, direction, and control of the business and the officers of
the corporation. He or she shall preside at all meetings of the stockholders
and, in the absence or nonexistence of a chairman of the board, at all meetings
of the Board of Directors and shall have the general powers and duties of
management usually vested in the office of chief executive officer of a
corporation and shall have such other powers and duties as may be prescribed by
the Board of Directors or these Bylaws.
5.7 PRESIDENT.
Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the chairman of the board (if any) or the chief executive officer,
the president shall have general supervision, direction, and control of the
business and other officers of the corporation. He or she shall have the general
powers and duties of management usually vested in the office of president of a
corporation and such other powers and duties as may be prescribed by the Board
of Directors or these Bylaws.
5.8 VICE PRESIDENTS.
In the absence or disability of the chief executive officer and president,
the vice presidents, if any, in order of their rank as fixed by the Board of
Directors or, if not ranked, a vice president designated by the Board of
Directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors, these Bylaws, the president or the chairman of the board.
5.9 SECRETARY.
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the Board of Directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and stockholders. The minutes shall show the time and place of
each meeting, the names of those present at directors' meetings or committee
meetings, the number of shares present or represented at stockholders' meetings,
and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the Board of Directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
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The secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the Board of Directors required to be given by law or by
these Bylaws. He or she shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the Board of Directors or by these Bylaws.
5.10 CHIEF FINANCIAL OFFICER.
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositories as may be
designated by the Board of Directors. He or she shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president, the chief executive officer, or the directors, upon request, an
account of all his or her transactions as chief financial officer and of the
financial condition of the corporation, and shall have other powers and perform
such other duties as may be prescribed by the Board of Directors or the Bylaws.
5.11 CHIEF TECHNICAL OFFICER.
Subject to such supervisory powers of the chief executive officer and the
president, the chief technical officer shall have general supervision,
direction, and control of the research and development activities of the
corporation and shall have other powers and perform such other duties as may be
prescribed by the Board of Directors or the Bylaws.
5.12 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
The chairman of the board, the chief executive officer, the president, any
vice president, the chief financial officer, chief technical officer, the
secretary or assistant secretary of this corporation, or any other person
authorized by the Board of Directors or the chief executive officer or the
president or a vice president, is authorized to vote, represent, and exercise on
behalf of this corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this corporation. The
authority granted herein may be exercised either by such person directly or by
any other person authorized to do so by proxy or power of attorney duly executed
by the person having such authority.
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5.13 AUTHORITY AND DUTIES OF OFFICERS.
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the Board of Directors or the stockholders.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The corporation shall, to the maximum extent and in the manner permitted by
the General Corporation Law of Delaware, indemnify each of its directors and
officers against expenses (including attorneys' fees), judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding, arising by reason of the fact that such person is or was an
agent of the corporation. For purposes of this Section 6.1, a "director" or
"officer" of the corporation includes any person (a) who is or was a director or
officer of the corporation, (b) who is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or (c) who was a director or officer of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
6.2 INDEMNIFICATION OF OTHERS.
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware, to indemnify each
of its employees and agents (other than directors and officers) against expenses
(including attorneys' fees), judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.2, an "employee" or "agent" of the corporation (other
than a director or officer) includes any person (a) who is or was an employee or
agent of the corporation, (b) who is or was serving at the request of the
corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (c) who was an employee or agent of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
6.3 PAYMENT OF EXPENSES IN ADVANCE.
Expenses incurred in defending any action or proceeding for which
indemnification is required pursuant to Section 6.1 or for which indemnification
is permitted pursuant to Section 6.2 following authorization thereof by the
Board of Directors shall be paid by the corporation in advance of the final
disposition of such action or proceeding upon receipt of an undertaking by or on
behalf of the indemnified party to repay such amount if it shall ultimately
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be determined that the indemnified party is not entitled to be indemnified as
authorized in this Article VI.
6.4 INDEMNITY NOT EXCLUSIVE.
The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any Bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, to the extent that such
additional rights to indemnification are authorized in the certificate of
incorporation.
6.5 INSURANCE.
The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the General Corporation Law of
Delaware.
6.6 CONFLICTS.
No indemnification or advance shall be made under this Article VI,
except where such indemnification or advance is mandated by law or the order,
judgment or decree of any court of competent jurisdiction, in any circumstance
where it appears:
(a) That it would be inconsistent with a provision of the certificate
of incorporation, these Bylaws, a resolution of the stockholders or an agreement
in effect at the time of the accrual of the alleged cause of the action asserted
in the proceeding in which the expenses were incurred or other amounts were
paid, which prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS.
The corporation shall, either at its principal executive offices or at such
place or places as designated by the Board of Directors, keep a record of its
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these Bylaws as amended to date,
accounting books, and other records.
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Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS.
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his or her position as a director. The Court of
Chancery is hereby vested with the exclusive jurisdiction to determine whether a
director is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS.
The Board of Directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS.
From time to time, the Board of Directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.
The Board of Directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the Board of Directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
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authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES.
The shares of a corporation shall be represented by certificates, provided
that the Board of Directors of the corporation may provide by resolution or
resolutions that some or all of any or all classes or series of its stock shall
be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the Board of
Directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the Board of Directors, or the chief executive officer or the president or vice-
president, and by the chief financial officer or an assistant treasurer, or the
secretary or an assistant secretary of such corporation representing the number
of shares registered in certificate form. Any or all of the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
has ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he or she were such officer, transfer agent or registrar at the date of
issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES.
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
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8.5 LOST CERTIFICATES.
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate previously issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or the owner's legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS.
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these Bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.7 DIVIDENDS.
The directors of the corporation, subject to any restrictions contained in
(a) the General Corporation Law of Delaware or (b) the certificate of
incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
corporation's capital stock.
The directors of the corporation may set apart out of any of the funds of
the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR.
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors and may be changed by the Board of Directors.
8.9 SEAL.
The corporation may adopt a corporate seal, which may be altered at
pleasure, and may use the same by causing it or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced.
8.10 TRANSFER OF STOCK.
Upon surrender to the corporation or the transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession,
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assignation or authority to transfer, it shall be the duty of the corporation to
issue a new certificate to the person entitled thereto, cancel the old
certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS.
The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS.
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
AMENDMENTS
The Bylaws of the corporation may be adopted, amended or repealed by
the stockholders entitled to vote; provided, however, that the corporation may,
in its certificate of incorporation, confer the power to adopt, amend or repeal
Bylaws upon the directors; provided, further, any amendment to the Bylaws that
increases or reduces the authorized number of directors shall require the
affirmative approval of at least two-thirds of the directors. The fact that
such power has been so conferred upon the directors shall not divest the
stockholders of the power, nor limit their power to adopt, amend or repeal
Bylaws. Notwithstanding the foregoing, any amendments to this Article IX shall
require approval of holders of two-thirds of the outstanding Common Stock.
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CERTIFICATE OF ADOPTION OF BYLAWS
OF
METAWAVE COMMUNICATIONS CORPORATION
The undersigned hereby certifies that the undersigned is the duly elected,
qualified, and acting Secretary of Metawave Communications Corporation, and that
the foregoing Bylaws were adopted as the Bylaws of the corporation on May 19,
1998, by the Board of Directors of the corporation.
Executed this 14th day of July, 1998.
/s/ Vito Palermo
-----------------------
Vito Palermo, Secretary
<PAGE>
EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made as of
_______________, by and between Metawave Communications Corporation, a Delaware
corporation (the "Company"), and [IndemniteeName] (the "Indemnitee").
RECITALS
The Company and Indemnitee recognize the increasing difficulty in obtaining
liability insurance for directors, officers and key employees, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance. The Company and Indemnitee further recognize the
substantial increase in corporate litigation in general, subjecting directors,
officers and key employees to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited.
Indemnitee does not regard the current protection available as adequate under
the present circumstances, and Indemnitee and agents of the Company may not be
willing to continue to serve as agents of the Company without additional
protection. The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, and to indemnify its directors,
officers and key employees so as to provide them with the maximum protection
permitted by law.
AGREEMENT
In consideration of the mutual promises made in this Agreement, and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the Company and Indemnitee hereby agree as follows:
1. INDEMNIFICATION.
(a) THIRD PARTY PROCEEDINGS. The Company shall indemnify Indemnitee
if Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any subsidiary of the
Company, by reason of any action or inaction on the part of Indemnitee while an
officer or director or by reason of the fact that Indemnitee is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) actually and reasonably incurred by
Indemnitee in connection with such action, suit or proceeding if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe Indemnitee's
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that Indemnitee did
not act in good faith and in a manner which Indemnitee
<PAGE>
reasonably believed to be in or not opposed to the best interests of
the Company, or, with respect to any criminal action or proceeding, that
Indemnitee had reasonable cause to believe that Indemnitee's conduct was
unlawful.
(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company shall
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action or proceeding by or in
the right of the Company or any subsidiary of the Company to procure a judgment
in its favor by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company, or any subsidiary of the Company, by
reason of any action or inaction on the part of Indemnitee while an officer or
director or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) and, to the fullest extent permitted by
law, amounts paid in settlement (if such settlement is approved in advance by
the Company, which approval shall not be unreasonably withheld), in each case to
the extent actually and reasonably incurred by Indemnitee in connection with the
defense or settlement of such action or suit if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company and its stockholders, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been finally adjudicated by court order or judgment
to be liable to the Company in the performance of Indemnitee's duty to the
Company and its stockholders unless and only to the extent that the court in
which such action or proceeding is or was pending shall determine upon
application that, in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
(c) MANDATORY PAYMENT OF EXPENSES. To the extent that Indemnitee has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 1(a) or Section 1(b) or the defense of any
claim, issue or matter therein, Indemnitee shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by Indemnitee in
connection therewith.
2. NO EMPLOYMENT RIGHTS. Nothing contained in this Agreement is intended
to create in Indemnitee any right to continued employment.
3. EXPENSES; INDEMNIFICATION PROCEDURE.
(a) ADVANCEMENT OF EXPENSES. The Company shall advance all expenses
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action, suit or proceeding referred to in
Section l(a) or Section 1(b) hereof (including amounts actually paid in
settlement of any such action, suit or proceeding). Indemnitee hereby undertakes
to repay such amounts advanced only if, and to the extent that, it shall
ultimately be determined that Indemnitee is not entitled to be indemnified by
the Company as authorized hereby.
(b) NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a
condition precedent to his or her right to be indemnified under this Agreement,
give the Company notice in
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writing as soon as practicable of any claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company and
shall be given in accordance with the provisions of Section 12(d) below. In
addition, Indemnitee shall give the Company such information and cooperation as
it may reasonably require and as shall be within Indemnitee's power.
(c) PROCEDURE. Any indemnification and advances provided for in
Section 1 and this Section 3 shall be made no later than twenty (20) days after
receipt of the written request of Indemnitee. If a claim under this Agreement,
under any statute, or under any provision of the Company's Certificate of
Incorporation or Bylaws providing for indemnification, is not paid in full by
the Company within twenty (20) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need not, at any
time thereafter bring an action against the Company to recover the unpaid amount
of the claim and, subject to Section 11 of this Agreement, Indemnitee shall also
be entitled to be paid for the expenses (including attorneys' fees) of bringing
such action. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in connection with any action,
suit or proceeding in advance of its final disposition) that Indemnitee has not
met the standards of conduct which make it permissible under applicable law for
the Company to indemnify Indemnitee for the amount claimed, but the burden of
proving such defense shall be on the Company and Indemnitee shall be entitled to
receive interim payments of expenses pursuant to Section 3(a) unless and until
such defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists. It is the parties' intention that if the Company
contests Indemnitee's right to indemnification, the question of Indemnitee's
right to indemnification shall be for the court to decide, and neither the
failure of the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or its
stockholders) to have made a determination that indemnification of Indemnitee is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct required by applicable law, nor an actual determination by the
Company (including its Board of Directors, any committee or subgroup of the
Board of Directors, independent legal counsel, or its stockholders) that
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that Indemnitee has or has not met the applicable standard of
conduct.
(d) NOTICE TO INSURERS. If, at the time of the receipt of a notice
of a claim pursuant to Section 3(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
(e) SELECTION OF COUNSEL. In the event the Company shall be
obligated under Section 3(a) hereof to pay the expenses of any proceeding
against Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by Indemnitee, upon the
delivery to Indemnitee of written notice of its election so to do. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel
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<PAGE>
by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same proceeding, provided that (i) Indemnitee shall have the
right to employ counsel in any such proceeding at Indemnitee's expense; and (ii)
if (A) the employment of counsel by Indemnitee has been previously authorized by
the Company, (B) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense or (C) the Company shall not, in fact, have employed counsel to
assume the defense of such proceeding, then the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company.
4. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
(a) SCOPE. Notwithstanding any other provision of this Agreement,
the Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Certificate
of Incorporation, the Company's Bylaws or by statute. In the event of any
change, after the date of this Agreement, in any applicable law, statute, or
rule which expands the right of a Delaware corporation to indemnify a member of
its board of directors or an officer, such changes shall be deemed to be within
the purview of Indemnitee's rights and the Company's obligations under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement shall have
no effect on this Agreement or the parties' rights and obligations hereunder.
(b) NONEXCLUSIVITY. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested members of the Company's Board of
Directors, the General Corporation Law of the State of Delaware, or otherwise,
both as to action in Indemnitee's official capacity and as to action in another
capacity while holding such office. The indemnification provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though he or she may have ceased
to serve in any such capacity at the time of any action, suit or other covered
proceeding.
5. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred in the investigation, defense, appeal or settlement of any civil or
criminal action, suit or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.
6. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or public policy may override applicable
state law and prohibit the Company from indemnifying its directors and officers
under this Agreement or otherwise.
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<PAGE>
For example, the Company and Indemnitee acknowledge that the Securities and
Exchange Commission (the "SEC") has taken the position that indemnification is
not permissible for liabilities arising under certain federal securities laws,
and federal legislation prohibits indemnification for certain ERISA violations.
Indemnitee understands and acknowledges that the Company has undertaken or may
be required in the future to undertake with the SEC to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.
7. OFFICER AND DIRECTOR LIABILITY INSURANCE. The Company shall, from
time to time, make the good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
director and officer liability insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company's directors, if
Indemnitee is a director; or of the Company's officers, if Indemnitee is not a
director of the Company but is an officer; or of the Company's key employees, if
Indemnitee is not an officer or director but is a key employee. Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a parent
or subsidiary of the Company.
8. SEVERABILITY. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 8. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.
9. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance expenses
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 145 of the Delaware General Corporation Law, but such indemnification or
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<PAGE>
advancement of expenses may be provided by the Company in specific cases if the
Board of Directors finds it to be appropriate;
(b) LACK OF GOOD FAITH. To indemnify Indemnitee for any expenses
incurred by Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee in such
proceeding was not made in good faith or was frivolous;
(c) INSURED CLAIMS. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the
extent such expenses or liabilities have been paid directly to Indemnitee by an
insurance carrier under a policy of officers' and directors' liability insurance
maintained by the Company; or
(d) CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for expenses
or the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
10. CONSTRUCTION OF CERTAIN PHRASES.
(a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
if Indemnitee is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, Indemnitee shall stand in
the same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not
opposed to the best interests of the Company" as referred to in this Agreement.
11. ATTORNEYS' FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee
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<PAGE>
with respect to such action, unless as a part of such action, the court of
competent jurisdiction determines that each of the material assertions made by
Indemnitee as a basis for such action were not made in good faith or were
frivolous. In the event of an action instituted by or in the name of the Company
under this Agreement or to enforce or interpret any of the terms of this
Agreement, Indemnitee shall be entitled to be paid all court costs and expenses,
including attorneys' fees, incurred by Indemnitee in defense of such action
(including with respect to Indemnitee's counterclaims and cross-claims made in
such action), unless as a part of such action the court determines that each of
Indemnitee's material defenses to such action were made in bad faith or were
frivolous.
12. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflict of law.
(b) ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS. This Agreement sets
forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.
(c) CONSTRUCTION. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.
(d) NOTICES. Any notice, demand or request required or permitted to
be given under this Agreement shall be in writing and shall be deemed sufficient
when delivered personally or sent by telegram or forty-eight (48) hours after
being deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party's address as
set forth below or as subsequently modified by written notice.
(e) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, and inure to the benefit of Indemnitee
and Indemnitee's heirs, legal representatives and assigns.
(g) SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of
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<PAGE>
Indemnitee, who shall execute all documents required and shall do all acts that
may be necessary to secure such rights and to enable the Company to effectively
bring suit to enforce such rights.
[Signature Page Follows]
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<PAGE>
The parties hereto have executed this Agreement as of the day and year set
forth on the first page of this Agreement.
METAWAVE COMMUNICATIONS CORPORATION
By: __________________________________________
Title: __________________________________________
Address: 8700 148th Avenue N.E.
Redmond, Washington 98052
AGREED TO AND ACCEPTED:
[IndemniteeName]
______________________________
(Signature)
Address: [IndemniteeAddress1]
[IndemniteeAddress2]
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<PAGE>
EXHIBIT 10.4
METAWAVE COMMUNICATIONS CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
---------------------------------
The following constitute the provisions of the 2000 Employee Stock Purchase
Plan of Metawave Communications Corporation.
1. Purpose. The purpose of the Plan is to provide employees of the
-------
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company. It is the intention of the Company to have the Plan
qualify as an "Employee Stock Purchase Plan" under Section 423 of the Code. The
provisions of the Plan shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
-----------
(a) "Board" means the Board of Directors of the Company.
-----
(b) "Code" means the Internal Revenue Code of 1986, as amended.
----
(c) "Common Stock" means the Common Stock of the Company.
------------
(d) "Company" means Metawave Communications Corporation, a Delaware
-------
corporation and formerly encoding.com, Inc.
(e) "Compensation" means total cash compensation received by an
------------
Employee from the Company or a Designated Subsidiary. By way of illustration,
but not limitation, Compensation includes regular compensation such as salary,
wages, overtime, shift differentials, bonuses (other than bonuses offered in
connection with, and as an inducement for, the commencement of employment),
commissions and incentive compensation, but excludes relocation, expense
reimbursements, tuition or other reimbursements, cash payments in lieu of sick
or vacation time benefits and income realized as a result of participation in
any stock option, stock purchase, or similar plan of the Company or any
Designated Subsidiary.
(f) "Continuous Status as an Employee" means the absence of any
--------------------------------
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of (i) sick leave; (ii)
military leave; (iii) any other leave of absence approved by the Administrator,
provided that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company and its Designated Subsidiaries.
(g) "Contributions" means all amounts credited to the account of a
-------------
participant pursuant to the Plan.
<PAGE>
(h) "Corporate Transaction" means a sale of all or substantially all
---------------------
of the Company's assets, or a merger, consolidation or other capital
reorganization of the Company with or into another corporation.
(i) "Designated Subsidiaries" means the Subsidiaries which have been
-----------------------
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan; provided however that the Board shall only have the
discretion to designate Subsidiaries if the issuance of options to such
Subsidiary's Employees pursuant to the Plan would not cause the Company to incur
adverse accounting charges.
(j) "Employee" means any person, including an Officer, who is
--------
customarily employed for at least twenty (20) hours per week and more than five
(5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(l) "Offering Date" means the first business day of each Offering
-------------
Period of the Plan.
(m) "Offering Period" means a period of twenty-four (24) months
---------------
commencing on May 1 and November 1 of each year, except for the first Offering
Period as set forth in Section 4(a).
(n) "Officer" means a person who is an officer of the Company within
-------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(o) "Plan" means this Employee Stock Purchase Plan.
----
(p) "Purchase Date" means the last day of each Purchase Period of the
-------------
Plan.
(q) "Purchase Period" means a period of six (6) months within an
---------------
Offering Period, except for the first Purchase Period as set forth in Section
4(b).
(r) "Purchase Price" means with respect to a Purchase Period an amount
--------------
equal to 85% of the Fair Market Value (as defined in Section 7(b) below) of a
Share of Common Stock on the Offering Date or on the Purchase Date, whichever is
lower; provided, however, that in the event (i) of any increase in the number of
Shares available for issuance under the Plan as a result of a stockholder-
approved amendment to the Plan, and (ii) all or a portion of such additional
Shares are to be issued with respect to one or more Offering Periods that are
underway at the time of such increase ("Additional Shares"), and (iii) the Fair
-----------------
Market Value of a Share of Common Stock on the date of such increase (the
"Approval Date Fair Market Value") is higher than the Fair Market Value on the
- --------------------------------
Offering Date for any such Offering Period, then in such instance the Purchase
Price with respect to Additional Shares shall be 85% of the Approval Date Fair
Market Value or the Fair Market Value of a Share of Common Stock on the Purchase
Date, whichever is lower.
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<PAGE>
(s) "Share" means a share of Common Stock, as adjusted in accordance
-----
with Section 19 of the Plan.
(t) "Subsidiary" means a corporation, domestic or foreign, of which
----------
not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.
3. Eligibility.
-----------
(a) Any person who is an Employee as of the Offering Date of a given
Offering Period shall be eligible to participate in such Offering Period under
the Plan, subject to the requirements of Section 5(a) and the limitations
imposed by Section 423(b) of the Code; provided however that eligible Employees
may not participate in more than one Offering Period at a time.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own capital stock of
the Company and/or hold outstanding options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or of any subsidiary of the Company, or (ii) if such
option would permit his or her rights to purchase stock under all employee stock
purchase plans (described in Section 423 of the Code) of the Company and its
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) of the Fair Market Value (as defined in Section 7(b) below) of such
stock (determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time.
4. Offering Periods and Purchase Periods.
-------------------------------------
(a) Offering Periods. The Plan shall be implemented by a series of
----------------
Offering Periods of approximately twenty-four (24) months duration, with new
Offering Periods commencing on or about May 1 and November 1 of each year (or at
such other time or times as may be determined by the Board of Directors). The
first Offering Period shall commence on the beginning of the effective date of
the Registration Statement on Form S-1 for the initial public offering of the
Company's Common Stock (the "IPO Date") and continue until April 30, 2002. The
--------
Plan shall continue until terminated in accordance with Section 20 hereof. The
Board of Directors of the Company shall have the power to change the duration
and/or the frequency of Offering Periods with respect to future offerings
without stockholder approval if such change is announced at least five (5) days
prior to the scheduled beginning of the first Offering Period to be affected.
(b) Purchase Periods. Each Offering Period shall consist of four (4)
----------------
consecutive Purchase Periods of six (6) months' duration. The last day of each
Purchase Period shall be the "Purchase Date" for such Purchase Period. A
-------------
Purchase Period commencing on May 1 shall end on the next October 31. A
Purchase Period commencing on November 1 shall end on the next April 30. The
first Purchase Period shall commence on the IPO Date and shall end on
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<PAGE>
October 31, 2000. The Board of Directors of the Company shall have the power to
change the duration and/or frequency of Purchase Periods with respect to future
purchases without stockholder approval if such change is announced at least five
(5) days prior to the scheduled beginning of the first Purchase Period to be
affected.
5. Participation.
-------------
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement on the form provided by the Company and
filing it with the Company's payroll office prior to the applicable Offering
Date, unless a later time for filing the subscription agreement is set by the
Board for all eligible Employees with respect to a given Offering Period. The
subscription agreement shall set forth the percentage of the participant's
Compensation (subject to Section 6(a) below) to be paid as Contributions
pursuant to the Plan.
(b) Payroll deductions shall commence on the first payroll paid
following the Offering Date and shall end on the last payroll paid on or prior
to the last Purchase Period of the Offering Period to which the subscription
agreement is applicable, unless sooner terminated by the participant as provided
in Section 10.
6. Method of Payment of Contributions.
----------------------------------
(a) A participant shall elect to have payroll deductions made on each
payday during the Offering Period in an amount not less than one percent (1%)
and not more than fifteen percent (15%) (or such greater percentage as the Board
may establish from time to time before an Offering Date) of such participant's
Compensation on each payday during the Offering Period. All payroll deductions
made by a participant shall be credited to his or her account under the Plan. A
participant may not make any additional payments into such account.
(b) A participant may discontinue his or her participation in the Plan
as provided in Section 10, or, on one occasion only during an Offering Period
may increase and on one occasion only during an Offering Period may decrease the
rate of his or her Contributions with respect to the Offering Period by
completing and filing with the Company a new subscription agreement authorizing
a change in the payroll deduction rate. The change in rate shall be effective
as of the beginning of the next calendar month following the date of filing of
the new subscription agreement, if the agreement is filed at least ten (10)
business days prior to such date and, if not, as of the beginning of the next
succeeding calendar month.
(c) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b), a participant's payroll
deductions may be decreased by the Company to 0% at any time during a Purchase
Period. Payroll deductions shall re-commence at the rate provided in such
participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10. In addition, a
participant's payroll deductions may be decreased by the Company to 0% at any
time during a Purchase Period in order to avoid unnecessary payroll
contributions as a result of application of the maximum share limit set forth in
Section 7(a), in which case payroll deductions shall re-commence at the rate
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<PAGE>
provided in such participant's subscription agreement at the beginning of the
next Purchase Period, unless terminated by the participant as provided in
Section 10.
7. Grant of Option.
---------------
(a) On the Offering Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase on each Purchase Date a number of Shares of the Company's Common Stock
determined by dividing such Employee's Contributions accumulated prior to such
Purchase Date and retained in the participant's account as of the Purchase Date
by the applicable Purchase Price; provided however that the maximum number of
Shares an Employee may purchase during each Purchase Period shall be 2,000
Shares (before giving effect to a stock split effected in connection with the
Company's initial public offering and subject to any adjustment pursuant to
Section 19 below), and provided further that such purchase shall be subject to
the limitations set forth in Sections 3(b) and 13.
(b) The fair market value of the Company's Common Stock on a given
date (the "Fair Market Value") shall be determined by the Board in its
-----------------
discretion based on the closing sales price of the Common Stock for such date
(or, in the event that the Common Stock is not traded on such date, on the
immediately preceding trading date), as reported by the National Association of
Securities Dealers Automated Quotation (Nasdaq) National Market or, if such
price is not reported, the mean of the bid and asked prices per share of the
Common Stock as reported by Nasdaq or, in the event the Common Stock is listed
on a stock exchange, the Fair Market Value per share shall be the closing sales
price on such exchange on such date (or, in the event that the Common Stock is
not traded on such date, on the immediately preceding trading date), as reported
in The Wall Street Journal. For purposes of the Offering Date under the first
-----------------------
Offering Period under the Plan, the Fair Market Value of a share of the Common
Stock of the Company shall be the Price to Public as set forth in the final
prospectus filed with the Securities and Exchange Commission pursuant to Rule
424 under the Securities Act of 1933, as amended.
8. Exercise of Option. Unless a participant withdraws from the Plan as
------------------
provided in Section 10, his or her option for the purchase of Shares will be
exercised automatically on each Purchase Date of an Offering Period, and the
maximum number of full Shares subject to the option will be purchased at the
applicable Purchase Price with the accumulated Contributions in his or her
account. No fractional Shares shall be issued. The Shares purchased upon
exercise of an option hereunder shall be deemed to be transferred to the
participant on the Purchase Date. During his or her lifetime, a participant's
option to purchase Shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Purchase Date of each
--------
Offering Period, the Company shall arrange the delivery to each participant, as
appropriate, the Shares purchased upon exercise of his or her option. No
fractional Shares shall be purchased; any payroll deductions accumulated in a
participant's account which are not sufficient to purchase a full Share shall be
retained in the participant's account for the subsequent Purchase Period or
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 below.
-5-
<PAGE>
Any other amounts left over in a participant's account after a Purchase Date
shall be returned to the participant.
10. Voluntary Withdrawal; Termination of Employment.
-----------------------------------------------
(a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior to
each Purchase Date by giving written notice to the Company. All of the
participant's Contributions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal and his or her
option for the current period will be automatically terminated, and no further
Contributions for the purchase of Shares will be made during the Offering
Period.
(b) Upon termination of the participant's Continuous Status as an
Employee prior to the Purchase Date of an Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Section 14, and his or her option will
be automatically terminated.
(c) In the event an Employee fails to remain in Continuous Status as
an Employee of the Company for at least twenty (20) hours per week during the
Offering Period in which the employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the Contributions credited to his
or her account will be returned to him or her and his or her option terminated.
(d) A participant's withdrawal from an offering will not have any
effect upon his or her eligibility to participate in a succeeding offering or in
any similar plan which may hereafter be adopted by the Company.
11. Automatic Withdrawal. To the extent permitted by any applicable laws,
--------------------
regulations or stock exchange rules, if the Fair Market Value of the Shares on
an Offering Date for an Offering Period commencing within an Offering Period
then in progress is lower than was the Fair Market Value of the Shares on the
Offering Date for such Offering Period then in progress, then every participant
in such Offering Period then in progress shall automatically (i) be deemed to
have withdrawn from such Offering Period then in progress at the close of the
Purchase Period immediately preceding the new Offering Period with the lower
Fair Market Value on its corresponding Offering Date, and (ii) be deemed to have
enrolled in such new Offering Period with the lower Fair Market Value on its
corresponding Offering Date. All payroll deductions accumulated in a
participant's account as of such withdrawal date pursuant to this Section 11
shall be returned to the participant.
12. Interest. No interest shall accrue on the Contributions of a
--------
participant in the Plan.
13. Stock.
-----
(a) Subject to adjustment as provided in Section 19, the maximum
number of Shares which shall be made available for sale under the Plan shall be
350,000 Shares (before
-6-
<PAGE>
giving effect to a stock split effected in connection with the Company's initial
public offering), plus an annual increase on the first day of each of the
Company's fiscal years beginning in 2001 through 2010 equal to the lesser of (i)
400,000 Shares (before giving effect to a stock split effected in connection
with the Company's initial public offering), (ii) one percent (1%) of the Shares
outstanding on the last day of the immediately preceding fiscal year, or (iii)
such lesser number of Shares as is determined by the Board. If the Board
determines that, on a given Purchase Date, the number of shares with respect to
which options are to be exercised may exceed (i) the number of shares of Common
Stock that were available for sale under the Plan on the Offering Date of the
applicable Offering Period, or (ii) the number of shares available for sale
under the Plan on such Purchase Date, the Board may in its sole discretion
provide (x) that the Company shall make a pro rata allocation of the Shares of
Common Stock available for purchase on such Offering Date or Purchase Date, as
applicable, in as uniform a manner as shall be practicable and as it shall
determine in its sole discretion to be equitable among all participants
exercising options to purchase Common Stock on such Purchase Date, and continue
all Offering Periods then in effect, or (y) that the Company shall make a pro
rata allocation of the shares available for purchase on such Offering Date or
Purchase Date, as applicable, in as uniform a manner as shall be practicable and
as it shall determine in its sole discretion to be equitable among all
participants exercising options to purchase Common Stock on such Purchase Date,
and terminate any or all Offering Periods then in effect pursuant to Section 20
below. The Company may make pro rata allocation of the Shares available on the
Offering Date of any applicable Offering Period pursuant to the preceding
sentence, notwithstanding any authorization of additional Shares for issuance
under the Plan by the Company's stockholders subsequent to such Offering Date.
(b) The participant shall have no interest or voting right in Shares
covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.
14. Administration. The Board, or a committee named by the Board, shall
--------------
supervise and administer the Plan and shall have full power to adopt, amend and
rescind any rules deemed desirable and appropriate for the administration of the
Plan and not inconsistent with the Plan, to construe and interpret the Plan, and
to make all other determinations necessary or advisable for the administration
of the Plan.
15. Designation of Beneficiary.
--------------------------
(a) A participant may file a written designation of a beneficiary who
is to receive any Shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of a
Purchase Period but prior to delivery to him or her of such Shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the Purchase Date of an Offering Period.
If a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.
-7-
<PAGE>
(b) Such designation of beneficiary may be changed by the participant
(and his or her spouse, if any) at any time by written notice. In the event of
the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company shall deliver such Shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such Shares and/or cash to the spouse or to any
one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.
16. Transferability. Neither Contributions credited to a participant's
---------------
account nor any rights with regard to the exercise of an option or to receive
Shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 15) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds in accordance with Section 10.
17. Use of Funds. All Contributions received or held by the Company under
------------
the Plan may be used by the Company for any corporate purpose, and the Company
shall not be obligated to segregate such Contributions.
18. Reports. Individual accounts will be maintained for each participant
-------
in the Plan. Statements of account will be given to participating Employees at
least annually, which statements will set forth the amounts of Contributions,
the per Share Purchase Price, the number of Shares purchased and the remaining
cash balance, if any.
19. Adjustments Upon Changes in Capitalization; Corporate Transactions.
------------------------------------------------------------------
(a) Adjustment. Subject to any required action by the stockholders of
----------
the Company, the number of Shares covered by each option under the Plan which
has not yet been exercised and the number of Shares which have been authorized
for issuance under the Plan but have not yet been placed under option
(collectively, the "Reserves"), as well as the maximum number of shares of
--------
Common Stock which may be purchased by a participant in a Purchase Period, the
number of shares of Common Stock set forth in Section 13(a) above, and the price
per Share of Common Stock covered by each option under the Plan which has not
yet been exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common Stock
(including any such change in the number of Shares of Common Stock effected in
connection with a change in domicile of the Company), or any other increase or
decrease in the number of Shares effected without receipt of consideration by
the Company; provided however that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an option.
-8-
<PAGE>
(b) Corporate Transactions. In the event of a dissolution or
----------------------
liquidation of the Company, any Purchase Period and Offering Period then in
progress will terminate immediately prior to the consummation of such action,
unless otherwise provided by the Board. In the event of a Corporate Transaction,
each option outstanding under the Plan shall be assumed or an equivalent option
shall be substituted by the successor corporation or a parent or Subsidiary of
such successor corporation. In the event that the successor corporation refuses
to assume or substitute for outstanding options, each Purchase Period and
Offering Period then in progress shall be shortened and a new Purchase Date
shall be set (the "New Purchase Date"), as of which date any Purchase Period and
-----------------
Offering Period then in progress will terminate. The New Purchase Date shall be
on or before the date of consummation of the transaction and the Board shall
notify each participant in writing, at least ten (10) days prior to the New
Purchase Date, that the Purchase Date for his or her option has been changed to
the New Purchase Date and that his or her option will be exercised automatically
on the New Purchase Date, unless prior to such date he or she has withdrawn from
the Offering Period as provided in Section 10. For purposes of this Section 19,
an option granted under the Plan shall be deemed to be assumed, without
limitation, if, at the time of issuance of the stock or other consideration upon
a Corporate Transaction, each holder of an option under the Plan would be
entitled to receive upon exercise of the option the same number and kind of
shares of stock or the same amount of property, cash or securities as such
holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to the transaction, the
holder of the number of Shares of Common Stock covered by the option at such
time (after giving effect to any adjustments in the number of Shares covered by
the option as provided for in this Section 19); provided however that if the
consideration received in the transaction is not solely common stock of the
successor corporation or its parent (as defined in Section 424(e) of the Code),
the Board may, with the consent of the successor corporation, provide for the
consideration to be received upon exercise of the option to be solely common
stock of the successor corporation or its parent equal in Fair Market Value to
the per Share consideration received by holders of Common Stock in the
transaction.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per Share
of Common Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of Shares of its outstanding Common Stock, and
in the event of the Company's being consolidated with or merged into any other
corporation.
20. Amendment or Termination.
------------------------
(a) The Board may at any time and for any reason terminate or amend
the Plan. Except as provided in Section 19, no such termination of the Plan may
affect options previously granted, provided that the Plan or an Offering Period
may be terminated by the Board on a Purchase Date or by the Board's setting a
new Purchase Date with respect to an Offering Period and Purchase Period then in
progress if the Board determines that termination of the Plan and/or the
Offering Period is in the best interests of the Company and the stockholders or
if continuation of the Plan and/or the Offering Period would cause the Company
to incur adverse accounting charges as a result of a change after the effective
date of the Plan in the generally
-9-
<PAGE>
accepted accounting rules applicable to the Plan. Except as provided in Section
19 and in this Section 20, no amendment to the Plan shall make any change in any
option previously granted which adversely affects the rights of any participant.
In addition, to the extent necessary to comply with Rule 16b-3 under the
Exchange Act, or under Section 423 of the Code (or any successor rule or
provision or any applicable law or regulation), the Company shall obtain
stockholder approval in such a manner and to such a degree as so required.
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
(or its committee) shall be entitled to change the Offering Periods and Purchase
Periods, limit the frequency and/or number of changes in the amount withheld
during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant in order to adjust for delays
or mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from
the participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable which are consistent with the Plan.
21. Notices. All notices or other communications by a participant to the
-------
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
----------------------------------
respect to an option unless the exercise of such option and the issuance and
delivery of such Shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, applicable state securities laws and the requirements of
any stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
23. Term of Plan; Effective Date. The Plan shall become effective upon
----------------------------
the IPO Date. It shall continue in effect for a term of twenty (20) years
unless sooner terminated under Section 20.
-10-
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
----------------------
New Election ______
Change of Election ______
1. I, ________________________, hereby elect to participate in the
Metawave Communications Corporation 2000 Employee Stock Purchase Plan (the
"Plan") for the Offering Period ______________, ____ to _______________, ____,
----
and subscribe to purchase shares of the Company's Common Stock in accordance
with this Subscription Agreement and the Plan.
2. I elect to have Contributions in the amount of ____% of my
Compensation, as those terms are defined in the Plan, applied to this purchase.
I understand that this amount must not be less than 1% and not more than 15% of
my Compensation during the Offering Period. (Please note that no fractional
percentages are permitted).
3. I hereby authorize payroll deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Subscription Agreement. I
understand that all payroll deductions made by me shall be credited to my
account under the Plan and that I may not make any additional payments into such
account. I understand that all payments made by me shall be accumulated for the
purchase of shares of Common Stock at the applicable purchase price determined
in accordance with the Plan. I further understand that, except as otherwise set
forth in the Plan, shares will be purchased for me automatically on the Purchase
Date of each Offering Period unless I otherwise withdraw from the Plan by giving
written notice to the Company for such purpose.
4. I understand that I may discontinue at any time prior to the Purchase
Date my participation in the Plan as provided in Section 10 of the Plan. I also
understand that I can increase or decrease the rate of my Contributions on one
occasion only with respect to any increase and one occasion only with respect to
any decrease during any Purchase Period by completing and filing a new
Subscription Agreement with such increase or decrease taking effect as of the
beginning of the calendar month following the date of filing of the new
Subscription Agreement, if filed at least ten (10) business days prior to the
beginning of such month. Further, I may change the rate of deductions for
future Offering Periods by filing a new Subscription Agreement, and any such
change will be effective as of the beginning of the next Offering Period. In
addition, I acknowledge that, unless I discontinue my participation in the Plan
as provided in Section 10 of the Plan, my election will continue to be effective
for each successive Offering Period.
<PAGE>
5. I have received a copy of the Company's most recent description of the
Plan and a copy of the complete "Metawave Communications Corporation 2000
Employee Stock Purchase Plan." I understand that my participation in the Plan
is in all respects subject to the terms of the Plan.
6. Shares purchased for me under the Plan should be issued in the name(s)
of (name of employee or employee and spouse only):
____________________________________
____________________________________
7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan:
NAME: (Please print) _______________________________________
(First) (Middle) (Last)
__________________________ _______________________________________
(Relationship) (Address)
_______________________________________
8. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Offering Date (the first day of the Offering
Period during which I purchased such shares) or within 1 year after the Purchase
Date, I will be treated for federal income tax purposes as having received
ordinary compensation income at the time of such disposition in an amount equal
to the excess of the fair market value of the shares on the Purchase Date over
the price which I paid for the shares, regardless of whether I disposed of the
shares at a price less than their fair market value at the Purchase Date. The
remainder of the gain or loss, if any, recognized on such disposition will be
treated as capital gain or loss.
I hereby agree to notify the Company in writing within 30 days after the
------------------------------------------------------------------------
date of any such disposition, and I will make adequate provision for federal,
- -----------------------------------------------------------------------------
state or other tax withholding obligations, if any, which arise upon the
- ------------------------------------------------------------------------
disposition of the Common Stock. The Company may, but will not be obligated to,
- -------------------------------
withhold from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make available to
the Company any tax deductions or benefits attributable to the sale or early
disposition of Common Stock by me.
9. If I dispose of such shares at any time after expiration of the 2-year
and 1-year holding periods, I understand that I will be treated for federal
income tax purposes as having received compensation income only to the extent of
an amount equal to the lesser of (1) the excess of the fair market value of the
shares at the time of such disposition over the purchase
-2-
<PAGE>
price which I paid for the shares under the option, or (2) 15% of the fair
market value of the shares on the Offering Date. The remainder of the gain or
loss, if any, recognized on such disposition will be treated as capital gain or
loss.
I understand that this tax summary is only a summary and is subject to
----------------------------------------------------------------------
change. I further understand that I should consult a tax advisor concerning the
- ------
tax implications of the purchase and sale of stock under the Plan.
10. In connection with the initial public offering of the Company's
securities and upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, I agree not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of any securities of the Company, however or whenever I acquired them, without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed 180 days) from the effective date of
such registration as may be requested by the Company or such managing
underwriters and to execute an agreement reflecting the foregoing as may be
requested by the underwriters at the time of the public offering.
11. I hereby agree to be bound by the terms of the Plan. The effectiveness
of this Subscription Agreement is dependent upon my eligibility to participate
in the Plan.
SIGNATURE:____________________________
SOCIAL SECURITY #:____________________
DATE:_________________________________
SPOUSE'S SIGNATURE (necessary
if beneficiary is not spouse):
_______________________________________
(Signature)
_______________________________________
(Print name)
-3-
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
--------------------
I, __________________________, hereby elect to withdraw my participation in
the Metawave Communications Corporation 2000 Employee Stock Purchase Plan (the
"Plan") for the Offering Period that began on _________ ___, _____. This
- -----
withdrawal covers all Contributions credited to my account and is effective on
the date designated below.
I understand that all Contributions credited to my account will be paid to
me within ten (10) business days of receipt by the Company of this Notice of
Withdrawal and that my option for the current period will automatically
terminate, and that no further Contributions for the purchase of shares can be
made by me during the Offering Period.
The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Subscription Agreement.
Dated:___________________ _______________________________________
Signature of Employee
_______________________________________
Social Security Number
<PAGE>
EXHIBIT 10.6
METAWAVE COMMUNICATIONS CORPORATION
AMENDED AND RESTATED SERIES E SENIOR PREFERRED STOCK
AND CONVERTIBLE NOTE PURCHASE AGREEMENT
April 28, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Purchase and Sale of Stock and Convertible Promissory Notes............................................... 2
1.1 Sale and Issuance of Series D Preferred Stock.................................................. 2
1.2 Sale and Issuance of Convertible Promissory Notes.............................................. 2
1.3 Closing........................................................................................ 2
2. Representations and Warranties of the Company............................................................. 3
2.1 Organization, Good Standing and Qualification.................................................. 3
2.2 Corporate Power................................................................................ 3
2.3 Capitalization and Voting Rights............................................................... 4
2.4 Subsidiaries................................................................................... 5
2.5 Authorization.................................................................................. 6
2.6 Valid Issuance of Preferred and Common Stock................................................... 6
2.7 Governmental Consents.......................................................................... 6
2.8 Offering....................................................................................... 7
2.9 Returns and Complaints......................................................................... 7
2.10 Litigation..................................................................................... 7
2.11 Proprietary Information........................................................................ 7
2.12 Patents and Trademarks......................................................................... 7
2.13 Compliance with Other Instruments.............................................................. 8
2.14 Agreements; Action............................................................................. 9
2.15 Related-Party Transactions.................................................................... 10
2.16 Permits....................................................................................... 10
2.17 Environmental and Safety Laws................................................................. 10
2.18 Manufacturing and Marketing Rights............................................................ 10
2.19 Disclosure.................................................................................... 10
2.20 Registration Rights........................................................................... 11
2.21 Corporate Documents........................................................................... 11
2.22 Title to Property and Assets.................................................................. 11
2.23 Financial Statements.......................................................................... 11
2.24 Changes....................................................................................... 11
2.25 Employee Benefit Plans........................................................................ 13
2.26 Tax Returns, Payments and Elections........................................................... 13
2.27 Insurance..................................................................................... 13
2.28 Minute Books.................................................................................. 13
2.29 Labor Agreements and Actions.................................................................. 13
2.30 Voting Agreements............................................................................. 14
2.31 Outstanding Debt.............................................................................. 14
2.32 Real Property Holding Corporation Status...................................................... 14
2.33 Use of Proceeds............................................................................... 14
</TABLE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
3. Representations and Warranties of the Investors......................................................... 14
3.1 Authorization................................................................................. 14
3.2 Purchase Entirely for Own Account............................................................. 15
3.3 Disclosure of Information..................................................................... 15
3.4 Investment Experience......................................................................... 15
3.5 Accredited Investor........................................................................... 15
3.6 Restricted Securities......................................................................... 16
3.7 Further Limitations on Disposition............................................................ 17
3.8 Legends....................................................................................... 18
4. Conditions of Investor's Obligations at Closing......................................................... 18
4.1 Representations and Warranties................................................................ 18
4.2 Performance................................................................................... 18
4.3 Compliance Certificate........................................................................ 18
4.4 Qualifications................................................................................ 19
4.5 Proceedings and Documents..................................................................... 19
4.6 Bylaws........................................................................................ 19
4.7 Board of Directors............................................................................ 19
4.8 Opinion of Company Counsel.................................................................... 19
4.8 Investors' Rights Agreement................................................................... 19
4.10 Consents and Waivers.......................................................................... 19
4.11 Adjustment to Prior Issuances of Series E Preferred Stock..................................... 19
5. Conditions of the Company's Obligations at Closing...................................................... 19
5.1 Representations and Warranties................................................................ 19
5.2 Payment of Purchase Price..................................................................... 19
5.3 Qualifications................................................................................ 20
6. HSR Act Filings......................................................................................... 20
7. Miscellaneous........................................................................................... 20
7.1 Survival of Warranties........................................................................ 20
7.2 Successors and Assigns........................................................................ 20
7.3 Governing Law................................................................................. 20
7.4 Counterparts.................................................................................. 20
7.5 Titles and Subtitles.......................................................................... 20
7.6 Notices....................................................................................... 20
7.7 Finder's Fee.................................................................................. 21
7.8 Expenses...................................................................................... 21
7.9 Amendments and Waivers........................................................................ 21
7.10 Severability.................................................................................. 21
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.11 Aggregation of Stock......................................................................... 21
7.12 Entire Agreement............................................................................. 21
</TABLE>
-iii-
<PAGE>
Schedule A-1
------------
and A-2 Schedule of Investors
-------
Schedule B Schedule of Exceptions
----------
Exhibit A Fifth Amended and Restated Certificate of Incorporation
---------
Exhibit B Fifth Amended and Restated Investors' Rights Agreement
---------
Exhibit C List of Stockholders
---------
Exhibit D Opinion of Counsel for the Company
---------
Exhibit E Addendum Agreement
---------
Exhibit F Convertible Note
---------
-1-
<PAGE>
AMENDED AND RESTATED SERIES E PREFERRED STOCK AND
CONVERTIBLE NOTE PURCHASE AGREEMENT
THIS AMENDED AND RESTATED SERIES E SENIOR PREFERRED STOCK AND CONVERTIBLE
NOTE PURCHASE AGREEMENT is made as of the 28th day of April, 1999 (this
"Agreement"), by and among Metawave Communications Corporation, a Delaware
- ----------
corporation (the "Company"), and the investors listed on Schedule A hereto, each
------- ----------
of which is herein referred to as an "Investor."
--------
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock and Convertible Promissory Notes
-----------------------------------------------------------
1.1 Sale and Issuance of Series E Senior Preferred Stock
----------------------------------------------------
Subject to the terms and conditions of this Agreement, each Investor
(except those Investors that must sign convertible notes, as defined below)
agrees, severally, to purchase at the Closing and the Company agrees to sell and
issue to each Investor at the Closing, that number of shares of the Company's
Series E Preferred Stock set forth opposite each Investor's name on Schedule A
----------
hereto for a purchase price of $5.00 per share. The Investors who are
purchasing Series E Preferred Stock pursuant to this Section 1.1 are referred to
herein as the "Stock Purchasers."
----------------
1.2 Sale and Issuance of Convertible Promissory Notes.
-------------------------------------------------
Subject to the terms and conditions of this Agreement, those Investors
executing a convertible note (collectively, the "Note Purchasers" and
---------------
individually, a "Note Purchaser") each agrees to purchase at the Closing and the
Company agrees to sell and issue to the Note Purchasers a convertible promissory
note in substantially the form attached hereto as Exhibit F (a "Note" and
--------- ----
collectively, the "Notes") in the principal amount specified with respect to the
-----
Note Purchaser on Schedule A to this Agreement. The purchase price of each Note
----------
shall be equal to 100% of the principal amount of such Note. The Company's
agreement with the Note Purchasers is a separate agreement, and the sales of the
Notes to the Note Purchasers is a separate sale.
1.3 Closings
--------
(a) The purchase and sale of the Series E Preferred Stock and the Notes
shall take place at the offices of Venture Law Group, 4750 Carillon Point,
Kirkland, Washington, at 9:00 a.m., on April 28, 1999, (assuming that all
conditions to closing have been satisfied), or at such other time and place as
the Company and the Stock Purchasers acquiring in the aggregate more than half
the shares of Series E Preferred Stock sold pursuant hereto and the Note
Purchasers purchasing a majority of the principal amount of the Notes sold
pursuant hereto mutually agree upon orally or in writing (which time and place
are designated as the "Closing"). At the Closing, or pursuant to the terms of
-------
any convertible debt, the Company shall (i) deliver to each Stock
-2-
<PAGE>
Purchaser a certificate representing the Series E Preferred Stock that such
Stock Purchaser is purchasing against payment of the purchase price therefor by
wire transfer in same day funds, or cancellation of indebtedness, or any
combination thereof, (ii) deliver to the Note Purchasers the Notes to be
purchased by the Note Purchasers against payment of the purchase price therefor
by wire transfer in same day funds or cancellation of indebtedness or any
combination thereof.
(b) If the full number of the authorized shares of Series E Preferred
Stock of the Company is not sold at the Closing, the Company shall have the
right, at any time on or before June 28, 1999, to sell the remaining authorized
but unissued shares of Series E Preferred Stock to one or more additional
purchasers as determined by the Company, or to any Investor hereunder who wishes
to acquire additional shares of Series E Preferred Stock at the price and on the
terms set forth herein, provided that any such additional purchaser shall be
required to execute an Addendum Agreement substantially in the form attached
hereto as Exhibit E. Any additional purchaser so acquiring shares of Series E
---------
Preferred Stock shall be considered an "Investor" for purposes of this Agreement
and the Fifth Amended and Restated Investors Rights Agreement dated as of the
date hereof (the "Investors' Rights Agreement") and attached hereto as Exhibit B
---------------------------
and shall have the rights and obligations hereunder and thereunder, and any
Series E Preferred Stock so acquired by such additional purchaser shall be
considered Series E Preferred Stock for purposes of this Agreement and all other
agreements contemplated hereby, including the Investor Rights Agreement.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to each Investor that, except as set forth on the
Schedule of Exceptions attached hereto as Schedule B (the "Schedule of
---------- -----------
Exceptions") specifically identifying the relevant subparagraph hereof, which
- ----------
exceptions shall be deemed to be representations and warranties as if made
hereunder:
2.1 Organization, Good Standing and Qualification. The Company is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted in its
Private Placement Memorandum heretofore furnished to the Investors (the "PPM").
---
The Company is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on its business or properties. Copies of the Company's Fifth
Amended and Restated Certificate of Incorporation, Bylaws, minutes and consents
of stockholders and of the Board of Directors are available for inspection at
the Company's offices and true, correct and complete copies of such documents
have been previously made available to each Investor or an Investor's special
counsel.
2.2 Corporate Power. The Company has now, or will have at the date
---------------
of the Closing, all requisite legal and corporate power to enter into, execute
and deliver this Agreement and the Investors' Rights Agreement.
-3-
<PAGE>
2.3 Capitalization and Voting Rights
--------------------------------
(a) The authorized capital of the Company consists, or will
consist immediately prior to the Closing, of:
(i) Preferred Stock. Thirty-seven Million (37,000,000)
---------------
shares of Preferred Stock (the "Preferred Stock") comprised of 5,565,416 shares
---------------
designated as Series A Preferred Stock (the "Series A Preferred Stock"), of
------------------------
which 5,500,000 shares are issued and outstanding, 2,760,742 shares designated
as Series B Preferred Stock (the "Series B Preferred Stock"), of which 2,740,743
------------------------
shares are issued and outstanding, 2,700,000 shares designated as Series C
Preferred Stock (the "Series C Preferred Stock"), of which 2,491,880 shares are
------------------------
issued and outstanding, 4,000,000 shares designated as Series D Preferred Stock
(the "Series D Preferred Stock") of which 2,397,727 shares are issued and
------------------------
outstanding and 20,500,000 shares designated as Series E Senior Preferred Stock
(the "Series E Preferred Stock"), 1,625,000 of which are currently outstanding
------------------------
and up to all of which will be sold pursuant to this Agreement. The rights,
privileges and preferences of the Series E Preferred Stock will be as stated in
the Company's Fifth Amended and Restated Certificate of Incorporation, attached
hereto as Exhibit A (the "Restated Certificate"). As of the date of this
--------- --------------------
Agreement, and pursuant to Article IV.B.4 of the Company's Restated Certificate,
each share of Series A, Series B, Series C, Series D and Series E Preferred
Stock is convertible into one (1) share of Common Stock (as may be adjusted to
reflect certain dilutive issuances of the Company's stock).
(ii) Common Stock. Fifty Million (50,000,000) shares of
------------
common stock (the "Common Stock"), of which 3,241,921 shares are issued and
------------
outstanding. The outstanding shares of Common Stock and Preferred Stock are
owned by the stockholders set forth in Exhibit C hereto.
---------
(b) The outstanding shares of Common Stock, Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock are all duly and validly authorized and
issued, fully paid and nonassessable, and were issued in accordance with the
registration or qualification provisions of the Securities Act of 1933, as
amended (the "Act") and any relevant state securities laws or pursuant to valid
---
exemptions therefrom.
(c) The Company has reserved 4,150,000 shares of Common Stock
for issuance to officers, directors, employees and consultants of the Company
pursuant to its Third Amended and Restated 1995 Stock Option Plan duly adopted
by the Board of Directors and approved by the Company stockholders (the "1995
----
Stock Plan"). Of such reserved shares of Common Stock, options to purchase
- ----------
4,881,922 have been granted (this number includes subsequent cancellations),
options to purchase 3,179,714 shares are currently outstanding, and 252,690
shares of Common Stock remain available for issuance to officers, directors,
employees and consultants pursuant to the 1995 Stock Plan.
-4-
<PAGE>
(d) The Company has reserved 2,645,053 shares of Common Stock
for issuance to officers, directors, employees and consultants of the Company
pursuant to its 1998 Stock Option Plan duly adopted by the Board of Directors
and approved by the Company stockholders (the "1998 Stock Plan"). Of such
---------------
reserved shares of Common Stock, options to purchase 986,050 shares have been
granted, options to purchase 713,375 shares are currently outstanding, and
1,931,678 shares of Common Stock remain available for issuance to officers,
directors, employees and consultants pursuant to the 1998 Stock Plan.
(e) The Company has reserved 500,000 shares of Common Stock for
purchase by officers, directors, employees and consultants of the Company
pursuant to its 1998 Employee Stock Purchase Plan duly adopted by the Board of
Directors and approved by the Company stockholders (the "Stock Purchase Plan").
-------------------
The Stock Purchase Plan will become effective upon completion of a public
offering by the Company, accordingly, no shares have been purchased under the
Stock Purchase Plan.
(f) The Company has reserved 300,000 shares of Common Stock for
issuance to nonemployee directors of the Company pursuant to its 1998 Directors'
Stock Option Plan duly adopted by the Board of Directors and approved by the
Company stockholders (the "Directors Plan"). Of such reserved shares of Common
--------------
Stock, options to purchase 75,000 shares have been granted and are currently
outstanding, and 225,000 shares of Common Stock remain available for issuance to
nonemployee directors pursuant to the 1998 Stock Plan.
(g) Except for (i) the conversion privileges of the Series A
Preferred Stock and such other rights, privileges and agreements contemplated
pursuant to the Series A Preferred Stock Purchase Agreement dated July 7, 1995,
(ii) the conversion privileges of the Series B Preferred Stock and such other
rights, privileges and agreements contemplated pursuant to the Series B
Preferred Stock Purchase Agreement dated May 30, 1996, (iii) the conversion
privileges of the Series C Preferred Stock and such other rights, privileges and
agreements contemplated pursuant to the Series C Preferred Stock Purchase
Agreement dated October 30, 1996, (iv) the conversion privileges of the Series D
Preferred Stock and such other rights, privileges and agreements contemplated
pursuant to the Series D Stock Purchase Agreement dated August 6, 1997, (v) the
conversion privileges of the Series E Preferred Stock and the Notes and such
other rights, privileges and agreements contemplated pursuant to this Agreement
(vi) those rights, privileges and agreements set forth in the Schedule of
Exceptions, and (vii) the rights provided in Section 2.4 of the Investors'
Rights Agreement, there are not outstanding any options, warrants, rights
(including conversion or preemptive rights) or agreements for the purchase or
acquisition from the Company of any shares of its capital stock. The Company is
not a party or subject to any agreement or understanding, and there is no
agreement or understanding between any persons and/or entities, which affects or
relates to the voting or giving of written consents with respect to any security
or by a director of the Company.
2.4 Subsidiaries. The Company does not presently own or control,
------------
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
-5-
<PAGE>
2.5 Authorization. All corporate actions on the part of the Company,
-------------
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the Investors' Rights Agreement,
the performance of all obligations of the Company hereunder and thereunder, and
the authorization, issuance (or reservation for issuance), sale and delivery of
the Series E Preferred Stock being sold hereunder and the Common Stock issuable
upon conversion of the Series E Preferred Stock have been taken or will be taken
prior to the Closing, and this Agreement and the Investors' Rights Agreement
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (b) as limited
by laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies, and (c) to the extent the indemnification
provisions contained in the Investors' Rights Agreement may be limited by
applicable federal or state securities laws.
2.6 Valid Issuance of Preferred and Common Stock. The Series E Preferred
--------------------------------------------
Stock that is being purchased by the Stock Purchasers hereunder, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid, and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and the Investors' Rights
Agreement and under applicable state and federal securities laws. The Notes
that are being purchased by the Note Purchasers hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly and validly issued, fully paid and nonassessable,
and will be free of restrictions on transfer other than restrictions on transfer
under this Agreement, the Notes, the Investors' Rights Agreement and applicable
state and federal securities laws. The Series E Preferred Stock that may be
issued to the Note Purchasers upon conversion of the Notes, when issued and
delivered in accordance with the terms thereof, will be duly and validly issued,
fully paid and nonassessable, and free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Investors' Rights Agreement
and applicable state and federal securities laws. The Common Stock issuable
upon conversion of the Series E Preferred Stock purchased under this Agreement
has been duly and validly reserved for issuance and, upon issuance in accordance
with the terms of the Restated Certificate, will be duly and validly issued,
fully paid, and nonassessable and will be free of restrictions on transfer other
than restrictions on transfer under this Agreement and the Investors' Rights
Agreement and under applicable state and federal securities laws.
2.7 Governmental Consents. No consent, approval, order or
---------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for filings pursuant to Section 25102(f)
of the California Corporate Securities Law of 1968, as amended, and the rules
thereunder, other applicable state securities laws and Regulation D of the
Securities Act of 1933, as amended and filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") as required for
-------
any conversion of the Notes into Series E Preferred Stock.
-6-
<PAGE>
2.8 Offering. Subject in part to the truth and accuracy of each
--------
Investor's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Series E Preferred Stock as contemplated by this
Agreement are exempt from the registration requirements of the Act, and neither
the Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
2.9 Returns and Complaints. The Company has received no material
----------------------
customer complaints concerning its products and/or services, nor has it had any
of its products returned by a purchaser thereof, other than for minor,
nonrecurring warranty problems.
2.10 Litigation. There is no action, suit, proceeding or
----------
investigation pending or currently threatened against the Company or against its
officers, directors or stockholders, or, to its knowledge, against its employees
or consultants that questions the validity of this Agreement or the Investors'
Rights Agreement or the right of the Company to enter into such agreements, or
to consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware that there is any basis for the foregoing. The foregoing
includes, without limitation, actions, suits, proceedings or investigations
pending or threatened (or any basis therefor known to the Company) involving the
prior employment of any of the Company's employees, their use in connection with
the Company's business of any information or techniques allegedly proprietary to
any of their former employers, or their obligations under any agreements with
prior employers. The Company is not a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.11 Proprietary Information. Each employee and officer, of the
-----------------------
Company has executed a Confidential Information and Inventions Agreement
substantially in the form made available or provided to each Investor or such
Investor's special counsel, as the case may be. The Company, after reasonable
investigation, is not aware that any of its employees, officers, consultants or
contractors are in violation thereof, and the Company will use its best efforts
to prevent any such violation.
2.12 Patents and Trademarks. The Company owns, or is licensed to
----------------------
use, all patents, trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights and processes necessary for its
business as now conducted and, to the Company's knowledge, as proposed to be
conducted as described in the PPM without any conflict with or infringement of
the rights of others (the "Intellectual Property"). The Schedule of Exceptions
---------------------
contains a complete list of patents and pending patent applications of the
Company. The Company is not obligated to make any material payments by way of
royalties, fees or otherwise to any owner or licensor of any patent, trademark,
trade name, copyright or other intangible asset, with respect to the use thereof
or in connection with the conduct of its business, or otherwise. The Company
has not granted any third party any option, license or other
-7-
<PAGE>
right of any kind to the Intellectual Property. The Company does not license any
technology from any third party other than for internal use and other than such
licenses arising from the purchase of "off the shelf" or standard products. The
Company is not aware of any violation or infringement by a third party of any of
the Company's rights in the Intellectual Property. There are no outstanding
options, licenses, or agreements of any kind relating to the foregoing, nor is
the Company bound by or a party to any options, licenses or agreements of any
kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity, other than such options, licenses, or
agreements arising from the purchase of "off the shelf" or standard products.
The Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity, nor is the Company aware
of any basis for any such violation. The Company is not aware that any of its
employees, officers, consultants or contractors are obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of his or her best efforts to promote
the interests of the Company or that would conflict with the Company's business
as conducted or as proposed to be conducted or that would prevent any such
employees, officers, consultants or contractors from assigning inventions to the
Company as set forth in the Employee Confidential Information and Inventions
Agreement. Neither the execution nor delivery of this Agreement or the
Investors' Rights Agreement, nor the carrying on of the Company's business by
the employees of the Company, nor the conduct of the Company's business as
proposed, will conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees, officers, consultants or
contractors is, to the best of the Company's knowledge, now obligated. The
Company does not believe it is or will be necessary to utilize any inventions of
any of its employees (or people it currently intends to hire), officers,
consultants or contractors made prior to their employment or engagement by the
Company, except for inventions which have already been assigned to the Company,
in order to conduct its business as now conducted or as proposed to be
conducted. The Company has taken and will take reasonable security measures to
protect the Intellectual Property.
2.13 Compliance with Other Instruments
---------------------------------
(a) The Company is not in violation or default of any provision
of its Restated Certificate or Bylaws, or of any instrument, judgment, order,
writ, decree or contract to which it is a party or by which it is bound, or, to
the best of its knowledge, of any provision of any federal or state statute,
rule or regulation applicable to the Company. The execution, delivery and
performance of this Agreement and the Investors' Rights Agreement, and the
consummation of the transactions contemplated hereby and thereby will not result
in any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision
in its Restated Certificate or Bylaws, or any instrument, judgment, order, writ,
decree or contract or any provision of any federal or state statue, rule or
regulation applicable to the Company or an event that results in the creation of
any
-8-
<PAGE>
lien, charge or encumbrance upon any assets of the Company or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any material permit,
license, authorization, or approval applicable to the Company, its business or
operations or any of its assets or properties.
(b) The Company has avoided every condition, and has not
performed any act, the occurrence of which would result in the Company's loss of
any right granted under any license, distribution or other agreement.
2.14 Agreements; Action
------------------
(a) Except for agreements explicitly contemplated hereby, by
the Investors' Rights Agreement and by the Stockholders Agreement dated July 7,
1995, there are no agreements, understandings or proposed transactions between
the Company and any of its officers, directors, affiliates, or any affiliate
thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound that may involve (i) obligations
(contingent or otherwise) of, or payments to the Company in excess of, $250,000
annually or (ii) the license of any patent, copyright, trade secret or other
proprietary right to or from the Company, or (iii) provisions restricting or
affecting the development, manufacture or distribution of the Company's products
or services, or (iv) indemnification by the Company with respect to
infringements of proprietary rights.
(c) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $25,000 or, in the case of
indebtedness and/or liabilities individually less than $25,000, in excess of
$100,000 in the aggregate, (iii) made any loans or advances to any person, other
than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than the sale of its inventory in
the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) The Company has not engaged in the past three (3) months in
any discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company or a
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Company is disposed of, or (iii) regarding any
other form of acquisition, liquidation, dissolution or winding up of the
Company.
-9-
<PAGE>
2.15 Related-Party Transactions. No employee, officer, or director
--------------------------
of the Company or member of his or her immediate family is indebted to the
Company, nor is the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them. To the Company's knowledge, none of such
persons has any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company, except
that employees, officers, or directors of the Company and members of their
immediate families may own stock in publicly traded companies that may compete
with the Company. No member of the immediate family of any officer or director
of the Company is directly or indirectly interested in any material contract
with the Company.
2.16 Permits. The Company has all franchises, permits, licenses, and
-------
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company, and the
Company believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted. The
Company is not in default in any respect under any of such franchises, permits,
licenses, or other similar authority.
2.17 Environmental and Safety Laws. The Company is not in material
-----------------------------
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety and no material expenditures are
or will be required in order to comply with any such existing statute, law or
regulation.
2.18 Manufacturing and Marketing Rights. The Company has not granted
----------------------------------
rights to manufacture, produce, assemble, license, market, or sell its products
to any other person and is not bound by any agreement that affects the Company's
exclusive right to develop, manufacture, assemble, distribute, market or sell
its products.
2.19 Disclosure. The Company has fully provided each Investor with
----------
all the information that such Investor has requested for deciding whether to
purchase the Series E Preferred Stock and all information that the Company
believes is reasonably necessary to enable such Investor to make such decision,
including disclosure describing its business. This Agreement and the Investors'
Rights Agreement, and any other statements or certificates made or delivered in
connection herewith or therewith, and to the Company's knowledge, the PPM (when
read together) do not contain any untrue statement of a material fact nor do the
representations and warranties in such agreements and other statements and
certificates (taken as a whole) omit to state a material fact necessary to make
the statements herein or therein not misleading in light of the circumstances
under which they were made. To the extent the PPM was prepared by management of
the Company, the PPM and the financial and other projections contained in the
PPM were prepared in good faith; however, the Company does not warrant that it
will achieve such projections.
-10-
<PAGE>
2.20 Registration Rights. Except as provided in the Investors'
-------------------
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
2.21 Corporate Documents. The Restated Certificate and Bylaws of the
-------------------
Company are in the form previously provided to each Investor or to such
Investor's special counsel, as the case may be.
2.22 Title to Property and Assets. The Company owns its property and
----------------------------
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens that arise in the ordinary course of business and do
not impair the Company's ownership or use of such property or assets. With
respect to the property and assets it leases, the Company is in compliance with
such leases and, holds a valid leasehold interest free of any liens, claims or
encumbrances.
2.23 Financial Statements. The Company has made available or
--------------------
delivered to each Investor its unaudited financial statements (balance sheet and
profit and loss statement and statement of cash flows) at March 31, 1999, and
its draft consolidated financial statements for the year ended December 31, 1998
and its audited financial statements for the years ended December 31, 1996 and
1997 (collectively, the "Financial Statements"). The Financial Statements
--------------------
have been prepared in accordance with generally accepted accounting principles,
except that the unaudited Financial Statements may not contain all footnotes
required by generally accepted accounting principles. The Financial Statements
fairly present the financial condition and operating results of the Company as
of the dates, and for the periods, indicated therein, subject to normal year-end
audit adjustments. Except as set forth in the Financial Statements, the Company
has no liabilities, contingent or otherwise, other than (a) liabilities incurred
in the ordinary course of business subsequent to March 31, 1999 and (b)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in the Financial Statements, which, in both cases, individually or in
the aggregate, are not material to the financial condition or operating results
of the Company. Except as disclosed in the Financial Statements, the Company is
not a guarantor or indemnitor of any indebtedness of any other person, firm or
corporation. The Company maintains and will continue to maintain a standard
system of accounting established and administered in accordance with generally
accepted accounting principles.
2.24 Changes. Since March 31, 1999, there has not been:
-------
(a) any change in the assets, liabilities, financial condition
or operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not
been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating
-11-
<PAGE>
results, prospects or business of the Company (as such business is presently
conducted and as it is proposed to be conducted);
(c) any waiver by the Company of a valuable right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted);
(e) any material change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;
(f) any material change in any compensation arrangement or
agreement with any employee;
(g) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any key
officer or key employee of the Company, and the Company does not know of the
impending resignation or termination of employment of any such key officer or
key employee;
(i) receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of the Company;
(j) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(k) any loans or guarantees made by the Company to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(l) any declaration, setting aside or payment or other
distribution in respect of any of the Company's capital stock, or any direct or
indirect redemption, purchase or other acquisition of any of such stock by the
Company;
(m) to the best of the Company's knowledge, any other event or
condition of any character that might materially and adversely affect the
assets, properties, financial condition, operating results, business or
prospects of the Company (as such business is presently conducted and as it is
proposed to be conducted); or
(n) any agreement or commitment by the Company to do any of the
things described in this Section 2.24.
-12-
<PAGE>
2.25 Employee Benefit Plans. The Company does not have any Employee
----------------------
Benefit Plans as defined in the Employee Retirement Income Security Act of 1974
("ERISA").
-----
2.26 Tax Returns, Payments and Elections. The Company has filed all
-----------------------------------
tax returns and reports as required by law. These returns and reports are true
and correct in all material respects. The Company has paid all taxes and other
assessments due, except those contested by it in good faith that are listed in
the Schedule of Exceptions. The provision for taxes of the Company as shown in
the Financial Statements is adequate for taxes due or accrued as of the date
thereof. The Company has not elected pursuant to the Internal Revenue Code of
1986, as amended (the "Code"), to be treated as a Subchapter S corporation or a
----
collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the
Code, nor has it made any other elections pursuant to the Code (other than
elections that relate solely to methods of accounting, depreciation or
amortization) that would have a material effect on the Company, its financial
condition, its business as presently conducted or proposed to be conducted or
any of its properties or material assets. The Company has never had any tax
deficiency proposed or assessed against it and has not executed any waiver of
any statute of limitations on the assessment or collection of any tax or
governmental charge. None of the Company's federal income tax returns and none
of its state income or franchise tax or sales or use tax returns has ever been
audited by governmental authorities. Since the date of the Financial
Statements, the Company has made adequate provisions on its books of account for
all taxes, assessments and governmental charges with respect to its business,
properties and operations for such period. The Company has withheld or
collected from each payment made to each of its employees, the amount of all
taxes (including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositories.
2.27 Insurance. The Company has in full force and effect fire and
---------
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.
2.28 Minute Books. The minute books of the Company made available or
------------
provided to the Investors contain a complete summary of all meetings of
directors and stockholders since the time of incorporation and reflect all
transactions referred to in such minutes accurately in all material respects.
2.29 Labor Agreements and Actions. The Company is not bound by or
----------------------------
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the best of the
Company's knowledge, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the best of the Company's
knowledge, threatened, that could have a material adverse effect on the assets,
properties, financial condition, operating results, business or prospects of the
Company (as such business is presently conducted and as it
-13-
<PAGE>
is proposed to be conducted), nor is the Company aware of any labor organization
activity involving its employees. The Company is not aware that any officer or
key employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing. The employment of each officer
and employee of the Company is terminable at the will of the Company subject to
severance payments upon termination under certain circumstances as set forth in
the Schedule of Exceptions. To the best of its knowledge, the Company has
complied in all material respects with all applicable state and federal equal
employment opportunity and other laws related to employment.
2.30 Voting Agreements. Except as set forth in the Company's
-----------------
Restated Certificate and the Investors' Rights Agreement, the Company has no
outstanding agreement, obligation or commitment with respect to the election of
any individual or individuals to the Board of Directors, and to the best of the
Company's knowledge, there is no outstanding voting agreement or other
arrangement among its stockholders with respect to the election of any
individual or individuals to the Board of Directors.
2.31 Outstanding Debt. The Company has no outstanding indebtedness
----------------
for borrowed money, and is not a guarantor or otherwise contingently liable for
any such indebtedness, except (a) as set forth on the Company's balance sheet as
of March 31, 1999, or reflected in the notes thereto, or (b) additional
indebtedness incurred, assumed or guaranteed since March 31, 1999 for immaterial
amounts or in the ordinary course of business consistent with past practice.
There exists no default under the provisions of any instrument evidencing any
such indebtedness or of any agreement relating thereto.
2.32 Real Property Holding Corporation Status. Since its inception
----------------------------------------
the Company has not been a "United States real property holding corporation" as
defined in Section 897(c)(2) of the U.S. Internal Revenue Code of 1986, as
amended, and in Section 1.897-2(b) of the Treasury Regulations issued thereunder
(the "Regulations"), and the Company has filed with the Internal Revenue Service
-----------
all statements, if any, with its United States income tax returns which are
required under Section 1.897-2(h) of the Regulations.
2.33 Use of Proceeds. The Company will use a portion of the net
---------------
proceeds from the sale of the Series E Preferred Stock to redeem its 13.75%
Senior Secured Bridge Notes and the remainder for working capital and general
corporate purposes no later than April 29, 1999.
3. Representations and Warranties of the Investors. Each Investor hereby
-----------------------------------------------
represents and warrants that:
3.1 Authorization. Such Investor has full power and authority to
-------------
enter into this Agreement and the Investors' Rights Agreement and each such
Agreement constitutes its valid and legally binding obligation, enforceable in
accordance with their respective terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (b) as
-14-
<PAGE>
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (c) to the extent the indemnification
provisions contained in the Investors' Rights Agreement may be limited by
applicable federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Series E Preferred Stock to be received by such Investor and
the Common Stock issuable upon conversion thereof (collectively, the
"Securities") will be acquired for investment for such Investor's own account,
----------
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that such Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, such Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Securities.
3.3 Disclosure of Information. Such Investor believes it has
-------------------------
received all the information it considers necessary or appropriate for deciding
whether to purchase the Series E Preferred Stock. Such Investor further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Series E Preferred Stock and the business, properties, prospects and financial
condition of the Company. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of the Investors to rely thereon.
3.4 Investment Experience. Such Investor is an investor in
---------------------
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Series E
Preferred Stock. If other than an individual, Investor also represents it has
not been organized for the purpose of acquiring the Series E Preferred Stock.
3.5 Investor Suitability. Such investor represents that it qualifies as
--------------------
an "accredited investor" as such term is defined in Rule 501(a) or Regulation D
under the Securities Act. To be an accredited investor, each Investor
understands that he, she or it must fall within one of the following categories
at the time of the sale of Series E Preferred Stock to such Investor:
(1) any bank as defined in Section 3(a)(2) of the Securities Act or any
savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act, whether acting in its
individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 13 of the Exchange Act; any insurance company as
defined in Section 2(13) of the Securities Act; any broker or dealer
registered pursuant to Section 15 of the Exchange Act: any investment
company registered under the Investment Company Act of 1940 or any
business development company as defined in Section 2(a)(48) of the
Act; any Small
-15-
<PAGE>
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality of
a state or its political subdivisions for the benefits of its
employees, if such plan has total assets in excess of $5,000,000; any
employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such act,
which is either a bank, savings and loan association, insurance
company, or registered investment advisor, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed
plan, with investment decisions made solely by persons that are
accredited investors;
(2) any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(3) any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
Series E Preferred Stock, with total assets in excess of $5,000,000;
(4) any director or executive officer of the Company;
(5) any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his purchase exceeds $1,000,000;
(6) any natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years and who
has a reasonable expectation of reaching the same income level in the
current year;
(7) any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D; or
(8) any entity in which all the equity owners are accredited investors as
defined above.
Any Investor who is a Massachusetts resident and proposes to rely on
category (5) or (6) above may only do so if the proposed investment does not
exceed twenty-five percent (25%) of such Investor's net worth (excluding
residence and its furnishings).
3.6 Restricted Securities. Such Investor understands that the
---------------------
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and
-16-
<PAGE>
that under such laws and applicable regulations such securities may be resold
without registration under the Act only in certain limited circumstances. In
this connection, such Investor represents that it is familiar with SEC Rule 144,
as presently in effect, and understands the resale limitations imposed thereby
and by the Act.
3.7 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and the Investors' Rights Agreement provided and to the extent
this Section and such agreement are then applicable, and:
(a) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company that
such disposition will not require registration of such shares under the Act. It
is agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b)
above, no such Registration Statement or opinion of counsel shall be necessary
for a transfer by an Investor that is a partnership to an Affiliate, a partner
of such partnership or a retired partner of such partnership who retires after
the date hereof, or to the estate of any such partner or retired partner or the
transfer by gift, will or intestate succession of any partner to his or her
spouse or to the siblings, lineal descendants or ancestors of such partner or
his or her spouse, or by an Investor that is a trust to any affiliate or
successor trust or trustee if the transferee agrees in writing to be subject to
the terms hereof to the same extent as if he or she were an original Investor
hereunder.
-17-
<PAGE>
3.8 Foreign Investors. If the Investor is not a United States person
(as defined by Section 7701 (a)(30) of the Internal Revenue Code of 1986, as
amended), such Investor hereby represents that it has satisfied itself as to the
full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Series E Preferred or any use of this Agreement,
including (i) legal requirements within its jurisdiction for the purchase of the
Series E Preferred, (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consents that may need to be obtained,
and (iv) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale, or transfer of the Series E
Preferred. Such Investor's subscription and payment for and continued
beneficial ownership of the Series E Preferred, will not violate any applicable
securities and other laws of the Purchaser's jurisdiction.
3.9 Legends. It is understood that the certificates evidencing the
-------
Securities may bear legends in substantially the following forms:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(b) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
4. Conditions of Investor's Obligations at Closing. The obligations of
-----------------------------------------------
each Investor under subsection 1.1 of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
in writing thereto:
4.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
4.3 Compliance Certificate. The Chief Financial Officer of the
----------------------
Company shall deliver to each Investor at the Closing a certificate stating that
the conditions specified in Sections 4.1 and 4.2 have been fulfilled and stating
that there shall have been no adverse change in the business, affairs,
prospects, operations, properties, assets or condition of the Company since
March 31, 1999.
-18-
<PAGE>
4.4 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
4.5 Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to each Investor or to such Investor's special counsel, as the case
may be, and they shall have received all such counterpart original and certified
or other copies of such documents as they may reasonably request.
4.6 Bylaws. The Bylaws of the Company shall provide that the Board
------
of Directors of the Company shall consist of nine (9) persons.
4.7 Board of Directors. The directors of the Company shall be Robert
------------------
Hunsberger, Doug Reudink, Bandel L. Carano, Jennifer Gill Roberts, David R.
Hathaway, Bruce Edwards, Scot Jarvis, David Twyver and one (1) vacancy.
4.8 Opinion of Company Counsel. Each Investor shall have received
--------------------------
from Venture Law Group, a Professional Corporation, counsel for the Company, an
opinion, dated as of the Closing, in the form attached hereto as Exhibit D.
---------
4.9 Investors' Rights Agreement. The Company and each Investor
---------------------------
shall have entered into the Investors' Rights Agreement in the form attached as
Exhibit B.
- ---------
4.10 Consents and Waivers. The Company shall have obtained on or
--------------------
before Closing any and all consents, permits and waivers necessary for
consummation of the transactions contemplated by this Agreement.
4.11 Adjustment to Prior Issuances of Series E Preferred Stock. The
---------------------------------------------------------
Company shall collect and cancel the outstanding stock certificates evidencing
shares of Series E Preferred Stock issued before the date hereof and reissue new
stock certificates with adjusted price and share amounts in accordance with the
terms of this Agreement.
5. Conditions of the Company's Obligations at Closing. The obligations
--------------------------------------------------
of the Company to each Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by that
Investor:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Investor contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
5.2 Payment of Purchase Price. The Investor shall have delivered the
-------------------------
purchase price specified in Section 1.2.
-19-
<PAGE>
5.3 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6. HSR Act Filings. As soon as practicable after the Closing, the
---------------
Company and the Note Purchasers will separately file with the United States
Federal Trade Commission and the Antitrust Division of the Justice Department
pursuant to the HSR Act all requisite documents and notifications in order to
provide for the conversion of the Notes into shares of the Company's Series E
Preferred Stock. The parties will cooperate and coordinate with one another in
exchanging information and providing reasonable assistance as the other parties
may request in connection with the foregoing.
7. Miscellaneous
-------------
7.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
7.2 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of Delaware as applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware.
7.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by facsimile or by overnight courier or upon deposit with the United
States Post Office, by registered or certified mail, postage prepaid and
addressed to the party to be notified at the address indicated for such party on
the
-20-
<PAGE>
signature page hereof, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
7.7 Finder's Fee. Except with respect to the Company's fee to
------------
Merrill Lynch, each party represents that it neither is nor will be obligated
for any finder's fee or commission in connection with this transaction. Each
Investor agrees to indemnify and to hold harmless the Company from any liability
for any commission or compensation in the nature of a finder's fee (and the
costs and expenses of defending against such liability or asserted liability)
for which such Investor or any of its officers, partners, employees, or
representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.8 Expenses. Irrespective of whether the Closing is effected, the
--------
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If the
Closing is effected, the Company shall, at the Closing, reimburse the reasonable
fees and expenses of one special counsel for the Investors, not to exceed
$12,000. If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the Investors' Rights Agreement, or the Restated
Certificate, the prevailing party shall be entitled to reasonable attorneys'
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
7.9 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock issuable or issued upon conversion of the Series
E Preferred Stock. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and the
Company.
7.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.11 Aggregation of Stock. All shares of the Preferred Stock held or
--------------------
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
7.12 Entire Agreement. This Agreement and the documents referred to
----------------
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any
-21-
<PAGE>
other party in any manner by any warranties, representations, or covenants
except as specifically set forth herein or therein.
[Signature page follows]
-22-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
METAWAVE COMMUNICATIONS
CORPORATION
By:/s/ Larry Culver
-----------------------------------
Larry Culver
Senior Vice President and Chief Financial
Officer
Address: 10735 Willows Road NE
Post Office Box 97069
Redmond, WA 98073
INVESTORS:
[SIGNATURE PAGE TO AMENDED AND RESTATED SERIES E
PREFERRED STOCK AND CONVERTIBLE NOTE PURCHASE AGREEMENT]
<PAGE>
OAK INVESTMENT PARTNERS VI, L.P.
By:___________________________________
Its:_________________________________
Address: 525 University Avenue
Suite 1300
Palo Alto, CA 94301
OAK VI AFFILIATES FUND, L.P.
By:___________________________________
Its:_________________________________
Address: 525 University Avenue
Suite 1300
Palo Alto, CA 94301
VENROCK ASSOCIATES
By:___________________________________
Its:_________________________________
Address: 30 Rockefeller Plaza
Room 5508
New York, NY 10112
VENROCK ASSOCIATES II, L.P.
By:___________________________________
Its:_________________________________
Address: 30 Rockefeller Plaza
Room 5508
New York, NY 10112
[SIGNATURE PAGE TO AMENDED AND RESTATED SERIES E
PREFERRED STOCK AND CONVERTIBLE NOTE PURCHASE AGREEMENT]
<PAGE>
SEVIN ROSEN FUND IV L.P.
By: SRB Associates IV L.P.,
its General Partner
By:___________________________________
John V. Jaggers
General Partner
Address: 13455 Noel Road
Suite 1670
Dallas, TX 75240
SEVIN ROSEN FUND V L.P.
By: SRB Associates V L.P.,
its General Partner
By:___________________________________
John V. Jaggers
General Partner
Address: 13455 Noel Road., Suite 1670
Dallas, TX 75240
Attn: John V. Jaggers
SEVIN ROSEN V AFFILIATES FUND L.P.
By: SRB Associates V L.P.,
its General Partner
By:___________________________________
John V. Jaggers
General Partner
Address: 13455 Noel Road., Suite 1670
Dallas, TX 75240
Attn: John V. Jaggers
INTEGRAL CAPITAL PARTNERS III, L.P.
By: Integral Capital Management III, L.P.
Its: General Partner
By:___________________________________
Its: General Partner
Address: 2750 Sand Hill Road
Menlo Park, CA 94025
[SIGNATURE PAGE TO AMENDED AND RESTATED SERIES E
PREFERRED STOCK AND CONVERTIBLE NOTE PURCHASE AGREEMENT]
<PAGE>
INTEGRAL CAPITAL PARTNERS
INTERNATIONAL III, L.P.
By: Integral Capital Management III, L.P.
Its: Investment General Partner
By:___________________________________
Its: General Partner
Address: 2750 Sand Hill Road
Menlo Park, CA 94025
WORLDVIEW TECHNOLOGY
PARTNERS I, L.P.
By:___________________________________
James Wei
Managing Director
______________________________________
Worldview Capital I, L.P.
Its: General Partner
Address: 435 Tasso Street, Suite 120
Palo Alto, CA 94301
WORLDVIEW TECHNOLOGY
INTERNATIONAL I, L.P.
By:___________________________________
James Wei
Managing Director
[SIGNATURE PAGE TO AMENDED AND RESTATED SERIES E
PREFERRED STOCK AND CONVERTIBLE NOTE PURCHASE AGREEMENT]
<PAGE>
SPINNAKER TECHNOLOGY FUND, L.P.
By: Bowman Capital Management, L.L.C.
Its: General Partner
By:_______________________________
Its:____________________________
Address: 1875 South Grant Road, Suite 1600
San Mateo, CA 94402
SPINNAKER TECHNOLOGY OFFSHORE
FUND, LIMITED
By: Bowman Capital Management, L.L.C.
Its: Investment Advisor and Attorney-in-
Fact
By:_______________________________
Its:___________________________
Address: 1875 South Grant Road, Suite 1600
San Mateo, CA 94402
[SIGNATURE PAGE TO AMENDED AND RESTATED SERIES E
PREFERRED STOCK AND CONVERTIBLE NOTE PURCHASE AGREEMENT]
<PAGE>
MERRILL LYNCH KECALP L.P. 1997
By: KECALP Inc., its General Partner
By:___________________________________
Edward J. Higgins, Vice-President
MERRILL LYNCH KECALP L.P. 1999
By: KECALP Inc., its General Partner
By:___________________________________
Edward J. Higgins, Vice-President
MERRILL LYNCH KECALP INTERNATIONAL
L.P. 1997
By: KECALP Inc., its Nominee
By:___________________________________
Edward J. Higgins, Vice-President
MERRILL LYNCH KECALP INTERNATIONAL
L.P. 1999
By: KECALP Inc., its Nominee
By:___________________________________
Edward J. Higgins, Vice-President
Notices for all the Merrill Lynch KECALP
entities:
KECALP Inc.
World Financial Center
South Tower
New York, N.Y. 10080-6123
Attention: Robert Tully
phone: 212 236 7304
fax: 212 236 7360
[SIGNATURE PAGE TO AMENDED AND RESTATED SERIES E
PREFERRED STOCK AND CONVERTIBLE NOTE PURCHASE AGREEMENT]
<PAGE>
ML IBK POSITIONS, INC.
By: _____________________
Name: ___________________
Title: ____________________
Address: World Financial Center
Merrill Lynch South Tower
New York, New York 10080-6114
THE CHASE MANHATTAN BANK, solely as Trustee
For First Plaza Group Trust (as directed by
General Motors Investment Management
Corporation) and not in its individual
capacity
By:___________________________________
Name:_________________________________
Title: Authorized Officer
--------------------------------
Address:
[SIGNATURE PAGE TO AMENDED AND RESTATED SERIES E
PREFERRED STOCK AND CONVERTIBLE NOTE PURCHASE AGREEMENT]
<PAGE>
EXHIBIT 10.7
METAWAVE COMMUNICATIONS CORPORATION
FIFTH AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
April 28, 1999
<PAGE>
FIFTH AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
THIS FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (the
"Agreement") is made as of the 28th day of April, 1999, by and among Metawave
Communications Corporation, a Delaware corporation (the "Company"), and the
investors and the founders listed on Schedule A hereto (the "Investors" and the
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"Founders", respectively).
RECITALS
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A. The Company and certain of the Investors have entered into the Amended
and Restated Series E Senior Preferred Stock and Convertible Note Purchase
Agreement dated April 28, 1999 (the "Series E Agreement") pursuant to which the
Company shall sell to such Investors (the "Series E Investors") up to 20,000,000
shares of its Series E Senior Preferred Stock.
B. The Company, the Founders and certain of the Investors who purchased
the Company's Series A Preferred Stock (the "Series A Investors") pursuant to
the Series A Preferred Stock Purchase Agreement dated as of July 7, 1995,
previously entered into that certain Investors' Rights Agreement of even date
therewith (the "First Investors' Rights Agreement"), which granted to the Series
A Investors certain rights with respect to the Series A Preferred Stock.
C. The Company, the Founders, the Series A Investors, and certain of the
Investors who purchased the Company's Series B Preferred Stock (the "Series B
Investors") pursuant to the Series B Preferred Stock Purchase Agreement dated as
of May 30, 1996, subsequently entered into that certain Amended and Restated
Investors' Rights Agreement dated as of even date therewith (the "Restated
Investors' Rights Agreement"), which amended, restated and superseded the First
Investors' Rights Agreement, and which granted to the Series A Investors and the
Series B Investors certain rights with respect to the Series A Preferred Stock
and the Series B Preferred Stock, respectively.
D. The Company, the Founders, the Series A Investors, the Series B
Investors, and certain of the Investors who purchased the Company's Series C
Preferred Stock (the "Series C Investors") pursuant to the Series C Preferred
Stock Purchase Agreement dated as of October 30, 1996, subsequently entered into
that certain Second Amended and Restated Investors' Rights Agreement dated as of
even date therewith (the "Second Restated Investors' Rights Agreement"), which
amended, restated and superseded the Restated Investors' Rights Agreement, and
which granted to the Series A Investors, the Series B Investors and the Series C
Investors certain rights with respect to the Series A Preferred Stock, Series B
Preferred Stock and the Series C Preferred Stock, respectively.
E. The Company, the Founders, the Series A Investors, the Series B
Investors, the Series C Investors, and certain Investors who purchased the
Company's Series D Preferred Stock (the "Series D Investors") pursuant to the
Series D Preferred Stock Purchase Agreement dated as of August 6, 1997,
subsequently entered into that certain Third Amended and Restated Investors'
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Rights Agreement dated as of even date therewith (the "Third Restated Investors'
Rights Agreement"), which amended, restated and superseded the Second Restated
Investors' Rights Agreement, and which granted to the Founders, the Series A
Investors, the Series B Investors, the Series C Investors and the Series D
Investors certain rights with respect to the Series A Preferred Stock, Series B
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock,
respectively.
F. The Company, the Founders, the Series A Investors, the Series B
Investors, the Series C Investors, the Series D Investors and certain of the
Investors who previously purchased shares of the Company's Series E Preferred
Stock (the "First Series E Investors") pursuant to the terms of the Series E
Preferred Stock Purchase Agreement dated as of December 21, 1998, as amended,
subsequently entered into the Fourth Amended and Restated Investors' Rights
Agreement dated as of even date therewith (the "Fourth Restated Investors'
Rights Agreement"), which amended, restated and superseded the Third Restated
Investors' Rights Agreement, and which granted to the parties thereto certain
rights with respect to the Series A Preferred Stock, Series B Preferred Stock,
the Series C Preferred Stock, the Series D Preferred Stock and the Series E
Preferred Stock, respectively.
G. The closing of the Series E Agreement, pursuant to which the Series E
Investors will receive Series E Preferred Stock, is subject to certain
conditions, including the condition that the Company, the Founders, the Series A
Investors, the Series B Investors, the Series C Investors, the Series D
Investors and the First Series E Investors grant to the Series E Investors
certain rights as set forth herein.
H. The Company, the Founders and the Investors are willing to enter into
this Agreement for the purpose of setting forth certain rights to which the
Investors are entitled.
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company, the Founders, the Series A Investors, the Series B
Investors, the Series C Investors, the Series D Investors, the First Series E
Investors and the Series E Investors hereby agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
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1.1 Definitions. For purposes of this Agreement:
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(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
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(c) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof in accordance with
Section 1.13 hereof.
(d) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(e) The term "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(f) The term "Registrable Securities" means Common Stock of the
Company not previously sold to the public and (i) issuable or issued upon
conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock (whether
currently issued or hereafter acquired), (ii) issued as (or issuable upon the
conversion or exercise of any warrant, right or other security that is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of the shares referenced in (i) above, and (iii) for purposes of
Section 1.3 (and other portions of this Section 1, to the extent they relate to
rights or registration under Section 1.3) the term "Registrable Securities"
shall also include shares of Common Stock of the Company (other than shares
described in clauses (i) and (ii) of this subsection 1.1(f)) eligible for
registration pursuant to subsection 1.3(b). Notwithstanding the foregoing,
"Registrable Securities" shall exclude any Registrable Securities to the extent
(A) sold by a person in a transaction in which his rights under this Section 1
are not assigned, or (B) the registration rights with respect to such
Registrable Securities have been terminated pursuant to Section 1.16.
(g) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding that are, and the number of shares of Common Stock issuable pursuant
to then exercisable or convertible securities that are, Registrable Securities.
(h) The term "SEC" shall mean the Securities and Exchange
Commission.
(i) The term "Affiliate" shall refer to any person or entity
controlling, controlled by or under common control with such Investors.
1.2 Request for Registration
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(a) If the Company shall receive at any time after the earlier
of (i) December 31, 2002, or (ii) six (6) months after the effective date of the
first registration statement for a public offering of securities of the Company
(other than a registration statement relating either to the sale of securities
to employees of the Company pursuant to a stock option, stock purchase or
similar plan or a SEC Rule 145 transaction), a written request, from (i) the
Holders of a majority of the Registrable Securities then outstanding in the case
of the first such
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written request and (ii) the Holders of at least forty percent (40%) of the
Registrable Securities then outstanding in the case of the second such request,
that the Company file a registration statement under the Act covering the
registration of Registrable Securities then outstanding having an aggregate
offering price, net of underwriting discounts and commissions, of at least
$7,500,000, then the Company shall:
(A) within ten (10) days of the receipt thereof, give
written notice of such request to all Holders; and
(B) effect as soon as practicable, and in any event within
sixty (60) days of the receipt of such request, the registration under the Act
of all Registrable Securities that the Holders request to be registered, subject
to the limitations of subsection 1.2(b), within twenty (20) days of the mailing
of such notice by the Company in accordance with Section 3.5.
(1) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to subsection 1.2(a) and the
Company shall include such information in the written notice referred to in
subsection 1.2(a). The underwriter will be selected by the majority in interest
of the Initiating Holders. In such event, the right of any Holder to include his
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
1.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting. Notwithstanding any
other provision of this Section 1.2, if the underwriter advises the Initiating
Holders in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the Initiating Holders shall so advise all
Holders of Registrable Securities that would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the underwriting shall be allocated among all Holders (electing to include
shares in the offering) thereof, including the Initiating Holders, in proportion
(as nearly as practicable) to the amount of Registrable Securities of the
Company owned by each Holder; provided, however, that the number of shares of
Registrable Securities to be included in such underwriting shall not be reduced
unless all other securities are first entirely excluded from the underwriting.
(2) Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting a registration statement pursuant to this
Section 1.2, a certificate signed by the President of the Company stating that
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer taking action
with
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respect to such filing for a period of not more than ninety (90) days after
receipt of the request of the Initiating Holders; provided, however, that the
Company may not utilize this right more than once in any twelve (12) month
period.
(3) The Company is obligated to effect only two (2)
such registrations pursuant to this Section 1.2.
1.3 Company Registration
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(a) If (but without any obligation to do so) the Company
proposes to register (including for this purpose a registration effected by the
Company for stockholders other than the Holders) any of its stock or other
securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a registration on
any form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, include in the registration statement all of the Registrable
Securities that each such Holder has requested to be registered.
(b) Each Founder shall be deemed a Holder for purposes of
Section 1.3(a) and shall be entitled to include Common Stock held by such
Founder in any registration described in Section 1.3(a) so long as such Founder
(A) continues to serve as an officer or director of the Company on the date the
registration statement is filed by the Company and (B) agrees to be bound by all
other provisions of this Agreement and to participate in any such registration
on the same basis as each other Holder in accordance with all applicable
provisions of this Agreement.
1.4 Obligations of the Company. Whenever required under this Section
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1 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one hundred twenty (120)
days or until the Holders have completed the distribution described in the
registration statement relating thereto, whichever first occurs.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
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(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or "Blue Sky"
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or nationally recognized
quotation system on which similar securities issued by the Company are then
listed.
1.5 Furnish Information
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(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 if, due to the
operation of subsection 1.5(a), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 1.2(a) or subsection
1.12(b)(ii), whichever is applicable.
1.6 Expenses of Demand Registration. All expenses other than
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underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications
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pursuant to Section 1.2, including (without limitation) all registration, filing
and qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company and the reasonable fees and disbursements of one counsel
(not to exceed $10,000) for the selling Holders shall be borne by the Company;
provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2; provided further, however, that if
at the time of such withdrawal, the Holders have learned of a material adverse
change in the condition, business, or prospects of the Company from that known
to the Holders at the time of their request and have withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall bear and pay
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all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing, and
qualification fees, printers' and accounting fees relating or apportionable
thereto and the fees and disbursements of counsel for this purpose; the Company
will pay the reasonable fees and disbursements of one counsel (not to exceed
$10,000), for the selling Holders selected by them but excluding underwriting
discounts and commissions relating to Registrable Securities.
1.8 Underwriting Requirements. In connection with any offering
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involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as the underwriters determine in their sole discretion
will not adversely affect their ability to market the offering. If the total
amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, that the underwriters determine in
their sole discretion will not adversely affect their ability to market the
offering (the securities so included to be apportioned pro rata among the
selling stockholders according to the total amount of securities owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders) but in no event shall (a) the amount of securities
of the selling Holders included in the offering be reduced below thirty percent
(30%) of the total amount of securities included in such offering, unless such
offering is the initial public offering of the Company's securities in which
case the selling stockholders may be reduced to a lesser percentage if the
underwriters make the determination described above and no other stockholder's
securities are included or (b) notwithstanding clause (a) above, any shares
being sold by a stockholder exercising a demand registration right
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similar to that granted in Section 1.2 be excluded from such offering. For
purposes of the preceding parenthetical concerning apportionment, for any
selling stockholder that is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and stockholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling stockholder", and any pro-rata reduction with
respect to such "selling stockholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling stockholder", as defined in this sentence.
1.9 Delay of Registration. No Holder shall have any right to obtain
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or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities are
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included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several), as incurred, to which they may become subject
under the Act, or the 1934 Act or other federal or state securities law, insofar
as such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, or the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation that occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the
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meaning of the Act, any underwriter, any other Holder selling securities in such
registration statement and any controlling person of any such underwriter or
other Holder, against any losses, claims, damages, or liabilities (joint or
several), as incurred, to which any of the foregoing persons may become subject,
under the Act, the 1934 Act or other federal or state securities law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided, that,
in no event shall any indemnity under this subsection 1.10(b) exceed the net
proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel, in
addition to one local counsel for all the indemnified parties, with the fees and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section 1.10 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or
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omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission, provided, however, that, to the extent
permitted by applicable law, in no event shall any indemnifying party be
required to contribute an aggregate amount in excess of the net proceeds from
the offering received by such indemnifying party.
(e) The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
(f) No indemnifying party shall, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 1.10 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to an admission of fault, culpability or a
failure to act by and on behalf of any indemnified party.
1.11 Reports Under Securities Exchange Act of 1934. With a view to
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making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after the effective
date of the first registration statement filed by the Company for the offering
of its securities to the general public;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied
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with the reporting requirements of SEC Rule 144 (at any time after ninety (90)
days after the effective date of the first registration statement filed by the
Company), the Act and the 1934 Act (at any time after it has become subject to
such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC that permits the selling of any such
securities without registration or pursuant to such form.
1.12 Form S-3 Registration. In case the Company shall receive from
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any Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 1.12: (i) if
Form S-3 is not available for such offering by the Holders; (ii) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $4,000,000; (iii) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than 90 days after receipt of
the request of the Holder or Holders under this Section 1.12; provided, however,
that the Company shall not utilize this right more than once in any twelve (12)
month period; (iv) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected (A) one (1) registration on
Form S-3 for the requesting Holder or Holders or (B) two (2) registrations on
Form S-3 pursuant to this Section 1.12; (v) if the Company has already effected
four (4) registrations on Form S-3 pursuant to this Section 1.12; or (vi) in any
particular jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in effecting such
registration, qualification or compliance.
-11-
<PAGE>
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred in connection with a
registration requested pursuant to Section 1.12, including (without limitation)
all registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel (not to exceed $10,000) for the
selling Holder or Holders and counsel for the Company, but excluding any
underwriters' discounts or commissions associated with Registrable Securities,
shall be borne by the Company. Registrations effected pursuant to this Section
1.12 shall not be counted as demands for registration or registrations effected
pursuant to Sections 1.2 or 1.3, respectively.
1.13 Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities who acquires all of the Registrable Securities
previously held by such Holder, or who, after such assignment or transfer, holds
at least 100,000 shares of Registrable Securities (subject to appropriate
adjustment for stock splits, stock dividends, combinations and other
recapitalizations), provided: the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act. For the purposes of determining the number of shares
of Registrable Securities held by a transferee or assignee, the holdings of
transferees and assignees of a partnership or a trust who are Affiliates,
partners or retired partners of such partnership (including spouses and
ancestors, lineal descendants and siblings of such partners or spouses who
acquire Registrable Securities by gift, will or intestate succession), or an
affiliate or successor trust or trustee of such trust, shall be aggregated
together and with the partnership; provided that all assignees and transferees
who would not qualify individually for assignment of registration rights shall
have a single attorney-in-fact for the purpose of exercising any rights,
receiving notices or taking any action under this Section 1.
1.14 Limitations on Subsequent Registration Rights. From and after
---------------------------------------------
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of a majority of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company that would allow such holder or prospective holder
(a) to include such securities in any registration filed under Section 1.2
hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his securities will not reduce the amount of the
Registrable Securities of the Holders that is included or (b) to make a demand
registration which could result in such registration statement being declared
effective prior to the earlier of either of the dates set forth in subsection
1.2(a) or within one hundred twenty (120) days of the effective date of any
registration effected pursuant to Section 1.2.
-12-
<PAGE>
1.15 "Market Stand-Off" Agreement. Each Investor hereby agrees that,
----------------------------
during the period of duration (not to exceed one hundred eighty (180) days)
specified by the Company and an underwriter of Common Stock or other securities
of the Company, following the effective date of a registration statement filed
under the Act for the initial public offering of the Company's Common Stock, it
shall not, to the extent requested by the Company and such underwriter, directly
or indirectly, sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Company held by it at any time during such period except
Common Stock included in such registration; provided, however, that the
restrictions imposed by this subsection 1.15 shall not apply to Common Stock
purchased by an Investor in the initial public offering of the Company's Common
Stock or acquired by an Investor by purchases in the public market following
such initial public offering; and provided further, that all officers and
directors of the Company and all other persons with registration rights (whether
or not pursuant to this Agreement) enter into similar agreements. In order to
enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the securities of the Company (except Common Stock
included in such registration) held at any time during such period by each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.16 Termination of Registration Rights
----------------------------------
No Holder shall be entitled to exercise any right provided for in
this Section 1 after the earlier of (a) three (3) years following the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public, the
public offering price of which was not less than $10.00 per share (adjusted to
reflect subsequent stock dividends, stock splits or recapitalizations), and
$40,000,000 in the aggregate, or (b) as to any Holder, such time at which all
Registrable Securities held by such Holder can be sold in any three month period
without registration in compliance with Rule 144 of the Act.
2. Covenants
---------
2.1 Delivery of Financial Statements. The Company shall deliver
--------------------------------
to each Investor:
(a) as soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, a consolidated
income statement for such fiscal year, a consolidated balance sheet of the
Company and consolidated statement of stockholder's equity as of the end of such
year, and a consolidated statement of cash flows for such year, such year-end
financial reports to be in reasonable detail, prepared in accordance with
generally accepted accounting principles ("GAAP"), and audited and certified by
independent public accountants of nationally recognized standing selected by the
Company;
(b) so long as such Investor holds an aggregate of at least
400,000 shares of Series A, Series B, Series C, Series D and/or Series E
Preferred Stock (or
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<PAGE>
Common Stock issued upon conversion thereof and as adjusted for subsequent
stock splits, recombinations or reclassifications) as soon as practicable, but
in any event within thirty (30) days after the end of each of the first three
(3) quarters of each fiscal year of the Company, an unaudited consolidated
income statement, consolidated statement of cash flows for such fiscal quarter
and an unaudited consolidated balance sheet as of the end of such fiscal
quarter;
(c) so long as such Investor holds an aggregate of at least
400,000 shares of Series A, Series B, Series C, Series D and/or Series E
Preferred Stock (or Common Stock issued upon conversion thereof and as adjusted
for subsequent stock splits, recombinations or reclassifications) within thirty
(30) days of the end of each month, an unaudited consolidated income statement,
consolidated statement of cash flows and consolidated balance sheet for and as
of the end of such month, in reasonable detail;
(d) so long as such Investor holds an aggregate of at least
400,000 shares of Series A, Series B, Series C, Series D and/or Series E
Preferred Stock (or Common Stock issued upon conversion thereof and as adjusted
for subsequent stock splits, recombinations or reclassifications) as soon as
practicable, but in any event thirty (30) days prior to the end of each fiscal
year, a budget and business plan for the next fiscal year, prepared on a monthly
basis, including consolidated balance sheets and consolidated income statements
for such months and, as soon as prepared, any other budgets or revised budgets
prepared by the Company;
(e) with respect to the financial statements called for in
subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief
Financial Officer or Chief Executive Officer of the Company and certifying that
such financials were prepared in accordance with GAAP consistently applied with
prior practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment;
(f) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Investor or any assignee of the Investor may from time to time request,
provided, however, that the Company shall not be obligated under this subsection
(f) or any other subsection of Section 2.1 to provide information which it deems
in good faith to be a trade secret or similar confidential information.
2.2 Inspection. The Company shall permit each Investor, at such
----------
Investor's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by the Investor; provided, however, that the Company shall not be obligated
pursuant to this Section 2.2 to provide access to any information that it
reasonably considers to be a trade secret or similar confidential information.
-14-
<PAGE>
2.3 Termination of Information and Inspection Covenants. The
---------------------------------------------------
covenants set forth in Section 2.1 and Section 2.2 shall terminate as to
Investors and be of no further force or effect (a) when the sale of securities
pursuant to a registration statement filed by the Company under the Act in
connection with the firm commitment underwritten offering of its securities to
the general public is consummated, the public offering price of which was not
less than $10.00 per share (adjusted to reflect subsequent stock dividends,
stock splits or recapitalizations), and $40,000,000 in the aggregate or (b) when
the Company first becomes subject to the periodic reporting requirements of
Sections 12(g) or 15(d) of the 1934 Act, whichever event shall first occur.
2.4 Right of First Offer. Subject to the terms and conditions
--------------------
specified in this Section 2.4, the Company hereby grants to each Investor a
right of first offer to purchase its pro rata share (in whole or in part) with
respect to future sales by the Company of its Shares (as hereinafter defined).
An Investor shall be entitled to assign or apportion the right of first offer
hereby granted it among itself and its partners and affiliates (including in the
case of a venture capital fund among other venture capital funds affiliated with
such fund) in such proportions as it deems appropriate. For purposes of this
Section 2.4, an Investor's pro rata share of Shares shall mean that number of
Shares that equals the proportion that the number of shares of Common Stock
issued and held by each Investor (assuming full conversion, exercise and/or
exchange of all convertible, exercisable and exchangeable securities) bears to
the total number of shares of Common Stock issued and outstanding immediately
prior to the issuance of Shares (assuming full conversion, exercise and/or
exchange of all convertible, exercisable and exchangeable securities).
Notwithstanding anything herein to the contrary, if the aggregate number of
Shares which the Investors elect to purchase pursuant to this Section 2.4
exceeds sixty-six and two-thirds percent (66 2/3%) of the Shares to be offered
by the Company, the number of Shares to be purchased by each Investor shall be
reduced proportionately so that the aggregate number of Shares to be purchased
by the Investors is no more than sixty-six and two-thirds percent (66 2/3%) of
the Shares to be issued.
Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of its
capital stock ("Shares"), the Company shall first make an offering of such
Shares to each Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail
("Notice") to the Investors stating (i) its bona fide intention to offer such
Shares, (ii) the number of such Shares to be offered, and (iii) the price and
terms, if any, upon which it proposes to offer such Shares.
(b) By written notification received by the Company within
twenty (20) calendar days after receipt of the Notice, each Investor may elect
to purchase or obtain, at the price and on the terms specified in the Notice, up
to its pro rata share of such Shares.
(c) If all Shares that Investors are entitled to obtain pursuant
to subsection 2.4(b) are not elected to be obtained as provided in subsection
2.4(b) hereof, the
-15-
<PAGE>
Company may, during the 30-day period following the expiration of the period
provided in subsection 2.4(b) hereof, offer the remaining unsubscribed portion
of such Shares to any person or persons at a price not less than, and upon terms
no more favorable to the offeree than those specified in the Notice. If the
Company does not enter into an agreement for the sale of the Shares within such
period, or if such agreement is not consummated within 30 days of the execution
thereof, the right provided hereunder shall be deemed to be revived and such
Shares shall not be offered unless first reoffered to the Investors in
accordance herewith.
(d) The right of first offer in this Section 2.4 shall not be
applicable (i) to the issuance or sale of no more than 7,100,000 shares of
Common Stock (or options therefor, including the number of options outstanding
as of the date of this Agreement) to employees, consultants or directors for the
primary purpose of soliciting or retaining their services, (ii) to or after
consummation of a bona fide, firmly underwritten public offering of shares of
Common Stock, registered under the Act pursuant to a registration statement on
Form S-1, at an offering price of at least $10.00 per share (appropriately
adjusted for any stock split, dividend, combination or other recapitalization)
and $40,000,000 in the aggregate, (iii) the issuance of securities pursuant to
the conversion or exercise of convertible or exercisable securities, (iv) the
issuance of securities in connection with a bona fide business acquisition of or
by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise, (v) the issuance of securities in connection
with a transaction the primary purpose of which is to acquire technology, (vi)
the issuance of securities to vendors, suppliers, equipment lessors or bank
lenders where such issuance is not principally for the purpose of raising
additional equity capital; or (vii) the issuance of securities to corporate
partners or in connection with other strategic alliances approved by the Board
of Directors of the Company.
2.5 Board of Directors
------------------
(a) With respect to those three (3) directors that the Company's
Fifth Amended and Restated Certificate of Incorporation provided were to be
elected by holders of Series A, Series B, Series C, Series D and Series E
Preferred Stock, those Investors that executed the Fourth Restated Investors'
Rights Agreement agreed to vote all of their shares of Series A, Series B,
Series C, Series D and Series E Preferred Stock in favor of the election of one
designee of each of Venrock Associates ("Venrock"), Sevin Rosen Fund IV, L.P.
("Sevin Rosen"), and Oak Investment Partners VI, L.P. ("Oak"). Notwithstanding
the foregoing if pursuant to Article IV, Section (B), Paragraph 5(b) of the
Company's Fifth Amended and Restated Certificate of Incorporation (which
Paragraph is entitled "Voting for the Election of Directors"), as such provision
may be amended from time to time, the number of directors to be elected by the
holders of Series A, Series B, Series C, Series D and Series E Preferred Stock
shall be decreased from three (3) directors to either two (2) directors or one
(1) director, then among Venrock, Sevin Rosen and Oak, those two (2)
stockholders (in the case where the Series A, Series B, Series C, Series D and
Series E Preferred Stock elects two (2) directors) or the one (1) stockholder
(in the case where the Series A, Series B, Series C, Series D and Series E
Preferred Stock elects one (1) director) holding the most shares of Series A,
Series B, Series C, Series D and Series E Preferred Stock shall be entitled to
designate the director(s) pursuant to this subsection (a).
-16-
<PAGE>
(b) So long as each of (i) Integral Capital Partners III, L.P.
("Integral"), (ii) Bowman Capital or its related entities ("Bowman"), (iii)
Worldview Technology Partners ("Worldview"), (iv) The Chase Manhattan Bank,
solely as Trustee for First Plaza Group Trust (as directed by General Motors
Investment Management Corporation) and not in its individual capacity ("First
Plaza") or (v) Merrill Lynch & Co., Inc. or any of its Affiliates (each a
"Merrill Lynch Entity"), including Merrill Lynch KECALP L.P. 1997, Merrill Lynch
KECALP International L.P. 1997, Merrill Lynch KECALP L.P. 1999, Merrill Lynch
KECALP International L.P. 1999, KECALP Inc. and ML IBK Positions Inc., holds at
least 50% of the total number of shares of preferred stock held by such entity
as of the date hereof (or Common Stock issued upon conversion thereof and as
adjusted for subsequent stock splits, recombinations or reclassifications), the
Company shall invite one (1) designated representative of each of Integral,
Bowman, Worldview, First Plaza and the Merrill Lynch Entity to attend all
meetings of its Board of Directors in a nonvoting observer capacity. The
Company shall give such designated representatives copies of all notices,
minutes, consents, and other materials that it provides to its directors at the
same time as such materials are provided to the directors; provided, however,
that such representatives shall agree to hold in confidence and trust and to act
in a fiduciary manner with respect to all information so provided; and, provided
further, that the Company reserves the right to withhold any information and to
exclude such representatives from any meeting or portion thereof if the Company
believes, upon advise of counsel, that such exclusion is reasonably necessary to
preserve the attorney-client privilege, to protect highly confidential
information, or for other similar reasons. The covenants and rights set forth
in this Section 2.5 shall terminate and be of no further force or effect upon
the closing of the Company's initial firm commitment underwritten offering of
its securities to the general public, the public offering price of which was not
less than $10.00 per share (adjusted to reflect subsequent stock dividends,
stock splits or recapitalizations), and $40,000,000 in the aggregate.
3. Miscellaneous
-------------
3.1 Successors and Assigns. Except as otherwise provided herein,
----------------------
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware.
3.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-17-
<PAGE>
3.4 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by facsimile or overnight courier or upon deposit with the United
States Post Office, by registered or certified mail, postage prepaid and
addressed to the party to be notified at the address indicated for such party on
the signature page hereof, or at such other address as such party may designate
by ten (10) days' advance written notice to the other parties.
3.6 Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
at least sixty-five percent (65%) of the Registrable Securities then
outstanding; provided, however, that in the event such amendment or waiver (a)
adversely affects the rights and/or obligations of an individual Holder in a
different manner than the other Holders, such amendment or waiver shall also
require the written consent of such individual Holder or (b) adversely affects
the rights and/or obligations of the Founders under Section 1 of this Agreement
in a different manner than the other Holders, such amendment or waiver shall
also require the written consent of the Holders of at least a majority of the
Common Stock (assuming the conversion of all outstanding shares of Preferred
Stock) then held by the Founders; or (c) affects the rights and/or obligations
of Integral, Worldview, Bowman, First Plaza and the Merrill Lynch Entity under
Section 2.5(b) of this Agreement, such amendment or waiver shall also require
the written consent of Integral, Worldview, Bowman, First Plaza and/or the
Merrill Lynch Entity, as the case may be.
3.8 Severability. If one or more provisions of this Agreement
------------
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement, and the balance of the Agreement shall be
interpreted as if such provision were so excluded, and shall be enforceable in
accordance with its terms.
3.9 Aggregation of Stock. All shares of Registrable Securities
--------------------
of the Company held or acquired by affiliated stockholders shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement. For purposes of the foregoing, the shares held by any
stockholder that (a) is a partnership or corporation shall be deemed to include
shares held by the partners, retired partners and stockholders and Affiliates of
such Holder or members of the "immediate family" (as defined below) of any such
partners,
-18-
<PAGE>
retired partners and stockholders, and any custodian or trustee for the benefit
of any of the foregoing persons and (b) is an individual shall be deemed to
include shares held by any members of the stockholder's immediate family
("immediate family" shall include any spouse, father, mother, brother, sister,
lineal descendant of spouse or lineal descendant) or to any custodian or trustee
for the benefit of any of the foregoing persons.
3.10 Amendment and Restatement. The Company, the Founders and the
-------------------------
Investors consent to the execution of this Agreement, and to any and all other
documents and agreements contemplated hereby and waive any and all rights they
may have to object hereto or thereto and agree that this Agreement supersedes in
all respects all prior agreements relating to the rights set forth herein,
including the Fourth Restated Investors' Rights Agreement.
[signature pages follow]
-19-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
-------
METAWAVE COMMUNICATIONS
CORPORATION
By:/s/ Larry Culver
------------------------------------
Larry Culver
Senior Vice President and
Chief Financial Officer
Address: 10735 Willows Road NE
Post Office Box 97069
Redmond, WA 98073
INVESTORS:
---------
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
<PAGE>
SPINNAKER TECHNOLOGY OFFSHORE
FUND LIMITED
By: Bowman Capital Management, L.L.C.
Its: Investment Advisor and Attorney-in-Fact
By:_________________________________
Its:_____________________________
Address: 1875 South Grant Road, Suite 1600
San Mateo, CA 94402
SPINNAKER FOUNDERS FUND, L.P.
By: Bowman Capital Management, L.L.C.
Its: General Partner
By:_________________________________
Its:_____________________________
Address: 1875 South Grant Road, Suite 1600
San Mateo, CA 94402
SPINNAKER CLIPPER FUND, L.P.
By: Bowman Capital Management, L.L.C.
Its: General Partner
By:_________________________________
Its:_____________________________
Address: 1875 South Grant Road, Suite 1600
San Mateo, CA 94402
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
<PAGE>
ML IBK POSITIONS, INC.
By:_________________________________
Its:_____________________________
Address: 250 Vesey Street
New York, New York 10281
VENROCK ASSOCIATES
By:_____________________________________
Its:________________________________
Address: 30 Rockefeller Plaza
Room 5508
New York, NY 10112
VENROCK ASSOCIATES II, L.P.
By:_____________________________________
Its:________________________________
Address: 30 Rockefeller Plaza
Room 5508
New York, NY 10112
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
<PAGE>
OAK INVESTMENT PARTNERS VI, L.P.
By:_____________________________________
Its:_________________________________
Address: 525 University Avenue, Suite 1300
Palo Alto, CA 94301
OAK VI AFFILIATES FUND, L.P.
By:_____________________________________
Its:________________________________
Address: 525 University Avenue, Suite 1300
Palo Alto, CA 94301
OAK INVESTMENT PARTNERS VIII LIMITED
PARTNERSHIP
By:_______________________________
Its:___________________________
Address: 525 University Avenue
Suite 1300
Palo Alto, CA 94301
OAK VIII AFFILIATES FUND LIMITED
PARTNERSHIP
By:_______________________________
Its:___________________________
Address:525 University Avenue
Suite 1300
Palo Alto, CA 94301
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
<PAGE>
SEVIN ROSEN FUND IV L.P.
By: SRB Associates IV L.P.
Its: General Partner
By:________________________________
Its: General Partner
Address: 13455 Noel Road., Suite 1670
Dallas, TX 75240
Attn: John V. Jaggers
SEVIN ROSEN FUND V L.P.
By: SRB Associates V L.P.
Its: General Partner
By:__________________________________
Its: General Partner
Address: 13455 Noel Road., Suite 1670
Dallas, TX 75240
Attn: John V. Jaggers
SEVIN ROSEN V AFFILIATES FUND L.P.
By: SRB Associates V L.P.
Its: General Partner
By:_________________________________
Its: General Partner
Address: 13455 Noel Road., Suite 1670
Dallas, TX 75240
Attn: John V. Jaggers
THE CHASE MANHATTAN BANK, solely as Trustee For
First Plaza Group Trust (as directed by General
Motors Investment Management Corporation) and not
in its individual capacity
By:_______________________________________
Name:_____________________________________
Title: Authorized Officer
-----------------------------------
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
<PAGE>
Address:
MERRILL LYNCH KECALP L.P. 1997
By: KECALP Inc., its General Partner
By:_____________________________________
Edward J. Higgins, Vice-President
MERRILL LYNCH KECALP L.P. 1999
By: KECALP Inc., its General Partner
By:_____________________________________
Edward J. Higgins, Vice-President
MERRILL LYNCH KECALP
INTERNATIONAL L.P. 1997
By: KECALP Inc., its Nominee
By:_____________________________________
Edward J. Higgins, Vice-President
MERRILL LYNCH KECALP
INTERNATIONAL L.P. 1999
By: KECALP Inc., its Nominee
By:_____________________________________
Edward J. Higgins, Vice-President
Notices for all the Merrill Lynch KECALP entities:
KECALP Inc.
World Financial Center
South Tower
New York, N.Y. 10080-6123
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
<PAGE>
Attention: Robert Tully
phone: 212 236 7304
fax: 212 236 7360
________________________________________
Jennifer G. Roberts
Address: c/o The Sevin Rosen Funds
550 Lytton Avenue, Suite 200
Palo Alto, CA 94301
_______________________________________
Stephen L. Domenik
Address: c/o The Sevin Rosen Funds
550 Lytton Avenue, Suite 200
Palo Alto, CA 94301
________________________________________
David F. Bellet
Address: c/o Crown Advisors, Ltd.
The Lincoln Building
60 East 42nd Street, Suite 3405
New York, NY 10165
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
<PAGE>
INTEGRAL CAPITAL PARTNERS III, L.P.
By: Integral Capital Management III, L.P.
Its: General Partner
By:______________________________
Its: General Partner
Address: 2750 Sand Hill Road
Menlo Park, CA 94025
INTEGRAL CAPITAL PARTNERS
INTERNATIONAL III, L.P.
By: Integral Capital Management III, L.P.
Its: Investment General Partner
By:______________________________
Its: General Partner
Address: 2750 Sand Hill Road
Menlo Park, CA 94025
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
<PAGE>
WORLDVIEW TECHNOLOGY
PARTNERS I, L.P.
By:_____________________________________
James Wei
Managing Director
________________________________________
Worldview Capital I, L.P.
Its: General Partner
Address: 435 Tasso Street, Suite 120
Palo Alto, CA 94301
WORLDVIEW TECHNOLOGY
INTERNATIONAL I, L.P.
By:_____________________________________
James Wei
Managing Director
________________________________________
Worldview Capital I, L.P.
Its: General Partner
Address: 435 Tasso Street, Suite 120
Palo Alto, CA 94301
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
<PAGE>
STANFORD UNIVERSITY
By:_____________________________________
Its:________________________________
Address: 2770 Sand Hill Rd.
Menlo Park, CA 94025
SEVIN ROSEN BAYLESS MANAGEMENT COMPANY
By:_____________________________________
Its: Vice President
Address: 13455 Noel Road., Suite 1670
Dallas, TX 75240
Attn: John V. Jaggers
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
<PAGE>
WA&H INVESTMENTS, L.L.C.
By: Wessels, Arnold & Henderson Group, L.L.C.
Its: Managing Member
By:_________________________________
Its______________________________
Address:
MONTGOMERY ASSOCIATES, 1992 L.P.
By:_____________________________________
Its:________________________________
Address: 600 Montgomery Street
San Francisco, CA 94111
MERITECH CAPITAL PARTNERS, L.P.
By: MeriTech Capital Associates, L.L.C.,
Its General Partner
By: MeriTech Management Associates, L.L.C.,
member
By:_____________________________________
Member
Address: 428 University Avenue, 2nd Floor
Palo Alto, CA 94301
Phone: 650/330-5472
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
<PAGE>
FOUNDERS:
---------
________________________________________
Douglas O. Reudink
Address: c/o Metawave Communications
Corporation
10735 Willows Road NE
Redmond, WA 98073
________________________________________
Thomas Huseby
c/o SeaPoint Ventures
777 108th Avenue NE, Suite 1895
Bellevue, WA 98004
[SIGNATURE PAGE TO FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT]
<PAGE>
EXHIBIT 10.8
* * * * * * * * * * * * * * * * * * * *
---------------------------------------
Lease
-----
WILLOW CREEK CORPORATE CENTER
-----------------------------
* * * * * * * * * * * * * * * * * * * *
---------------------------------------
Between
-------
METAWAVE COMMUNICATIONS CORPORATION, INC.
-----------------------------------------
(Tenant)
--------
and
---
CARR AMERICA REALTY CORPORATION
-------------------------------
(Landlord)
----------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. LEASE AGREEMENT 2
2. RENT 2
A. Types of Rent 2
(1) Base Rent 3
(2) Operating Cost Share Rent 3
(3) Tax Share Rent 3
(4) Additional Rent 3
(5) Rent 3
(6) Skybridge 3
B. Payment of Operating Cost Share Rent and Tax Share Rent 4
(1) Payment of Estimated Operating Cost Share Rent and
Tax Share Rent 4
(2) Correction of Operating Cost Share Rent 4
(3) Correction of Tax Share Rent 4
C. Definitions 4
(1) Included Operating Costs 4
(2) Excluded Operating Costs 5
(3) Taxes 6
(4) Lease Year 7
(5) Fiscal Year 7
D. Computation of Base Rent and Rent Adjustments 7
(1) Prorations 7
(2) Default Interest 7
(3) Rent Adjustments 8
(4) Books and Records 8
(5) Miscellaneous 8
3. PREPARATION AND CONDITION OF PREMISES; POSSESSION
AND SURRENDER OF PREMISES 8
A. Condition of Premises 8
B. Tenant's Possession 9
C. Surrender 9
4. BUILDING AND LANDLORD REPAIR 9
A. Heating and Air Conditioning 9
B. Electricity 10
C. Water 10
D. Janitorial Service 10
E. Landlord's Repair Obligations 10
F. Interruption of Services 11
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5. ALTERATIONS AND REPAIRS BY TENANT 11
A. Landlord's Consent and Conditions 11
B. Damage to Systems 12
C. No Liens 12
D. Ownership of Improvements 13
E. Removal at Termination 13
F. Tenant's Repair Obligation 13
6. USE OF PREMISES 14
7. GOVERNMENTAL REQUIREMENTS AND BUILDING RULES 14
8. WAIVER OF CLAIMS; INDEMNIFICATION; INSURANCE 15
A. Waiver of Claims 15
B. Indemnification 15
C. Tenant's Insurance 15
D. Insurance Certificates 17
E. Landlord's Insurance 17
9. FIRE AND OTHER CASUALTY 17
A. Termination 17
B. Restoration 17
10. EMINENT DOMAIN 18
11. RIGHTS RESERVED TO LANDLORD 18
A. Name 18
B. Signs 18
C. Window Treatments 18
D. Keys 18
E. Access 18
F. Preparation for Reoccupancy 19
G. Heavy Articles 19
H. Show Premises 19
I. Use of Lockbox 19
J. Repairs and Alterations 19
K. Landlord's Agents 19
L. Building Services 19
M. Other Actions 19
12. TENANT'S DEFAULT 20
A. Rent Default 20
B. Assignment/Sublease Default 20
C. Other Performance Default 20
</TABLE>
<PAGE>
<TABLE>
<S> <C>
D. Credit Default 20
13. LANDLORD REMEDIES 20
A. Termination of Lease or Possession 20
B. Lease Termination Damages 20
C. Possession Termination Damages 21
D. Landlord's Remedies Cumulative 21
E. WAIVER OF TRIAL BY JURY 21
F. Litigation Costs 22
14. SURRENDER 22
15. HOLDOVER 22
16. SUBORDINATION TO GROUND LEASES AND MORTGAGES 22
A. Subordination 22
B. Termination of Ground Lease or Foreclosure of Mortgage 22
C. Security Deposit 23
D. Notice and Right to Cure 23
E. Definitions 23
17. ASSIGNMENT AND SUBLEASE 23
A. In General 23
B. Landlord's Consent 23
C. Procedure 24
D. Change of Ownership 24
E. Excess Payments 24
18. CONVEYANCE BY LANDLORD 24
19. ESTOPPEL CERTIFICATE 25
20. SECURITY DEPOSIT 25
21. FORCE MAJEURE 26
22. TENANT'S PERSONAL PROPERTY AND FIXTURES 26
23. NOTICES 26
A. Landlord 26
B. Tenant 26
24. QUIET POSSESSION 27
25. REAL ESTATE BROKER 28
</TABLE>
<PAGE>
<TABLE>
<S> <C>
26. MISCELLANEOUS 28
A. Successors and Assigns 28
B. Date Payments Are Due 28
C. Meaning of "Landlord", "Re-Entry, "including" and "Affiliate" 28
D. Time of the Essence 28
E. No Option 28
F. Severability 28
G. Governing Law 28
H. Lease Modification 29
I. No Oral Modification 29
J. Landlord's Right to Cure 29
K. Captions 29
L. Authority 29
M. Landlord's Enforcement of Remedies 29
N. Entire Agreement 29
O. Landlord's Title 29
P. Light and Air Rights 29
Q. Singular and Plural 29
R. No Recording by Tenant 30
S. Exclusivity 30
T. No Construction Against Drafting Party 30
U. Survival 30
V. Rent Not Based on Income 30
W. Building Manager and Service Providers 30
X. Late Charge and Interest on Late Payments 30
Y. Parking 30
Z. Signage 30
27. UNRELATED BUSINESS INCOME 31
28. HAZARDOUS SUBSTANCES 31
29. EXCULPATION 31
</TABLE>
<PAGE>
LEASE
-----
THIS LEASE (the "Lease") is made as of September 29, 1997 between
-----------
CARRAMERICA REALTY CORPORATION, a Maryland corporation (the "Landlord") and the
--------
Tenant as named in the Schedule below. The term "Project" means the buildings
-------
one through six (individually the "Building" and collectively the "Buildings")
-------- ---------
known as "Willow Creek Corporate Center" and the land (the "Land") located at
----
10525 Willows Road, Redmond, Washington 98073. "Premises" means that part of
--------
the Project leased to Tenant described in the Schedule and outlined on Appendix
A.
The following schedule (the "Schedule") is an integral part of this Lease.
--------
Terms defined in this Schedule shall have the same meaning throughout the Lease.
SCHEDULE
I. TENANT: Metawave Communications Corporation, Inc., a Delaware
corporation.
II. PREMISES: Buildings 1 and 2 of the Project.
III. RENTABLE SQUARE FEET OF THE PREMISES: Approximately 95,838
square feet (Building 1 - 51,286 square feet, Building 2 - 44,552
square feet).
IV. TENANT'S PROPORTIONATE SHARE: 28.62% (based upon a total of
334,906 rentable square feet in the Buildings).
V. SECURITY DEPOSIT: $2,500,000 Letter of Credit.
VI. TENANT'S REAL ESTATE BROKER FOR THIS LEASE: CB Commercial Real
Estate Group, Inc.
VII. LANDLORD'S REAL ESTATE BROKER FOR THIS LEASE: N/A.
VIII. TENANT IMPROVEMENTS, IF ANY: See the Tenant Improvement
Agreement attached hereto as Appendix C.
IX. COMMENCEMENT DATE: June 1, 1998. If the Commencement Date is
other than June 1, 1998, Landlord and Tenant shall execute a
Commencement Date Confirmation substantially in the form of Appendix E
promptly following the Commencement Date.
X. TERMINATION DATE/TERM: May 31, 2005, seven (7) years after the
Commencement Date, or if the Commencement Date is not the first day of
a month, then after the first day of the following month.
XI. GUARANTOR: N/A.
1
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<PAGE>
XII. BASE RENT.
<TABLE>
<CAPTION>
Annual Monthly Per Sq. Ft.
Period Base Rent Base Rent Rent
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
[***]
</TABLE>
I. APPENDICES: The following attached Appendices are an integral
part of this Lease and incorporated herein by this reference:
Appendix A-1 - Plan of the Premises
Appendix A-2 - Plan of the Project
Appendix B - Rules and Regulations
Appendix C - Tenant Improvement Agreement
Appendix D - Mortgages Affecting Project
Appendix E - Commencement Date Conformation
Appendix F - Legal Description
Appendix G - Extension Option
Appendix H - Expansion Option
1. LEASE AGREEMENT. On the terms stated in this Lease, Landlord leases
---------------
the Premises to Tenant, and Tenant leases the Premises from Landlord, for the
Term beginning on the Commencement Date and ending on the Termination Date
unless extended or sooner terminated pursuant to this Lease.
2. RENT.
----
A. Types of Rent. Tenant shall pay the following Rent in the form of a
-------------
check to Landlord at the following address:
CARRAMERICA REALTY CORPORATION
WILLOW CREEK CORPORATE CENTER
P.O. Box 198456
Atlanta, GA 30384-7918
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
2
-
<PAGE>
or by wire transfer as follows:
Account Name: CarrAmerica Realty Corporation
Account Number: 3255807986
ABA Number: 061-000-052
Bank Name: NationsBank of Georgia
Notification: Jennifer Malone (CarrAmerica)
Telephone: 202-639-3829
or in such other manner as Landlord may notify Tenant:
(1) Base Rent in monthly installments in advance on or before the
---------
first day of each month of the Term in the amount set forth on the Schedule.
Notwithstanding the foregoing, Landlord and Tenant agree that for the first six
(6) months of the Lease Term Tenant's monthly Base Rent payment shall be [***]
and, thereafter, Tenant s Base Rent obligation shall be as set forth in the
Schedule. Landlord and Tenant agree that in the event Tenant shall occupy any
portion of the approximately 23,000 square feet of Pocket Space as identified in
the Tenant Improvement Agreement, Appendix C, Section 1, the Base Rent during
months one through six (1-6) of the Lease Term shall be increased
proportionately based on [***] PSF for that portion of the Pocket Space occupied
by Tenant.
(2) Operating Cost Share Rent in an amount equal to the Tenant's
-------------------------
Proportionate Share of the Operating Costs for the applicable fiscal year of the
Lease, paid monthly in advance in an estimated amount. Definitions of Operating
Costs and Tenant's Proportionate Share, and the method for billing and payment
of Operating Cost Share Rent are set forth in Sections 2B, 2C and 2D.
(3) Tax Share Rent in an amount equal to the Tenant's Proportionate
--------------
Share of the Taxes for the applicable fiscal year of this Lease, paid monthly in
advance in an estimated amount. A definition of Taxes and the method for
billing and payment of Tax Share Rent are set forth in Sections 2B, 2C and 2D.
(4) Additional Rent in the amount of all costs, expenses,
---------------
liabilities, and amounts which Tenant is required to pay under this Lease,
excluding Base Rent, Operating Cost Share Rent, and Tax Share Rent, but
including any interest for late payment of any item of Rent.
(5) Rent as used in this Lease means Base Rent, Operating Cost Share
----
Rent, Tax Share Rent and Additional Rent. Tenant's agreement to pay Rent is an
independent covenant, with no right of setoff, deduction or counterclaim of any
kind, except as otherwise expressly stated herein.
(6) Skybridge. Tenant hereby agrees to pay to Landlord the costs and
---------
expenses incurred by Landlord in the construction of the skybridge pursuant to
Appendix C(6)(b) as follows: Tenant shall pay monthly throughout the term of
this Lease an amount per month equal to the total cost and expenses of
constructing the skybridge amortized over the seven year term of this Lease at
an annual interest rate of 10.5%. Tenant shall not be required to remove the
skybridge at the termination of the Lease.
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
3
-
<PAGE>
B. Payment of Operating Cost Share Rent and Tax Share Rent.
-------------------------------------------------------
(1) Payment of Estimated Operating Cost Share Rent and Tax Share Rent
-----------------------------------------------------------------
Landlord shall estimate the Operating Costs and Taxes of the Project by April 1
of each fiscal year, or as soon as reasonably possible thereafter. Landlord may
revise these estimates whenever it obtains more accurate information, such as
the final real estate tax assessment or tax rate for the Project.
Within ten (10) days after receiving the original or revised estimate
from Landlord, Tenant shall pay Landlord one-twelfth (1/12th) of Tenant's
Proportionate Share of this estimate, multiplied by the number of months that
have elapsed in the applicable fiscal year to the date of such payment including
the current month, minus payments previously made by Tenant for the months
elapsed. On the first day of each month thereafter, Tenant shall pay Landlord
one-twelfth (1/12th) of Tenant's Proportionate Share of this estimate, until a
new estimate becomes applicable.
(2) Correction of Operating Cost Share Rent. Landlord shall deliver
---------------------------------------
to Tenant a report for the previous fiscal year (the "Operating Cost Report") by
---------------------
April 1 of each year, or as soon as reasonably possible thereafter, setting
forth (a) the actual Operating Costs incurred, (b) the amount of Operating Cost
Share Rent due from Tenant, and (c) the amount of Operating Cost Share Rent paid
by Tenant. Within twenty (20) days after such delivery, Tenant shall pay to
Landlord the amount due minus the amount paid. If the amount paid exceeds the
amount due, Landlord shall apply the excess to Tenant's payments of Operating
Cost Share Rent next coming due.
(3) Correction of Tax Share Rent. Landlord shall deliver to Tenant a
----------------------------
report for the previous fiscal year (the "Tax Report") by April 1 of each year,
----------
or as soon as reasonably possible thereafter, setting forth (a) the actual
Taxes, (b) the amount of Tax Share Rent due from Tenant, and (c) the amount of
Tax Share Rent paid by Tenant. Within twenty (20) days after such delivery,
Tenant shall pay to Landlord the amount due from Tenant minus the amount paid by
Tenant. If the amount paid exceeds the amount due, Landlord shall apply any
excess as a credit against Tenant's payments of Tax Share Rent next coming due.
C. Definitions.
-----------
(1) Included Operating Costs. "Operating Costs" means any expenses,
------------------------ ---------------
costs and disbursements of any kind other than Taxes, paid or incurred by
Landlord in connection with the management, maintenance, operation, insurance,
repair and other related activities in connection with any part of the Project
and of the personal property, fixtures, machinery, equipment, systems and
apparatus used in connection therewith, including the cost of providing those
repair, maintenance and services required to be furnished by Landlord to the
Premises and Building under this Lease, a management fee
4
-
<PAGE>
in an amount equal to three percent (3%) of the annual Base Rent and accounting
and administration costs incurred by Landlord with respect to the Project.
Operating Costs shall also include the costs of any capital improvements (other
than Landlord's Work, Initial Improvements, and Additional Improvements) which
reduce Operating Costs or improve safety, and those made to keep the Project in
compliance with governmental requirements applicable from time to time
(collectively, "Included Capital Items"); provided, that the costs of any
Included Capital Item shall be amortized by Landlord, together with an amount
equal to interest at ten percent (10%) per annum, over the estimated useful life
of such item and such amortized costs are only included in Operating Costs for
that portion of the useful life of the Included Capital Item which falls within
the Term.
If the Project is not fully occupied during any portion of any fiscal
year, Landlord may adjust (an "Equitable Adjustment") Operating Costs to equal
--------------------
what would have been incurred by Landlord had the Project been fully occupied.
This Equitable Adjustment shall apply only to Operating Costs which are variable
and therefore increase as occupancy of the Project increases. Landlord may
incorporate the Equitable Adjustment in its estimates of Operating Costs.
If Landlord does not furnish any particular service whose cost would
have constituted an Operating Cost to a tenant other than Tenant who has
undertaken to perform such service itself, Operating Costs shall be increased by
the amount which Landlord would have incurred if it had furnished the service to
such tenant.
(2) Excluded Operating Costs. Operating Costs shall not include:
------------------------
(a) costs of alterations of tenant premises;
(b) costs of capital improvements other than Included
Capital Items;
(c) interest and principal payments on mortgages or
any other debt costs, or rental payments on any ground lease of
the Project;
(d) real estate brokers' leasing commissions;
(e) legal fees, space planner fees and advertising
expenses incurred with regard to leasing the Building or portions
thereof;
(f) any cost or expenditure for which Landlord is
reimbursed, by insurance proceeds or otherwise, except by
Operating Cost Share Rent;
5
-
<PAGE>
(g) the cost of any service furnished to any office
tenant of the Project which Landlord does not make available to
Tenant;
(h) depreciation (except on any Included Capital
Items);
(i) franchise or income taxes imposed upon Landlord;
(j) costs of correcting defects in construction of the
Building, including Building Shell, Initial Improvements and
Additional Improvements (as opposed to the cost of normal
repair, maintenance and replacement expected with the
construction materials and equipment installed in the Building in
light of their specifications);
(k) legal and auditing fees which are for the benefit
of Landlord such as collecting delinquent rents, preparing tax
returns and other financial statements, and audits other than
those incurred in connection with the preparation of reports
required pursuant to Section 2B above;
(l) the wages of any employee for services not related
directly to the day to day management, maintenance, operation and
repair of the Building; and
(m) fines, penalties and interest.
(n) amounts paid for deductibles on insurance carried
by Landlord relating to the Project in excess of industry standard deductibles
for insurance policies covering comparable Projects.
(3) Taxes. "Taxes" means any and all taxes, assessments and charges
----- -----
of any kind, general or special, ordinary or extraordinary, levied against the
Project, which Landlord shall pay or become obligated to pay in connection with
the ownership, leasing, renting, management, use, occupancy, control or
operation of the Project or of the personal property, fixtures, machinery,
equipment, systems and apparatus used in connection therewith. Taxes shall
include real estate taxes, personal property taxes, sewer rents, water rents,
special or general assessments, transit taxes, ad valorem taxes, and any tax
levied on the rents hereunder or the interest of Landlord under this Lease (the
"Rent Tax"). Taxes shall also include all fees and other costs and expenses
--------
paid by
6
-
<PAGE>
Landlord in reviewing any tax and in seeking a refund or reduction of any Taxes,
whether or not the Landlord is ultimately successful.
For any year, the amount to be included in Taxes (a) from taxes or
assessments payable in installments, shall be the amount of the installments
(with any interest) due and payable during such year, and (b) from all other
Taxes, shall at Landlord's election be the amount accrued, assessed, or
otherwise imposed for such year or the amount due and payable in such year. Any
refund or other adjustment to any Taxes by the taxing authority, shall apply
during the year in which the adjustment is made.
Taxes shall not include any net income (except Rent Tax), capital,
stock, succession, transfer, franchise, gift, estate or inheritance tax, except
to the extent that such tax shall be imposed in lieu of any portion of Taxes.
(4) Lease Year. "Lease Year" means each consecutive twelve-month
---------- ----------
period beginning with the Commencement Date, except that if the Commencement
Date is not the first day of a calendar month, then the first Lease Year shall
be the period from the Commencement Date through the final day of the twelve
months after the first day of the following month, and each subsequent Lease
Year shall be the twelve months following the prior Lease Year.
(5) Fiscal Year. "Fiscal Year" means the calendar year, except that
----------- -----------
the first fiscal year and the last fiscal year of the Term may be a partial
calendar year.
D. Computation of Base Rent and Rent Adjustments.
---------------------------------------------
(1) Prorations. If this Lease begins on a day other than the first
----------
day of a month, the Base Rent, Operating Cost Share Rent and Tax Share Rent
shall be prorated for such partial month based on the actual number of days in
such month. If this Lease begins on a day other than the first day, or ends on
a day other than the last day, of the fiscal year, Operating Cost Share Rent and
Tax Share Rent shall be prorated for the applicable fiscal year.
(2) Default Interest. Any sum due from Tenant to Landlord not paid
----------------
when due shall bear interest from the date due until paid at ten and one half
percent (10.5%).
(3) Rent Adjustments. The square footage of the Premises and the
----------------
Building set forth in the Schedule are conclusively deemed to be the actual
square footage thereof, without regard to any subsequent remeasurement of the
Premises or the Building. If any Operating Cost paid in one fiscal year relates
to more than one fiscal year, Landlord may proportionately allocate such
Operating Cost among the related fiscal years.
7
-
<PAGE>
(4) Books and Records. Landlord shall maintain books and records
-----------------
reflecting the Operating Costs and Taxes in accordance with sound accounting and
management practices. Tenant and its certified public accountant shall have the
right to inspect Landlord's records at Landlord's office upon at least seventy-
two (72) hours' prior notice during normal business hours during the ninety (90)
days following the respective delivery of the Operating Cost Report or the Tax
Report. The results of any such inspection shall be kept strictly confidential
by Tenant and its agents, and Tenant and its certified public accountant must
agree, in their contract for such services, to such confidentiality restrictions
and shall specifically agree that the results shall not be made available to any
other tenant of the Building. Unless Tenant sends to Landlord any written
exception to either such report within said ninety (90) day period, such report
shall be deemed final and accepted by Tenant. Tenant shall pay the amount shown
on both reports in the manner prescribed in this Lease, whether or not Tenant
takes any such written exception, without any prejudice to such exception. If
Tenant makes a timely exception, Landlord shall cause its independent certified
public accountant to issue a final and conclusive resolution of Tenant's
exception. Tenant shall pay the cost of such certification unless Landlord's
original determination of annual Operating Costs or Taxes overstated the amounts
thereof by more than five percent (5%).
(5) Miscellaneous. So long as Tenant is in default of any obligation
-------------
under this Lease, Tenant shall not be entitled to any refund of any amount from
Landlord. If this Lease is terminated for any reason prior to the annual
determination of Operating Cost Share Rent or Tax Share Rent, either party shall
pay the full amount due to the other within fifteen (15) days after Landlord's
notice to Tenant of the amount when it is determined. Landlord may commingle
any payments made with respect to Operating Cost Share Rent or Tax Share Rent,
without payment of interest.
3. PREPARATION AND CONDITION OF PREMISES; POSSESSION AND SURRENDER OF
------------------------------------------------------------------
PREMISES.
- --------
A. Condition of Premises. Except to the extent of the Tenant
---------------------
Improvements item on the Schedule, and without limiting Landlord s duties under
other provisions of this Lease, Landlord is leasing the Premises to Tenant "as
is", without any obligation to alter, remodel, improve, repair or decorate any
part of the Premises. Landlord shall cause the Premises to be completed in
accordance with the Tenant Improvement Agreement attached as Appendix C.
B. Tenant's Possession. Tenant's taking possession on the Commencement
-------------------
Date of any portion of the Premises shall be conclusive evidence that the
Premises was in good order, repair and condition, other than latent and other
defects which are not discoverable upon reasonable inspection by Tenant at the
time of taking possession. If Landlord authorizes Tenant to take possession of
any part of the Premises prior to the Commencement Date for purposes of doing
business, all terms of this Lease shall apply to such pre-Term possession,
including Base Rent at the rate set forth for the First Lease
8
-
<PAGE>
Year in the Schedule prorated for any partial month. Notwithstanding the
foregoing, Tenant shall be granted access to the Premises thirty (30) days prior
to the Commencement Date for the purposes of installing Tenant s furniture,
fixtures and equipment.
In the event that through no fault of Tenant, and subject to force majeure,
Landlord has not substantially completed (as defined in Appendix C) the Premises
in accordance with Appendix C by the Commencement Date, as Tenant s sole and
exclusive remedy, Landlord shall provide Tenant with two (2) days of Base Rent
abatement credit for each day of late delivery until the Premises are
substantially complete provided, however, that in the event that Premises are
not delivered within 120 days of the Commencement Date, Tenant shall have the
right to terminate this Lease.
C. Surrender. Subject to Landlord's obligations set forth herein and
---------
paragraph 4E, throughout the Term, Tenant shall maintain, repair and replace the
Premises in their condition as of the Completion Date, loss or damage caused by
the elements, ordinary wear, and fire and other casualty excepted, and at the
termination of this Lease, or Tenant's right to possession, Tenant shall return
the Premises to Landlord in broom-clean condition. To the extent Tenant fails
to perform either obligation, Landlord may, but need not, restore the Premises
to such condition and Tenant shall pay the cost thereof.
4. BUILDING AND LANDLORD REPAIR.
----------------------------
Landlord shall furnish the services, repair and maintenance to the Premises
and Buildings ("Building Services"), unless otherwise stated herein, as follows:
A. Heating and Air Conditioning. Landlord shall furnish heating and air
----------------------------
conditioning system to the Premises as part of the Building Shell to provide a
comfortable temperature, in Landlord's judgment, for normal business operations.
Tenant may install supplementary stand alone air conditioning units in the
Premises, if necessary to maintain comfortable temperature for normal business
operations, provided that such improvements by Tenant shall be of Tenant's sole
cost and expense, and subject to Landlord's reasonable prior approval and the
terms of Article 5 hereof. Tenant shall pay to Landlord upon demand as
Additional Rent the cost of operation, repair and maintenance thereof.
B. Electricity. Landlord shall furnish to the Premises as part of the
-----------
Building Shell sufficient electricity to operate normal office equipment.
Tenant shall not install or operate in the Premises any electrically operated
equipment or other machinery, other than business machines and equipment
normally employed for general office use (other than equipment installed in
Tenant's "equipment demo rooms", engineering laboratories and on the production
floor) which do not require high electricity consumption for operation. If any
of Tenant's equipment requires electricity consumption in excess of the capacity
of the electrical system installed by Landlord in the Premises, all additional
9
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<PAGE>
transformers, distribution panels and wiring that may be required to provide the
amount of electricity required for Tenant's equipment shall be installed by
Landlord at the cost and expense of Tenant except to the extent covered by the
Landlord Contribution. Tenant shall pay the cost of electricity it consumes as
recorded by the electric meter serving the Premises directly to the electric
company. In the event that the Premises are not separately metered, Tenant
shall be billed periodically by Landlord based upon such consumption or shall be
made part of the Operating Cost Share Rent.
C. Water. Landlord shall furnish hot and cold tap water for drinking and
-----
toilet purposes to the Premises as part of the Building Shell. Tenant shall pay
directly to the water company for water furnished and consumed. Tenant shall
not permit water to be wasted.
D. Janitorial Service. Tenant shall provide, at its own cost and
------------------
expense, janitorial services to the Premises. At Tenant's request, Landlord may
furnish janitorial to the Premises. Tenant shall reimburse Landlord such costs
as Additional Rent.
E. Landlord's Repair Obligations. Subject to Tenant's obligations set
-----------------------------
forth in paragraph 5F below and Landlord's rights to reimbursement of costs and
expenses as set forth in this Lease, Landlord shall repair, maintain and
replace, as necessary, the Building shell, the roof, exterior walls and
structural parts of the Premises, and equipment and fixtures comprising the
Building Services (unless otherwise expressly excluded as set forth in this
paragraph 4). Tenant shall pay to and reimburse Landlord for the cost and
expense of Landlord's obligations hereunder as Operating Costs, or if such
services are provided solely to Tenant and the Premises, Landlord shall invoice
Tenant and Tenant shall pay Landlord, as Additional Rent, the cost of such
services. Notwithstanding the foregoing, Landlord shall not (i) be required to
make repairs necessitated by reason of the negligence or willful misconduct of
Tenant or anyone claiming under Tenant, by reason of the failure of Tenant to
perform or observe any conditions or agreements of this Lease, or by reason of
any improvements or alterations made by Tenant, or (ii) be liable to Tenant for
failure to make repairs as herein specifically required of it unless Tenant has
notified Landlord, in writing (except in emergencies) of the need for such
repairs and Landlord has failed to commence said repairs within ten (10)
business days following receipt of Tenant's notification.
F. Interruption of Services. If any of the Building utilities systems,
------------------------
equipment or machinery provided or maintained by Landlord ceases to function
properly for any cause, Landlord shall use reasonable diligence to repair the
same promptly. Landlord's inability to furnish, to any extent, the Building
Services set forth in this Section 4, or any cessation thereof resulting from
any causes, including any entry for repairs pursuant to this Lease, and any
renovation, redecoration or rehabilitation of any area of the Building shall not
render Landlord liable for damages to either person or property or for
interruption or loss to Tenant's business, nor be construed as an eviction of
Tenant, nor work an abatement of any portion of rent, nor relieve Tenant from
fulfillment
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of any covenant or agreement hereof; provided, however, in the event that an
interruption of the Building Services set forth in this Section 4 to the extent
caused by Landlord's negligence or performance of its duties under this Lease
causes the Premises to be untenantable for a period of at least five (5)
consecutive business days, monthly Rent shall be abated proportionately.
5. ALTERATIONS AND REPAIRS BY TENANT.
---------------------------------
A. Landlord's Consent and Conditions.
---------------------------------
Tenant shall not make any improvements or alterations to the Premises (the
"Work"), in excess of ten thousand dollars ($10,000) without in each instance
----
submitting plans to Landlord and obtaining Landlord's prior written consent,
which shall not be unreasonably withheld. For purposes of this Section, the
term "Work" shall not include Tenant's furniture, fixtures or equipment.
Landlord will be deemed to be acting reasonably in withholding its consent for
any Work which (a) impacts the base structural components or systems of the
Building, (b) impacts any other tenant's premises, or (c) is visible from
outside the Premises, with the exception of antennas installed pursuant to
Section 6 hereof. With respect to any consent required herein, Landlord shall
respond within ten (10) days.
Tenant shall reimburse Landlord for actual costs incurred for review of the
plans and all other items submitted by Tenant. Tenant shall pay for the cost of
all Work. All Work shall become the property of Landlord upon its installation,
except for Tenant's trade fixtures and for items which Landlord requires Tenant
to remove at Tenant's cost at the termination of the Lease pursuant to Section
5E.
The following requirements shall apply to all Work:
(1) Prior to commencement, Tenant shall furnish to Landlord building
permits, certificates of insurance satisfactory to Landlord, and, at Landlord's
request, security for payment of all costs.
(2) Tenant shall perform all Work so as to maintain peace and harmony
among other contractors serving the Project and shall avoid interference with
other work to be performed or services to be rendered in the Project.
(3) The Work shall be performed in a good and workmanlike manner,
meeting the standard for construction and quality of materials in the Building,
and shall comply with all insurance requirements and all applicable governmental
laws, ordinances and regulations ("Governmental Requirements").
-------------------------
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<PAGE>
(4) Tenant shall perform all Work so as to minimize or prevent
disruption to other tenants, and Tenant shall comply with all reasonable
requests of Landlord in response to complaints from other tenants.
(5) Tenant shall perform all Work in compliance with Landlord's
"Policies, Rules and Procedures for Construction Projects" in effect at the time
the Work is performed.
(6) Tenant shall permit Landlord to supervise all Work. Landlord may
charge a supervisory fee not to exceed five percent (5%) of labor, material, and
all other costs of the Work, if Landlord's employees or contractors perform the
Work.
(7) Upon completion, Tenant shall furnish Landlord with contractor's
affidavits and full and final statutory waivers of liens, as-built plans and
specifications, and receipted bills covering all labor and materials.
B. Damage to Systems. If any part of the mechanical, electrical or other
-----------------
systems in the Premises provided or maintained by landlord shall be damaged as a
result of Tenant's improvements or alterations, Tenant shall promptly notify
Landlord, and Landlord shall repair such damage. Landlord may also at any
reasonable time make any repairs or alterations which Landlord deems necessary
for the safety or protection of the Project, or which Landlord is required to
make by any court or pursuant to any Governmental Requirement. During any
period of Tenant's alteration or improvement of the Premises, Tenant shall at
its expense make all other repairs required as a result or caused by Tenant's
construction of alterations and improvements necessary to keep the Premises, and
Tenant's fixtures and personal property, in good order, condition and repair; to
the extent Tenant fails to do so, Landlord may make such repairs itself. The
cost of any repairs made by Landlord on account of Tenant's default, or on
account of the mis-use or neglect by Tenant or its invitees, contractors or
agents anywhere in the Project, shall become Additional Rent payable by Tenant
on demand.
C. No Liens. Tenant has no authority to cause or permit any lien or
--------
encumbrance of any kind to affect Landlord's interest in the Project; any such
lien or encumbrance shall attach to Tenant's interest only. If any mechanic's
lien shall be filed or claim of lien made for work or materials furnished to
Tenant, then Tenant shall at its expense within ten (10) days thereafter either
discharge or contest the lien or claim. If Tenant contests the lien or claim,
then Tenant shall (i) within such ten (10) day period, provide Landlord adequate
security for the lien or claim, (ii) contest the lien or claim in good faith by
appropriate proceedings that operate to stay its enforcement, and (iii) pay
promptly any final adverse judgment entered in any such proceeding. If Tenant
does not comply with these requirements, Landlord may discharge the lien or
claim, and the amount paid, as well as attorney's fees and other expenses
incurred by Landlord, shall become Additional Rent payable by Tenant on demand.
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D. Ownership of Improvements. All improvements, alterations or work to
-------------------------
the Premises as defined in this Section 5, partitions, hardware, equipment,
machinery and all other improvements and all fixtures except trade fixtures,
constructed in the Premises by either Landlord or Tenant, (i) shall become
Landlord's property upon installation without compensation to Tenant, unless
Landlord consents otherwise in writing, and (ii) shall at Landlord's option
either (a) be surrendered to Landlord with the Premises at the termination of
the Lease or of Tenant's right to possession, or (b) be removed in accordance
with Subsection 5E below (unless Landlord at the time it gives its consent to
the performance of such construction expressly waives in writing the right to
require such removal).
E. Removal at Termination. Upon the termination of this Lease or
----------------------
Tenant's right of possession Tenant shall remove from the Project its trade
fixtures, furniture, moveable equipment and other personal property, any
improvements which Landlord elects shall be removed by Tenant pursuant to
Section 5D, and any improvements to any portion of the Project other than the
Premises, provided, however, that Tenant is not required to remove any Initial
Improvements, Additional Improvements, Landlord's Work, or the skybridge. If
Tenant does not timely remove such property, then Tenant shall be conclusively
presumed to have, at Landlord's election (i) conveyed such property to Landlord
without compensation or (ii) abandoned such property, and Landlord may dispose
of or store any part thereof in any manner at Tenant's sole cost, without
waiving Landlord's right to claim from Tenant all expenses arising out of
Tenant's Sailure to remove the property, and without liability to Tenant or any
other person. Landlord shall have no duty to be a bailee of any such personal
property. If Landlord elects abandonment, Tenant shall pay to Landlord, upon
demand, any expenses incurred for disposition.
F. Tenant's Repair Obligation. Subject to Landlord's obligations set
--------------------------
forth in paragraph 4E, Tenant shall, throughout the term of this Lease and at
its own cost and expense, maintain, repair and replace, as necessary, or
required by applicable law or ordinances, the Premises improvements, fixtures,
equipment, mechanical and electrical systems in their condition as of the
Commencement Date, ordinary wear and tear excepted. Tenant shall provide its
own garbage service to the Premises at its own cost and expense. All
replacements made by Tenant shall be of like kind and quality to the items
replaced as they existed when originally installed. With respect to any
maintenance or repair of mechanical and electrical systems in the Premises and
required be maintained by Tenant hereunder, Tenant shall contract and pay for
periodic inspection and maintenance and the repair and replacement, as
necessary, subject to the Landlord's approval and satisfaction which shall not
be unreasonably withheld or delayed.
6. USE OF PREMISES. Tenant shall use the Premises only for general
---------------
office and light manufacturing purposes, which shall include product
demonstration to customers, equipment testing and storage. Tenant shall not
allow any use of the Premises which will negatively affect the cost of coverage
of Landlord's insurance on the Project.
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Tenant shall not allow any inflammable or explosive liquids or materials to be
kept on the Premises (other than propane tanks used for vehicles on the
Premises). Tenant shall not allow any use of the Premises which would cause the
value or utility of any part of the Premises to diminish or would interfere with
any other Tenant or with the operation of the Project by Landlord. Tenant shall
not permit any nuisance or waste upon the Premises, or allow any offensive noise
or odor in or around the Premises.
If any governmental authority shall deem the Premises to be a "place of
public accommodation" under the Americans with Disabilities Act or any other
comparable law as a result of Tenant's use, Tenant shall either modify its use
to cause such authority to rescind its designation or be responsible for any
alterations, structural or otherwise, required to be made to the Building or the
Premises under such laws.
Tenant, its employees, agents, contractors or invitees shall be allowed
access to the building roof for the purpose of installing servicing, monitoring,
testing and changing its equipment; provided that Landlord shall be notified
prior to any installation work and such work satisfies the requirements of
Section 3 and 5.
7. GOVERNMENTAL REQUIREMENTS AND BUILDING RULES. Landlord shall comply
--------------------------------------------
with all Governmental Regulations applicable to the design or construction of
the Premises, the Building shell, the Initial Improvements and the Additional
Improvements. Tenant shall comply with all Governmental Requirements applying
to its use of the Premises. Tenant shall also comply with all reasonable rules
established for the Project from time to time by Landlord. The present rules
and regulations are contained in Appendix B. Failure by another tenant to
comply with the rules or failure by Landlord to enforce them shall not relieve
Tenant of its obligation to comply with the rules or make Landlord responsible
to Tenant in any way. Landlord shall use reasonable efforts to apply the rules
and regulations uniformly with respect to Tenant and tenants in the Project
under leases containing rules and regulations similar to this Lease. In the
event of alterations and repairs performed by Tenant, Tenant shall comply with
the provisions of Section 5 of this Lease and also landlord s Policies, Rules
and Regulations for Construction Projects".
8. WAIVER OF CLAIMS; INDEMNIFICATION; INSURANCE.
--------------------------------------------
A. Waiver of Claims. To the extent permitted by law, Tenant waives any
----------------
claims it may have against Landlord or its officers, directors, employees or
agents for business interruption or damage to property sustained by Tenant
constituting insurable risks covered by the insurance policies required to be
maintained by the parties hereunder as the result of any act or omission of
Landlord.
To the extent permitted by law, Landlord waives any claims it may have
against Tenant or its officers, directors, employees or agents for loss of rents
or damage to property sustained by Landlord constituting insurable risks covered
by the insurance
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<PAGE>
policies required to be maintained by the parties hereunder as the result of any
act or omission of Tenant.
B. Indemnification. Tenant shall indemnify, defend and hold harmless
---------------
Landlord and its officers, directors, employees and agents against any claim by
any third party for injury to any person or damage to or loss of any property
occurring in the Project and arising from the use of the Premises or from any
other act or omission or negligence of Tenant or any of Tenant's employees or
agents. Tenant's obligations under this section shall survive the termination
of this Lease.
Landlord shall indemnify, defend and hold harmless Tenant and its officers,
directors, employees and agents against any claim by any third party for injury
to any person or damage to or loss of any property occurring in the Project and
arising from any other act or omission or negligence of Landlord or any of
Landlord's employees or agents. Landlord's obligations under this section shall
survive the termination of this Lease.
TENANT HEREBY WAIVES ITS IMMUNITY WITH RESPECT TO LANDLORD UNDER THE
INDUSTRIAL INSURANCE ACT (RCW TITLE 51) AND/OR THE LONGSHOREMAN S AND
HARBORWORKER S ACT AND/OR ANY EQUIVALENT ACTS AND TENANT EXPRESSLY AGREES TO
ASSUME POTENTIAL LIABILITY FOR ACTIONS BROUGHT AGAINST LANDLORD BY TENANT S
EMPLOYEES EXCEPT TO THE EXTENT CAUSED BY LANDLORD. THIS WAIVER HAS BEEN
SPECIFICALLY NEGOTIATED BY THE PARTIES TO THIS LEASE AND TENANT HAS HAD THE
OPPORTUNITY TO, AND HAS BEEN ENCOURAGED, TO CONSULT WITH INDEPENDENT COUNSEL
REGARDING THIS WAIVER.
C. Tenant's Insurance. Tenant shall maintain insurance as follows, with
------------------
such other terms, coverages and insurers, as Landlord shall reasonably require
from time to time:
(1) Commercial General Liability Insurance, with (a) Contractual
Liability including the indemnification provisions contained in this Lease, (b)
a severability of interest endorsement, (c) limits of not less than One Million
Dollars ($1,000,000) combined single limit per occurrence and not less than Two
Million Dollars ($2,000,000) in the aggregate for bodily injury, sickness or
death, and property damage, and umbrella coverage of not less than Five Million
Dollars ($5,000,000).
(2) Property Insurance against "Special Form, All Risks" of physical
loss covering the replacement cost of all improvements, fixtures and personal
property.
(3) Workers compensation or similar insurance in form and amounts
required by law, and Employers Liability with not less than the following
limits:
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Each Accident $100,000
Disease--Policy Limit $500,000
Disease--Each Employee $100,000
Tenant's insurance shall be primary and not contributory to that carried by
Landlord, its agents, or mortgagee. Landlord, and if any, Landlord s building
manager or agent and ground lessor shall be named as additional insureds as
respects to insurance required of the Tenant in Section 8C(1). The company or
companies writing any insurance which Tenant is required to maintain under this
Lease, as well as the form of such insurance, shall at all times be subject to
Landlord's approval, and any such company shall be licensed to do business in
the state in which the Building is located. Such insurance companies shall have
a A.M. Best rating of A VI or better.
Tenant shall cause any contractor of Tenant performing work on the Premises
to maintain insurance as follows, with such other terms, coverages and insurers,
as Landlord shall reasonably require from time to time:
(1) Commercial General Liability Insurance, including contractor's
liability coverage, contractual liability coverage, completed operations
coverage, broad form property damage endorsement, and contractor's protective
liability coverage, to afford protection with limits, for each occurrence, of
not less than One Million Dollars ($1,000,000) with respect to personal injury,
death or property damage.
(2) Workers compensation or similar insurance in form and amounts
required by law, and Employer's Liability with not less than the following
limits:
Each Accident $100,000
Disease--Policy Limit $500,000
Disease--Each Employee $100,000
Tenant's contractor's insurance shall be primary and not contributory to
that carried by Tenant, Landlord, their agents or mortgagees. Tenant and
Landlord, and if any, Landlord's building manager or agent, mortgagee or ground
lessor shall be named as additional insured on Tenant's contractor's insurance
policies.
D. Insurance Certificates. Tenant shall deliver to Landlord certificates
----------------------
evidencing all required insurance no later than five (5) days prior to the
Commencement Date and each renewal date. Each certificate will provide for
thirty (30) days prior written notice of cancellation to Landlord and Tenant.
E. Landlord's Insurance. Landlord shall maintain "Special Form, All-
--------------------
Risk" property insurance at replacement cost, including loss of rents, on the
Building, and Commercial General Liability insurance policies covering the
common areas of the
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<PAGE>
Building, each with such terms, coverages and conditions as are normally carried
by reasonably prudent owners of properties similar to the Project.
F. Waiver of Subrogation. With respect to all policies of insurance to
---------------------
be maintained hereunder by Tenant and Landlord, Landlord and Tenant mutually
waive all rights of subrogation, and the respective "All-Risk" coverage property
insurance policies carried by Landlord and Tenant shall contain enforceable
waiver of subrogation endorsements.
9. FIRE AND OTHER CASUALTY.
-----------------------
A. Termination. If a fire or other casualty causes substantial damage to
-----------
the Building or the Premises, Landlord shall engage a registered architect to
certify within one (1) month of the casualty to both Landlord and Tenant the
amount of time needed to restore the Building and the Premises to tenantability,
using standard working methods. If the time needed exceeds twelve (12) months
from date of damage, or two (2) months therefrom if the restoration would begin
during the last twelve (12) months of the Lease, then in the case of the
Premises, either Landlord or Tenant may terminate this lease, and in the case of
the Building, Landlord may terminate this Lease, by notice to the other party
within ten (10) days after the notifying party's receipt of the architect's
certificate. The termination shall be effective thirty (30) days from the date
of the notice and Rent shall be paid by Tenant to that date, with an abatement
for any portion of the Premises which has been untenantable after the casualty.
B. Restoration. If a casualty causes damage to the Building or the
-----------
Premises but this Lease is not terminated for any reason, then subject to the
rights of any mortgagees or ground lessors, Landlord shall obtain the applicable
insurance proceeds and diligently restore the Building and the Premises subject
to current Governmental Requirements. Tenant shall replace its damaged
improvements, personal property and fixtures. Rent shall be abated on a per
diem basis during the restoration for any portion of the Premises which is
untenantable, except to the extent that Tenant's negligence caused the casualty.
10. EMINENT DOMAIN. If a part of the Project is taken by eminent domain
--------------
or deed in lieu thereof which is so substantial that the Premises cannot
reasonably be used by Tenant for the operation of its business, then either
party may terminate this Lease effective as of the date of the taking. In the
event that seventy five percent (75%) or more of the Project is taken without
affecting the Premises, then Landlord may terminate this Lease as of the date of
such taking. Rent shall abate from the date of the taking in proportion to any
part of the Premises taken. Subject to Tenant's rights to pursue claims
described below, the entire award for a taking of any kind shall be paid to
Landlord, and Tenant shall have no right to share in the award. All obligations
accrued to the date of the taking shall be performed by each party.
Notwithstanding the foregoing, nothing herein shall be deemed a waiver of
Tenant's rights to receive an award for a
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taking of its personal property, good will, relocation expense and/or interest
in the Lease provided Tenant's award does not reduce or adversely affect
Landlord's award.
11. RIGHTS RESERVED TO LANDLORD.
---------------------------
Landlord may exercise at any time any of the following rights respecting
the operation of the Project without liability to the Tenant of any kind:
A. Name. To change the name or street address (but only to extent such
----
changes in street address is required by a governmental authority) of the
Building or the suite number(s) of the Premises.
B. Signs. Subject to applicable law, to install and maintain any signs
-----
on the exterior and in the interior of the Building, and to approve at its
reasonable discretion, prior to installation, any of Tenant's signs in the
Premises visible from the common areas or the exterior of the Building.
C. Window Treatments. To approve, at its discretion, prior to
-----------------
installation, any shades, blinds, ventilators or window treatments of any kind,
as well as any lighting within the Premises that may be visible from the
exterior of the Building or any interior common area.
D. Keys. To retain and use at any time passkeys to enter the Premises or
----
any door within the Premises after reasonable notice (except in emergency).
E. Access. To have access to inspect the Premises, and to perform its
------
obligations, or make repairs, alterations, additions or improvements, as
permitted by this Lease.
F. Preparation for Reoccupancy. To decorate, remodel, repair, alter or
---------------------------
otherwise prepare the Premises for reoccupancy at any time after Tenant abandons
the Premises, without relieving Tenant of any obligation to pay Rent.
G. Heavy Articles. To approve the weight, size, placement and time and
--------------
manner of movement within the Building of any safe, central filing system or
other heavy article of Tenant's property. Tenant shall move its property
entirely at its own risk.
H. Show Premises. To show the Premises to prospective purchasers,
-------------
tenants, brokers, lenders, investors, rating agencies or others at any
reasonable time, provided that Landlord gives prior notice to Tenant and does
not materially interfere with Tenant's use of the Premises.
I. Use of Lockbox. To designate a lockbox collection agent for
--------------
collections of amounts due Landlord. In that case, the date of payment of Rent
or other sums shall be
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the date of the agent's receipt of such payment or the date of actual collection
if payment is made in the form of a negotiable instrument thereafter dishonored
upon presentment. However, Landlord may reject any payment for all purposes as
of the date of receipt or actual collection by mailing to Tenant within 21 days
after such receipt or collection a check equal to the amount sent by Tenant.
J. Repairs and Alterations. To make repairs or alterations to the
-----------------------
Project and in doing so transport any required material through the Premises, to
close entrances, doors, corridors, elevators and other facilities in the
Project, to open any ceiling in the Premises, or to temporarily suspend services
or use of common areas in the Building. Landlord may perform any such repairs
or alterations during ordinary business hours, provided that Landlord gives
prior notice to Tenant and does not materially interfere with Tenant s use of
the Premises, except that Tenant may require any Work in the Premises to be done
after business hours if Tenant pays Landlord for overtime and any other expenses
incurred. Landlord may do or permit any work on any nearby building, land,
street, alley or way.
K. Landlord's Agents. If Tenant is in default under this Lease,
-----------------
possession of Tenant's funds or negotiation of Tenant's negotiable instrument by
any of Landlord's agents shall not waive any breach by Tenant or any remedies of
Landlord under this Lease.
L. Building Services. To install, use and maintain through the Premises,
-----------------
pipes, conduits, wires and ducts serving the Building, provided that such
installation, use and maintenance does not unreasonably interfere with Tenant's
use of the Premises.
M. Other Actions. To take any other action which Landlord deems
-------------
reasonable in connection with the operation, maintenance or preservation of the
Building.
12. TENANT'S DEFAULT.
----------------
Any of the following shall constitute a default by Tenant:
A. Rent Default. Tenant fails to pay any Rent when due within five (5)
------------
days of written notice to Tenant.
B. Assignment/Sublease Default. Tenant defaults in its obligations under
---------------------------
Section 17 Assignment and Sublease;
C. Other Performance Default. Tenant fails to perform any other
-------------------------
obligation to Landlord under this Lease, and, in the case of only the first two
(2) such failures during the Term of this Lease, this failure continues for ten
(10) days after written notice from Landlord, except that if Tenant begins to
cure its failure within the ten (10) day period but cannot reasonably complete
its cure within such period, then, so long as Tenant continues
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<PAGE>
to diligently attempt to cure its failure, the ten (10) day period shall be
extended to sixty (60) days, or such lesser period as is reasonably necessary to
complete the cure;
D. Credit Default. One of the following credit defaults occurs:
--------------
(1) Tenant commences any proceeding under any law relating to
bankruptcy, insolvency, reorganization or relief of debts, or seeks appointment
of a receiver, trustee, custodian or other similar official for the Tenant or
for any substantial part of its property, or any such proceeding is commenced
against Tenant and either remains undismissed for a period of thirty days or
results in the entry of an order for relief against Tenant which is not fully
stayed within seven days after entry;
(2) Tenant becomes insolvent or bankrupt, does not generally pay its
debts as they become due, or admits in writing its inability to pay its debts,
or makes a general assignment for the benefit of creditors;
13. LANDLORD REMEDIES.
-----------------
A. Termination of Lease or Possession. If Tenant defaults, Landlord may
----------------------------------
elect by notice to Tenant either to terminate this Lease or to terminate
Tenant's possession of the Premises without terminating this Lease. In either
case, Tenant shall immediately vacate the Premises and deliver possession to
Landlord, and Landlord may repossess the Premises and may, at Tenant's sole
cost, remove any of Tenant's signs and any of its other property, without
relinquishing its right to receive Rent or any other right against Tenant.
B. Lease Termination Damages. If Landlord terminates the Lease, Tenant
-------------------------
shall pay to Landlord all Rent due on or before the date of termination, plus
Landlord's reasonable estimate of the aggregate Rent that would have been
payable from the date of termination through the Termination Date, reduced by
the rental value of the Premises calculated as of the date of termination for
the same period, taking into account reletting expenses and market concessions,
both discounted to present value at the rate of five percent (5%) per annum. If
Landlord shall relet any part of the Premises for any part of such period before
such present value amount shall have been paid by Tenant or finally determined
by a court, then the amount of Rent payable pursuant to such reletting (taking
into account any concessions) shall be deemed to be the reasonable rental value
for that portion of the Premises relet during the period of the reletting.
C. Possession Termination Damages. If Landlord terminates Tenant's right
------------------------------
to possession without terminating the Lease and Landlord takes possession of the
Premises itself, Landlord may relet any part of the Premises for such Rent, for
such time, and upon such terms as Landlord in its sole discretion shall
determine, without any obligation to do so prior to renting other vacant areas
in the Building. Any proceeds from reletting the Premises shall first be
applied to the expenses of reletting, including redecoration, repair,
alteration, advertising, brokerage, legal, and other reasonably necessary
expenses. If the
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<PAGE>
reletting proceeds after payment of expenses are insufficient to pay the full
amount of Rent under this Lease, Tenant shall pay such deficiency to Landlord
monthly upon demand as it becomes due. Any excess proceeds shall be retained by
Landlord.
D. Landlord's Remedies Cumulative. All of Landlord's remedies under this
------------------------------
Lease shall be in addition to all other remedies Landlord may have at law or in
equity. Waiver by Landlord of any breach of any obligation by Tenant shall be
effective only if it is in writing, and shall not be deemed a waiver of any
other breach, or any subsequent breach of the same obligation. Landlord's
acceptance of payment by Tenant shall not constitute a waiver of any breach by
Tenant, and if the acceptance occurs after Landlord's notice to Tenant, or
termination of the Lease or of Tenant's right to possession, the acceptance
shall not affect such notice or termination. Acceptance of payment by Landlord
after commencement of a legal proceeding or final judgment shall not affect such
proceeding or judgment. Landlord may advance such monies and take such other
actions for Tenant s account as reasonably may be required to cure or mitigate
any default by Tenant. Tenant shall immediately reimburse Landlord for any such
advance, and such sums shall bear interest at the default interest rate until
paid.
E. WAIVER OF TRIAL BY JURY. EACH PARTY WAIVES TRIAL BY JURY IN THE EVENT
-----------------------
OF ANY LEGAL PROCEEDING BROUGHT BY THE OTHER IN CONNECTION WITH THIS LEASE.
EACH PARTY SHALL BRING ANY ACTION AGAINST THE OTHER IN CONNECTION WITH THIS
LEASE IN A FEDERAL OR STATE COURT LOCATED IN WASHINGTON, CONSENTS TO THE
JURISDICTION OF SUCH COURTS, AND WAIVES ANY RIGHT TO HAVE ANY PROCEEDING
TRANSFERRED FROM SUCH COURTS ON THE GROUND OF IMPROPER VENUE OR INCONVENIENT
FORUM.
F. Litigation Costs. Tenant shall pay Landlord's reasonable attorneys'
----------------
fees and other costs in any action brought to enforce this Lease.
14. SURRENDER. Upon termination of this Lease or Tenant's right to
---------
possession, Tenant shall return the Premises to Landlord in good order and
condition, ordinary wear and casualty damage excepted. If Landlord requires
Tenant to remove any alterations, then Tenant shall remove the alterations in a
good and workmanlike manner and restore the Premises to its condition prior to
their installation.
15. HOLDOVER. If Tenant retains possession of any part of the Premises
--------
after the Term, Tenant shall become a month-to-month tenant for the entire
Premises upon all of the terms of this Lease as might be applicable to such
month-to-month tenancy, except that Tenant shall pay all of Base Rent, Operating
Cost Share Rent and Tax Share Rent at one hundred twenty five percent (125%) of
the rate in effect immediately prior to such holdover, computed on a monthly
basis for each full or partial month Tenant remains in possession. Tenant shall
also pay Landlord all of Landlord's
21
<PAGE>
direct and consequential damages if such holdover is without consent. No
acceptance of Rent or other payments by Landlord under these holdover provisions
shall operate as a waiver of Landlord's right to regain possession or any other
of Landlord's remedies.
16. SUBORDINATION TO GROUND LEASES AND MORTGAGES.
--------------------------------------------
A. Subordination. Subject to Section 16B, this Lease shall be
-------------
subordinate to any present or future ground lease or mortgage respecting the
Project, and any amendments to such ground lease or mortgage, at the election of
the ground lessor or mortgagee as the case may be, effected by notice to Tenant
in the manner provided in this Lease. The subordination shall be effective upon
such notice, but at the request of Landlord or ground lessor or mortgagee,
Tenant shall within ten (10) days of the request, execute and deliver to the
requesting party any reasonable documents provided to evidence the
subordination.
B. Termination of Ground Lease or Foreclosure of Mortgage. If any ground
------------------------------------------------------
lease is terminated or mortgage foreclosed or deed in lieu of foreclosure given
and the ground lessor, mortgagee, or purchaser at a foreclosure sale shall
thereby become the owner of the Project, Tenant shall attorn to such ground
lessor or mortgagee or purchaser without any deduction or setoff by Tenant, and
this Lease shall continue in effect as a direct lease between Tenant and such
ground lessor, mortgagee or purchaser. The ground lessor or mortgagee or
purchaser shall be liable as Landlord only during the time such ground lessor or
mortgagee or purchaser is the owner of the Project. At the request of Landlord,
ground lessor or mortgagee, Tenant shall execute and deliver within ten (10)
days of the request any document furnished by the requesting party to evidence
Tenant's agreement to attorn.
C. Security Deposit. Any ground lessor or mortgagee shall be responsible
----------------
for the return of any security deposit by Tenant only to the extent the security
deposit is received by such ground lessor or mortgagee.
D. Notice and Right to Cure. The Project is subject to any ground lease
------------------------
and mortgage identified with name and address of ground lessor or mortgagee in
Appendix D to this Lease (as the same may be amended from time to time by
written notice to Tenant). Tenant agrees to send by registered or certified mail
to any ground lessor or mortgagee identified either in such Appendix or in any
later notice from Landlord to Tenant a copy of any notice of default sent by
Tenant to Landlord. If Landlord fails to cure such default within the required
time period under this Lease, but ground lessor or mortgagee begins to cure
within ten (10) days after such period and proceeds diligently to complete such
cure, then ground lessor or mortgagee shall have such additional time as is
necessary to complete such cure, including any time necessary to obtain
possession if possession is necessary to cure, and Tenant shall not begin to
enforce its remedies so long as the cure is being diligently pursued.
22
<PAGE>
E. Definitions. As used in this Section 16, "mortgage" shall include
-----------
"trust deed" and "mortgagee" shall include "trustee", "mortgagee" shall include
the mortgagee of any ground lessee, and "ground lessor", "mortgagee", and
"purchaser at a foreclosure sale" shall include, in each case, all of its
successors and assigns, however remote.
17. ASSIGNMENT AND SUBLEASE.
-----------------------
A. In General. Tenant shall not, without the prior consent of Landlord
----------
in each case, (i) make or allow any assignment or transfer, by operation of law
or otherwise, of any part of Tenant's interest in this Lease, (ii) grant or
allow any lien or encumbrance, by operation of law or otherwise, upon any part
of Tenant's interest in this Lease, (iii) sublet any part of the Premises, or
(iv) permit anyone other than Tenant and its employees to occupy any part of the
Premises. Tenant shall remain primarily liable for all of its obligations under
this Lease, notwithstanding any assignment or transfer. No consent granted by
Landlord shall be deemed to be a consent to any subsequent assignment or
transfer, lien or encumbrance, sublease or occupancy. Tenant shall pay
reasonable Landlord's attorneys' fees and other expenses incurred in connection
with any consent requested by Tenant or in reviewing any proposed assignment or
subletting. Any assignment or transfer, grant of lien or encumbrance, or
sublease or occupancy without Landlord's prior written consent shall be void.
B. Landlord's Consent. Landlord will not unreasonably withhold its
------------------
consent to any proposed assignment or subletting. It shall be reasonable for
Landlord to withhold its consent to any assignment or sublease if (i) Tenant is
in default under this Lease, (ii) the proposed assignee or sublessee is a tenant
in the Project and Landlord has appropriate available space in the Project,
(iii) the financial condition, nature of business, and character of the proposed
assignee or subtenant are not all reasonably satisfactory to Landlord, (iv) in
the reasonable judgment of Landlord the purpose for which the assignee or
subtenant intends to use the Premises (or a portion thereof) is not in keeping
with Landlord's standards for the Building or are in violation of the terms of
this Lease or any other leases in the Project. The foregoing shall not exclude
any other reasonable basis for Landlord to withhold its consent.
C. Procedure. Tenant shall notify Landlord of any proposed assignment or
---------
sublease at least thirty (30) days prior to its proposed effective date. The
notice shall include the name and address of the proposed assignee or subtenant,
its corporate affiliates in the case of a corporation and its partners in a case
of a partnership, an execution copy of the proposed assignment or sublease, and
sufficient information to permit Landlord to determine the financial condition
and character of the proposed assignee or subtenant. As a condition to any
effective assignment of this Lease, the assignee shall execute and deliver in
form satisfactory to Landlord at least fifteen (15) days prior to the effective
date of the assignment, an assumption of all of the obligations of Tenant under
this Lease. As a condition to any effective sublease, subtenant shall execute
and deliver in form satisfactory to Landlord at least fifteen (15) days prior to
the
23
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<PAGE>
effective date of the sublease, an agreement to comply with all of Tenant's
obligations under this Lease, and at Landlord's option, an agreement (except for
the economic obligations which subtenant will undertake directly to Tenant) to
attorn to Landlord under the terms of the sublease in the event this Lease
terminates before the sublease expires.
D. Change of Ownership. Any direct or indirect change in 50% or more of
-------------------
the ownership interest in Tenant shall constitute an assignment of this Lease;
provided, however, that Landlord hereby consents to any such assignment that is
in connection with (i) transfer of shares between existing shareholders, (ii)
redemption of shares by Tenant, or (iii) a public offering of Tenant s stock
under the Securities Act of 1933, as amended. Notwithstanding Landlord's prior
consent to the foregoing, Tenant shall provide Landlord with written notice
required hereunder.
E. Excess Payments. If Tenant shall assign this Lease or sublet any part
---------------
of the Premises for consideration in excess of the pro-rata portion of Rent
applicable to the space subject to the assignment or sublet, then Tenant shall
pay to Landlord as Additional Rent 50% of any such excess immediately upon
receipt.
18. CONVEYANCE BY LANDLORD. If Landlord shall at any time transfer its
----------------------
interest in the Project or this Lease, provided that the transferee shall
expressly assume in writing all duties of Landlord in this Lease, Landlord shall
be released of any obligations accruing after such transfer, except the
obligation to return to Tenant any security deposit not delivered to its
transferee, and Tenant shall look solely to Landlord's successors for
performance of such obligations. This Lease shall not be affected by any such
transfer.
19. ESTOPPEL CERTIFICATE. Each party shall, within ten (10) days of
--------------------
receiving a request from the other party, execute, acknowledge in recordable
form, and deliver to the other party or its designee a certificate stating,
subject to a specific statement of any applicable exceptions, that the Lease as
amended to date is in full force and effect, that the Tenant is paying Rent and
other charges on a current basis, and that to the best of the knowledge of the
certifying party, the other party has committed no uncured defaults and has no
offsets or claims. The certifying party may also be required to state the date
of commencement of payment of Rent, the Commencement Date, the Termination Date,
the Base Rent, the current Operating Cost Share Rent and Tax Share Rent
estimates, the status of any improvements required to be completed by Landlord,
the amount of any security deposit, and such other matters as may be reasonably
requested. Failure to deliver such statement within the time required shall be
conclusive evidence against the non-certifying party that this Lease, with any
amendments identified by the requesting party, is in full force and effect, that
there are no uncured defaults by the requesting party, that not more than one
month's Rent has been paid in advance, that the non-certifying party has not
paid any security deposit, and that the non-certifying party has no claims or
offsets against the requesting party.
24
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<PAGE>
20. SECURITY DEPOSIT. Tenant shall arrange for the issuance and delivery
----------------
to Landlord on the date of this Lease, as security for the performance of all of
its obligations of Tenant hereunder an irrevocable, standby letter of credit
(the "Letter of Credit") from Silicon Valley Bank, Imperial Bank or such other
commercial bank of Tenant's choosing and reasonably acceptable and in form and
content reasonably satisfactory to Landlord, in the amount set forth on the
Schedule. Upon the execution of this Lease, Tenant shall deliver a Letter of
Credit in the amount of $1,000.000. The amount of the Letter of Credit shall be
increased by $1,000,000 on January 1, 1998 and then by $500,000 on the
Commencement Date. If Tenant defaults under this Lease, Landlord may use any
part of the Letter of Credit or Security Deposit to make any defaulted payment,
to pay for Landlord's cure of any defaulted obligation, or to compensate
Landlord for any loss or damage resulting from any default. Landlord agrees to
release the Letter of Credit upon satisfaction of all of the following
conditions: (i) Tenant s Operating Income from continuing operations under GAAP
exceeds $500,000 for four consecutive quarters; (ii) Tenant s cash and
receivables are a minimum of $10,000,000; (iii) a current ratio (defined as
current assets divided by current liabilities) of at least two times; and (iv)
Tenant has delivered a certificate of the President of Tenant representing and
warranting the foregoing and the amount of one month s rent as a Security
Deposit. Landlord may keep the Security Deposit, if cash, in its general funds
and shall not be required to pay interest to Tenant on the deposit amount. If
Tenant shall perform all of its obligations under this Lease and return the
Premises to Landlord at the end of the Term, Landlord shall return all of the
remaining Security Deposit to Tenant within thirty (30) days after the end of
the Term. The Security Deposit shall not serve as an advance payment of Rent or
a measure of Landlord's damages for any default under this Lease.
If Landlord transfers its interest in the Project or this Lease, Landlord
shall transfer the Security Deposit to its transferee. Upon such transfer,
Landlord shall have no further obligation to return the Security Deposit to
Tenant, and Tenant's right to the return of the Security Deposit shall apply
solely against Landlord's transferee.
21. FORCE MAJEURE. Landlord shall not be in default under this Lease to
-------------
the extent Landlord is unable to perform any of its obligations on account of
any strike or labor problem, energy shortage, governmental pre-emption or
prescription, national emergency, or any other cause of any kind beyond the
reasonable control of Landlord ("Force Majeure"). This Section 21 shall not
limit Tenant's rights to any abatement of rent expressly allowed in this Lease.
22. TENANT'S PERSONAL PROPERTY AND FIXTURES. Intentionally omitted.
---------------------------------------
23. NOTICES. All notices, consents, approvals and similar communications
-------
to be given by one party to the other under this Lease, shall be given in
writing, mailed or personally delivered as follows:
25
<PAGE>
A. Landlord. To Landlord as follows:
--------
CARRAMERICA REALTY CORPORATION
18640 NE 67th Court, Suite 150
Redmond, WA 98052
Attn: Market Officer
Fax No. 425-558-2246
with a copy to:
CarrAmerica Realty Corporation
1700 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attn: Lease Administration
or to such other person at such other address as Landlord may designate by
notice to Tenant.
B. Tenant. To Tenant as follows:
------
(i) After Commencement Date:
Metawave Communications Corporation, Inc.
10525 Willows Road
Redmond, WA 98073
Attn: CFO
with a copy to:
Metawave Communications Corporation, Inc.
10525 Willows Road
Redmond, WA 98073
Attn: General Counsel
(ii) Prior to Commencement Date:
Metawave Communications Corporation, Inc.
8700 - 148th Avenue N.E.
Redmond, WA 98052
Attn: CFO
Fax No. 425-702-5972
with a copy to:
Metawave Communications Corporation, Inc.
26
<PAGE>
8700 - 148th Avenue N.E.
Redmond, WA 98052
Attn: General Counsel
Fax No. 425-702-5976
or to such other person at such other address as Tenant may designate by notice
to Landlord.
Notices shall be sent by United States certified or registered mail, by a
reputable national overnight courier service, postage prepaid, hand delivery, or
by facsimile transmission. Mailed notices shall be deemed to have been given on
the earlier of actual delivery or three (3) business days after posting in the
United States mail in the case of registered or certified mail, and one business
day in the case of overnight courier.
24. QUIET POSSESSION. So long as Tenant shall perform all of its
----------------
obligations under this Lease, Tenant shall enjoy peaceful and quiet possession
of the Premises against Landlord or any party claiming through the Landlord.
Interruption of Tenant's peaceful and quiet possession, unless caused by Tenant,
shall title Tenant to an appropriate abatement of rent.
25. REAL ESTATE BROKER. Tenant represents to Landlord that Tenant has not
------------------
dealt with any real estate broker with respect to this Lease except for any
broker(s) listed in the Schedule, and no other broker is in any way entitled to
any broker's fee or other payment in connection with this Lease. Tenant shall
indemnify and defend Landlord against any claims by any other broker or third
party for any payment of any kind in connection with this Lease. Landlord shall
pay to CB Commercial Real Estate Group Inc. a real estate leasing commission per
a separate agreement and Tenant shall have no responsibility for such
commission.
26. MISCELLANEOUS.
-------------
A. Successors and Assigns. Subject to the limits on Tenant's assignment
----------------------
contained in Section 17, the provisions of this Lease shall be binding upon and
inure to the benefit of all successors and assigns of Landlord and Tenant.
B. Date Payments Are Due. Except for payments to be made by Tenant under
---------------------
this Lease which are due upon demand, Tenant shall pay to Landlord any amount
for which Landlord renders a statement of account within ten days of Tenant's
receipt of Landlord's statement.
C. Meaning of "Landlord", "Re-Entry, "including" and "Affiliate". The
-------------------------------------------------------------
term "Landlord" means only the owner of the Project and the lessor's interest in
this Lease from time to time. The words "re-entry" and "re-enter" are not
restricted to their technical legal meaning. The words "including" and similar
words shall mean "without limitation."
27
<PAGE>
The word "affiliate" shall mean a person or entity controlling, controlled by or
under common control with the applicable entity. "Control" shall mean the power
directly or indirectly, by contract or otherwise, to direct the management and
policies of the applicable entity.
D. Time of the Essence. Time is of the essence of each provision of this
-------------------
Lease.
E. No Option. This document shall not be effective for any purpose until
---------
it has been executed and delivered by both parties; execution and delivery by
one party shall not create any option or other right in the other party.
F. Severability. The unenforceability of any provision of this Lease
------------
shall not affect any other provision.
G. Governing Law. This Lease shall be governed in all respects by the
-------------
laws of the state of Washington, without regard to the principles of conflicts
of laws.
H. Lease Modification. Tenant agrees to modify this Lease in any way
------------------
requested by a mortgagee which does not cause increased expense to Tenant or
otherwise materially adversely affect Tenant's interests under this Lease.
I. No Oral Modification. No modification of this Lease shall be
--------------------
effective unless it is a written modification signed by both parties.
J. Landlord's Right to Cure. If Landlord breaches any of its obligations
------------------------
under this Lease, Tenant shall notify Landlord in writing and shall take no
action respecting such breach so long as Landlord immediately begins to cure the
breach and diligently pursues such cure to its completion. Landlord may cure any
default by Tenant; any expenses incurred shall become Additional Rent due from
Tenant on demand by Landlord.
K. Captions. The captions used in this Lease shall have no effect on the
--------
construction of this Lease.
L. Authority. Landlord and Tenant each represents to the other that it
---------
has full power and authority to execute and perform this Lease.
M. Landlord's Enforcement of Remedies. Landlord may enforce any of its
----------------------------------
remedies under this Lease either in its own name or through an agent.
N. Entire Agreement. This Lease, together with all Appendices,
----------------
constitutes the entire agreement between the parties. No representations or
agreements of any kind have been made by either party which are not contained in
this Lease.
28
<PAGE>
O. Landlord's Title. Without limiting Tenant s right to peaceful and
----------------
quiet possession of the Premises, Landlord's title shall always be paramount to
the interest of the Tenant, and nothing in this Lease shall empower Tenant to do
anything which might in any way impair Landlord's title.
P. Light and Air Rights. Landlord does not grant in this Lease any
--------------------
rights to light and air in connection with Project. Landlord reserves to itself,
the Land, the Building below the improved floor of each floor of the Premises,
the Building above the ceiling of each floor of the Premises, the exterior of
the Premises and the areas on the same floor outside the Premises, along with
the areas within the Premises required for the installation and repair of
utility lines and other items required to serve other tenants of the Building.
Q. Singular and Plural. Wherever appropriate in this Lease, a singular
-------------------
term shall be construed to mean the plural where necessary, and a plural term
the singular. For example, if at any time two parties shall constitute Landlord
or Tenant, then the relevant term shall refer to both parties together.
R. No Recording by Tenant. Tenant shall not record in any public records
----------------------
any memorandum or any portion of this Lease except as may be required by
applicable securities laws.
S. Exclusivity. Landlord does not grant to Tenant in this Lease any
-----------
exclusive right except the right to occupy its Premises.
T. No Construction Against Drafting Party. The rule of construction that
--------------------------------------
ambiguities are resolved against the drafting party shall not apply to this
Lease.
U. Survival. All obligations of Landlord and Tenant under this Lease
--------
shall survive the termination of this Lease.
V. Rent Not Based on Income. No rent or other payment in respect of the
------------------------
Premises shall be based in any way upon net income or profits from the Premises.
Tenant may not enter into or permit any sublease or license or other agreement
in connection with the Premises which provides for a rental or other payment
based on net income or profit.
W. Building Manager and Service Providers. Landlord may perform any of
--------------------------------------
its obligations under this Lease through its employees or third parties hired by
the Landlord.
X. Late Charge and Interest on Late Payments. Without limiting the
-----------------------------------------
provisions of Section 12A, if Tenant fails to pay any installment of Rent or
other charge
29
<PAGE>
to be paid by Tenant pursuant to this Lease within five (5) business days after
the same becomes due and payable, then Tenant shall pay a late charge equal to
the greater of three and one-half percent (3-1/2%) of the amount of such payment
or $250. In addition, interest shall be paid by Tenant to Landlord on any late
payments of Rent from the date due until paid at the rate provided in Section
2D(2). Such late charge and interest shall constitute additional Rent due and
payable by Tenant to Landlord upon the date of payment of the delinquent payment
referenced above.
Y. Parking. Landlord will provide an allowance of three (3) cars per
-------
1,000 rentable square feet of Premises to Tenant on the Premises.
Z. Signage. Tenant shall have exclusive right, subject to Landlord's
-------
reasonable approval to install Tenant's signage on the exterior of Buildings 1 &
2, provided the signage complies with all ordinances and orders.
27. UNRELATED BUSINESS INCOME. If Landlord is advised by its counsel at
-------------------------
any time that any part of the payments by Tenant to Landlord under this Lease
may be characterized as unrelated business income under the United States
Internal Revenue Code and its regulations, then Tenant shall enter into any
amendment proposed by Landlord to avoid such income, so long as the amendment
does not require Tenant to make more payments or accept fewer services from
Landlord, than this Lease provides.
28. HAZARDOUS SUBSTANCES. Tenant shall not cause or permit any Hazardous
--------------------
Substances to be brought upon, produced, stored, used, discharged or disposed of
in or near the Project unless Landlord has consented to such storage or use in
its sole discretion. "Hazardous Substances" include those hazardous substances
--------------------
described in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq., any
other applicable federal, state or local law, and the regulations adopted under
these laws. If any lender or governmental agency shall require testing for
Hazardous Substances in the Premises, Tenant shall pay for such testing.
29. EXCULPATION. Without limiting Tenant's rights to abatement of rent as
-----------
expressly allowed in this Lease, Landlord shall have no personal liability under
this Lease; its liability shall be limited to its interest in the Project, and
shall not extend to any other property or assets of the Landlord. In no event
shall any officer, director, employee, agent, shareholder, partner, member or
beneficiary of Landlord be personally liable for any of Landlord's obligations
hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Lease.
LANDLORD:
30
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<PAGE>
CARRAMERICA REALTY CORPORATION
a Maryland corporation
By: /s/ Philip L. Hawkins
--------------------------------------
Print Name: Philip L. Hawkins
--------------------------------------
Print Title: Managing Director
--------------------------------------
TENANT:
METAWAVE COMMUNICATIONS
CORPORATION, INC.
a Delaware corporation
By: /s/ Vito Palermo
---------------------------------------
Print Name: Vito Palermo
---------------------------------------
Print Title: Chief Financial Officer
---------------------------------------
DISTRICT OF COLUMBIA )
) ss.
)
On this _______ day of __________, 1997, before me, the undersigned, a
Notary Public in and for the District of Columbia, duly commissioned and sworn
as such, personally appeared _________________, to me known to be the
___________________ of __________________________, the corporation that executed
the within and foregoing instrument, and acknowledged the said instrument to be
the free and voluntary act and deed of said corporation for the uses and
purposes therein mentioned, and on oath stated that he was authorized to execute
said instrument, and that the seal affixed is the corporate seal of said
corporation.
WITNESS my hand and official seal the day and year in this certificate
first above written.
Printed Name: ______________________
NOTARY PUBLIC in and for the District of Columbia,
residing at ________________
My commission expires: _______________
STATE OF DELAWARE )
31
<PAGE>
) ss.
COUNTY OF KING )
On this _______ day of _________________, 1997, before me, the undersigned,
a Notary Public in and for the State of Delaware, duly commissioned and sworn as
such, personally appeared __________________________________, to me known to be
the _______________ of _________________________, the corporation that executed
the within and foregoing instrument, and acknowledged the said instrument to be
the free and voluntary act and deed of said corporation for the uses and
purposes therein mentioned, and on oath stated that he/she was authorized to
execute said instrument, and that the seal affixed is the corporate seal of said
corporation.
WITNESS my hand and official seal the day and year in this certificate
first above written.
Printed Name: ______________________
NOTARY PUBLIC in and for the State of Delaware,
residing at ________________
My commission expires: _______________
32
<PAGE>
APPENDIX A
PLAN OF THE PREMISES
(attach floor plan depicting the Premises)
APPENDIX A
Page 1 of 1
<PAGE>
APPENDIX B
RULES AND REGULATIONS
1. Tenant shall not place anything, or allow anything to be placed near
the glass of any window, door, partition or wall which may, in Landlord's
judgment, appear unsightly from outside of the Project.
2. The Project directory shall be available to Tenant solely to display
names and their location in the Project, which display shall be as directed by
Landlord.
3. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Tenant or used by Tenant for any purposes
other than for ingress to and egress from the Premises. Tenant shall lend its
full cooperation to keep such areas free from all obstruction and in a clean and
sightly condition and shall move all supplies, furniture and equipment as soon
as received directly to the Premises and move all such items and waste being
taken from the Premises (other than waste customarily removed by employees of
the Building) directly to the shipping platform at or about the time arranged
for removal therefrom. The halls, passages, exits, entrances, elevators,
stairways, balconies and roof are not for the use of the general public and
Landlord shall, in all cases, retain the right to control and prevent access
thereto by all persons whose presence in the judgment of Landlord, reasonably
exercised, shall be prejudicial to the safety, character, reputation and
interests of the Project. Except as allowed in the Lease, neither Tenant nor
any employee or invitee of Tenant shall go upon the roof of the Project.
4. The toilet rooms, urinals, wash bowls, showers and other apparatuses
shall not be used for any purposes other than that for which they were
constructed, and no foreign substance of any kind whatsoever shall be thrown
therein, and to the extent caused by Tenant or its employees or invitees, the
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be borne by Tenant.
5. Tenant shall not cause any unnecessary janitorial labor or services by
reason of Tenant's carelessness or indifference in the preservation of good
order and cleanliness.
6. Tenant shall not install or operate any refrigerating, heating or air
conditioning apparatus, or carry on any mechanical business without the prior
written consent of Landlord; use the Premises for housing, lodging or sleeping
purposes (other than wellness rooms used by sick employees); or permit
preparation or warming of food in the Premises (warming of coffee and individual
or group meals with employees and guests excepted). Tenant shall not occupy or
use the Premises or permit the Premises to
APPENDIX B
Page 1 of 5
<PAGE>
be occupied or used for any purpose, act or thing which is in violation of any
Governmental Requirement or which may be dangerous to persons or property.
7. Tenant shall not bring upon, use or keep in the Premises or the
Project any kerosene, gasoline or inflammable or combustible fluid or material,
or any other articles deemed hazardous to persons or property (other than
propane tanks used for vehicles such as forklifts), or use any method of heating
or air conditioning other than that supplied by Landlord.
8. Landlord shall have sole power to direct electricians as to where and
how telephone and other wires are to be introduced. No boring or cutting for
wires is to be allowed without the consent of Landlord. The location of
telephones, call boxes and other office equipment affixed to the Premises shall
be subject to the approval of Landlord.
9. No additional locks shall be placed upon any doors, windows or
transoms in or to the Premises and Tenant shall not change existing locks or the
mechanism thereof without prior notification to Landlord. During the Term and
upon termination of the lease, Tenant shall deliver to Landlord all keys and
passes for offices, rooms, parking lot and toilet rooms which shall have been
furnished Tenant.
In the event of the loss of keys so furnished, Tenant shall pay
Landlord therefor. Tenant shall not make, or cause to be made, any such keys
and shall order all such keys solely from Landlord and shall pay Landlord for
any keys in addition to the two sets of keys originally furnished by Landlord
for each lock.
10. Tenant shall not install linoleum, tile, carpet or other floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Landlord.
11. Tenant shall not take or permit to be taken in or out of other
entrances of the Building, or take or permit on other elevators, any item
normally taken in or out through the trucking concourse or service doors or in
or on freight elevators.
12. Tenant shall cause all doors to the Premises to be closed and securely
locked before leaving the Project at the end of the day.
13. Without the prior written consent of Landlord, Tenant shall not use
the name of the Project or any picture of the Project in connection with, or in
promoting or advertising the business of, Tenant, except Tenant may use the
address of the Project as the address of its business.
14. Tenant shall cooperate fully with Landlord to assure the most
effective operation of the Premises' or the Project's heating and air
conditioning, and shall refrain
APPENDIX B
----------
Page 1 of 5
-----------
<PAGE>
from attempting to adjust any controls, other than room thermostats installed
for Tenant's use. Tenant shall keep corridor doors closed.
15. Tenant assumes full responsibility for protecting the Premises from
theft, robbery and pilferage, which may arise from a cause other than Landlord's
negligence, which includes keeping doors locked and other means of entry to the
Premises closed and secured.
16. Peddlers, solicitors and beggars shall be reported to the office of
the Project or as Landlord otherwise requests.
17. Tenant shall not advertise the business, profession or activities of
Tenant conducted in the Project in any manner which violates the letter or
spirit of any code of ethics adopted by any recognized association or
organization pertaining to such business, profession or activities.
18. No motorized vehicle (other than freight handling equipment) and no
animals or pets shall be allowed in the Premises, halls, freight docks, or any
other parts of the Building except that blind persons may be accompanied by
"seeing eye" dogs. Tenant shall not make or permit any noise, vibration or odor
to emanate from the Premises, or do anything therein tending to create, or
maintain, a nuisance, or do any act tending to injure the reputation of the
Building.
19. Tenant acknowledges that Building security problems may occur which
may require the employment of extreme security measures in the day-to-day
operation of the Project.
Accordingly:
(a) Landlord may, at any time, or from time to time, or for regularly
scheduled time periods, as deemed advisable by Landlord and/or its agents, in
their sole discretion, require that persons entering or leaving the Project or
the Property identify themselves to watchmen or other employees designated by
Landlord, by registration, identification or otherwise.
(b) Tenant agrees that it and its employees will cooperate fully with
Project employees in the implementation of any and all security procedures.
(c) Such security measures shall be the sole responsibility of
Landlord, and Tenant shall have no liability for any action taken by Landlord in
connection therewith, it being understood that Landlord is not required to
provide any security procedures and shall have no liability for such security
procedures or the lack thereof.
20. Tenant shall not do or permit the manufacture, sale or purchase of any
fermented, intoxicating or alcoholic beverages without obtaining written consent
of Landlord.
21. Tenant shall not disturb the quiet enjoyment of any other tenant.
<PAGE>
22. Landlord may retain a pass key to the Premises and be allowed
admittance thereto at all times to enable its representatives to examine the
Premises from time to time and to exhibit the same in accordance with Section
11(H) of the Lease and Landlord may place and keep on the windows and doors of
the Premises at any time signs advertising the Premises for Rent.
23. No equipment, mechanical ventilators, awnings, special shades or other
forms of window covering shall be permitted either inside or outside the windows
of the Premises without the prior written consent of Landlord, and then only at
the expense and risk of Tenant, and they shall be of such shape, color,
material, quality, design and make as may be approved by Landlord.
24. Tenant shall not during the term of this Lease canvas or solicit other
tenants of the Building for any purpose except as expressly allowed in the Lease
or these regulations.
25. Except as allowed in the Lease or related to Tenant's use of the
Premises, Tenant shall not install or operate any phonograph, musical or sound-
producing instrument or device, radio receiver or transmitter, TV receiver or
transmitter, or similar device in the Building which would interfere with any
tenant in the Project, nor install or operate any antenna, aerial, wires or
other equipment inside or outside the Building, nor operate any electrical
device from which may emanate electrical waves which may interfere with or
impair radio or television broadcasting or reception from or in the Building or
elsewhere, without in each instance the prior written approval of Landlord. The
use thereof, if permitted, shall be subject to control by Landlord to the end
that others shall not be disturbed.
26. Tenant shall promptly remove all rubbish and waste from the Premises.
27. Tenant shall not exhibit, sell or offer for sale, Rent or exchange in
the Premises or at the Project any article, thing or service, except those
ordinarily embraced within the use of the Premises specified in Section 6 of
this Lease, without the prior written consent of Landlord.
28. Tenant shall not overload any floors in the Premises or any public
corridors or elevators in the Building.
29. Whenever Landlord's consent, approval or satisfaction is required
under these Rules, then unless otherwise stated, any such consent, approval or
satisfaction must be obtained in advance, such consent or approval may be
granted or withheld in Landlord's sole discretion, and Landlord's satisfaction
shall be determined in its sole judgment provided, however, Landlord shall
respond to any such request within ten (10) days.
<PAGE>
30. Tenant and its employees shall cooperate in all fire drills conducted
by Landlord in the Building.
31. In the event of a conflict between these Rules and Regulations and the
provisions of the Lease, the provisions of the Lease shall prevail.
<PAGE>
APPENDIX C
TENANT IMPROVEMENT AGREEMENT
1. INITIAL IMPROVEMENTS. Landlord shall cause to be performed the
improvements (the "Initial Improvements") in the Premises provided for in the
--------------------
plans and specifications prepared by _________________________ dated
_______________ and agreed to by Landlord and Tenant (the "Plans"). The Initial
-----
Improvements shall be performed by _________________________ (the "Contractor"),
----------
using Building standard materials. Landlord shall use commercially reasonable
efforts to cause the Work to be substantially completed on or before the
Commencement Date specified in the Schedule to the Lease, subject to Tenant
Delay (as defined in Section 4 hereof) and any Force Majeure. Notwithstanding
the foregoing, Landlord shall be required to deliver only 73,000 square feet of
the Premises on the Commencement Date. The remaining 23,000 square feet shall
be delivered within 180 days of Tenant s written notice of its intent to occupy
the remaining space; provided, however, that rent shall commence no later than
January 1, 1999 regardless of the date Tenant occupies such space. Landlord may
charge a supervisory fee not to exceed three percent (3%) of labor, material and
all other costs of the Initial Improvements and the Additional Improvements.
2. ADDITIONAL IMPROVEMENTS. If Tenant shall require improvements
("Additional Improvements") to the Premises in addition, revision of, or
-----------------------
substitution for the Initial Improvements, Tenant shall deliver to Landlord for
its approval plans and specifications for such Additional Improvements. If
Landlord does not approve of the plans for Additional Improvements, Landlord
shall advise Tenant of the revisions required. Tenant shall revise and redeliver
the plans and specifications to Landlord within five (5) business days of
Landlord's advice or Tenant shall be deemed to have abandoned its request for
such Additional Improvements. Tenant shall pay for all such preparations and
revisions of plans and specifications, and the construction of all Additional
Improvements, subject to Landlord s Contribution.
3. LANDLORD'S CONTRIBUTION. Landlord shall contribute an amount of
Twenty Dollars ($20.00) per square foot ("Landlord's Contribution") toward the
-----------------------
costs incurred by Landlord for the Initial Improvements or Additional
Improvements or other items Tenant is responsible for hereunder that constitute
a physical improvement to the Premises such as cabling and security. Landlord
has no obligation to pay for costs of the Initial Improvements in excess of
Landlord's Contribution. If the cost of the Initial Improvements exceeds the
Landlord's Contribution, Tenant shall pay such overage to Landlord upon
completion of construction of the Initial Improvements. Tenant shall also pay
to Landlord prior to commencement of construction, the cost of all Additional
Improvements above the Landlord's Contribution.
4. COMMENCEMENT DATE DELAY. Commencement Date shall be
APPENDIX C
Page 1 of 4
<PAGE>
delayed until the Initial Improvements have been substantially completed (the
"Completion Date"), except to the extent that the delay shall be caused by any
---------------
one or more of the following (a "Tenant Delay"):
------------
(a) Tenant's request for Additional Improvements whether or not any
such Additional Improvements are actually performed; or
(b) Contractor's performance of any Additional Improvements; or
(c) Tenant's request for materials, finishes or installations
requiring unusually long lead times; or
(d) Tenant's delay in reviewing, revising or approving plans and
specifications beyond the periods set forth herein; or
(e) Any other act or omission by Tenant, its agents, contractors or
persons employed by any of such persons.
If the Commencement Date is delayed for any reason, then Landlord shall
cause Landlord's Architect to certify the date on which the Initial Improvements
would have been completed but for such Tenant Delay, or were in fact completed
without any Tenant Delay.
5. ACCESS BY TENANT PRIOR TO COMMENCEMENT OF TERM. Landlord shall permit
Tenant and its agents to enter the Premises thirty (30) days prior to the
Commencement Date to prepare the Premises for Tenant's use and occupancy. Any
such permission shall constitute a license only, conditioned upon Tenant's:
(a) working in harmony with Landlord and Landlord's agents, contractors,
workmen, mechanics and suppliers and with other tenants and occupants of the
Building;
(b) obtaining in advance Landlord's approval of the contractors proposed
to be used by Tenant and depositing with Landlord in advance of any work (i)
security satisfactory to Landlord for the completion thereof, and (ii) the
general contractor's affidavit for the proposed work and the waivers of lien
from the general contractor and all subcontractors and suppliers of material;
and
(c) furnishing Landlord with such insurance as Landlord may require
against liabilities which may arise out of such entry.
Landlord shall not be liable in any way for any injury, loss or damage
which may occur to any of Tenant's property or installations in the Premises
prior to the Commencement Date. Tenant shall protect, defend, indemnify and
save harmless
APPENDIX C
Page 2 of 4
<PAGE>
Landlord from all liabilities, costs, damages, fees and expenses arising out of
the activities of Tenant or its agents, contractors, suppliers or workmen in the
Premises or the Building. Any entry and occupation permitted under this Section
shall be governed by Section 5 and all other terms of the Lease.
6. MISCELLANEOUS.
(a) Landlord s Work. In addition to the Initial Improvements, Landlord
shall construct Building 1 and Building 2 in accordance with Plans and
Specifications dated ____________ ("Landlord s Work"). Landlord shall use its
best efforts to substantially complete the Landlord s Work on or before the
Commencement Date, subject to force majeure and actions or omissions of Tenant
causing delay. The Improvements to be constructed by Landlord shall include as
part of the Building Shell (and shall not be included in the Initial
Improvements) the following:
Landlord shall provide as part of the Building Shell:
Building HVAC system per the building specifications dated 7-1-97 and the
McKinstry Drawings dated 6-30-97
Finished Building Restroom and Core per the building specifications dated
7-1-97 and the G2 Architectural Drawings dated 6-30-97. Landlord to
provide one set of showers per building as a component of the shell.
Elevator per G2 Architectural Drawings dated 6-30-97 and building
specifications dated 7-1-97.
One on grade loading door per building per the G2 Architectural Drawings
dated 6-30-97.
Landlord to provide one dock height loading area at Building One per
mutually developed and approved drawings.
Insulated perimeter walls.
Blinds installed on the exterior windows.
Ceiling tiles, grid and lights for the entire Premises of the types
identified in the building specifications dated ______________. In the
event that the plans and specifications for the Initial Improvements are
such that fewer ceiling tiles, less grid or fewer lights are required than
if the entire Premises were improved for initial use as office space,
Tenant shall receive a credit equal to Landlord's resulting cost savings,
which shall be applied against any part of the Initial
APPENDIX C
Page 3 of 4
<PAGE>
Improvements, Additional Improvements or other items that become a physical
part of the Building (such as security systems, rooftop work and
telecommunications improvements) for which Tenant would otherwise be
responsible to pay.
Landlord to provide a comprehensive signage program for Willow Creek
Corporate Center. The park signage package will include park entry and
park directional signage, building directory signage and building
informational signage.
(b) Landlord shall construct a skybridge between Building 1 and Building 2,
in accordance with plans and specifications prepared by Landlord, subject to
Tenant s approval of such plans and specifications. The construction of the
skybridge shall be undertaken, if possible, in conjunction with Landlord s work
and the Initial Improvements. Costs of the skybridge shall be advanced by
Landlord and repaid by Tenant in accordance with the terms of the Lease. Tenant
shall not be required to remove the Skybridge at the termination of the Lease.
(c) Substantial Completion as used in this Lease and Appendix shall mean
completion of work so that (i) Tenant can use the Premises and Building for
intended use without material interference to Tenant, (ii) the only incomplete
items are minor or insubstantial details of construction and "punch list" items,
and (iii) Landlord has obtained a temporary or permanent certificate of
occupancy from the appropriate governmental agency.
(d) Landlord shall provide Tenant with two (2) preliminary Space Planning
meetings and two (2) Space Plans at its sole cost and expense, exclusive of the
Tenant Allowance.
(e) Landlord shall cooperate with Tenant to assist Tenant in its efforts to
allow Tenant the benefits of the R&D Tax Deferral available from the State of
Washington, provided that Landlord shall not be required to undertake any act or
take any position that in Landlord s reasonable judgment would expose Landlord
to any liability, cost or expense.
Terms used in this Appendix C shall have the meanings assigned to them in
the Lease. The terms of this Appendix C are subject to the terms of the Lease.
APPENDIX C
Page 4 of 4
<PAGE>
APPENDIX D
MORTGAGES CURRENTLY AFFECTING THE PROJECT
APPENDIX D
Page 1
<PAGE>
APPENDIX E
COMMENCEMENT DATE CONFIRMATION
Landlord: CARRAMERICA REALTY CORPORATION, a Maryland corporation
Tenant: ____________________, a _____________
This Commencement Date Confirmation is made by Landlord and Tenant pursuant
to that certain Lease dated as of _________, 199__ (the "Lease") for certain
premises known as Suite ____ in the building commonly known as WILLOW CREEK
CORPORATE CENTER (the "Premises"). This Confirmation is made pursuant to Item 9
of the Schedule to the Lease.
1. Lease Commencement Date, Termination Date. Landlord and Tenant hereby
-----------------------------------------
agree that the Commencement Date of the Lease is _____________, 199__, and the
Termination Date of the Lease is _______________, _____.
2. Acceptance of Premises. Subject to the terms of the Lease, Tenant has
----------------------
inspected the Premises and affirms that the Premises is acceptable in all
respects in its current "as is" condition.
3. Incorporation. This Confirmation is incorporated into the Lease, and
-------------
forms an integral part thereof. This Confirmation shall be construed and
interpreted in accordance with the terms of the Lease for all purposes.
TENANT:
,
a
Name:_________________________________
Title:________________________________
LANDLORD:
CARRAMERICA REALTY CORPORATION,
a Maryland corporation
By:__________________________________
Name:________________________________
Title:_______________________________
APPENDIX E
Page 1
<PAGE>
APPENDIX F
LEGAL DESCRIPTION
PARCEL A:
THE SOUTH 10 ACRES OF THE SOUTHEAST QUARTER OF THE NORTHWEST QUARTER OF SECTION
34, TOWNSHIP 26 NORTH, RANGE 5 EAST, W.M., IN KING COUNTY, WASHINGTON.
PARCEL B:
BEGINNING AT THE SOUTHEAST CORNER OF THE NORTH THREE-FOURTHS OF THE SOUTHEAST
QUARTER OF THE NORTHWEST QUARTER OF SAID SECTION 34, TOWNSHIP 26 NORTH, RANGE 5
EAST, W.M., IN KING COUNTY, WASHINGTON;
THENCE NORTH 88 29 27" WEST ALONG THE SOUTH LINE THEREOF 333.48 FEET;
THENCE NORTH 1 30 33" EAST 700.00 FEET;
THENCE SOUTH 88 29 27" EAST 703.19 FEET TO THE WESTERLY MARGIN OF THE C.D.
STIMSON ROAD (NOW KNOWN AS WILLOWS ROAD); THENCE SOUTH 6 20 48" EAST ALONG SAID
WESTERLY MARGIN 708.26 FEET TO THE SOUTH LINE OF THE NORTH THREE-FOURTHS OF THE
SOUTHWEST QUARTER OF THE NORTHEAST QUARTER OF SAID SECTION 34;
THENCE NORTH 88 17 35" WEST ALONG SAID SOUTH LINE 466.52 FEET TO THE POINT OF
BEGINNING;
EXCEPT THAT PORTION, IF ANY, LYING WITHIN WILLOWS ROAD AS CONVEYED TO THE CITY
OF REDMOND BY DEED RECORDED UNDER RECORDING NO. 8002070845;
(BEING KNOWN AS PARCEL 2 OF CITY OF REDMOND LOT LINE ADJUSTMENT NO. SS-83-29
RECORDED UNDER RECORDING NO. 8310270925).
PARCEL C:
THAT PORTION OF THE SOUTH HALF OF THE SOUTH HALF OF THE SOUTHWEST QUARTER OF THE
NORTHEAST QUARTER OF SECTION 34, TOWNSHIP 26 NORTH, RANGE 5 EAST, W.M., IN KING
COUNTY, WASHINGTON, LYING WESTERLY OF RIGHT-OF-WAY OF NORTHERN PACIFIC RAILWAY
COMPANY;
EXCEPT ANY PORTION LYING WITHIN THE WILLOWS ROAD.
APPENDIX F
Page 1 of 3
<PAGE>
PARCEL D:
THE NORTH 100 FEET OF THAT PORTION OF THE NORTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 34, TOWNSHIP 26 NORTH, RANGE 5 EAST, W.M., IN KING COUNTY,
WASHINGTON, LYING WESTERLY OF THE RIGHT-OF-WAY OF THE NORTHERN PACIFIC RAILWAY
COMPANY;
EXCEPT THAT PORTION THEREOF CONVEYED TO KING COUNTY FOR ROAD BY DEED RECORDED
UNDER RECORDING NO. 956171.
PARCEL E:
LOTS 1, 2 AND 3 OF CITY OF REDMOND SHORT PLAT NO. SS-79-37 RECORDED UNDER
RECORDING NO. 8010230411;
PARCEL F:
THE NORTH HALF OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 34,
TOWNSHIP 26 NORTH, RANGE 5 EAST, W.M., IN KING COUNTY, WASHINGTON;
EXCEPT THE SOUTH 400 FEET OF THE NORTH 430 FEET OF THE EAST 228 FEET THEREOF.
PARCEL G:
THE SOUTH 400 FEET OF THE NORTH 430 FEET OF THE EAST 228 FEET OF THE FOLLOWING
DESCRIBED PROPERTY:
THE NORTH HALF OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 34,
TOWNSHIP 26 NORTH, RANGE 5 EAST, W.M., IN KING COUNTY, WASHINGTON.
PARCEL H:
THE NORTH HALF OF THE SOUTH HALF OF THE NORTHEAST QUARTER OF THE SOUTHWEST
QUARTER OF SECTION 34, TOWNSHIP 26 NORTH, RANGE 5 EAST, W.M., IN KING COUNTY,
WASHINGTON.
APPENDIX F
Page 2 of 3
<PAGE>
PARCEL I:
THE EAST ONE-HALF OF THE FOLLOWING DESCRIBED TRACT:
THE SOUTH 10 ACRES OF THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION
34, TOWNSHIP 26 NORTH, RANGE 5 EAST, W.M., IN KING COUNTY, WASHINGTON, ACCORDING
TO SURVEY THEREOF AS SHOWN BY THE SUBDIVISIONAL PLAT APPROVED BY DECREE OF THE
SUPERIOR COURT OF KING COUNTY IN CAUSE NO. 106237.
PARCEL I-1:
AN EASEMENT FOR SANITARY SEWER AND UNDERGROUND UTILITIES OVER AND ACROSS THE
NORTH 25 FEET OF THE FOLLOWING DESCRIBED PROPERTY:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF THE SOUTHEAST
QUARTER OF SECTION 34, TOWNSHIP 26 NORTH, RANGE 5 EAST, W.M.;
THENCE SOUTH 370 FEET ALONG THE WESTERLY BOUNDARY OF SAID SOUTHWEST QUARTER OF
THE SOUTHEAST QUARTER;
THENCE EAST PARALLEL TO THE NORTH BOUNDARY LINE OF SAID SOUTHWEST QUARTER OF THE
SOUTHEAST QUARTER TO THE COUNTY ROAD AS NOW LAID OUT AND ESTABLISHED;
THENCE NORTHWEST ALONG SAID COUNTY ROAD TO THE NORTH BOUNDARY LINE OF SAID
SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER;
THENCE WEST ALONG SAID NORTH BOUNDARY LINE OF SAID SOUTHWEST QUARTER OF THE
SOUTHEAST QUARTER TO THE POINT OF BEGINNING;
TOGETHER WITH THE NORTH 70.42 FEET OF THE SOUTH 295 FEET OF THE NORTH 665 FEET
OF THAT PORTION OF THE SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 34,
TOWNSHIP 26 NORTH, RANGE 5 EAST, W.M., LYING WESTERLY OF COUNTY ROAD (ALSO KNOWN
AS WILLOWS ROAD) IN KING COUNTY, WASHINGTON.
ALL SITUATE IN THE COUNTY OF KING, STATE OF WASHINGTON.
APPENDIX F
Page 3 of 3
<PAGE>
APPENDIX G
EXTENSION OPTION
EXTENSION OPTION. Subject to Subsection B below, Tenant may at its option
----------------
extend the Term of this Lease for TWO (2) successive periods of FIVE (5) YEARS
each. Each such period is called a "Renewal Term", and the first such FIVE (5)
------------
YEAR period is called the "First Renewal Term" and the second such five (5) year
------------------
period is called the "Second Renewal Term". Each Renewal Term shall be upon the
-------------------
same terms contained in this Lease except for the payment of Base Rent during
the Renewal Term; and any reference in the Lease to the "Term" of the Lease
shall be deemed to include any Renewal Term and apply thereto, unless it is
expressly provided otherwise. Tenant shall have no additional extension
options.
A. The Base Rent during a Renewal Term shall be the greater of (i) the
Base Rent applicable to the last day of the final Lease Year prior to the
applicable Renewal Term, or (ii) 100% of the Market Rate (defined hereinafter)
for such space for a term commencing on the first day of the Renewal Term.
"Market Rate" shall mean the then prevailing market rate for a five (5) year
-----------
term commencing on the first day of the Renewal Term for tenants of comparable
size and creditworthiness for comparable buildings in the general vicinity of
the Project. Determination of the Market Rate shall include, without
limitation, then current applicable market conditions such as rent abatements,
tenant allowances, cash incentives, broker commissions, Tenant's use,
availability of space in the Redmond area, the build out of the Premises and
such additional factors as might reasonably be considered in determining the
Market Rate.
B. To exercise any option, Tenant must deliver a binding notice to
Landlord not less than twelve (12) months prior to the expiration of the initial
Term of this Lease, or the first Renewal Term, as the case may be. Thereafter,
the Market Rate for the particular Renewal Term shall be calculated pursuant to
Subsection C below and Landlord shall inform Tenant of the Market Rate. Such
calculations shall be final and shall not be recalculated at the actual
commencement of such Renewal Term. If Tenant fails to timely give its notice of
exercise, Tenant will be deemed to have waived its option to extend.
C. Market Rate shall be determined as follows:
(i) If Tenant provides Landlord with its binding notice of exercise
pursuant to Subsection B above, then at some point between thirteen (13)
and eleven (11) months prior to the commencement of the applicable Renewal
Term (or, at Landlord s election, at an earlier point), Landlord shall
calculate and inform Tenant of the Market Rate. At the same time Landlord
shall provide to Tenant in writing supporting information used by Landlord
to calculate the Market Rate including rental rates and lease terms on
comparable buildings, which Landlord
APPENDIX G
Page 1 of 2
<PAGE>
shall identify by name and location. If Tenant rejects the Market Rate as
calculated by Landlord, Tenant shall inform Landlord of its rejection
within twenty (20) days after Tenant s receipt of Landlord s calculation,
and Landlord and Tenant shall commence negotiations to agree upon the
Market Rate. If Tenant fails to timely reject Landlord s calculation of the
Market Rate it will be deemed to have accepted such calculation. If
Landlord and Tenant are unable to reach agreement within twenty-one (21)
days after Landlord s receipt of Tenant s notice of rejection, then the
Market Rate shall be determined in accordance with (ii) below.
(ii) If Landlord and Tenant are unable to reach agreement on the
Market Rate within said twenty-one (21) day period, then within seven (7)
days, Landlord and Tenant shall each simultaneously submit to the other in
a sealed envelope its good faith estimate of the Market Rate. If the
higher of such estimates is not more than one hundred five percent (105%)
of the lower, then the Market Rate shall be the average of the two.
Otherwise, the dispute shall be resolved by arbitration in accordance with
(iii) below.
(iii) Within seven (7) days after the exchange of estimates, the
parties shall select as an arbitrator an independent MAI appraiser with at
least five (5) years of experience in appraising office space in the
metropolitan area in which the Project is located (a "Qualified
Appraiser"). If the parties cannot agree on a Qualified Appraiser, then
within a second period of seven (7) days, each shall select a Qualified
Appraiser and within ten (10) days thereafter the two appointed Qualified
Appraisers shall select a third Qualified Appraiser and the third Qualified
Appraiser shall be the sole arbitrator. If one party shall fail to select
a Qualified Appraiser within the second seven (7) day period, then the
Qualified Appraiser chosen by the other party shall be the sole arbitrator.
(iv) Within twenty-one (21) days after submission of the matter to
the arbitrator, the arbitrator shall determine the Market Rate by choosing
whichever of the estimates submitted by Landlord and Tenant the arbitrator
judges to be more accurate. The arbitrator shall notify Landlord and Tenant
of its decision, which shall be final and binding. If the arbitrator
believes that expert advice would materially assist him, the arbitrator may
retain one or more qualified persons to provide expert advice. The fees of
the arbitrator and the expenses of the arbitration proceeding, including
the fees of any expert witnesses retained by the arbitrator, shall be paid
by the party whose estimate is not selected. Each party shall pay the fees
of its respective counsel and the fees of any witness called by that party.
D. Tenant's option to extend this Lease is subject to the conditions
that: (i) on the date that Tenant delivers its binding notice exercising an
option to extend, Tenant is
APPENDIX G
Page 2 of 2
<PAGE>
not in default under this Lease after the expiration of any applicable notice
and cure periods.
APPENDIX G
Page 3 of 2
<PAGE>
APPENDIX H
EXPANSION OPTION AND LETTER OF CREDIT
1. EXPANSION OPTION. Subject to the terms and conditions of this
----------------
paragraph, Landlord hereby grants to Tenant an option (the "Option") to lease
Building 6 located in the Project as shown on Exhibit A attached hereto (the
"Expansion Space"). To exercise the Option, Tenant must deliver a binding
written notice to Landlord of its intent to lease the Expansion Space on or
before May 1, 1999. In the notice of intent to lease, Tenant shall specify the
date on which the Landlord shall deliver the Expansion Space to Tenant, which
date (i) shall not be less than nine (9) months from the date of the notice, and
(ii) shall be no later than February 1, 2000 . Tenant hereby acknowledges that
time is of the essence with respect to delivery of the notice and that failure
to deliver such written notice to Landlord within the time required shall result
in the termination of Tenant s Option to lease the Expansion Space. Upon proper
exercise of Tenant s Option, Landlord shall deliver to Tenant the Expansion
Space on the specific delivery date, unless otherwise mutually agreed by
Landlord and Tenant. Tenant s notice of its election to exercise its Option for
the Expansion Space shall be subject to the following conditions: (a) the Lease
shall be in full force and effect at the time of the exercise of such Option;
and (b) Tenant shall not be in default (subject to any notice and cure periods)
under the Lease.
Tenant s lease of the Expansion Space shall be on the same terms and
conditions of this Lease of the Premises, including, without limitation, at the
rental rates paid at the time of such election for the Premises and, except for
Extension Options without further extension of the term of the Lease (it being
the intent of the parties that the lease of the Expansion Space shall be co-
terminus with the lease of the Premises). Landlord and Tenant hereby agree to
execute an Amendment to Lease evidencing the lease of the Expansion Space in
form consistent with the terms hereof and satisfactory to the parties. Landlord
shall deliver to Tenant the Expansion Space in a similar condition and terms as
the Premises were delivered to Tenant, including, Landlord s work and the Tenant
improvement allowance set forth in the Lease for the initial Premises.
2. LETTER OF CREDIT. Section 12 of the Lease is hereby supplemented and
----------------
modified by adding the following language as Section 12E:
APPENDIX H
Page 1 of 2
<PAGE>
E. Default Relating to Letter of Credit. In the event that thirty (30)
------------------------------------
days prior to the expiry date set forth in the Letter of Credit or replacement
Letter of Credit required to be provided by Tenant pursuant to Article 20 hereof
and which is in effect at such time, Tenant fails to (1) obtain an extension of
such Letter of Credit or (2) provide a new Letter of Credit, as security for the
performance of all of its obligations hereunder in form and substance
satisfactory to Landlord, Landlord may, at its sole and exclusive remedy for
such default, present drafts for payment of the entire amount of the Letter of
Credit and such amounts shall be held by Landlord as a Security Deposit pursuant
to the terms of Article 20 hereof.
APPENDIX H
Page 2 of 2
<PAGE>
EXHIBIT 10.9
METAWAVE COMMUNICATIONS CORPORATION
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made as of this 4th day of March,
1998 (the "Effective Date") between Metawave Communications Corporation, a
Delaware corporation ("Seller"), and ALLTEL Supply Inc., a Delaware corporation
("Customer").
The parties, in consideration of the mutual covenants, agreements and promises
of the other set forth in this Agreement and intending to be legally bound,
agree as follows:
1. AGREEMENT
Seller agrees to sell to Customer, and Customer agrees to purchase from time to
time by submitting a Purchase Order to Seller, the Products and Services
identified on Exhibit A to this Agreement in accordance with the specifications
and the terms and conditions hereof and at the Purchase Prices set forth in
Exhibit A. Notwithstanding any other provision of this Agreement or any other
contract between the parties to the contrary, the provisions of this Agreement
shall apply to all Purchase Orders for the Products and Services during the term
of this Agreement unless the parties expressly agree by written modification to
this Agreement that the provisions of this Agreement shall not apply. Any
additional or different terms in any acknowledgment, confirmation, invoice,
Purchase Order or other communication from one party to the other shall be
deemed objected to without need of further notice of objection and shall be of
no effect and not in any circumstance binding upon either party unless expressly
accepted by both parties in writing.
2. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth
below:
"Acceptance Test Procedure" or "ATP" shall mean the testing procedures and
protocols described and administered for each Product as set forth in Exhibit C
and Exhibit E.
"Affiliate" shall mean any partnership, corporation or other entity (i) in which
Customer, directly or indirectly, owns more than fifty percent (50%) of the
voting shares, or (ii) which owns more than fifty percent (50%) of the voting
shares of Customer.
"Certificate of Conditional Acceptance" shall mean Customer's certification of
Seller's completion of the Acceptance Test Procedure in the form set forth in
Exhibit C.
"Certificate of Final Acceptance" shall mean , for the [***],Customer's
certification of the Products' satisfaction of the Performance Criteria set
forth in Exhibit E.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
"Change Order" shall mean any subsequent change to a Purchase Order initiated by
either Seller or Customer, including but not limited to, changes in Site
configuration and Products and Services needed for the Site project, which is
mutually agreed to by both parties.
"Conditional Acceptance" shall mean, [***] Initial Spectrum Clearing Order and
Follow-on Orders, the [***] of (i) the [***] Certificate of Conditional
Acceptance [***] or (ii) the [***] which a Product has [***].
"Final Acceptance" shall mean (i) for Products in the Initial Spectrum Clearing
Order, the date on which Customer has executed a Certificate of Final Acceptance
for the Products, and all Punchlist items have been resolved and (ii) for
Products in Follow-on Orders, the date on which all Punchlist items for a
Product have been resolved.
"Follow-on Order" shall mean any Products (and any associated Services) [***]
Initial Spectrum Clearing Order [***] of this Agreement.
"Initial Spectrum Clearing Order" shall mean Customer's initial purchase of a
number of Products (and any associated Services)for widespread deployment in a
single market which shall be ordered together on one Purchase Order pursuant to
the terms and conditions of this Agreement.
"Performance Criteria" shall mean the [***] of the Products in the Initial
Spectrum Clearing Order [***] Performance Evaluation Period set forth in Exhibit
E.
"Performance Evaluation Period" shall mean [***] specified in Exhibit E [***]
Products in the Initial Spectrum Clearing Order [***] with Exhibit E.
"Product" shall mean the Spotlight(TM) antenna system described in Exhibit B
hereto or any additional products set forth in Exhibit B or any amendments
thereto as may be subsequently agreed to from time to time by Seller and
Customer.
"Punchlist" shall mean the list provided by Customer to Seller at Conditional
Acceptance which sets forth those mutually agreed items relating to a Product,
if any, to be resolved by Seller within ten (10) working days of Conditional
Acceptance of such Product.
"Purchase Order" shall mean any purchase order Customer may deliver to Seller
for the purchase of the Products and Services which incorporates the terms and
conditions of this Agreement and which has been accepted by Seller.
"Purchase Price" shall mean the price of the Products and the price of the
Services shown on Exhibit A or any other amount set forth in any amendments to
Exhibit A as may be subsequently agreed to from time to time by Seller and
Customer.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
"Services" shall mean the engineering services set forth in Exhibit A or any
additional services set forth in any amendments to Exhibit A as may be
subsequently agreed to from time to time by Seller and Customer.
"Site" shall mean each of the Customer cell site locations at which a Product is
installed.
"Software" shall mean the (i) object-code computer programs embedded in the
Product which control and monitor the operation of the Product ("Embedded
Software"), and (ii) the Lamplighter PC-based graphical user interface computer
program for the Product, and all Features, Major Releases, Point Releases, and
Software Patches (as such terms are defined in Exhibit H), other updates and
modifications to such Software (the "Software Updates") and any documentation in
support thereof.
"Software License" shall mean the software license for the Software and Software
Updates to be delivered to Customer for use with the Products as set forth in
Exhibit D.
"Specifications" shall mean the specifications for the Products set forth in
Exhibit B and incorporated herein.
3. PURCHASE ORDERS; PRICING; CANCELLATIONS
a. Customer shall order Products and Services pursuant to this
Agreement by submitting a Purchase Order to Seller at least ninety
(90) days prior to date of delivery for such Products and Services.
b. Upon receipt of the Purchase Order, Seller shall have [***]
to confirm or reject its acceptance of the Purchase Order in writing
to the Customer, subject to completion of Site survey for each Product
to be completed no later than [***] prior to the date of delivery
specified on the Purchase Order. If Seller fails to reject acceptance
within [***] after receipt of the Purchase Order, the Purchase Order
will be deemed accepted.
c. If the Site Survey reveals that the Products configurations
set forth in the Purchase Order must be changed in order to implement
and install the Products, Seller shall notify Customer immediately
with a written proposal for changes. In no event shall Seller's
notification and submission of a written proposal for changes exceed
[***] from the date of completion of Site survey.
d. Customer shall have [***] to accept the written proposal for
changes upon receipt of the proposal. If accepted, Seller and Customer
shall execute a written Change Order at which time such Change Order
shall become binding on Seller and Customer subject to Section 3(e)
below. If rejected, Customer may either inform the Seller in writing
to proceed with the original Purchase Order or cancel the Purchase
Order subject to section 3(e) below.
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
e. Customer may cancel delivery of a Product prior to Seller's
shipment of the Product provided that if Customer directs such
cancellation with less than [***] written notice from the delivery
date specified in Purchase Order, Customer shall pay to Seller any
nonrecurring losses associated with such cancellation and which are
documented in writing by Seller, provided, however, that any such
losses shall not exceed [***] of the Purchase Price of each Product
included in such cancellation.
f. Within thirty days following Customer's completion of its
seminannual budget, Customer shall give Seller, for planning purposes,
a non-binding forecast of its estimated requirements for the Products
and Services for the forthcoming [***].
4. SHIPPING; TITLE; RISK OF LOSS
a. Unless otherwise instructed by Customer, and subject to section 3,
Seller shall ship all Products to the destination designated in a
Purchase Order on or before the delivery date(s) specified in a
Purchase Order and render invoices in accordance with Section 6 below.
Customer is responsible for the payment of all reasonable shipping
charges, except as noted in Section 4(b) below, and any exceptional
shipping charges required to fulfill a Purchase Order shall be agreed
to in advance with Customer.
b. Products shall be packed by Seller, at no additional charge to
Customer, in containers adequate to prevent damage during shipping,
handling and storage.
c. Unless otherwise specified herein, title to Products sold by Seller to
Customer shall vest in Customer on shipment of Product to Customer
(except title to Software shall remain with Seller pursuant to the
terms of the Software License attached as Exhibit D hereto).
d. Risk of loss or damage to any Product supplied hereunder shall pass to
Customer upon Conditional Acceptance, except for Products installed by
Customer, in which case risk of loss or damage shall pass to Customer
on shipment of Product to Customer.
5. WARRANTY
a. Seller warrants for a period [***] (the "Warranty Period") that (i)
all Products furnished hereunder will be free from defects in
materials, workmanship and title, (ii) all Products will conform in
all material respects to the documentation and specifications provided
by the Seller herein, (iii) the media on which the Software is
contained will be free from defects in material and workmanship under
normal use, and (iv) the Software will conform in all material
respects to the documentation provided by Seller. The warranties in
this Agreement are given in
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
lieu of all other warranties express or implied which are specifically
excluded, including, without limitation, implied warranties of
merchantibility and fitness for a particular purpose.
b. If Customer believes that there is a claim under the warranty set
forth herein, Customer shall follow the procedures set forth in
Exhibit H hereto (Product Maintenance). If Seller is unable to repair
or replace the Product so that it conforms to Specifications, Customer
shall receive a refund of the prorated undepreciated portion of the
Purchase Price actually paid by Customer to Seller for the returned
portion of the Products. The Purchase Price shall be depreciated over
a five (5) year period for Software and a ten (10) year period for
non-Software Products. The actions taken by Seller under the Product
Maintenance Program procedures set forth in Exhibit H shall be the
full extent of Seller's liability and Customer's exclusive remedy with
respect to a claim under this section 5.
c. This warranty does not apply to any claim which arises out of any one
of the following: (i) the Product is used in other than its normal and
customary manner; (ii) the Product has been subject to misuse,
accident, neglect or damage by Customer; (iii) the Product has been
installed, optimized or moved from its original installation site by
any person other than Seller or a person who has been certified by
Seller through completion of a Seller-sponsored training course to
provide such services; (iv) unauthorized alterations or repairs have
been made to the Product, or parts have been used in the Product which
are not approved by Seller, such approval not to be unreasonably
withheld (a current list of approved parts is set forth in Exhibit A);
(v) the Product is not maintained pursuant to Seller maintenance
programs or under the supervision of a person who has been certified
by Seller to provide such maintenance service through completion of a
Seller-sponsored training course described in Exhibit G; (vi) an event
of Force Majeure has occurred; (vii) the failure of third party
antennas, lines or interconnection facilities at the Site; and (viii)
damage which occurs during shipment of equipment from Customer to
Seller.
6. INVOICES AND PAYMENT
a. For the Products in the Initial Spectrum Clearing Order only, the
payment schedule shall be as follows:
1. Seller [***] for [***] of the Purchase Price of the Products and
[***] of the Purchase Price of the Services [***] Products [***] of a
Certificate of Final Acceptance for such Products.
2. Seller [***] for the [***] of the Purchase Price for the Products
upon Final Acceptance of such Products.
3. [***] Final Acceptance for the Products in the Initial Spectrum
Clearing Order [***], Customer [***] (i) [**] of the Products [***] Seller
[***] or (ii) [***] Products to the Seller, Seller [***] such Products at
Seller's [***] to Customer [***] Purchase at Seller's [***] to Customer [***]
Purchase Price [***] for Products and Services [***] [***] such Products. Seller
shall [***] of [***] of the Products [***].
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
b. For Products and Services in all Follow-on Orders, Seller [***] as
follows: (i) [***] of the Purchase Price of each Product upon [***] Product to
Customer, (ii) [***] of the Purchase Price of each Product and [***] of [***]
Services [***] Conditional Acceptance of such Product, and (iii) [***] of the
Purchase Price of each Product promptly following Final Acceptance Follow-on
Order, Seller [***] of the Purchase Price of each Product [***] Product to
Customer and [***] Conditional Acceptance and Final Acceptance.
c. All invoices shall be computed on the basis of the prices set forth in
Exhibit A [***] and shall identify and show separately quantities of
Products, type of Services, total amounts for each item, shipping
charges, applicable sales or use taxes and total amount due. Customer
shall promptly pay Seller the amount due within 30 days of the date of
invoice. Customer shall pay a late fee at the rate of one and one-half
percent (1.5%) of the amount due for each month or portion thereof
that the amount remains unpaid.
d. Customer shall be responsible for the payment of all sales, use and
any other taxes applicable to the Products and Services provided by
the Seller pursuant to this Agreement. When Seller is required by law
to collect such taxes, 100% thereof will be added to invoices as
separately stated charges and paid by Customer in accordance with this
section.
e. If Customer disputes any invoices rendered or amount paid, Customer
will so notify Seller, and the parties will use their reasonable
efforts to resolve such dispute expeditiously. [***].
7. OBLIGATIONS OF CUSTOMER
In addition to performing the other obligations set forth in this
Agreement, Customer shall:
a. procure from appropriate regulatory authorities all necessary permits
and station licenses as may be required to install and operate the
system incorporating the Products;
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
b. maintain adequate property insurance for each Site, including coverage
for each Product at a Site during the period of installation and
operation prior to Conditional Acceptance; and
c. comply with its obligations set forth in Exhibit F.
8. INFRINGEMENT INDEMNITY
a. Seller shall indemnify and hold harmless Customer and its Affiliates
against any and all liabilities, losses, costs, damages and expenses,
including reasonable attorney's fees, associated with any claim or
action for actual or alleged infringement by any Product or Software
supplied in accordance with this Agreement of any United States
patent, trademark, copyright, trade secret or other intellectual
property right incurred by Customer and its Affiliates as a result of
Customer's use of such Products or Software in accordance with this
Agreement provided that (i) Customer promptly notifies Seller in
writing of the claim, (ii) Customer gives Seller full opportunity and
authority to assume sole control of the defense and all related
settlement negotiations, and (iii) Customer gives Seller information
and assistance for the defense (Customer will be reimbursed for
reasonable costs and expenses incurred in rendering such assistance,
against receipt of invoices therefor). Subject to the conditions and
limitations of liability stated in this Agreement, Seller shall
indemnify and hold harmless Customer from all payments, which by final
judgments in such claims, may be assessed against Customer on account
of such alleged infringement and shall pay resulting settlements,
costs and damages finally awarded against Customer by a court of law,
arbitration or other adjudication of the claim.
b. Customer agrees that if the Products or Software become, or in
Seller's opinion are likely to become, the subject of such a claim,
Customer will permit Seller, at its option and expense, either to
procure the right for Customer to continue using such Products or
Software or to replace or modify same so that they become non-
infringing as long as they continue to conform in all material
respects to the specifications contained in this Agreement and
Exhibits, and, if neither of the foregoing alternatives is available
on terms which are acceptable to Seller, Customer shall at the written
request of Seller, return the infringing or potentially infringing
Products or Software and all the rights thereto at Seller's expense.
Customer shall receive a refund of the prorated undepreciated portion
of the Purchase Price actually paid by Customer to Seller for the
returned portion of the Products. The Purchase Price shall be
depreciated over a five (5) year period.
c. Seller shall have no obligation to Customer with respect to any claim
of patent or copyright infringement which is based upon (i) adherence
to specifications, designs or instructions furnished by Customer, (ii)
the combination, operation or use of any Products supplied hereunder
with products, software or data not supplied by Seller, (iii) the
alteration of the Products or modification of any
<PAGE>
Software made by any party other than Seller; or (iv) the Customer's
use of a superseded or altered release of some or all of the Software
if infringement would have been avoided by the use of a subsequent
unaltered release of the Software that is provided to the Customer.
9. INDEPENDENT CONTRACTOR
Seller hereby declares and agrees that Seller is engaged in an independent
business and will perform its obligations under this Agreement as an independent
contractor and not as the agent or employee of Customer and has no authority to
represent Customer as to any matters. Seller shall be solely responsible for
payment of compensation to its personnel and for injury to them in the course of
their employment except to the extent that any intentional or negligent act of
Customer is solely and directly responsible for any such injury . Seller is
responsible for payment of all federal, state, or local taxes or contributions
imposed or required under unemployment insurance, social security and income tax
laws for persons employed by Seller to perform Seller's obligations under this
Agreement.
10. INDEMNIFICATION
Seller shall indemnify Customer, its employees and directors, and each of them,
against any loss, damage, claim, or liability, arising out of, as a result of,
or in connection with the use of the Product in accordance with this Agreement
or the acts or omissions, negligent or otherwise, of Seller in the performance
of this Agreement, or a contractor or an agent of Seller or an employee of
anyone of them, except where such loss, damage, claim, or liability arises from
the sole negligence or willful misconduct of Customer, agents or its employees.
Seller shall, at its own expense, defend any suit asserting a claim for any
loss, damage or liability specified above, and Seller shall pay any costs,
expenses and attorneys' fees that may be incurred by Customer in connection
with any such claim or suit or in enforcing the indemnity granted above,
provided that Seller (i) is given prompt notice of any such claim or suit and
(ii) full opportunity to assume control of the defense or settlement. Neither
Seller nor Customer shall not be liable to the other for indirect or
consequential damages, including but not limited to lost profits.
11. TERM AND TERMINATION
The term of this Agreement shall be three (3) years from the Effective Date. If
either party is in material default of any of its obligations under this
Agreement and such default continues for thirty (30) days after written notice
thereof by the party not in default, the nondefaulting party may cancel this
Agreement. In addition, a party may cancel this Agreement if a petition in
bankruptcy or under any insolvency law is filed by or against the other party
and is not dismissed within sixty (60) days of the commencement thereof.
12. ASSIGNMENT
a. Any assignment by Seller of this Agreement or any other interest
hereunder without Customer's prior written consent, shall be void,
except assignment to
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
a person or entity who acquires all or substantially all of the
assets, business or stock of Seller, whether by sale, merger or
otherwise.
b. Customer reserves the right to assign this Agreement or any portion
hereof to any present or future Affiliate. Notwithstanding the
foregoing, without the prior written consent of Seller, (i) the
Software license granted to Customer in the form of Exhibit D
(Software License), may not be sublicensed, assigned or otherwise
transferred by Customer except to Affiliates; (ii) the Products may
not be transported, relocated, sold or otherwise transferred outside
the United States and (iii) no assignment may be made to an entity
which Seller considers to be a competitor.
c. Subject to the provisions of paragraphs a, and b above, this Agreement
shall inure to the benefit of and be binding upon the respective
successors and assigns, if any, of the parties hereto.
13. [***] PRODUCT
Seller [***] to Customer an [***] in the Product to [***] Product (the "[***]
Product"). This [***] Product will [***] in Exhibit B, Section 4.1, in a [***]
in Exhibit B, Section 2.2.7 ([***]). Seller [***] to make [***] for [***]
Customer on [***] on the terms and conditions set forth in Exhibit A.
14. NOTICES
Except as otherwise specified in this Agreement, all notices or other
communications hereunder shall be deemed to have been duly given when made in
writing and delivered in person or deposited in the United States mail, postage
prepaid, certified mail, return receipt requested, or by a reputable overnight
courier service providing proof of delivery, or by confirmed facsimile
transmission and addressed as follows:
To Seller: To Customer:
Metawave Communications Corporation ALLTEL Supply Inc.
8700 148th Avenue NE 6625 The Corners Parkway
Redmond WA 98052 Norcross, GA 30092
Attn: VP, Sales Attn.: H.S. Fisher, Jr.
Copy to: General Counsel Copy to: Mark Kelso
Fax: 425 702 5976 Fax: (770) 368-1449
The address to which notices or communications may be given to either party may
be changed by written notice given by such party to the other pursuant to this
section 14.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
15. COMPLIANCE WITH LAWS
Seller shall comply with all applicable federal, state and local laws,
regulations and codes, including the procurement of permits and licenses when
needed, in the performance of this Agreement.
16. FORCE MAJEURE
Except for payment of moneys due, neither party shall be liable for delays in
delivery or performance or for failure to manufacture, deliver or perform
resulting from acts beyond the reasonable control of the party responsible for
performance. Such acts shall include, but not be limited to (a) acts of God,
acts of a 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, and loss or damage to goods in transit; or (b) inability to obtain
necessary products, components, services or facilities on account of causes
beyond the reasonable control of the delayed party or its suppliers. In the
event of any such delay, the date(s) of delivery or performance shall be
extended for as many days are reasonably required due to the delay. If such
delay continues for 45 days, either party may terminate the Purchase Order
affected by the event by providing written notice.
17. GOVERNING LAW; DISPUTE RESOLUTION
a. This Agreement and each Purchase Order shall be construed in
accordance with the internal laws of the State of Washington, without
regard to its choice of law provisions.
b. Any and all disputes arising between the parties shall be resolved in
the following order: (i) by good faith negotiation between
representatives of Customer and Seller who have authority to fully and
finally resolve the dispute to commence within ten (10) days of the
request of either party; (ii) in the event that the parties have not
succeeded in negotiating a resolution of the dispute within ten (10)
days after the first meeting, then the dispute will be resolved by
nonbinding mediation to be held in a mutually agreed location in the
United States, using a mutually agreed upon non-affiliated neutral
party having experience with or knowledge in the wireless
communications equipment industry to be chosen within twenty (20) days
after written notice by either party demanding mediation (the costs
therefor to be shared equally); and (iii) if within sixty (60) days of
the initial demand for mediation by the parties, the dispute cannot be
resolved by mediation, then a party may institute litigation in a
court having subject matter jurisdiction, and the parties expressly
consent and submit themselves to the personal jurisdiction of such
court.
<PAGE>
18. DELAY PENALTIES
a. The parties agree that damages for delay are difficult to calculate
accurately, and, therefore, agree that penalties will be paid for late
performance of certain of Seller's obligations under this Agreement.
b. [***]
c. [***].
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
19. GENERAL PROVISIONS
a. All information, data and materials provided by either party under
this Agreement shall be subject to the terms and conditions of the
Non-Disclosure Agreement between the parties dated April 10, 1996.
b. Seller and Customer may issue a joint press release concerning the
execution of this Agreement. Such press release shall be subject to
prior review and written approval by both parties, not to be
unreasonably withheld.
c. Waiver by either party of any obligation or default by the other party
shall not be deemed a waiver by such party of any other obligation or
default.
d. Any rights of cancellation, termination or other remedies prescribed
in this Agreement are cumulative and are not intended to be exclusive
of any other remedies to which the injured party may be entitled at
law or equity (including but not limited to the remedies of specific
performance and cover) in case of any breach or threatened breach by
the other party of any provision of this Agreement, unless such other
remedies which are not prescribed in this Agreement are specifically
limited or excluded by this Agreement. The use of one or more
available remedies shall not bar the use of any other remedy for the
purpose of enforcing the provisions of this Agreement; provided,
however, that a party shall not be entitled to retain the benefit of
inconsistent remedies.
e. If any of the provisions of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not
invalidate or render unenforceable the entire Agreement, but rather
the entire Agreement shall be construed as if not containing the
particular invalid or unenforceable provisions, and the rights and
obligations of Seller and Customer shall be construed and enforced
accordingly.
f. This Agreement, including all Exhibits attached to or referenced in
this Agreement, shall constitute the entire agreement between Customer
and Seller with respect to the subject matter hereof.
g. No provision of this Agreement shall be deemed waived, amended or
modified by any party hereto, unless such waiver, amendment or
modification is in writing and signed by a duly authorized
representative of each of the parties.
h. This Agreement applies only to sales of Products and Services in the
United States.
i. Each party shall comply with all applicable U.S. and foreign export
control laws and regulations and shall not export or re-export any
technical data or products except in compliance with the applicable
export control laws and regulations of the U.S. and any foreign
country.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized representatives.
Metawave Communications Corporation ALLTEL Supply Inc.
By: /s/ Richard Henderson By: /s/ H.S. Fisher, Jr.
----------------------------------- ---------------------------
Name: Richard Henderson Name: H.S. Fisher, Jr.
----------------- ----------------
Title: Vice President of Sales and Marketing Title: Senior Vice President,
------------------------------------- ----------------------
Operations
----------
EXHIBITS ATTACHED:
A Product and Services Pricing
B Performance Specifications
C Site Acceptance Test Procedure (ATP)
D Software License
E System Acceptance Test Procedure (ATP)
F Installation and Optimization
G Training
H Product Maintenance Program
<PAGE>
EXHIBIT A: PRODUCTS AND SERVICES PRICING
TO THE AGREEMENT BETWEEN
METAWAVE COMMUNICATIONS CORP. ("SELLER")
AND
ALLTEL SUPPLY, INC. ("CUSTOMER")
Metawave Communications Corporation
8700 148/th/ Avenue NE
Redmond, WA 98052 USA
Tel. 425 702-5600
Fax 425 702-5970
http://www.metawave.com
- -------------------------------------------------------------------------------
This document and the information in it is the proprietary and confidential
information of Metawave Communications Corporation and is provided by Metawave
under an agreement of nondisclosure to the Customer for internal evaluation
purposes only and is protected by applicable copyright and trade secret law.
This document may only be disclosed or disseminated to those employees of the
Customer who have a need to use it for evaluation purposes; no other use or
disclosure can be made by Customer without Metawave's consent.
(C) 1998, METAWAVE COMMUNICATIONS CORPORATION
CONFIDENTIAL PROPRIETARY
- --------------------------------------------------------------------------------
CONFIDENTIAL AND PROPRIETARY FINAL
<PAGE>
Products and Services Pricing
================================================================================
PRODUCTS AND SERVICES PRICING
For the purposes of uniformity and brevity, references to Agreement or to an
Exhibit shall refer to the Purchase Agreement to which this document is Exhibit
A and to the other Exhibits to that Agreement. All definitions set forth in the
Agreement shall apply hereto unless otherwise expressly defined herein.
1. Introduction
This Exhibit A lists the Products and Services pricing and the Product quantity
discounts as of the Effective Date of the Agreement and throughout the term of
this Agreement. All payments for the Products and Services shall be made
according to the terms set forth in the Agreement. The prices included herein
are for products installed and services performed in the U.S.A.
2. SpotLight Pricing
<TABLE>
<CAPTION>
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SPOTLIGHT UNITS
(BY NO. OF CHANNELS) [***] [***]
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<TABLE>
<CAPTION>
LPA CONFIGURATION PRICING
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Configuration [***] [***]
- --------------------------------------------------------------------------------
<S> <C> <C>
4 LPA Module Assy. [***] [***]
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16 LPA Module Assy. [***] [***]
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</TABLE>
* SpotLight Tx/Rx includes all of the hardware and software as described in
Section 2 of Exhibit B except those items identified as optional or supplied by
Customer.
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Products and Services Pricing
================================================================================
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<TABLE>
<CAPTION>
4. SpotLight Spares Pricing
SPOTLIGHT RECOMMENDED SPARES KIT
- --------------------------------------------------------------------------------
PART NUMBER DESCRIPTION [***] [***] [***]
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
250-0035-XX Tx Driver [***] [***] [***]
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250-0042-XX Voice LNA [***] [***] [***]
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250-0044-XX LNA Alarm [***] [***] [***]
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250-0082-XX LNA Power [***] [***] [***]
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250-0083-XX External I/O card [***] [***] [***]
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270-0002-XX RX SMU Assy. [***] [***] [***]
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270-0026-XX TX SMU Assy. [***] [***] [***]
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LPA module [***] [***] [***]
- --------------------------------------------------------------------------------
TOTALS:
- --------------------------------------------------------------------------------
</TABLE>
Notes:
1. The SpotLight Recommended Spares Kit list is for SpotLight configurations
supporting up to 90 channels.
2. Metawave recommends to maintain an inventory of one spares kit for every
four SpotLight systems installed.
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<PAGE>
Products and Services Pricing
================================================================================
<TABLE>
<CAPTION>
5. CDMA Product Feature Packages
- --------------------------------------------------------------------------------
INITIAL RELEASE DESCRIPTION [***]
- --------------------------------------------------------------------------------
<S> <C> <C>
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</TABLE>
Notes:
1. [***]
2. [***]
<TABLE>
<CAPTION>
6. Engineering Services Pricing
ENGINEERING SERVICES
- --------------------------------------------------------------------------------
DESCRIPTION [***]
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<S> <C>
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</TABLE>
Notes:
1. [***]
2. [***]
3. [***]
4. [***]
7. Software Licensing Fee
The Software licensing fees for the most current versions of LampLighter and
SpotLight embedded system Software (available at the time of purchase of
SpotLight) are included in the Purchase Price of each SpotLight unit purchased.
Software Updates are available under the SMP described in Exhibit H or for
additional licensing fees.
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
Products and Services Pricing
================================================================================
Maintenance Fees
Software Maintenance Program (SMP) Fees
The SMP annual fee for LampLighter software and the SpotLight embedded system
software is [***] per each RF analog channel supported by SpotLight not to
exceed [***] per "Host System" per year where a Host System is defined herein as
that group of SpotLight units serving cellular RF infrastructure equipment
connected to a common Mobile Switching Center.
Hardware Maintenance Program (HMP) Fees
Seller and Customer agree to negotiate in good faith the HMP fee prior to the
end of the Warranty Period.
9. General Conditions For Order:
1. Customer shall provide the local air-time for all drive testing at no
charge to Seller.
2. If Seller's Services are delayed for reasons beyond the control of
Seller or if additional Services are required by Customer, the
Services shown herein shall be adjusted accordingly, as mutually
agreed upon by both parties.
3. Towers and transmission lines to the towers and antennas, or any costs
associated with the preparation of towers and the site, not covered in
Exhibit F, including the installation of antennas and adequate
electrical power, are not included in the prices shown herein and are
the responsibility of Customer.
4. Performance of the Services set forth herein is dependent upon
Customer and or Seller obtaining any and all necessary licenses,
permits and governmental approvals required to perform the Services
set forth herein. Seller shall not be held liable for any non-
performance due to delays by Customer in obtaining any of the above
documentation and or approvals.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
Products and Services Pricing
================================================================================
<TABLE>
<CAPTION>
SPOTLIGHT 2.0 FIELD REPLACEABLE UNIT (FRU) PRICE LIST
- --------------------------------------------------------------------------------
PART NUMBER PART DESCRIPTION PRICE
- --------------------------------------------------------------------------------
<S> <C> <C>
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Products and Services Pricing
================================================================================
<TABLE>
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RESPECT TO THE OMITTED PORTIONS.
<PAGE>
EXHIBIT B: PERFORMANCE SPECIFICATIONS
TO THE PURCHASE AGREEMENT
SPOTLIGHT MULTIBEAM ANTENNA PLATFORM 2.0
TRANSMIT/RECEIVE
(for use with Motorola HDII Base Station Equipment)
Metawave Communications Corporation
8700 148/th/ Avenue NE
Redmond, WA 98052 USA
Tel. 425 702-5600
Fax 425 702-5970
http://www.metawave.com
- --------------------------------------------------------------------------------
This document and the information in it is the proprietary and confidential
information of Metawave Communications Corporation and is provided by Metawave
under an agreement of nondisclosure to the Customer for internal evaluation
purposes only and is protected by applicable copyright and trade secret law.
This document may only be disclosed or disseminated to those employees of the
Customer who have a need to use it for evaluation purposes; no other use or
disclosure can be made by Customer without Metawave's consent.
(C)1998, Metawave Communications Corporation
CONFIDENTIAL PROPRIETARY
- --------------------------------------------------------------------------------
FINAL
<PAGE>
SpotLight Multibeam Antenna Platform Performance Specifications
================================================================================
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Introduction....................................................... 3
2. System Description................................................. 3
2.1. Introduction................................................ 4
2.2. General System Overview..................................... 4
2.2.1. Operational Overview................................. 5
2.2.2. SIG/SCAN............................................. 6
2.2.3. Remote Access........................................ 6
2.2.4. Antennas............................................. 6
2.2.5. Lightning Arrestor................................... 7
2.2.6.Rack Mounted Components......................................... 7
2.2.7. Interfaces........................................... 8
2.3. SpotLight Specifications.................................... 9
2.3.1. RF Performance....................................... 9
2.3.2. Electrical Specifications............................ 9
2.3.3. Environmental Specifications......................... 10
2.3.4. Physical Specifications.............................. 10
2.3.5. Alarming............................................. 10
2.3.6. Reset................................................ 10
2.3.7. SMAP Frequency Reference............................. 10
2.4. RF Performance.............................................. 10
2.4.1. Angular Diversity.................................... 10
2.4.2. Transmit Output Power................................ 11
2.4.3. Transmit Spurious Emissions.......................... 11
2.5. System Software............................................. 12
2.5.1. LampLighter Software................................. 12
2.5.2. Embedded System Software............................. 12
2.6. Software Performance........................................ 12
2.6.1. Program Upgrades..................................... 12
2.6.2. Programming and Development Standards................ 12
2.6.3. Built-In-Self-Test................................... 13
2.6.4. Response Times....................................... 13
3. Regulatory Requirements............................................ 13
3.1 US............................................................. 13
4. Optional SpotLight Platform CDMA Features.......................... 13
4.1 CDMA/AMPS/NAMPS Integration Feature............................... 13
4.2 RF Sector Synthesis Feature....................................... 13
4.3 CDMA Base Stations Supported...................................... 14
</TABLE>
<PAGE>
SpotLight Multibeam Antenna Platform Performance Specifications
================================================================================
PERFORMANCE SPECIFICATIONS
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to the Products and Services Purchase Agreement to which this
document is Exhibit B and to the other Exhibits to that Agreement. All
definitions set forth in the Agreement shall apply hereto.
Introduction
The purpose of this document is to describe and specify Metawave's
SpotLight(TM) 2.0 Multibeam Antenna Platform including:
. System operation
. Hardware and elements of the SpotLight equipment
. Interconnect between SpotLight equipment and the base station equipment
While the specifications contained in this document are based on the most
current information available, such information is based on cell site specific
data and may not apply to all cell sites contained within a system. Metawave
reserves the right to make changes to any design, specification, manufacturing
techniques and/or product testing procedures provided those new specifications
meet the minimum requirements contained in this Exhibit, Exhibit G and Exhibit
H. The new specifications shall be provided to Customer at least 60 days
prior to the date of general availability of the Products.
ACRONYMS AND TERMS DEFINITION
-----------------------------
C/I Carrier to Interference Ratio
FRU Field Replaceable Unit
LNA Low Noise Amplifier
LPA Linear Power Amplifier
RCU Radio Channel Unit (P/O Motorola Cell Equipment)
RF Radio Frequency
Rx Receive
SMAP Spotlight Multibeam Antenna Platform
SMU Spectrum Management Unit
Tx Transmit
TxCD Transmit Combiner Driver
<PAGE>
SpotLight Multibeam Antenna Platform Performance Specifications
================================================================================
2. System Description
[***]
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
3. Regulatory Requirements
This section specifies requirements which are set primarily by local
and/or national governing bodies, consortiums and standards
committees.
The SpotLight system complies with appropriate US FCC regulations
(includes both RF and EMI). Specifically, the SMAP shall comply with
the resolutions defined in CFR47 part 22 and part 15.
The SpotLight system is UL listed.
4. [***]
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
EXHIBIT C: SITE ACCEPTANCE TEST PROCEDURE (ATP)
TO THE AGREEMENT
BETWEEN
METAWAVE COMMUNICATIONS CORP. ("SELLER")
AND
ALLTEL SUPPLY INC. ("CUSTOMER")
Metawave Communications Corporation
8700 148/th/ Avenue NE
Redmond, WA 98052 USA
Tel. 425 702-5600
Fax 425 702-5970
http://www.metawave.com
- --------------------------------------------------------------------------------
This document and the information in it is the proprietary and confidential
information of Metawave Communications Corporation and is provided by Metawave
under an agreement of nondisclosure to the Customer for internal evaluation
purposes only and is protected by applicable copyright and trade secret law.
This document may only be disclosed or disseminated to those employees of the
Customer who have a need to use it for evaluation purposes; no other use or
disclosure can be made by Customer without Metawave's consent.
(C)1998, Metawave Communications Corporation
CONFIDENTIAL PROPRIETARY
- --------------------------------------------------------------------------------
FINAL
<PAGE>
SpotLight Multibeam Antenna Platform Site Acceptance Test Procedure
================================================================================
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Introduction............................................................ 3
2. Acceptance Tests........................................................ 3
2.1. LampLighter Installation Test.................................... 4
2.2. System Configuration Test........................................ 5
2.3. Transmit Effective Radiated Power (Tx ERP) Test.................. 6
2.4. Receive Sensitivity Test......................................... 8
2.5. Alarm Functionality Test......................................... 9
2.6. Call Processing Test............................................. 11
</TABLE>
<PAGE>
SpotLight Multibeam Antenna Platform Site Acceptance Test Procedure
================================================================================
SITE ACCEPTANCE TEST PROCEDURE
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
SOFTWARE LICENSE AGREEMENT
--------------------------
EXHIBIT D
TO THE PURCHASE AGREEMENT
BETWEEN
METAWAVE COMMUNICATIONS CORPORATION ("SELLER")
AND
ALLTEL SUPPLY, INC. ("CUSTOMER")
1. DEFINITIONS
"Agreement" shall mean the Purchase Agreement between Seller and Customer
executed concurrently herewith, and the Exhibits attached thereto, including
this Exhibit E (Software License).
"Software" shall mean the (i) object-code computer programs embedded in the
Spotlight Unit which control and monitor the operation of the Spotlight Unit
("Embedded Software"), and (ii) the Lamplighter(TM) PC-based graphical user
interface computer program for the Spotlight Unit, and all Features, Major
Releases, Point Releases, Software Patches, SP Software (as such terms are
defined in Exhibit H), other updates and modifications ("Software Updates")
and any documentation in support thereof .
"Spotlight Unit" shall mean the Spotlight(TM) antenna system described in
Exhibit B.
Any terms not defined herein shall have the same meanings as in the
Agreement and the Exhibits thereto.
2. SCOPE
Pursuant to the Agreement, Software will be delivered by Seller to Customer
for use with a Spotlight Unit according to the terms of the Agreement and
this Exhibit. Customer shall then become a licensee with respect to such
Software.
3. LICENSING GRANT
3.1 Concurrent with execution of the Agreement, and subject to the terms
and conditions set forth herein, Seller grants to Customer a revocable,
non-exclusive and non-transferable license under Seller's applicable
proprietary rights to use Software delivered to Customer hereunder.
Such use shall apply only to operate a Spotlight Unit delivered under
the Agreement.
3.2 The licensing fees for the current versions of the Embedded Software
and of Lamplighter(TM) Software are included in the Purchase Price for
the Spotlight Unit. Software Updates are available under the Software
Maintenance Program described in Exhibit H or for additional licensing
fees.
<PAGE>
SpotLight Multibeam Antenna Platform Site Acceptance Test Procedure
================================================================================
4. LIMITATIONS ON USE OF SOFTWARE
4.1 Without the prior written consent of Seller, Customer shall only use
the Software in conjunction with a single Spotlight Unit existing
within the site specified in the Purchase Order ("Designated Spotlight
Unit").
4.2 Customer may use the Software to perform the activities listed in
section 2.5 of Exhibit B and those activities available in future
enhancements or features. Under no condition shall the Software be
used for any other purpose, including, but not limited to, substituted
Spotlight Units, or Spotlight Units not owned by Customer, or Spotlight
Units located at a location other than the site specified in the
Purchase Order.
4.3 The License granted to Customer in Section 2 is personal and may not be
transferred to another Spotlight or site or another entity without the
written consent of Seller.
4.4 The Software is subject to laws protecting patents, trade secrets,
know-how, confidentiality and copyright.
4.5 Customer shall not translate, modify, adapt, decompile, disassemble, or
reverse engineer the Software or any portion thereof.
4.6 Unless otherwise expressly agreed by Seller, Customer shall not permit
its directors, officers, employees or any other person under its direct
or indirect control, to write, develop, produce, sell, or license any
software that performs the same functions as the Software by means
directly attributable to access to the Software (e.g. reverse
engineering or copying).
4.7 Customer shall not export the Software from the United States without
the written permission of Seller. If written permission is granted for
export of the Software, then Customer shall comply with all U.S. laws
and regulations for such exports and shall hold Seller harmless,
including legal fees and expenses for any violation or attempted
violation of the U.S. export laws.
4.8 Customer acknowledges that Seller owns the Software and that any rights
therein not specifically granted in this License are the exclusive
property of Seller.
5. RIGHT TO COPY, PROTECTION AND SECURITY
5.1 Software provided hereunder may be copied (for back-up purposes only)
in whole or in part, in printed or machine-readable form for Customer's
internal use only, provided, however, that no more than two (2) printed
copies and two (2) machine-readable copies shall be in existence at any
one time without the prior written consent of Seller, other than copies
electronically resident in the Spotlights.
5.2 With reference to any copyright notice of Seller associated with
Software, Customer agrees to include the same on all copies it makes in
whole or in part. Seller's copyright notice may appear in any of
several forms, including machine-readable form. Use of a copyright
notice on the Software does not imply that such has been published or
otherwise made generally available to the public.
<PAGE>
SpotLight Multibeam Antenna Platform Site Acceptance Test Procedure
================================================================================
5.3 Customer agrees to keep confidential, in accordance with the terms of
the Agreement or a non disclosure agreement signed by the parties, and
not provide or otherwise make available in any form any Software or its
contents, or any portion thereof, or any documentation pertaining to
the Software, to any person other than employees of Customer or Seller.
5.4 Software is the sole and exclusive property of Seller and no title or
ownership rights to the Software or any of its parts, including
documentation, is transferred to Customer.
5.5 Customer acknowledges that it is the responsibility of Customer to take
all reasonable measures to safeguard Software and to prevent its
unauthorized use or duplication.
6. REMEDIES
Customer acknowledges that violation of the terms of this Exhibit or the
Agreement shall cause Seller irreparable harm for which monetary damages may
be inadequate, and Customer agrees that Seller may, in addition to any other
legal or equitable remedy it may have, seek temporary or permanent injunctive
relief without the need to prove actual harm in order to protect Seller's
interests.
7. TERM
Unless otherwise terminated pursuant to Section 8 hereof, or in the event
that Customer is required to return the Software pursuant to section 8(b) of
the Purchase Agreement, the term of the license granted pursuant to Section 2
herein shall be perpetual.
8. TERMINATION
8.1 The license granted hereunder may be terminated by Customer upon one
(1) month's prior written notice.
8.2 Seller may terminate the license granted hereunder if Customer is in
material default of any of the terms and conditions of this Exhibit D
(Software License Agreement) , and such termination shall be effective
if Customer fails to correct such default within thirty (30) days
after written notice thereof by Seller. The provisions of Sections 4
and 5 herein shall survive termination of any such license.
8.3 Within one (1) month after termination of the license granted
hereunder, Customer shall furnish to Seller a document certifying that
through its best efforts and to the best of its knowledge, the
original and all copies in whole or in part of all Software, in any
form, including any copy in an updated work, have been returned to
Seller or destroyed. With prior written consent from Seller, Customer
may retain one (1) copy for archival purposes only.
9. RIGHTS OF THE PARTIES
9.1 Nothing contained herein shall be deemed to grant, either directly or
by implication, estoppel, or otherwise, any license under any patents,
patent applications or copyrights of Seller except as expressly
granted herein.
9.2 Rights in programs or operating systems of third parties, if any, are
further limited by their license agreements with such third parties,
which agreements are hereby
<PAGE>
SpotLight Multibeam Antenna Platform Site Acceptance Test Procedure
================================================================================
incorporated by reference thereto and made a part hereof as if fully
set forth herein. Customer agrees to abide thereby.
9.3 During the term of the license granted pursuant to Section 2 herein
and for a period of one (1) year after expiration or termination,
Seller, and where applicable, its licensor(s), or their
representatives may, upon prior notice to Customer, a) inspect the
files, computer processors, equipment, facilities and premises of
Customer during normal working hours to verify Customer's compliance
with this Agreement, and b) while conducting such inspection, copy
and/or retain all Software, including the medium on which it is stored
and all documentation that Customer may possess in violation of the
license or the Agreement.
9.4 Customer acknowledges that the provisions of this Exhibit E are
intended to inure to the benefit of Seller and its licensors and their
respective successors in interest. Customer acknowledges that Seller
or its licensors have the right to enforce these provisions against
Customer, whether in Seller's or its licensor's name.
10. LIMITATIONS ON SOFTWARE
Customer understands that errors occur in Software and Seller makes no
warranty that the Software will perform without error. Customer agrees that
it is Customer's responsibility to select and test the Software to
determine that is meets Customer's needs. Customer accepts the Software "as
is" subject to the warranty set forth in Section 5 of the Purchase
Agreement.
11. [***]
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<PAGE>
SpotLight Multibeam Antenna Platform Site Acceptance Test Procedure
================================================================================
12. ENTIRE UNDERSTANDING
12.1 This Exhibit D (Software License) is a part of, and is to be read
together with, the Agreement which contains additional terms and
conditions, warranties and indemnities applicable to the Software.
12.2 Notwithstanding anything to the contrary in other agreements,
purchase orders or order acknowledgments, the Agreement, the Software
specifications set forth in Exhibit B and this Exhibit D set forth
the entire understanding and obligations regarding use of Software,
implied or expressed.
<PAGE>
EXHIBIT E: SYSTEM ACCEPTANCE TEST PROCEDURE (ATP)
TO THE AGREEMENT
BETWEEN
METAWAVE COMMUNICATIONS CORP. ("SELLER")
AND
ALLTEL SUPPLY, INC. ("CUSTOMER")
Metawave Communications Corporation
8700 148th Avenue NE
Redmond, WA 98052 USA
Tel. 425 702-5600
Fax 425 702-5970
http://www.metawave.com
CONFIDENTIAL PROPRIETARY FINAL
- --------------------------------------------------------------------------------
This document and the information in it is the proprietary and confidential
information of Metawave Communications Corporation and is provided by Metawave
under an agreement of nondisclosure to the Customer for internal evaluation
purposes only and is protected by applicable copyright and trade secret law.
This document may only be disclosed or disseminated to those employees of the
Customer who have a need to use it for evaluation purposes; no other use or
disclosure can be made by Customer without Metawave's consent.
(c)1998, Metawave Communications Corporation
CONFIDENTIAL PROPRIETARY
- --------------------------------------------------------------------------------
<PAGE>
SpotLight Multibeam Antenna Platform Site Acceptance Test Procedure
================================================================================
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
1. Introduction ERROR! BOOKMARK NOT DEFINED.
2. System (ATP)......................................................................................... 3
2.1. Network Planning Phase..................................................................... 3
2.2. Baseline Performance Collection Phase...................................................... 5
2.3. SpotLight Installation and Site ATP Phase.................................................. 7
2.4. SpotLight Network Optimization Phase....................................................... 7
2.5 SpotLight Performance Collection, Evaluation and Sign-off Phase................................. 8
</TABLE>
<PAGE>
SpotLight Multibeam Antenna Platform Site Acceptance Test Procedure
================================================================================
SPECTRUM CLEARING SYSTEM ATP
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[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
EXHIBIT F: SPOTLIGHT IMPLEMENTATION, INSTALLATION AND SITE COMMISSIONING
TO THE PURCHASE AGREEMENT
BETWEEN
("SELLER")
AND
("CUSTOMER")
Metawave Communications Corporation
8700 148/th/ Avenue NE
Redmond, WA 98052 USA
Tel. 425 702-5600
Fax 425 702-5970
http://www.metawave.com
- --------------------------------------------------------------------------------
This document and the information in it is the proprietary and confidential
information of Metawave Communications Corporation and is provided by Metawave
under an agreement of nondisclosure to the Customer for internal evaluation
purposes only and is protected by applicable copyright and trade secret law.
This document may only be disclosed or disseminated to those employees of the
Customer who have a need to use it for evaluation purposes; no other use or
disclosure can be made by Customer without Metawave's consent.
(c)1997, Metawave Communications Corporation
CONFIDENTIAL PROPRIETARY
- --------------------------------------------------------------------------------
FINAL
<PAGE>
Implementation, Installation and Commissioning
============================================================================
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Scope........................................................... 3
2. Commencement of Work............................................ 3
3. Schedule A: Implementation Engineering.......................... 3
4. Schedule B: Cell Site Installation.............................. 4
5. Schedule C: Site Commissioning.................................. 5
6. Acceptance Test Procedure (ATP)................................. 5
7. Customer Responsibilities....................................... 5
8. Invoices & Payment.............................................. 6
9. Right to Subcontract............................................ 6
10. Supervision..................................................... 6
11. Extra Work...................................................... 7
12. Special Transportation.......................................... 7
</TABLE>
<PAGE>
Implementation, Installation and Commissioning
================================================================================
SPOTLIGHT IMPLEMENTATION, INSTALLATION AND SITE
COMMISSIONING
For purposes of uniformity and brevity, references to Agreement or to an Exhibit
shall refer to the Products and Services Purchase Agreement to which this
document is Exhibit F and to the other Exhibits to that Agreement. All
definitions set forth in the Agreement shall apply hereto.
1. SCOPE
1.1 THIS EXHIBIT INCLUDES A DESCRIPTION OF THE ENGINEERING SERVICES
REQUIRED TO PLACE A SPOTLIGHT PLATFORM INTO COMMERCIAL SERVICE:
. Schedule A: Implementation
. Schedule B: Installation
. Schedule C: Site Commissioning
1.2 CUSTOMER AGREES TO ACCEPT SCHEDULES A, B AND C ACCORDING TO THE TERMS
AND CONDITIONS OF THIS EXHIBIT AND TO PAY TO METAWAVE THE PRICES SET
FORTH IN EXHIBIT A FOR SUCH SERVICES.
2. COMMENCEMENT OF WORK
2.1 IMPLEMENTATION ENGINEERING SHALL COMMENCE IN ACCORDANCE WITH THE
PROJECT SCHEDULE AS SET FORTH IN A PURCHASE ORDER.
2.2 INSTALLATION AND COMMISSIONING SHALL COMMENCE WITHIN A REASONABLE TIME
AFTER ARRIVAL OF THE PRODUCTS AT THE SITE AND IN ACCORDANCE WITH THE
PROJECT SCHEDULE AS SET FORTH IN A PURCHASE ORDER.
3. SCHEDULE A: IMPLEMENTATION ENGINEERING
3.1 SITE APPRAISAL AND INSTALLATION ANALYSIS
In accordance with the project schedule as set forth in a Purchase
Order, Metawave and Customer shall conduct a site walk to appraise
the Site and perform an installation analysis. The information
gathered at the site walk will be used to develop a Scope of Work.
The following information is examined and recorded during a Site
walk:
. dimensions of cell site and available space,
. primary power availability and distribution,
. Customer supplied equipment,
. number of channels,
<PAGE>
Implementation, Installation and Commissioning
================================================================================
. current antenna configuration,
. current system traffic statistics.
3.2 SCOPE OF WORK
Seller shall prepare a Scope of Work (SOW) document from the
information collected during the Site walk. The SOW, shall be
mutually agreed upon by both Seller and Customer. The SOW document
will contain the materials and resources required from Seller and
Customer to perform the installation and shall contain the Network
Plan required to complete the commissioning of each cell site.
4. SCHEDULE B: CELL SITE INSTALLATION
4.1 ALL INSTALLATION WILL BE PERFORMED IN ACCORDANCE WITH THE INSTRUCTIONS
AND TECHNIQUES AS DESCRIBED IN THE SERVICE MANUALS SUPPLIED WITH THE
EQUIPMENT.
4.2 UPON THE COMPLETION OF THE CELL SITE INSTALLATION(S), METAWAVE WILL
PROVIDE THE FOLLOWING DOCUMENTATION FOR EACH CELL SITE:
. Site Walk with documentation,
. Scope of Work (SOW),
. Floor plan,
. SpotLight-to-HDII Channel Mapping documentation,
. LampLighter Settings document,
. Antenna Sweep records,
. Installation Verification Test Data sheets,
. Configuration and Integration Test Data sheets,
. Link Budget spread sheet/Tx Path Attenuator Calculations,
. Sig/Scan Installation diagram.
4.3 INSTALLATION TEST SCHEDULE (REFER TO SPOTLIGHT SYSTEMS MANUAL,
CHAPTERS 7 AND 8)
[***]
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
Implementation, Installation and Commissioning
================================================================================
5. SCHEDULE C: Site Commissioning
UPON COMPLETION OF THE SPOTLIGHT INSTALLATION, METAWAVE WILL INFORM
CUSTOMER THAT SPOTLIGHT IS READY FOR COMMISSIONING (BASED ON THE
NETWORK PLAN IN THE SOW). COMMISSIONING INCLUDES THE FOLLOWING
ACTIVITIES:
[***]
6. ACCEPTANCE TEST PROCEDURE (ATP)
Within 24 hours after Seller has advised Customer that installation and
commissioning are complete, Customer shall furnish representative to witness the
Acceptance Test Procedure (ATP) as set forth in Exhibit C (Acceptance Test
Procedure). The representatives shall then be available on a continuous basis
to witness the ATP.
7. CUSTOMER RESPONSIBILITIES
7.1 ANY CHANGES TO THE SOW MUST BE MUTUALLY AGREED UPON BY BOTH SELLER AND
CUSTOMER, IN WRITING, AND SHALL BECOME AN ATTACHMENT TO THE PURCHASE
AGREEMENT.
7.2 CUSTOMER IS RESPONSIBLE FOR OBTAINING ANY REQUIRED OPERATING AUTHORITY
AND ALL REQUIRED APPROVALS AND PERMITS TO INSTALL AND OPERATE THE
WIRELESS NETWORK.
7.3 INFORMATION, DOCUMENTATION, FACILITIES AND SERVICES UNDER CUSTOMER'S
CONTROL OR REASONABLY OBTAINABLE BY CUSTOMER SHALL BE FURNISHED BY
CUSTOMER IN A TIMELY MANNER IN ORDER TO FACILITATE THE ORDERLY
PROGRESS OF THE WORK. INCLUDED, WITHOUT IMPLIED LIMITATION, SHALL BE:
ACCESS AND RIGHT OF ENTRY TO ALL SITES; REGULATORY FILING
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
Implementation, Installation and Commissioning
================================================================================
INFORMATION; FLOOR PLANS; AND ANY SUPPORTING DOCUMENTS WHICH MAY
AFFECT SITE ENGINEERING OR INSTALLATION ANALYSIS.
7.4 IN THE EVENT THAT CUSTOMER HAS NOT MADE PERMANENT SITES AVAILABLE TO
RECEIVE THE EQUIPMENT BY THE SITE AVAILABILITY DATE AS SET FORTH IN
THE SOW, METAWAVE, AT ITS OPTION, MAY SHIP THE EQUIPMENT TO A
WAREHOUSE IN OR NEAR THE SITE, AND CUSTOMER SHALL BEAR THE COSTS OF
INSURANCE, WAREHOUSING, RELOADING, TRANSPORTING, OFF-LOADING AND
MOVING THE EQUIPMENT ONTO THE PERMANENT SITE WHEN SUCH SITE BECOMES
AVAILABLE AS WELL AS BEAR THE RESPONSIBILITY FOR SAFEKEEPING AND
WAREHOUSING OF THE EQUIPMENT IN ENVIRONMENTAL CONDITIONS AS SET OUT IN
THE SPECIFICATIONS.
7.5 CUSTOMER SHALL MAKE EACH SITE AVAILABLE TO SELLER FOR WORK 24 HOURS
PER DAY, SEVEN DAYS PER WEEK. SITE ACCESS INCLUDES PROVIDING METAWAVE
WITH KEYS, PASS CODES, SECURITY CLEARANCES, ESCORT, ETC., NECESSARY TO
GAIN ENTRANCE TO AND EXIT FROM THE WORK AREA. WAIVER OF LIABILITY OR
OTHER RESTRICTIONS SHALL NOT BE IMPOSED AS A SITE ACCESS REQUIREMENT.
7.6 CUSTOMER IS AT ALL TIMES RESPONSIBLE FOR MAINTAINING PROPER
ENVIRONMENTAL CONDITIONS AT EACH SITE. TEMPERATURE, HUMIDITY, DUST,
ETC., SHALL BE MONITORED AND CONTROLLED WITHIN THE RECOMMENDED RANGES
SET FORTH IN THE EQUIPMENT SPECIFICATIONS.
7.7 CUSTOMER IS RESPONSIBLE FOR TOWER SPECIFICATIONS FOR THE LOADING OF
THE SPOTLIGHT ANTENNAS AND TRANSMISSION LINES.
7.8 ALL CUSTOMER-PROVIDED CABLES AND WIRING SHALL BE RUN TO THE IMMEDIATE
AREA OF THE METAWAVE-SUPPLIED EQUIPMENT.
7.9 CUSTOMER SHALL GROUND SELLER EQUIPMENT AND PROVIDE LIGHTING PROTECTION
FOR THE RF SYSTEM.
7.10 CUSTOMER SHALL PROVIDE SELLER WITH THE HARDWARE REVISION AND SOFTWARE
LOAD OF EACH BASE STATION THAT SELLER'S PRODUCTS ARE TO BE INTERFACED
TO.
7.11 CUSTOMER SHALL PROVIDE, AT SELLER'S REQUEST AND IN A TIMELY FASHION,
DATABASE INFORMATION, INCLUDING BUT NOT LIMITED TO, NETWORK STATISTICS
AND FREQUENCY INFORMATION BEFORE AND AFTER THE INSTALLATION OF
SELLER'S PRODUCTS.
8. INVOICES & PAYMENT
Invoices and payment for implementation, installation and commissioning shall be
made in accordance with the Agreement.
9. RIGHT TO SUBCONTRACT
Seller shall have the right to subcontract the implementation, installation
and commissioning work in whole or in part.
<PAGE>
Implementation, Installation and Commissioning
================================================================================
10. SUPERVISION
Seller shall appoint a Program Manager to supervise the implementation,
installation and commissioning of the Products. Customer shall appoint a
Program Manager who shall have authority to make changes that may be
required during the performance of such services.
11. EXTRA WORK
Extra work to be performed by Seller not specified in this Exhibit but
required to complete installation or commissioning shall be authorized in
writing by Customer prior to the commencement of such work. If mutually
agreed-upon, such work shall be performed by Seller at its then prevailing
rates.
12. SPECIAL TRANSPORTATION
Special transportation required to gain access to a Site shall be supplied
by Customer. Seller shall, if directed in writing, furnish the special
transportation and invoice Customer for such services.
<PAGE>
EXHIBIT G
TO THE PURCHASE AGREEMENT
BETWEEN
SELLER
AND
CUSTOMER
TRAINING
--------
For purposes of uniformity and brevity, references to Purchase Agreement
("Agreement") or to an Exhibit shall refer to that Agreement to which this
document is Exhibit G and to the other Exhibits to that Agreement. All
definitions set forth in the Agreement shall apply hereto.
1. OVERVIEW
Seller's sponsored courses include the SpotLight System Maintenance and
Operations course as described below. The SpotLight System Maintenance and
Operation course is offered at Seller's offices in Redmond, WA [***]. Upon
Customer's request, Seller will provide the SpotLight System Maintenance
and Operation course at a location chosen by Customer. In the event that
Seller provides the training at a Customer chosen location, Customer will
pay the instructor's airfare, per diem expenses and any and all equipment
shipping charges to provide the class at Customer's chosen location.
Metawave training courses are copyrighted by Metawave Communications
Corporation. No reproduction rights for these training courses will be
granted. Metawave reserves the right to change courses without notifying
Customer beforehand.
2. SPOTLIGHT SYSTEM MAINTENANCE AND OPERATION COURSE OBJECTIVE
SpotLight System Maintenance and Operation is a one day course designed for
Cellular Technicians, and assumes no prior background with Smart Antenna
systems. At the successful completion of this course, technicians will be
certified by Seller to maintain, troubleshoot, and replace Field
Replaceable Units (FRU) as needed to sustain site operation. The technician
will also become familiar with the LampLighter user interface, and be able
to configure and monitor SMUs (Spectrum Management Units) either on-site or
remotely, view system performance statistics, and perform SpotLight system
verification. Upon completion of the course, all students will receive a
SpotLight System Manual, a LampLighter User Guide, copies of the
presentation materials as site reference material and a course certificate
of completion.
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
EXHIBIT H: PRODUCT MAINTENANCE PROGRAM
TO THE PURCHASE AGREEMENT
BETWEEN
METAWAVE COMMUNICATIONS CORP. ("SELLER")
AND
ALLTEL SUPPLY, INC. ("CUSTOMER")
Metawave Communications Corporation
8700 148th Avenue NE
Redmond, WA 98052 USA
Tel. 425 702-5600
Fax 425 702-5970
http://www.metawave.com
- --------------------------------------------------------------------------------
This document and the information in it is the proprietary and confidential
information of Metawave Communications Corporation and is provided by
Metawave under an agreement of nondisclosure to the Customer for internal
evaluation purposes only and is protected by applicable copyright and trade
secret law. This document may only be disclosed or disseminated to those
employees of the Customer who have a need to use it for evaluation
purposes; no other use or disclosure can be made by Customer without
Metawave's consent.
1998, Metawave Communications Corporation
CONFIDENTIAL PROPRIETARY
- --------------------------------------------------------------------------------
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
PRODUCT MAINTENANCE PROGRAM
1. Introduction
Seller's product maintenance program includes both a Hardware Maintenance
Program (HMP) and a Software Maintenance Program (SMP). This document
describes each of the two programs.
2. Hardware Maintenance Program (HMP)
Seller repairs its Product(s) down to the Field Replaceable Unit (FRU)
(refer to Exhibit A for the most current list of FRUs). In this Exhibit H,
the term hardware refers to the non-Software components making up a FRU.
The following describes Seller's Hardware Maintenance Program ("HMP"):
2.1 Term
2.1.1 SELLER'S HMP IS INCLUDED IN THE PURCHASE PRICE OF EACH PRODUCT
PURCHASED BY CUSTOMER AND SHALL EXTEND THROUGHOUT THE DURATION
OF THE WARRANTY PERIOD, AS SET FORTH IN THE WARRANTY SECTION OF
THE AGREEMENT (THE "INITIAL HMP"). HARDWARE REPAIR SERVICES
ARE MADE AVAILABLE TO CUSTOMER FOR A PERIOD OF [***] FROM THE
DATE PRODUCT IS SHIPPED FROM SELLER'S FACTORY TO CUSTOMER.
FOLLOWING THE EXPIRATION OF THE INITIAL HMP, CUSTOMER HAS A
CHOICE OF (I) SUBSCRIBING TO SELLER'S HMP ON AN ANNUAL BASIS
PURSUANT TO THE TERMS HEREIN AND AT THE HMP FEES SET FORTH IN
EXHIBIT A ("EXTENDED HMP") FOR THE DURATION OF THE TERM OF THE
AGREEMENT AND THEREAFTER AT SELLER'S THEN CURRENT HMP FEES, OR
(II) HAVING THE PRODUCT REPAIRED ON A TIME-AND-MATERIALS BASIS
AT THE REPAIR RATES LISTED IN ANNEX A, SECTION F FOR THE
DURATION OF THE TERM OF THE AGREEMENT AND THEREAFTER AT
SELLER'S THEN CURRENT REPAIR RATE.
2.2 Seller shall:
2.2.1 IN THE EVENT A DEFECT OCCURS, EITHER (I) REPAIR THE DEFECTIVE
FRU OR (II) REPLACE SAID FRU WITH A NEW OR REFURBISHED FRU. ANY
ITEM REPLACED WILL BE DEEMED TO BE ON AN EXCHANGE BASIS, AND
ANY ITEM RETAINED BY SELLER THROUGH REPLACEMENT WILL BECOME THE
PROPERTY OF SELLER.
2.2.2 FRUs THAT HAVE BEEN REPAIRED OR REPLACED WILL BE WARRANTED FOR
A PERIOD OF TIME WHICH IS THE LONGER OF (I) [***] FROM THE DATE
OF SHIPMENT OF FRU TO CUSTOMER OR (II) [***].
2.2.3 [***] OF RECEIPT OF A DEFECTIVE FRU FROM CUSTOMER, SHIP A
REPAIRED OR REPLACEMENT FRU TO CUSTOMER. EQUIPMENT NOT
MANUFACTURED BY SELLER WILL BE REPAIRED OR REPLACED AS PROMPTLY
AS ARRANGEMENTS WITH THE MANUFACTURERS OR VENDORS THEREOF
PERMIT.
2.2.4 ISSUE A RETURN MATERIAL AUTHORIZATION ("RMA") NUMBER TO
CUSTOMER PRIOR TO CUSTOMER'S RETURN OF THE DEFECTIVE FRU.
2.2.5 PAY ALL TRANSPORTATION CHARGES FOR THE RETURN OF THE REPAIRED
OR REPLACEMENT FRU TO CUSTOMER.
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
2.2.6 PROVIDE TELEPHONE TECHNICAL SUPPORT 24 HOURS A DAY, 7 DAYS A
WEEK WITH A TELEPHONE CALL-BACK RESPONSE TIME TO CUSTOMER NOT
TO EXCEED ONE HOUR FROM CUSTOMER'S CALL TO CUSTOMER SUPPORT.
2.3 Customer shall:
2.3.1 CONTACT SELLER VIA TELEPHONE, E-MAIL OR FAX TO OBTAIN AN RMA
PRIOR TO RETURNING A DEFECTIVE FRU.
2.3.2 PACKAGE FRU IN A MANNER TO PREVENT DAMAGE DURING SHIPMENT AND
CLEARLY IDENTIFY RMA NUMBER ON OUTSIDE OF PACKAGE.
2.3.3 SHIP THE DEFECTIVE FRU TO THE ADDRESS SHOWN IN ANNEX A TO THIS
EXHIBIT.
2.3.4 PAY ALL COSTS OF TRANSPORTATION FOR SENDING THE DEFECTIVE FRU
TO SELLER.
2.3.5 IF SELLER HAS SHIPPED A REPLACEMENT FRU IN ADVANCE OF CUSTOMER
RETURNING A DEFECTIVE FRU TO SELLER, CUSTOMER AGREES TO INSURE
AND PROVIDE CONFIRMATION OF SHIPMENT OF SUCH DEFECTIVE FRU,
FREIGHT PREPAID, TO SELLER (AT ADDRESS SHOWN IN ANNEX A TO THIS
EXHIBIT) WITHIN 5 DAYS OF SELLER'S SHIPMENT OF REPLACEMENT FRU.
CUSTOMER AGREES TO PROMPTLY PAY SELLER'S INVOICE FOR THE
REPLACEMENT FRU (BILLED AT THE THEN CURRENT FRU PRICE) SHIPPED
TO CUSTOMER IF THE DEFECTIVE FRU IS NOT RETURNED TO SELLER
WITHIN THE SPECIFIED 5 DAY PERIOD.
2.3.6 BE RESPONSIBLE FOR THE INITIAL IDENTIFICATION OF PRODUCT
PROBLEMS DOWN TO THE FRU LEVEL AND FOR THE REMOVAL, SHIPMENT
AND RE-INSTALLATION OF THE MALFUNCTIONING FRU.
2.4 On-Site Repair
On-Site Repair can be performed at an additional charge. Such
charge will be quoted to Customer and agreed upon in writing before
dispatch of personnel.
2.5 Service Limitations
2.5.1 SELLER SHALL HAVE NO RESPONSIBILITY TO REPAIR OR REPLACE FRUS
WHICH HAVE BEEN REPAIRED IN AN UNAUTHORIZED MANNER OR WHICH
HAVE HAD THE BARCODE, SERIAL NUMBER, OR OTHER IDENTIFYING MARK
MODIFIED, REMOVED OR OBLITERATED THROUGH ACTION OR INACTION OF
CUSTOMER.
2.5.2 IN THE EVENT THAT CUSTOMER SENDS A FRU TO SELLER FOR WHICH NO
DEFECTS OR FAILURES CAN BE FOUND, SELLER MAY INVOICE CUSTOMER
AT THE THEN CURRENT FEE FOR THE SERVICES RENDERED DURING THE
EVALUATION PROCESS.
3. Software Maintenance Program (SMP)
The following describes Seller's SMP:
3.1 Definitions
Terms which are capitalized have the meanings set forth below or,
absent definition herein, as contained in the Agreement.
Feature an innovation or performance improvement to
Software that is made available to all users of
the current Software release. Features are
licensed to Customer individually and may be at
additional cost.
<PAGE>
Major Release indicates a new version of Software that adds new
Features (excluding Optional Features) or major
enhancements to the currently existing release of
Software.
Point Release indicates a modification to Software resulting
from planned revisions to the current release, or
corrections and/or fixes to the current release
of Software.
Software Patch Software that corrects or removes a reproducible
anomaly or "bug" in an existing Major Release.
3.2 Term
3.2.1 SELLER'S SMP IS INCLUDED IN THE PURCHASE PRICE OF EACH PRODUCT
PURCHASED BY CUSTOMER AND SHALL EXTEND THROUGHOUT THE DURATION
OF THE WARRANTY PERIOD, AS SET FORTH IN THE WARRANTY SECTION OF
THE AGREEMENT (THE "INITIAL SMP TERM"). THEREAFTER, SMP IS
PROVIDED BY SELLER TO CUSTOMER PURSUANT TO THE TERMS HEREIN AND
IS INCLUDED IN THE SMP FEES SET FORTH IN EXHIBIT A FOR A PERIOD
OF 12 MONTHS. ANY SOFTWARE PROVIDED TO CUSTOMER DURING THE TERM
OF THE SMP WILL BE PROVIDED PURSUANT TO SELLER'S SOFTWARE
LICENSE AS SET FORTH IN THE SOFTWARE LICENSE EXHIBIT OF THE
PURCHASE AGREEMENT.
3.3 Scope
3.3.1 DURING THE TERM OF SMP, ALL MAJOR RELEASES, POINT RELEASES,
SOFTWARE PATCHES AND STANDARD FEATURES MADE GENERALLY AVAILABLE
BY SELLER SHALL BE AVAILABLE TO CUSTOMER AT NO ADDITIONAL
CHARGE. CUSTOMER SHALL INSTALL SUCH SOFTWARE PROMPTLY UPON
RECEIPT.
3.3.2 OPTIONAL FEATURES AND CERTAIN SIGNIFICANT ENHANCEMENTS SHALL BE
MADE AVAILABLE TO CUSTOMER AT AN ADDITIONAL CHARGE. [***]
3.3.3 CERTAIN OPTIONAL FEATURES SHALL BE SOLD ON A PER-UNIT BASIS AND
MAY HAVE PRICE LEVELS THAT REFLECT UNIT CAPACITY.
3.3.4 CUSTOMER WILL BE RESPONSIBLE FOR PROBLEM IDENTIFICATION OF
REPRODUCIBLE SOFTWARE MALFUNCTIONS. IN THE EVENT OF ANY SUCH
SOFTWARE MALFUNCTION, CUSTOMER SHALL NOTIFY SELLER PROMPTLY OF
THE FAILURE
3.3.5 SELLER SHALL PROVIDE, AT A SELLER AUTHORIZED REPAIR DEPOT, SUCH
THROUGH CALLING SELLER'S CUSTOMER SUPPORT.
SERVICE AS IS NECESSARY TO CORRECT SOFTWARE DEFECTS IN
ACCORDANCE WITH THE APPLICABLE DOCUMENTATION. SUCH SERVICE WILL
BE PROVIDED BY SELLER SEVERITY OF THE PROBLEM.
3.3.6 AS SOON AS IS POSSIBLE AND ON A PRIORITY BASIS ACCORDING TO THE
SELLER SHALL PROVIDE TELEPHONE TECHNICAL SUPPORT 24-HOUR A DAY,
7 DAYS A WEEK WITH A TELEPHONE CALL-BACK RESPONSE TIME TO
CUSTOMER NOT TO EXCEED ONE HOUR FROM CUSTOMER'S CALL TO
CUSTOMER SUPPORT. ADDITIONALLY, SELLER SHALL PROVIDE TELEPHONE
ASSISTANCE AND GUIDANCE DURING THE INSTALLATION OF NEW
SOFTWARE.
3.3.7 SELLER SHALL SUPPORT THE CURRENT MAJOR RELEASE AND ASSOCIATED
POINT RELEASES AND FEATURES AS WELL AS THE IMMEDIATELY
PRECEDING MAJOR RELEASE AND ASSOCIATED POINT RELEASES AND
FEATURES.
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
<PAGE>
3.3.8 SELLER SHALL HAVE NO OBLIGATION TO SUPPORT ANY SOFTWARE WHICH
IS OLDER THAN THE IMMEDIATELY PRECEDING MAJOR RELEASE. HOWEVER,
ANY SUPPORT PROVIDED BY SELLER FOR SOFTWARE OLDER THAN THE
IMMEDIATELY PRECEDING MAJOR RELEASE AND ASSOCIATED POINT
RELEASES AND FEATURES SHALL BE ON A TIME AND MATERIAL BASIS. AN
OPEN PURCHASE ORDER WILL BE REQUIRED BEFORE ANY SUCH SERVICES
ARE RENDERED.
3.3.9 SELLER SHALL PERFORM ITS SERVICES HEREUNDER IN A GOOD
WORKMANLIKE MANNER AND IN ACCORDANCE WITH INDUSTRY STANDARDS
WHERE APPLICABLE.
<PAGE>
ANNEX A: PROCEDURES FOR METAWAVE'S HARDWARE
MAINTENANCE PROGRAM
A. METAWAVE'S CUSTOMER SUPPORT
Customer Support can be reached by call the following numbers:
Domestic phone: 888-642-2455
International phone: 425-702-6550
B. RETURN MATERIAL AUTHORIZATION (RMA):
Customer must contact Customer Support via telephone, e-mail or fax to
obtain a Return Material Authorization (RMA) number. Seller may return
shipments without a RMA number to the Customer unrepaired and at
Customer's cost.
The RMA number must be clearly written on the outside of the package.
A RMA number will not be issued until a purchase order is provided for
the repair price for those items not covered under warranty.
C. RETURN ADDRESS:
All Field Replaceable Units (FRUs) must be shipped to:
Metawave Communications Corporation
8700 148th Avenue N.E.
Redmond, WA 98052 USA
D. PACKING INSTRUCTIONS:
Customer must pack all returned equipment in a manner no less
protective to such equipment than the manner in which Seller packages
similar equipment.
E. REPAIR PURCHASE ORDERS:
Repair purchase orders are required in the following instances:
1. When Customer requests Emergency Expedite Service.
2. When Customer returns our of warranty FRUs for repair.
3. When Seller sends pre-exchange FRU to Customer prior to the
defective FRU being received by Seller.
Under these circumstances, a facsimile copy of the purchase order may
be transmitted to be followed up by a confirming hard copy in the
mail. The terms and conditions of the Agreement between Seller and
the Customer shall prevail notwithstanding any variance with the terms
and conditions of any purchase orders submitted by Customer.
<PAGE>
F. PRICING AND INVOICING:
Emergency Expedite Request (Under Initial HMP or Extended HMP):
---------------------------------------------------------------
Seller does not charge an Emergency Expedite Fee for FRUs covered
under the Initial HMP or Extended HMP..
Emergency Expedite Request (Under Time-and -Materials):
------------------------------------------------------
Seller charges an Emergency Expedite Fee of $300 per FRU (plus the
standard time-and-materials repair rates shown below) plus freight for
emergency service for FRUs not covered under the Initial HMP or
Extended HMP.
Repair and Return Shipment of FRUs (Under Initial HMP or Extended
----------------- -----------------------------------------------
HMP):
---
Seller does not charge for the repair or return shipment of FRUs
covered under the Initial or Extended HMP.
Time-and-Material Repair Services (not covered under Initial HMP or
-------------------------------------------------------------------
Extended HMP):
-------------
All repairs not covered under either the Initial HMP or Extended HMP
will be calculated on a time-and-materials basis at $100 for the first
hour and $50 per hour for each additional hour thereafter. If the
estimated cost to repair the defective FRU exceeds 50% of the price of
a new FRU, Seller will call Customer to inform them prior to repairing
defective FRU.
Loaner Fees:
-----------
Seller charges a loaner fee, not to exceed $200 per FRU, when Customer
requests a loaner FRU in support of FRUs not covered under either
Initial HMP or Extended HMP.
Invoices:
--------
Invoices are payable in accordance with the terms of the Agreement
between Seller and Customer.
G. EMERGENCY EXPEDITE SERVICE:
Within 24 hours of notification from Customer of an Emergency, Seller
will ship a replacement FRU. Customer must either provide Seller with
a new repair purchase order (a facsimile copy of the purchase order
may be transmitted to be followed up by a confirming hard copy in the
mail) or have already provided Seller with a blanket purchase order if
an out of warranty item (s).
H FREIGHT:
Initial HMP or Extended HMP:
----------------------------
Customer shall ship the FRU to Seller on a prepaid basis and Seller
will return the FRU to Customer on a prepaid basis, not billing
Customer for return freight.
Repair Services on a Time-and-Material basis:
--------------------------------------------
Customer shall ship the FRU to Seller on a prepaid basis and Seller
will prepay and invoice Customer for return freight.
I. DUTIES AND TAXES:
All duties, customs clearance fees and any and all taxes will be the
responsibility of the Customer.
<PAGE>
J. NON-COMPLIANCE:
Failure to comply with any of the procedures may result in delay or
non-delivery of the FRUs.
K. CONFLICTING TERMS:
In the event that the terms contained herein conflict with the terms
of the Agreement between Seller and Customer, the terms of the
Agreement shall govern.
<PAGE>
EXHIBIT 10.10
LOAN AGREEMENT
THIS LOAN AGREEMENT is entered into as of October 14, 1997 (this "Loan
Agreement") between METAWAVE COMMUNICATIONS CORPORATION, a Delaware corporation
(herein called "Borrower"), and IMPERIAL BANK (herein called "Bank").
1. COMMITMENT.
A. FACILITY-A COMMITMENT. Subject to all the terms and conditions
of this Loan Agreement and prior to the termination of its commitment as
hereinafter provided, Bank hereby agrees to make loans (each a "Facility-A
Loan") to Borrower, from time to time and in such amounts as Borrower shall
request pursuant to this SECTION 1.A., up to an aggregate principal amount
outstanding under the Facility-A Loan Account (as hereinafter defined) not to
exceed the least of: (a) Eighty percent (80%) of Eligible Accounts (the
"Borrowing Base") or (b) $5,000,000.00 (the "Facility-A Commitment"). If at any
time or for any reason, the outstanding principal amount of the Facility-A Loan
Account is greater than the least of: (x) the Borrowing Base or (y) the
Facility-A Commitment, Borrower shall immediately pay to Bank, in cash, the
amount of such excess. Any commitment of Bank, pursuant to the terms of this
Loan Agreement, to make Facility-A Loans shall expire on the Facility-A Maturity
Date (as hereinafter defined), subject to Bank's right to renew said commitment
in its sole and absolute discretion at Borrower's request. Any such renewal of
said commitment shall not be binding upon Bank unless it is in writing and
signed by an officer of Bank. Provided that no Event of Default (as hereinafter
defined) has occurred and is continuing, all or any portion of the Facility-A
Loans advanced by Bank which are repaid by Borrower shall be available for
reborrowing in accordance with the terms hereof. Borrower promises to pay to
Bank the entire outstanding unpaid principal balance (and all accrued unpaid
interest thereon) of the Facility-A Loan Account on October 14, 1999 ("Facility-
A Maturity Date").
(1) FACILITY-A LOANS. The amount of each Facility-A Loan made by
Bank to Borrower hereunder shall be debited to the loan ledger account of
Borrower maintained by Bank for the Facility-A Commitment (herein called the
"Facility-A Loan Account") and Bank shall credit the Facility-A Loan Account
with all loan repayments in respect thereof made by Borrower. When Borrower
desires to obtain a Facility-A Loan, Borrower shall notify Bank (which notice
shall be signed by an officer of Borrower and shall be irrevocable) in
accordance with SECTION 2 hereof, to be received no later than 3:00 p.m. Pacific
time one (1) Banking Day (as hereinafter defined) before the day on which the
Facility-A Loan is to be made. Facility-A Loans may only be used for working
capital purposes and the issuance of letters of credits.
(a) LETTER OF CREDIT USAGE AND SUBLIMIT. Subject to the
availability of the Facility-A Commitment and in reliance on the representations
and warranties of Borrower set forth herein, at any time and from time to time
from the date hereof through the Banking Day immediately prior to the Facility-A
Maturity Date, Bank shall issue for the account of Borrower such standby and
commercial letters of credit ("Letters of Credit") as Borrower may request,
which request shall be made by delivering to Bank a duly executed letter of
credit application on Bank's standard form; provided, however, that the
outstanding and undrawn amounts under all such Letters of Credit (i) shall not
at any time exceed $3,000,000.00 and (ii) shall be deemed to constitute
Facility-A Loans for the purpose of calculating availability under the
Facility-A Commitment. Unless Borrower shall have deposited with Bank cash
collateral in an amount sufficient to cover all undrawn amounts under each such
Letter of Credit and Bank shall have agreed in writing, no Letter of Credit
shall have an expiration date that is later than the Facility-A Maturity Date.
All Letters of Credit shall be in form and substance acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank's
application and letter of credit agreement, in the form of EXHIBIT B attached
hereto and incorporated herein by this reference. Borrower will pay any standard
issuance and other fees that Bank notifies Borrower will be charged for issuing
and processing Letters of Credit for Borrower.
(2) LIMITATION ON ADVANCE OF ANY FACILITY-A LOAN.
Notwithstanding any of the provisions contained in SECTION 1.A hereof, prior to
any advance of a Facility-A Loan, a representative of Bank shall have conducted
an audit of Borrower's books and records relating to the Collateral and made
extracts therefrom, and arranged for verification of the Accounts, directly with
the account debtors or otherwise, all with results reasonably satisfactory to
Bank, the cost of such audit of which shall be at Borrower's sole expense. Based
on Bank's review of such audit, and prior to the advance of a
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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Facility-A Loan in accordance with the terms of SECTION 1.A hereof, Bank may
adjust the Borrowing Base percentage, in its sole and reasonable discretion, as
provided for under SECTION 9.B. hereof.
(3) NON-FORMULA AVAILABILITY. Provided that no Event of Default
has occurred and is continuing, and subject to the availability of the Facility-
A Commitment and in reliance on the representations and warranties of Borrower
set forth herein, at any time from the date hereof through April 30, 1998, Bank
hereby agrees to make Facility-A Loans to Borrower in such amounts as Borrower
shall request pursuant to this SECTION 1.A.(3), in an aggregate principal amount
not to exceed $2,500,000.00 (the "Non-Formula Availability"); provided, however,
that the outstanding amounts under this Non-Formula Availability shall be deemed
to constitute Facility-A Loans for the purpose of calculating availability under
the Facility-A Commitment.
(4) INTEREST PAYMENTS ON FACILITY-A LOANS. Borrower further
promises to pay to Bank from the date of the advance of the initial Facility-A
Loan through the Facility-A Maturity Date, on or before the tenth (10th) day of
each month, interest on the average daily unpaid balance of the Facility-A Loan
Account during the immediately preceding month at a rate of interest equal to
the rate of interest per annum which Bank has announced as its prime lending
rate (the "Prime Rate"), which shall vary concurrently with any change in the
Prime Rate. Interest shall be computed at the above rate on the basis of the
actual number of days during which the principal balance of the Facility-A Loan
Account is outstanding divided by 360, which shall for interest computation
purposes be considered one (1) year.
2. LOAN REQUESTS. Requests for Loans hereunder shall be in writing duly
executed by Borrower in the form of EXHIBIT C attached hereto and incorporated
herein by this reference and shall contain a certification setting forth the
matters referred to in SECTION 1, which shall disclose that Borrower is entitled
to the amount and type of Loan being requested. Bank is hereby authorized to
charge Borrower's deposit account with Bank for all principal and interest due
Bank under this Loan Agreement.
3. DELIVERY OF PAYMENTS. Payment to Bank of all amounts due hereunder
shall be made at its Santa Clara Valley Regional office, or at such other place
as may be designated in writing by Bank from time to time. If any payment date
fall on a day that is not a day that Bank is open for the transaction of
business ("Banking Day"), the payment due date shall be extended to the next
Banking Day.
4. LATE CHARGE. If any interest payment, principal payment or principal
balance payment required hereunder is not received by Bank on or before ten (10)
days from the date in which such payment becomes due, Borrower shall pay to
Bank, a late charge equal to the lesser of (a) five percent (5.0%) of the amount
of such unpaid payment, in addition to said unpaid payment or (b) the maximum
amount permitted to be charged by applicable law, until remitted to Bank;
provided; however, nothing contained in this SECTION 4, shall be construed as
any obligation on the part of Bank to accept payment of any past due payment or
less than the total unpaid principal balance of the Facility-A Loan Account
following the FacilityA Maturity Date. All payments shall be applied first to
any late charges due hereunder, next to accrued interest then payable and the
remainder, if any, to reduce any unpaid principal due under the Facility-A Loan
Account.
5. DEFAULT INTEREST. From and after the Facility-A Maturity Date, or
such earlier date as all sums owing under the Facility-A Loan Account becomes
due and payable by acceleration or otherwise, or upon the occurrence of an Event
of Default, at the option of Bank all sums owing under the Facility-A Loan
Account shall bear interest until paid in full at a rate equal to the lesser of
(a) five percent (5.0%) per annum in excess of the then applicable interest rate
provided for in SECTION 1.A.(3) hereof or (b) the maximum amount permitted to be
charged by applicable law, until all obligations hereunder are repaid in full or
the Event of Default is waived or cured to the satisfaction of Bank, as
applicable.
6. DEFINITIONS. As used in this Loan Agreement and unless otherwise
defined herein, all initially capitalized terms shall have the meanings set
forth on EXHIBIT A attached hereto and incorporated herein by this reference.
7. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Bank: (a) That Borrower is a corporation, duly organized and existing in the
State of its incorporation and the execution, delivery and performance of each
of the Loan Documents are within Borrower's corporate powers, have been duly
authorized and are not in conflict with law or the terms of any charter, by-law
or other incorporation papers, or of any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower is bound or affected; (b)
Borrower is, and at the time the Collateral becomes
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subject to Bank's security interest will be, the true and lawful owner of and
has, and at the time the Collateral becomes subject to Bank's security interest
will have, good and clear title to the Collateral, subject only to Bank's rights
therein and to Permitted Liens; (c) Each Account is, and at the time the Account
comes into existence will be, a true and correct statement of a bona fide
indebtedness incurred by the debtor named therein in the amount of the Account
for either merchandise sold or delivered (or being held subject to Borrower's
delivery instructions) to, or services rendered, performed and accepted by, the
account debtor; (d) That there are and will be no defenses, counterclaims, or
setoffs which may be asserted against the Accounts from time to time represented
by Borrower to be Eligible Accounts, except as permitted in the definition
thereof; (e) Any and all financial information, including information relating
to the Collateral, submitted by Borrower to Bank, whether previously or in the
future, is and will be true and correct in all material respects; (f) There is
no material litigation or other proceeding pending or threatened against or
affecting Borrower, and Borrower is not in default with respect to any order,
writ, injunction, decree or demand of any court or other governmental or
regulatory authority; (g) (i) The consolidated balance sheets of Borrower dated
as of September, 1997, and the related consolidated profit and loss statements
for the fiscal year then ended, copies of which have heretofore been delivered
to Bank by Borrower, and all other statements and data submitted in writing by
Borrower to Bank in connection with Borrower's request for credit are true and
correct, and said balance sheet and profit and loss statement accurately present
the financial condition of Borrower as of the date thereof and the results of
the operations of Borrower for the period covered thereby, and have been
prepared in accordance with GAAP, (ii) since such date, there have been no
material adverse changes in the financial condition of Borrower, and (iii)
Borrower has no knowledge of any material liabilities, contingent or otherwise,
which are not reflected in said balance sheet, and Borrower has not entered into
any special commitments or substantial contracts which are not reflected in said
balance sheet, other than in the ordinary and normal course of its business,
which may have a Material Adverse Effect upon its financial condition,
operations or business as now conducted; (h) Borrower has no material liability
for any delinquent local, state or federal taxes, and, if Borrower has
contracted with any government agency, it has no liability for renegotiation of
profits; and (i) to the best of its knowledge, Borrower, as of the date hereof,
possesses all necessary trademarks, trade names, copyrights, patents, patent
rights, and licenses to conduct its business as now operated, without any known
conflict with valid trademarks, trade names, copyrights, patents, patent rights
and license rights of others.
8. NEGATIVE COVENANTS. Borrower agrees that so long as any loans,
obligations or liabilities remain outstanding or unpaid to Bank or the
commitment of Bank hereunder is in effect, neither Borrower, nor any of its
subsidiaries ("Subsidiaries") will, without the prior written consent of Bank,
which will not be unreasonably withheld:
A. Make any substantial change in the character of its business as
now conducted;
B. Create, incur, assume or permit to exist any Indebtedness other
than loans from Bank except obligations now existing as shown in the financial
statements referenced in SECTION 7.(G)(I), excluding those being refinanced by
Bank, Subordinated Debt and Permitted Indebtedness; or sell or transfer, either
with or without recourse, any accounts or notes receivable or any monies due or
to become due;
C. Create, incur, assume or permit to exist any mortgage, pledge,
encumbrance, lien or charge of any kind (including the charge upon property at
any time purchased or acquired under conditional sale or other title retention
agreement) upon any asset now owned or hereafter acquired by it, other than
Permitted Liens and liens in favor of Bank;
D. Sell, dispose of or grant a security interest in any of the
Collateral other than to Bank (other than the disposing of such Collateral in
the ordinary and normal course of its business as now conducted, such Collateral
which is disposed in connection with the sale of Network Services Division or
other assets which are obsolete or otherwise considered surplus), or execute any
financing statements covering the Collateral in favor of any secured party or
Person other than Bank;
E. Sell, transfer, assign, mortgage, pledge, license (except in the
ordinary and normal course of its business as it is now conducted), lease, grant
a security interest in, or otherwise encumber any of its Intellectual Property;
F. Make any loans or advances to any Person or other entity other
than in the ordinary and normal course of its business as now conducted
(provided that such loans or advances are not made to any Person or entity which
is controlled by or under common control with Borrower);
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G. Purchase or otherwise acquire all or substantially all of the
assets or business of any Person or other entity; or liquidate, dissolve, merge
or consolidate, or commence any proceedings therefore; or, except in the
ordinary and normal course of its business as now conducted, sell (including,
without limitation, the selling of any property or other asset accompanied by
the leasing back of the same) any assets including any fixed assets, any
property, or other assets necessary for the continuance of its business as now
conducted; and
H. Declare or pay any dividend or make any other distribution on any
of its capital stock now outstanding or hereafter issued or purchase, redeem or
retire any of such stock other than in dividends or distributions payable in
Borrower's or any such Subsidiary's capital stock, except for the repurchase of
Borrower's capital stock from officers, directors, employees or consultants of
Borrower upon termination of their employment with or rendering of services to
Borrower.
9. AFFIRMATIVE COVENANTS. Borrower affirmatively covenants that so long
as any loans, obligations or liabilities remain outstanding or unpaid to Bank or
the commitment of Bank hereunder is in effect, it will:
A. Furnish Bank from time to time such financial statements and
information as Bank may reasonably request and inform Bank immediately upon the
occurrence of a material adverse change therein;
B. Notwithstanding the provisions contained in SECTION 1.A.(2)
hereof, permit representatives of Bank to conduct annual audits of Borrower's
books and records relating to the Collateral and make extracts therefrom, with
results satisfactory to Bank, provided that Bank shall use its best efforts to
not interfere with the conduct of Borrower's business, and to the extent
possible to arrange for verification of the Accounts directly with the account
debtors obligated thereon or otherwise, all under reasonable procedures
acceptable to Bank and at Borrower's sole expense. Borrower hereby acknowledges
and agrees that upon completion of any such audit, including any such audit
conducted in accordance with the provisions of SECTION 1.A.(2) hereof, Bank
shall have the right to adjust the Borrowing Base percentage based on its review
of the results of such Collateral audit, if in its reasonable discretion the
Accounts have a lower likelihood of collection than Bank previously believed
prior to such Collateral audit;
C. Promptly notify Bank of any attachment or other material legal
process levied against any of the Collateral and any information received by
Borrower relative to the Collateral, including the Accounts, the account debtors
or other Persons obligated in connection therewith, which may in any way affect
the value of the Collateral or the rights and remedies of Bank in respect
thereto;
D. Reimburse Bank upon demand for any and all legal costs, including
reasonable attorneys' fees, and other expense incurred in collecting any sums
payable by Borrower under the Facility-A Loan Account or any other obligation
secured hereby, enforcing any term or provision of this Loan Agreement or
otherwise or in the checking, handling and collection of the Collateral and the
preparation and enforcement of any agreement relating thereto;
E. Notify Bank of each location and of each office of Borrower at
which records of Borrower relating to the Accounts are kept;
F. Provide, maintain and deliver to Bank policies insuring the
Collateral against loss or damage by such risks and in such amounts, forms and
companies as Bank may require (to the extent customarily maintained by
businesses similar to Borrower) and with loss payable to Bank, and, in the event
Bank takes possession of the Collateral, the insurance policy or policies and
any unearned or returned premium thereon, to the extent necessary to repay any
indebtedness owed to Bank, shall at the option of Bank become the sole property
of Bank, such policies and the proceeds of any other insurance covering or in
any way relating to the Collateral, whether now in existence or hereafter
obtained, being hereby assigned to Bank;
G. In the event the unpaid balance of the Facility-A Loan Account
shall exceed the maximum amount of outstanding loans to which Borrower is
entitled under SECTION 1 hereof, as applicable, Borrower shall immediately pay
to Bank for credit to the Facility-A Loan Account the amount of such excess;
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H. Maintain and preserve all rights, franchises and other authority
adequate and necessary for the conduct of its business and maintain and preserve
its existence in the State of its incorporation and any other state(s) in which
Borrower conducts its business, except with respect to such other state(s), as
the failure to do so would not have a Material Adverse Effect;
I. Maintain public liability, property damage and workers
compensation insurance and insurance on all its insurable property against fire
and other hazards with responsible insurance carriers to the extent usually
maintained by similar businesses. Borrower shall provide evidence of property
insurance in amounts and types acceptable to Bank, and certificates naming Bank
as a loss payee;
J. Pay and discharge, before the same becomes delinquent and
penalties accrue thereon, all taxes, assessments and governmental charges upon
or against it or any of its properties, and any of its other liabilities at any
time existing, except to the extent and so long as: (1) the same are being
contested in good faith and by appropriate proceedings in such manner as not to
cause any Material Adverse Effect or the loss of any right of redemption from
any sale thereunder; and (2) it shall have set aside on its books reserves
(segregated to the extent required by GAAP);
K. Maintain a standard and modern system of accounting in accordance
with GAAP on a basis consistently maintained; permit Bank's representatives to
have access to, and to examine its properties, books and records at all
reasonable times; provided that Bank shall use its best efforts to not interfere
with the conduct of Borrower's business;
L. Maintain its properties, equipment and facilities in good order
and repair;
M. Prior to allowing any of Borrower's raw materials, work in
process, finished goods inventory and property, plant and equipment to be
transported to or be held at any contract manufacturer, warehouse or other
location (other than with bona fide distributors and retail accounts), Borrower
shall provide notice to Bank and Borrower shall have complied with such filing
and notice requirements as shall, in Bank's opinion, assure Borrower's and
Bank's priority in such property over creditors of such contract manufacturer,
warehouseman or operator of such other location, including, without limitation,
making filings under California Commercial Code (S)2326, providing notice under
California Commercial Code (S)9114 and making filings and publications as
required under California Civil Code (S)3440.1 and (S)3440.5 All such filings,
notices and publications shall be in form and substance satisfactory to Bank.
10. FINANCIAL COVENANTS AND INFORMATION. All financial covenants and
financial information referenced herein shall be interpreted and prepared in
accordance with GAAP as used in the United States of America applied on a basis
consistent with previous years. Compliance with the financial covenants shall
be calculated and monitored on a monthly basis, except as shall be expressly
stated to the contrary. Borrower affirmatively covenants that so long as any
loans, obligations or liabilities remain outstanding or unpaid to Bank or any
commitment is outstanding hereunder, it will, on a consolidated basis:
A. At all times, maintain a Minimum Tangible Net Worth (meaning all
assets, excluding any value for goodwill, trademarks, patents, copyrights,
organization expense and other similar intangible items, less all liabilities,
plus Subordinated Debt) of not less than $6,000,000.00.
B. At all times maintain a Maximum Ratio of Total Liabilities
(meaning all liabilities, excluding Subordinated Debt) to Tangible Net Worth (as
defined in SECTION 10.A. hereof) not to exceed 1.50:1.00;
C. At all times maintain a Minimum Quick Ratio (meaning all cash
plus Accounts divided by current liabilities) of not less than 1.00:1.00;
D. As soon as it is available, but not later than twenty-five (25)
days after and as of the end of each month, deliver to Bank an internally-
prepared financial statement consisting of a balance sheet and profit and loss
statement, in form satisfactory to Bank, and a Compliance Certificate in the
form of EXHIBIT D attached hereto and incorporated herein by this reference,
certified by an officer of Borrower;
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E. As soon as it is available, but not later than one hundred twenty
(120) days after the end of Borrower's fiscal year, deliver to Bank unqualified
copies of Borrower's consolidated financial statements together with changes in
financial position audited by an independent certified public accountant
selected by Borrower but acceptable to Bank;
F. So long as the Facility-A Commitment shall be outstanding or any
amounts remain outstanding and unpaid under the Facility-A Loan Account, as soon
as it is available, but not later than twenty-five (25) days after and as of the
end of each month, deliver to Bank, in such form and detail as Bank may require,
statements showing aging of the Accounts and Borrower's accounts payable,
together with a Borrowing Base Certificate in the form of EXHIBIT E attached
hereto and incorporated herein by this reference, certified by an officer of
Borrower. Notwithstanding the foregoing, as a condition to any request for a
FacilityA Loan, Borrower shall have delivered to Bank said aging statements as
well as a Borrowing Base Certificate covering the most recent month then ended
prior to the date of Borrower's request for an advance for a FacilityA Loan;
G. Upon the reasonable request of Bank, deliver to Bank current
budgets, sales projections, operating plans and other financial exhibits and
information in form and substance satisfactory to Bank; and
H. Upon any officer becoming aware, deliver immediately to Bank
written notice of any pending or threatened litigation claiming, or reasonably
likely to result in, damages against Borrower in an amount in excess of
$150,000.00.
11. LOAN FEE. Borrower has paid, and Bank hereby acknowledges receipt of
a loan fee in the amount of Twenty-five Thousand Dollars ($25,000.00).
12. DEFAULT AND REMEDIES. The occurrence of any one or more of the
following shall constitute an "Event of Default": (a) Default be made in the
payment of any obligation by Borrower under any Loan Document; (b) Except for
any failure to pay as described in clause (a) above, material breach be made in
any warranty, statement, promise, term or condition, contained herein or in any
other Loan Document and the same shall not have been cured to the satisfaction
of Bank within fifteen (15) days after Borrower shall have become aware thereof,
whether by written notice from Bank, or otherwise, (except that no cure period
shall exist for breaches in respect of Borrower's obligations under SECTION 8,
SUBSECTIONS 9.A., 9.B., 9.C., 9.F., 9.G. and 9.H., SUBSECTIONS 10.A., 10.B. and
10.C. of this Loan Agreement, and SECTIONS 1 and 2 of the General Security
Agreement and a cure period of five (5) days shall exist for SUBSECTIONS 9.I.,
10.D., 10.E. and 10.F.); (c) Any statement, warranty or representation made by
Borrower at any time proves materially false; (d) Borrower defaults in the
repayment of any principal of or the payment of any interest on any indebtedness
exceeding in the aggregate principal amount $100K or breaches or violates any
term or provision of any promissory note, loan agreement, mortgage, indenture or
other evidence of such indebtedness pursuant to which amounts outstanding in the
aggregate exceed $2.0M if the effect of such breach is to permit the
acceleration of such indebtedness, whether or not waived by the note holder or
obligee, and such failure shall not have been cured to Bank's satisfaction
within fifteen (15) calendar days after Borrower shall become aware thereof,
whether by written notice from Bank or otherwise, or there has in fact been an
acceleration of such indebtedness; (e) Borrower becomes insolvent or makes an
assignment for the benefit of creditors; (f) Any proceeding be commenced by
Borrower under any bankruptcy, reorganization, arrangement, readjustment of debt
or moratorium law or statute or, any such a proceeding is commenced against
Borrower and is not dismissed or stayed within ten (10) days (provided that no
Loans will be made prior to the dismissal of such proceeding); (g) Any money
judgment, writ of attachment, garnishment, execution or other legal process be
entered against Borrower or issued against any material property of Borrower
which is not fully covered by insurance (subject to reasonable deductibles) and
remains unvacated, unbonded, unstayed or unpaid or undischarged for more than
fifteen (15) days (whether or not consecutive) or in any event later than five
(5) days prior to the date of any proposed sale thereunder, or if any assessment
for taxes against Borrower other than against any of its real property, is made
by the Federal or State government or any department thereof; or (h) Any change
in Borrower's financial condition, prospects or operations which has a Material
Adverse Effect. Upon the occurrence and during the continuance of an Event of
Default, Bank may, at its option and without demand first made and without
notice to Borrower, do any one or more of the following: (i) Terminate its
obligation to make loans to Borrower as provided in SECTION 1 hereof; (ii)
Declare all sums secured hereby immediately due and payable; (iii) Immediately
take possession of the Collateral wherever it may be found, using all legally
permissible means to do so, or require Borrower to assemble the Collateral and
make it available to Bank at a place designated by Bank which is reasonably
convenient to Borrower and
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Bank, and Borrower waives all claims for damages due to or arising from or
connected with any such taking; (iv) Proceed in the foreclosure of Bank's
security interest and sale of the Collateral in any manner permitted by law, or
provided for herein; (v) Sell, lease or otherwise dispose of the Collateral at
public or private sale, with or without having the Collateral at the place of
sale, and upon terms and in such manner as Bank may determine, and Bank may
purchase same at any such sale; (vi) Retain the Collateral in full satisfaction
of the obligations secured thereby to the extent permitted under the Uniform
Commercial Code; (vii) Exercise any remedies of a secured party under the
Uniform Commercial Code; or (viii) Immediately record the IP Security Agreement
with the United States Patent and Trademark Office, the Register of Copyrights
and/or the UCC Division of the California Secretary of State, to perfect Bank's
security interests created and assignment granted in the Intellectual Property
thereunder. Prior to any such disposition, Bank may, at its option, cause any of
the Collateral to be repaired or reconditioned in such manner and to such extent
as Bank may deem advisable, and any sums expended therefor by Bank shall be
repaid by Borrower and secured hereby. Bank shall have the right to enforce one
or more remedies hereunder successively or concurrently, and any such action
shall not estop or prevent Bank from pursuing any further remedy which it may
have hereunder or by law. If a sufficient sum is not realized from any such
disposition of the Collateral to pay all obligations secured by this Loan
Agreement, Borrower hereby promises and agrees to pay Bank any deficiency.
13. RECORDS RETENTION. Borrower authorizes Bank to destroy all invoices,
delivery receipts, reports and other types of documents and records submitted to
Bank in connection with the transactions contemplated herein at any time
subsequent to four (4) months from the time such items are delivered to Bank.
14. ATTORNEYS' FEES. Borrower agrees to reimburse Bank for its reasonable
attorneys' fees and expenses incurred in connection with the negotiation,
preparation, execution and delivery of the Loan Documents.
15. GOVERNING LAW; JUDICIAL REFERENCE.
A. GOVERNING LAW. This Agreement shall be deemed to have been made
in the State of California and the validity, construction, interpretation, and
enforcement hereof, and the rights of the parties hereto, shall be determined
under, governed by, and construed in accordance with the internal laws of the
State of California, without regard to principles of conflicts of law.
B. JUDICIAL REFERENCE.
(1) Other than (a) nonjudicial foreclosure and all matters in
connection therewith regarding security interests in real or personal property;
or (b) the appointment of a receiver, or the exercise of other provisional
remedies (any and all of which may be initiated pursuant to applicable law),
each controversy, dispute or claim between the parties arising out of or
relating to this Loan Agreement or the other Loan Documents, which controversy,
dispute or claim is not settled in writing within thirty (30) days after the
"Claim Date" (defined as the date on which a party subject to this Loan
Agreement gives written notice to all other parties that a controversy, dispute
or claim exists), will be settled by a reference proceeding in California in
accordance with the provisions of Section 638 et seq. of the California Code of
Civil Procedure, or their successor section ("CCP"), which shall constitute the
exclusive remedy for the settlement of any controversy, dispute or claim
concerning this Loan Agreement, including whether such controversy, dispute or
claim is subject to the reference proceeding and except as set forth above, the
parties waive their rights to initiate any legal proceedings against each other
in any court or jurisdiction other than the Superior Court in the County where
the real property, if any, is located or Santa Clara County, if none (the
"Court"). The referee shall be a retired Judge of the Court selected by mutual
agreement of the parties, and if they cannot so agree within forty-five (45)
days after the Claim Date, the referee shall be promptly selected by the
Presiding Judge of the Court (or his/her representative). The referee shall be
appointed to sit as a temporary judge, with all of the powers for a temporary
judge, as authorized by law, and upon selection should take and subscribe to the
oath of office as provided for in Rule 244 of the California Rules of Court (or
any subsequently enacted Rule). Each party shall have one peremptory challenge
pursuant to CCP (S) 170.6. The referee shall (x) be requested to set the matter
for hearing within sixty (60) days after the date of selection of the referee
and (y) try any and all issues of law or fact and report a statement of decision
upon them, if possible, within ninety (90) days of the Claim Date. Any decision
rendered by the referee will be final, binding and conclusive and judgement
shall be entered pursuant to CCP (S) 644 in any court in the State of California
having jurisdiction. Any party may apply for a reference proceeding at any time
after thirty (30) days following notice to any other party of the nature of the
controversy, dispute or claim, by filing a petition for a hearing and/or trial.
All discovery
-7-
<PAGE>
permitted by this Loan Agreement shall be completed no later than fifteen (15)
days before the first hearing date established by the referee. The referee may
extend such period in the event of a party's refusal to provide requested
discovery for any reason whatsoever, including, without limitation, legal
objections raised to such discovery or unavailability of a witness due to
absence or illness. No party shall be entitled to "priority" in conducting
discovery. Depositions may be taken by either party upon seven (7) days written
notice, and request for production or inspection of documents shall be responded
to within ten (10) days after service. All disputes relating to discovery which
cannot be resolved by the parties shall be submitted to the referee whose
decision shall be final and binding upon the parties. Pending appointment of the
referee as provided herein, the Superior Court is empowered to issue temporary
and/or provisional remedies, as appropriate.
(2) Except as expressly set forth in this Loan Agreement, the
referee shall determine the manner in which the reference proceeding is
conducted including the time and place of all hearings, the order of
presentation of evidence, and all other questions that arise with respect to the
course of the reference proceeding. All proceedings and hearings conducted
before the referee, except for trial, shall be conducted without a court
reporter except that when any party so requests, a court reporter will be used
at any hearing conducted before the referee. The party making such a request
shall have the obligation to arrange for and pay for the court reporter. The
costs of the court reporter at the trial shall be borne equally by the parties.
(3) The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding. The referee shall
be empowered to enter equitable as well as legal relief, to provide all
temporary and/or provisional remedies and to enter equitable orders that will be
binding upon the parties. The referee shall issue a single judgment at the
close of the reference proceeding which shall dispose of all of the claims of
the parties that are the subject of the reference. The parties hereto expressly
reserve the right to contest or appeal from the final judgment or any appealable
order or appealable judgment entered by the referee. The parties hereto
expressly reserve the right to findings of fact, conclusions of laws, a written
statement of decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference proceeding
under this provision.
(4) In the event that the enabling legislation which provides
for appointment of a referee is repealed (and no successor statute is enacted),
any dispute between the parties that would otherwise be determined by the
reference procedure herein described will be resolved and determined by
arbitration. The arbitration will be conducted by a retired judge of the Court,
in accordance with the California Arbitration Act, (S) 1280 through (S) 1294.2
of the CCP as amended from time to time. The limitations with respect to
discovery as set forth hereinabove shall apply to any such arbitration
proceeding.
16. MISCELLANEOUS PROVISIONS.
A. Borrower agrees that it will review the products and services
offered by Bank and use its best efforts to establish its primary banking
accounts with Bank, provided, that the products and services offered by Bank are
satisfactory to Borrower.
B. Nothing herein shall in any way limit the effect of the
conditions set forth in any other security or other agreement executed by
Borrower, but each and every condition hereof shall be in addition thereto.
C. No failure or delay on the part of Bank, in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof.
D. All rights and remedies existing under this Loan Agreement or any
other Loan Document are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
E. All headings and captions in this Loan Agreement and any related
documents are for convenience only and shall not have any substantive effect.
F. This Loan Agreement may be executed in any number of
counterparts, each of which when so delivered shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. Each
such
-8-
<PAGE>
agreement shall become effective upon the execution of a counterpart hereof or
thereof by each of the parties hereto and telephonic notification that such
executed counterparts has been received by Borrower and Bank.
BANK: BORROWER:
IMPERIAL BANK METAWAVE COMMUNICATIONS CORPORATION,
A DELAWARE CORPORATION
By: /s/ James E. Ellison /s/ Vito Palermo
-------------------------------- -------------------------------------
Senior Vice President/Manager Chief Financial Officer and Secretary
LIST OF EXHIBITS AND SCHEDULES
- ------------------------------
EXHIBIT A: Definitions
SCHEDULE 1 TO EXHIBIT A: List of Specific Permitted Indebtedness
SCHEDULE 2 TO EXHIBIT A: List of Specific Permitted Liens
EXHIBIT B: Form of Application and Letter of Credit Agreement
EXHIBIT C: Loan Request Form
EXHIBIT D: Compliance Certificate
EXHIBIT E: Borrowing Base Certificate
-9-
<PAGE>
________________________________________________________________________________
________________________________________________________________________________
EXHIBIT A
DEFINITIONS
"ACCOUNTS" means any right to payment for goods sold or leased, or to be
sold or to be leased, or for services rendered or to be rendered no matter how
evidenced, including accounts receivable, contract rights, chattel paper,
instruments, purchase orders, notes, drafts, acceptances, general intangibles
and other forms of obligations and receivables.
"CAPITAL LEASE" means, as to any Person, any lease of any Property by such
Person as lessee that is, or should be in accordance with Financing Accounting
Standards Board Statement No. 13, classified and accounted for as a "capital
lease" on the balance sheet of such Person prepared in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such lessee in respect of such Capital Lease
or otherwise be disclosed in a note to such balance sheet.
"COLLATERAL" means any and all personal property of Borrower which is
assigned or hereafter is assigned to Bank as security or in which Bank now has
or hereafter acquires a security interest hereunder (including, without
limitation, the Accounts), or pursuant to the terms of the General Security
Agreement, the Intellectual Property Security Agreement (upon its recordation in
accordance with SECTION 12(VIII) hereof) or otherwise.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), comade or discounted or sold with recourse by that Person,
or in respect of which that Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation for which that Person is in
effect liable through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, capital stock purchases, capital contributions or
otherwise), or to maintain the solvency of the obligor of such obligation, or to
make payment for any products, materials or supplies or for any transportation,
services or lease regardless of the nondelivery or nonfurnishing thereof, in any
such case if the purpose or intent of such agreement is to provide assurance
that such obligation will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof. The amount of
any Contingent Obligation of any Person shall be deemed to be an amount equal to
the maximum amount of such Person's liability with respect to the stated or
determinable amount of the primary obligation for which such Contingent
Obligation is incurred or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder).
"ELIGIBLE ACCOUNTS" means such of Borrower's Accounts as Bank in its sole
reasonable discretion shall determine are eligible from time to time; provided,
however, that in no event shall Eligible Accounts include the following:
(1) all domestic and pre-approved international (foreign) Accounts
under which payment is not received within the earlier of (a) 90 days from
the applicable invoice date and (b) 60 days from the applicable payment due
date;
(2) all Accounts against which the account debtor or any other Person
obligated to make payment thereon asserts any defense, offset, counterclaim
or other right to avoid or reduce the liability represented by the
Accounts;
(3) any Accounts if the account debtor or any other Person liable in
connection therewith is insolvent, subject to bankruptcy or receivership
proceedings or has made an assignment for the benefit of creditors or whose
credit standing is unacceptable to Bank and Bank has so notified Borrower;
(4) Accounts with respect to which the account debtor is an officer,
director, shareholder, employee or Subsidiary;
-10-
<PAGE>
(5) Accounts due from an account debtor if more than twenty-five
percent (25%) of the aggregate amount of Accounts of such account debtor
have at that time remained unpaid for more than the earlier of (a) ninety
(90) days from the applicable invoice date and (b) sixty (60) days from the
applicable payment due date;
(6) Accounts with respect to international (foreign) transactions
unless (a) such Accounts are insured or covered by a letter of credit in a
manner and form acceptable to the Bank, (b) the account debtors of such
Accounts are foreign companies with sales greater than Five Hundred Million
Dollars ($500,000,000) per year, or (c) Bank shall have otherwise permitted
in writing in its sole and absolute direction;
(7) salesperson's accounts for promotional purposes;
(8) the amount by which the aggregate of all Accounts of an account
debtor exceeds thirty-five percent (35%) of the total accounts receivable
balance;
(9) Accounts where the account debtor is a seller to borrower, to the
extent that a potential offset exists; and
(10) Accounts where the account debtor is a federal governmental
entity, federal agency or instrumentality thereof.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 12.
"FACILITY-A MATURITY DATE" has the meaning set forth in SECTION 1.A.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by the significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"GENERAL SECURITY AGREEMENT" means that certain General Security Agreement
(Tangible and Intangible Personal Property) dated of even date herewith, made by
Borrower in favor of Bank.
"INDEBTEDNESS" means, as to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money, including, without limitation,
all of such indebtedness outstanding under this Loan Agreement and any of the
other Loan Documents, (b) all Capital Lease Obligations of such Person, (c) to
the extent of the outstanding indebtedness thereunder, any obligation of such
Person representing an extension of credit to such Person, whether or not for
borrowed money, (d) any obligation of such Person for the deferred purchase
price of Property or services (other than (i) trade or other accounts payable in
the ordinary course of business in accordance with customary industry terms and
(ii) deferred franchise fees), (e) all Contingent Obligations, (f) any
obligation of such Person of the nature described in clauses (a), (b), (c), (d)
or (e) above, that is secured by a Lien on assets of such Person and which is
nonrecourse to the credit of such Person, but only to the extent of the fair
market value of the assets so subject to the Lien, (g) obligations of such
Person arising under acceptance facilities or under facilities for the discount
of accounts receivable of such Person, (h) any obligation of such Person to
reimburse the issuer of any letter of credit issued for the account of such
Person upon which a draw has been made, and (i) any lease having the effect of
indebtedness, whether or not the same shall be treated as such on the balance
sheet of Borrower under GAAP.
"IP SECURITY AGREEMENT" means that certain Collateral Assignment, Patent
Mortgage and Security Agreement executed in blank by Borrower in favor of Bank
to be filed by Bank in accordance with SECTION 12(VIII) hereof.
"INTELLECTUAL PROPERTY" means collectively, all of Borrower's intellectual
property, including, without limitation, the following:
(1) Any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret (collectively, the "Copyrights");
11
<PAGE>
(2) Any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products;
(3) Any and all design rights which may be available to Borrower;
(4) All patents, patent applications and like protections including,
without limitation, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same (collectively, the "Patents");
(5) Any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like protections, and
the entire goodwill of the business of Borrower connected with and symbolized by
such trademarks (collectively, the "Trademarks");
(6) Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of
the intellectual property rights identified above;
(7) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
(8) All amendments, renewals and extensions of any of the Copyrights,
Patents or Trademarks; and
(9) All proceeds and products of the foregoing, including, without
limitation, all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.
"LIEN" means any mortgage, pledge, security interest, lien or other charge
or encumbrance, including the lien or retained security title of a conditional
vendor, upon or with respect to any property or assets.
"LOAN DOCUMENTS" means this Loan Agreement, the General Security Agreement
and that certain Agreement to Provide Insurance (Real or Personal Property)
dated of even date herewith, each as executed by Borrower in favor of Bank,
together with all other documents entered into or delivered pursuant to any of
the foregoing (including, without limitation, the IP Security Agreement upon its
recordation in accordance with SECTION 12(VIII) hereof), in each case as
originally executed or as the same may from time to time be modified, amended,
supplemented or restated.
"LOANS" means the Facility-A Loans advanced pursuant to SECTION 1.
"MATERIAL ADVERSE EFFECT" means any set of circumstances or events which
(a) has or could reasonably be expected to have any material adverse effect upon
the validity or enforceability of any material provision of any Loan Document,
(b) is or could reasonably be expected to be material and adverse to the
condition (financial or otherwise) or business operations of Borrower, (c)
materially impairs or could reasonably be expected to materially impair the
ability of Borrower, to perform its material Obligations, (d) materially impairs
or could reasonably be expected to materially impair the value or priority of
Bank's security interest in any Collateral or (e) materially impairs or could
reasonably be expected to materially impair the ability of Bank to enforce any
of its legal remedies pursuant to the Loan Documents.
"PERMITTED INDEBTEDNESS" means the following:
(1) indebtedness of Borrower or Indebtedness and Contingent
Obligations of its Subsidiaries in favor of Bank arising under this Loan
Agreement and the other Loan Documents;
(2) the existing Indebtedness and Contingent Obligations disclosed on
SCHEDULE 1 attached hereto and incorporated herein by this reference;
provided that the principal amount thereof is not increased and the terms
thereof are not modified to impose more burdensome terms upon Borrower or
any of its Subsidiaries;
(3) the Subordinated Debt;
(4) extensions, renewals or refinancings of Indebtedness permitted
under this Loan Agreement, other than clause (3) immediately above;
(5) accrued dividends on the preferred stock of Borrower;
(6) interest rate and currency hedging agreements;
(7) guaranties of any Subsidiary's suppliers in connection with the
purchase of supplies in the ordinary course of business;
12
<PAGE>
(8) guaranties of lease obligations incurred in the ordinary course
of business and to the extent otherwise permitted hereunder;
(9) Contingent Obligations constituting Permitted Liens; and
(10) the indebtedness referred to in clause (3)(a) of the definition
of Permitted Liens.
"PERMITTED LIENS" means the following:
(1) liens and security interests existing as of this date and
disclosed in SCHEDULE 2 attached hereto and incorporated herein by this
reference;
(2) liens for taxes, fees, assessments or other governmental charges
or levies, either not delinquent or being contested in good faith by appropriate
proceedings;
(3) liens and security interests (a) upon or in any equipment
acquired or held by Borrower to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment and in an amount not greater than the purchase price thereof or
(b) existing on such equipment at the time of its acquisition, provided that the
lien and security interest is confined solely to the property so acquired and
improvements thereon, and the proceeds of such equipment;
(4) liens consisting of leases or subleases and licenses and
sublicenses granted to others in the ordinary course of Borrower's business not
interfering in any material respect with the business of Borrower and any
interest or title of a lessor or licensor under any lease or license, as
applicable;
(5) liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons or entities imposed
without action of such parties;
(6) liens incurred or deposits made in the ordinary course of
Borrower's business in connection with worker's compensation, unemployment
insurance, social security and other like laws;
(7) liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;
(8) easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property not interfering in any material respect with the
ordinary conduct of Borrower's business;
(9) liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(10) liens that are not prior to Bank's security interest which
constitute rights of set-off of a customary nature;
(11) any interest or title of a lessor in equipment subject to any
Capitalized Lease otherwise permitted hereunder; and
(12) any liens arising from the filing of any financing statements
relating to true leases otherwise permitted hereunder.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, firm, joint stock
company, estate, entity or governmental agency.
"PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
"SUBORDINATED DEBT" means indebtedness of Borrower, the repayment of
principal of which is fully subordinated in time and right of payment to the
Loans, and has been approved in Bank's sole and absolute discretion and in
writing.
13
<PAGE>
SCHEDULE 1 TO EXHIBIT A
SPECIFIC PERMITTED INDEBTEDNESS
14
<PAGE>
SCHEDULE 2 TO EXHIBIT A
SPECIFIC PERMITTED LIENS
15
<PAGE>
EXHIBIT B
FORM OF APPLICATION AND LETTER OF CREDIT AGREEMENT
[TO BE PROVIDED AND ATTACHED BY BANK]
16
<PAGE>
EXHIBIT C
LOAN REQUEST FORM
[TO BE PROVIDED AND ATTACHED BY BANK]
17
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
The consolidated financial statements dated as of __________________________ of
METAWAVE COMMUNICATIONS CORPORATION, a Delaware corporation ("Borrower")
attached hereto and submitted to IMPERIAL BANK ("Bank") pursuant to that certain
Loan Agreement dated as of October __, 1997, entered into between Borrower and
Bank (the "Loan Agreement"), are in compliance with all financial covenants
(unless otherwise noted below) as specified in SECTION 10 therein, as follows:
COVENANT: ACTUAL:
A. Minimum Tangible Net Worth of:
-----------------------------
$6,000,000.00
B. Maximum Liabilities to Tangible Net Worth Ratio:
-----------------------------------
1.50 : 1.00 ___________________
C. Minimum Quick Ratio:
-------------------
1.00 : 1.00 ___________________
Exceptions: (if none, so state):
The undersigned authorized officer of Borrower hereby certifies that Borrower is
in complete compliance with the terms and conditions of the Loan Agreement for
the period ending _____________________, ____, and as of the date of this
Compliance Certificate the representations and warranties stated therein are
true, accurate and complete as of the date hereof (except as to those
representations and warranties which specifically reference a particular date
and except as noted above).
The undersigned further certifies that s/he knows of no pending conditions which
may cause an Event of Default (as defined in the Loan Agreement) to exist in the
next thirty (30) days. The required support documents for this certification
are attached and prepared in accordance with GAAP consistently applied.
Date:____________________ METAWAVE COMMUNICATIONS CORPORATION,
a Delaware corporation
18
<PAGE>
EXHIBIT E
BORROWING BASE CERTIFICATE
(To be provided and attached by Bank)
19
<PAGE>
Imperial Bank Exhibit 10.10
5330 Carillon Point
Kirkland, WA 98033
(425) 832-1233
(425) 576-2810
February 11, 2000
VIA FACSIMILE AND US MAIL
-------------------------
METAWAVE COMMUNICATIONS CORPORATION
8700 148th AVENUE NE
REDMOND, WA 98052
Re: LOAN EXTENSION
Borrower Name: METAWAVE COMMUNICATIONS CORPORATION
Loan Number: 736000021
Note Number: 3
Gentlemen:
Imperial Bank has approved an extension of Facility-A Maturity Date to March 14,
2000 from its current maturity as evidenced by that certain Loan Agreement dated
October 14, 1997.
Except as modified and extended hereby, the existing loan documentation as
amended concerning your obligation remains in full force and effect.
Very truly yours,
/s/ Christopher Fenner
Christopher Fenner
Vice President
<PAGE>
EXHIBIT 10.11
METAWAVE COMMUNICATIONS CORPORATION
-----------------------------------
MANUFACTURING AGREEMENT
-----------------------
This agreement is made this /3rd/ day of September, 1998 between Metawave
Communications Corporation, a Delaware corporation ("Customer") and Powerwave
Technologies, Inc., a Delaware corporation ("Manufacturer").
RECITALS
--------
Customer desires to have certain products manufactured by Manufacturer for
sale to Customer. Manufacturer has the capability of manufacturing such
products and desires to do so for sale to Customer.
AGREEMENT
---------
In consideration of the foregoing and the agreements contained herein, the
parties agree as follows:
1. Definitions.
-----------
(a) "Confidential Information" of a party shall mean any information
------------------------
disclosed by that party to the other pursuant to this Agreement which is in
written, graphic, machine readable or other tangible form and is marked
"Confidential," "Proprietary" or in some other manner to indicate its
confidential nature. Confidential Information may also include oral information
disclosed by one party to the other pursuant to this Agreement, provided that
such information is designated as confidential at the time of disclosure and is
reduced to writing by the disclosing party within a reasonable time (not to
exceed thirty (30) days) after its oral disclosure, and such writing is marked
in a manner to indicate its confidential nature and delivered to the receiving
party. Notwithstanding any failure to so identify it, however, all
Specifications shall be Confidential Information of Customer.
(b) "Inventory" shall mean raw materials and supplies necessary for
---------
the manufacture of Products pursuant to this Agreement.
(c) "Long-Lead Inventory" shall mean those items of Inventory
-------------------
identified in writing by Manufacturer to Customer prior to beginning manufacture
of any particular type of Product that have a lead time from Manufacturer's
supplier longer than ninety (90) days.
(d) "Products" shall mean the products manufactured by Manufacturer in
--------
accordance with the Specifications pursuant to this Agreement, as set forth on
Exhibit A attached hereto.
- ---------
(e) "Intellectual Property" shall mean (i) all rights held by Customer
---------------------
in its Confidential Information, including, but not limited to, patents,
copyrights, authors' rights, trademarks, tradenames, know-how and trade secrets,
irrespective of whether such rights arise
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
under U.S. or international intellectual property, unfair competition or trade
secret laws, and (ii) all rights held by Manufacturer in the Products and in its
Confidential Information, including, but not limited to, patents, copyrights,
authors' rights, trademarks, tradenames, know-how and trade secrets,
irrespective of whether such rights arise under U.S. or international
intellectual property, unfair competition or trade secret laws.
(f) "Purchase Order" shall mean a Customer Purchase Order in the form
--------------
provided by the Customer or in a form mutually agreed to by the parties.
(g) "Specifications" shall mean the specifications for the Products as
--------------
provided by Customer and accepted by Manufacturer which are set forth in Exhibit
B, and may be revised from time to time upon mutual written agreement of the
parties.
2. Manufacture and Supply of Products.
----------------------------------
(a) Sale and Purchase. Manufacturer agrees to sell to Customer such
-----------------
quantities of the Products meeting the Specifications as Customer may order in
accordance herewith. Subject to the provisions of section 10 hereof, so long as
this Agreement remains in effect, Manufacturer agrees to satisfy 100% of
Customer's requirements for the Products under this Agreement. Manufacturer
will be the sole supplier of Products to Customer which Customer purchases for
resale in its antenna systems to its cellular network operator customers
(hereinafter referred to as "Network Operators"), provided that Manufacturer
offers the Product(s) for sale. The foregoing does not preclude (i) Customer
from designing and selling to Network Operators antenna systems which use
Products of another manufacturer if Manufacturer does not offer such Product for
sale, and (ii) Network Operators from purchasing a Product directly from
Manufacturer or from purchasing or utilizing the product of another manufacturer
for use with Customer's antenna system.
(b) Agreement to Manufacture. Subject to section 2(a) of this
------------------------
Agreement, pursuant to Purchase Orders or changes to Purchase Orders issued by
Customer and accepted by Manufacturer, Manufacturer agrees to procure Inventory,
components and other supplies and to manufacture, test, assemble, and deliver
the Products pursuant to the Specifications for each such Product and to deliver
such Products to a location designated by Customer.. Manufacturer will not
place its name or any other marking not approved by Customer anywhere on the
exterior of the Products or their respective packaging material, except
markings, if any, which are required by law.
(c) Forecasts. Manufacturer shall supply the quantities of Product
---------
meeting the Specifications on the Delivery Dates requested by Customer, provided
the Delivery Dates conform to the Product lead times and Customer forecasts set
forth herein. On the tenth (10th) day of each month, Customer shall provide
Manufacturer with a rolling forecast in writing (the "Forecast") of Customer's
estimated aggregate purchase requirements of Product for the subsequent twelve-
month (12) period. Subject to section 2(d) hereof, the initial six (6) weeks of
the Forecast shall be binding. Subject to these binding Forecast requirements,
if the Forecast for any period is less than the previous Forecast supplied for
the same period, the difference will be
-2-
<PAGE>
considered canceled. Manufacturer shall use its best efforts to supply the
number of Products set forth in the Forecast.
(d) Purchase Orders. All orders for Product shall be submitted to
---------------
Manufacturer in writing by mail or facsimile to the address set forth on the
signature page to this Agreement, and shall conform to the binding Forecasts in
accordance with Section 2(c). Customer shall submit such Purchase Orders to
Manufacturer at least 30 business days prior to the date of requested delivery
("Delivery Date"), or such longer period of time as mutually agreed upon by the
-------------
parties for Products incorporating Long-Lead Inventory.
(e) Order Forecast Variations. For each Purchase Order, Customer
--------------------------
shall be entitled, without penalty, to: (i) upon forty-five (45) or more days'
prior notice, reschedule the scheduled delivery date for one hundred percent
(100%) of the quantity of Product ordered pursuant to such Purchase Order and/or
(ii) upon more than forty-five (45) days prior notice, increase the quantity of
Product ordered by an amount equal to an additional one hundred percent (100%)
of the quantity of Product ordered. Such rescheduled Purchase Orders shall be
submitted in writing to Manufacturer, by mail or facsimile, and shall supersede
prior Purchase Orders to the extent such prior Purchase Orders conflict with the
rescheduled Purchase Order.
(f) Acceptance or Rejection of Purchase Orders. Purchase Orders that
------------------------------------------
conform to binding Forecasts delivered to Manufacturer for the relevant period
shall be deemed accepted by Manufacturer upon receipt. All other Purchase
Orders not rejected by Manufacturer within ten (10) working days of receipt by
Manufacturer shall be deemed accepted by Manufacturer effective upon receipt of
such Purchase Order.
(g) Engineering Changes. Customer may request at any time, with at
-------------------
least thirty (30) days' written notice, that Manufacturer incorporate an
engineering change into the Product. Such request will include a description of
the proposed change sufficient to permit Manufacturer to evaluate its
feasibility. Manufacturer's evaluation shall be in writing and shall state the
impact on delivery schedule and expected cost. Manufacturer will not be
obligated to proceed with the engineering change until the parties have agreed
in good faith on the changes to the Specifications, Delivery Dates and Pricing
and upon the costs to be paid by Customer, including reassembly, retooling or
cost of Inventory on-hand and on-order that becomes obsolete as a result of the
Engineering Change. Manufacturer will use all reasonable efforts to return all
unused Inventory for a full refund, to cancel pending orders and to take other
actions to reduce such costs to be paid by Customer.
3. Tooling.
-------
(a) Tooling/Non-Recurring Expenses. Manufacturer shall provide
-------------------------------
tooling that is not specific to the Product at its own expense. Customer shall
pay for or obtain and consign to Manufacturer for its use any Product-specific
tooling and other reasonably necessary non-recurring expenses specific to the
Product, as set forth in Manufacturer's quotation, and approved in writing by
Customer.
-3-
<PAGE>
4. Product Shipment and Inspection.
-------------------------------
(a) Shipments. All Products delivered pursuant to the terms of this
---------
Agreement shall be suitably packed for shipment to avoid damage, marked for
shipment to Customer's destination specified in the applicable Purchase Order,
and Manufacturer shall use its best efforts to ensure that the Products are
received by Customer 0 days late, or 5 days prior to the delivery date set forth
on the Purchase Order (the "Delivery Date"). Shipment will be F.O.B.
Manufacturer's factory, at which time risk of loss and title will pass to
Customer. All freight, insurance and other shipping expenses, as well as any
special packing expenses approved in writing by Customer and not included in the
original price quotation for the Products will be paid by Customer.
(b) Cancellation. Customer may not cancel any portion of an accepted
------------
Purchase Order without Manufacturer's prior written approval, which will not be
unreasonably withheld. If the parties agree upon a cancellation, Customer will
pay Manufacturer for Products and Inventory affected by the cancellation as
follows: 100% of the cost of all Inventory in Manufacturer's possession and not
returnable to the vendor or usable for other customers, whether in raw form or
work in process.. Manufacturer will use reasonable commercial efforts,
including the mutual involvement of Customer, to return unused Inventory for a
full refund, net of restocking charges of such vendor and to cancel pending
orders. Customer will be entitled to take delivery of all Products and
Inventory to be paid for by Customer under this section, promptly following
Manufacturer's receipt of payment therefor.
5. Payment Terms, Additional Costs and Price Changes.
-------------------------------------------------
(a) Payment Terms. Payment for any products, services or other costs
-------------
to be paid by Customer hereunder are due thirty (30) days from the later of (i)
the date of invoice for Products delivered to Customer, and (ii) the delivery of
products to the Customer, and shall be made in lawful U.S. currency.
(b) Pricing. The prices for the Products shall be as set forth on
---------
Exhibit C hereto and will be reviewed quarterly or as requested by Customer.
Such prices are, and the price for each Product sold hereunder will be, as low
as the prices for like products supplied by Manufacturer to two of the five
largest base station equipment suppliers to the wireless infrastructure
industry. For comparison purposes, Manufacturer may exclude non-recurring,
promotional sales.
(c) Additional Costs.
----------------
(i) Duties and Taxes. All prices quoted are exclusive of
----------------
federal, state and local excise, sales, use and similar duties and taxes, and
Customer shall be responsible for all such items.
(ii) Expediting Charges. Customer shall be responsible for any
------------------
expediting charges reasonably necessary because of a change in Customer's
requirements.
-4-
<PAGE>
Manufacturer shall obtain approval from Customer for expediting charges prior to
incurring any such charge.
(d) Cost Reductions. Manufacturer may be requested by Customer to
---------------
institute a cost reduction plan which will be reviewed quarterly pursuant to
section 5(e) below.
(e) Quarterly Business Reviews. During each quarter, the parties will
--------------------------
have a quarterly business review to review the prices of the Products, cost
reduction plans, quality, Forecasts and Delivery performance and to agree to any
modifications that may be necessary.
6. License Grants; Ownership Rights.
--------------------------------
(a) Intellectual Property Rights. Each party shall retain sole
----------------------------
ownership of, and all rights to, any Intellectual Property of any kind
previously owned by that party or created solely by that party. The parties
shall jointly own any Intellectual Property where both parties made substantial
contributions documented in writing prior to the creation of the Intellectual
Property.
(b) Trademarks. In consideration of the fees set forth herein,
----------
Customer further grants to Manufacturer a non-exclusive license to use the
Trademarks on and in connection with the manufacture of the Products, and for
this purpose to affix, subject to Customer's prior written approval, the
Trademarks to or on the Products. Such trademark license shall expire or
terminate upon the expiration or termination of this Agreement.. The Trademarks
may only be used in association with the manufacture and distribution of the
Products pursuant to the terms of this Agreement. Any and all uses of the
Trademarks shall be subject to the prior written approval of Customer.
Manufacturer shall not remove trademark notices from any Product without the
prior written consent of Customer. Manufacturer shall not use the name,
Trademarks or logos associated with the Products in its business name. For
purposes of the preceding paragraph, "Trademark" shall mean the trademarks that
are associated with the Product which are approved by Customer for use by
Manufacturer in the manufacture of the Products.
7. Confidential Information.
------------------------
(a) Nondisclosure and Nonuse. Each party shall treat as confidential
------------------------
all Confidential Information of the other party, shall not use such Confidential
Information except as set forth in this Agreement, and shall use reasonable
efforts not to disclose such Confidential Information to any third party.
Without limiting the foregoing, each of the parties shall use at least the same
degree of care which it uses to prevent the disclosure of its own confidential
information of like importance to prevent the disclosure of Confidential
Information disclosed to it by the other party under this Agreement. Each party
shall disclose Confidential Information of the other party only to its
directors, officers, employees, and consultants who are required to have such
information in order for such party to carry out the transactions contemplated
by this Agreement. Each party shall promptly notify the other party of any
actual or suspected misuse or unauthorized disclosure of the other party's
Confidential Information. Each party agrees to hold
-5-
<PAGE>
such Confidential Information in confidence for a period of three (3) years from
the date of receipt of same unless otherwise agreed to in writing by the
disclosing party.
(b) Exceptions. Notwithstanding the above, neither party shall have
----------
liability to the other with regard to any Confidential Information of the other
which the receiving party can prove:
(i) was in the public domain at the time it was disclosed or
has entered the public domain through no fault of the receiving party;
(ii) was known to the receiving party, without restriction, at
the time of disclosure, as demonstrated by files in existence at the time of
disclosure;
(iii) is disclosed with the prior written approval of the
disclosing party;
(iv) was independently developed by the receiving party without
any use of the Confidential Information, as demonstrated by files created at the
time of such independent development;
(v) becomes known to the receiving party, without restriction,
from a source other than the disclosing party without breach of this Agreement
by the receiving party and otherwise not in violation of the disclosing party's
rights; or
(vi) is disclosed pursuant to the order or requirement of a
court, administrative agency, or other governmental body; provided, however,
that the receiving party shall provide prompt notice of such court order or
requirement to the disclosing party to enable the disclosing party to seek a
protective order or otherwise prevent or restrict such disclosure.
(c) Return of Confidential Information. Upon expiration or
----------------------------------
termination of this Agreement, each party shall promptly return all Confidential
Information of the other party. In addition, each party shall, upon written
request of the other party, return Confidential Information of such other party.
(d) Remedies. Any breach of the restrictions contained in this
--------
Section is a breach of this Agreement which may cause irreparable harm to the
nonbreaching party. Any such breach shall entitle the nonbreaching party to
injunctive relief in addition to all legal remedies.
(e) Confidentiality of Agreement. Each party shall be entitled to
----------------------------
disclose the existence of this Agreement, but agrees that the terms and
conditions of this Agreement shall be treated as Confidential Information and
shall not be disclosed to any third party; provided, however, that each party
may disclose the terms and conditions of this Agreement:
(i) as required by any court or other governmental body;
(ii) as otherwise required by law;
-6-
<PAGE>
(iii) to legal counsel of the parties;
(iv) in confidence, to accountants, banks, and financing sources
and their advisors;
(v) in connection with the enforcement of this Agreement or
rights under this Agreement; or
(vi) in confidence, in connection with an actual or proposed
merger, acquisition, or similar transaction.
8. Indemnity.
---------
(a) Indemnification by Manufacturer. Manufacturer agrees, at its own
-------------------------------
expense, to indemnify the Customer against any damages, costs (including
attorneys' fees and costs) or other liability arising from any claim brought
against them with respect to any Products manufactured by Manufacturer, and any
reasonable out-of-pocket costs to Customer of any returned or failed Products
manufactured by Manufacturer, including all costs incurred as a result of a
Product withdrawal or recall (collectively "Customer Losses") to the extent such
---------------
Customer Losses are caused by Manufacturer's failure to manufacture the Products
in conformance with the Specifications and with Manufacturer's warranties as set
forth in this Agreement, or by Manufacturer's misconduct or negligence;
provided, with respect to any claim or action, that Customer provides (i) prompt
- --------
written notice of such claim or action, (ii) sole control and authority over the
defense or settlement of such claim or action and (iii) proper and full
information and reasonable assistance to defend and/or settle any such claim or
action.
(b) Indemnification by the Customer. Customer agrees, at its own
-------------------------------
expense, to defend or at its option to settle any claim or action brought
against Manufacturer based on an allegation that the Specification provided by
Customer for a Product manufactured by Manufacturer pursuant to this Agreement
infringes any U.S. patent, or registered U.S. copyright, or registered U.S.
trademark , trade secret, or other intellectual property right of any third
party, and to indemnify Manufacturer against any and all damages and costs,
including legal fees, that a court awards against Manufacturer under any such
claim or action; provided that Manufacturer provides Customer with (i) prompt
--------
written notice of such claim or action, (ii) sole control and authority over
the defense or settlement of such claim or action and (iii) proper and full
information and reasonable assistance to defend and/or settle any such claim or
action. Notwithstanding the foregoing, Customer assumes no liability for
infringement claims with respect to any Product that is not manufactured in
conformance with the Specifications and with Manufacturer's warranties as set
forth in this Agreement.
The foregoing states the entire liability and obligations of, and the
exclusive remedy of, the parties, with respect to any alleged or actual
infringement of patents, copyrights, trade secrets, trademarks or other
intellectual property rights.
(c) No Other Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY
------------------
HEREIN, NEITHER PARTY NOR ITS AGENT(S), REPRESENTATIVE(S) OR
-7-
<PAGE>
EMPLOYEE(S) SHALL BE LIABLE TO THE OTHER PURSUANT TO THIS AGREEMENT FOR AMOUNTS
REPRESENTING LOSS OF REVENUES, LOSS OF PROFITS, LOSS OF BUSINESS OR INDIRECT,
CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OF THE OTHER PARTY, HOWEVER CAUSED
AND ON ANY THEORY OF LIABILITY, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. THE LIABILITY OF CUSTOMER, ITS AGENT(S),
REPRESENTATIVE(S) AND EMPLOYEE(S) TO THE MANUFACTURER FOR DAMAGES OR ALLEGED
DAMAGES WHETHER IN CONTRACT OR TORT (INCLUDING STRICT LIABILITY AND NEGLIGENCE)
WITH RESPECT TO THIS AGREEMENT IS LIMITED TO AND SHALL NOT EXCEED THE AMOUNTS
PAID BY CUSTOMER TO MANUFACTURER UNDER THIS AGREEMENT DURING THE TWELVE (12)
MONTHS IMMEDIATELY PRECEDING THE EVENT AND/OR PRODUCT GIVING RISE TO THE
DAMAGES.
9. Warranty and Disclaimer.
-----------------------
Manufacturer warrants that all Products will conform to the
Specifications set forth herein (or as may otherwise be mutually agreed upon in
writing), and will be free from defects in material and workmanship for a period
of fifteen (15) months from date of shipment to Customer. In the case of
shipments directly to a customer site, the warranty period shall also begin on
the date of shipment from the Manufacturer. In the event of a failure under
warranty, Manufacturer will repair or replace the Product(s), at it's option,
within thirty (30) days notice of such non-compliance. Manufacturer shall bear
the transportation charges for Products returned under these warranty
conditions. If the Product is not found defective by Manufacturer, then
Customer will bear the expense to return the Product to its facility. Except
for the foregoing expressly stated warranties, manufacturer makes no express or
implied warranties relating to the products covered by this agreement.
Manufacturer expressly disclaims any implied warranties of merchantability or
fitness for a particular purpose.
10. Term and Termination.
--------------------
(a) Term. This Agreement shall become effective on the date of this
----
Agreement and shall continue for a period of eighteen (18) months; this
Agreement shall be extended automatically at the end of the initial term or
subsequent terms for an additional 18 month term, unless within thirty (30) days
prior to the end of the initial term or a renewal term, a party gives written
notice to the other party of its intention to terminate the Agreement.
(b) Termination for Convenience. This Agreement may be terminated at
---------------------------
any time with or without cause by either party upon the giving of not less than
one hundred eighty (180) days' written notice by registered mail to the other
party.
(c) Termination for Cause. Either party may cancel this Agreement at
---------------------
any time if the other party breaches any term hereof and fails to cure such
breach within ten (10) business days after notice of such breach or if the other
party shall be or becomes insolvent, or if either party makes an assignment for
the benefit of creditors, or if there are instituted by or against either party
proceedings in bankruptcy or under any insolvency or similar law or for
reorganization, receivership or dissolution.
-8-
<PAGE>
(d) Termination Liability. Neither party shall be liable in any
---------------------
manner on account of the termination or cancellation of this Agreement. The
rights of termination and cancellation as set forth herein are absolute. Both
Customer and Manufacturer are aware of the possibility of expenditures necessary
in preparing for performance hereunder and the possible losses and damages which
may occur to each in the event of termination or cancellation. Both parties
clearly understand that neither shall be liable for damages of any kind
(including but not limited to special, incidental or consequential damages) by
reason of the termination or cancellation of this Agreement.
(e) Obligations Upon Termination. The termination or expiration of
----------------------------
this Agreement shall in no way relieve either party from its obligations to pay
the other any sums accrued hereunder prior to such termination or expiration.
(f) Survival of Certain Provisions. Notwithstanding anything to the
------------------------------
contrary in this Agreement, the following sections shall survive termination of
this Agreement: 1, 5, 6,7,8,9,10, and 11.
11. Miscellaneous.
-------------
(a) Amendments and Waivers. Any term of this Agreement may be amended
----------------------
or waived only with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 11(a) shall be binding upon the parties and their respective successors
and assigns.
(b) Successors and Assigns. Manufacturer or Customer shall not assign
----------------------
any of its rights, obligations or privileges (by operation of law or otherwise)
hereunder without the prior written consent of the other party, which shall not
be unreasonably withheld, except to a successor entity into which either party
shall have sold or transferred all or substantially all its assets. Subject to
the foregoing, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
(c) Governing Law. This Agreement and all acts and transactions
--------------
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Washington, without giving effect to principles of conflicts of law.
(d) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(e) Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
-9-
<PAGE>
(f) Notices. Any notice required or permitted by this Agreement
-------
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below, or as subsequently modified by written
notice.
-10-
<PAGE>
Customer: Metawave Communications Corporation
PO Box 97069
10735 Willows Road NE
Redmond, WA 98073
fax: (425) 702-5971
Attention: VP, Operations
Copy to: General Counsel
Manufacturer: Powerwave Technologies, Inc.
2026 McGaw Avenue
Irvine, CA 92614
fax: (949) 757-6670
Attention: President and Chief Executive Officer
Copy to: Chief Financial Officer
(g) Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(h) Entire Agreement. This Agreement is the product of both of the
----------------
parties hereto, and constitutes the entire agreement between such parties
pertaining to the subject matter hereof, and merges all prior negotiations and
drafts of the parties with regard to the transactions contemplated herein. Any
and all other written or oral agreements existing between the parties hereto
regarding such transactions are expressly canceled.
(i) Independent Contractors. The relationship of Manufacturer and
-----------------------
Customer established by this Agreement is that of independent contractors, and
nothing contained in this Agreement will be construed (i) to give either party
the power to direct and control the day-to-day activities of the other, (ii) to
constitute the parties as partners, joint venturers, co-owners or otherwise as
participants in a joint or common undertaking, or (iii) to allow either party to
create or assume any obligation on behalf of the other for any purpose
whatsoever.
(j) Force Majeure. If the performance of this Agreement or any
-------------
obligations hereunder is prevented, restricted or interfered with by reason of
fire or other casualty or accident, strikes or labor disputes, war or other
violence, any law, order, proclamation, regulation, ordinance, demand or
requirement of any government agency, or any other act or condition beyond the
reasonable control of the parties hereto, the party so affected upon giving
-11-
<PAGE>
prompt notice to the other parties shall be excused from such performance during
such prevention, restriction or interference.
-12-
<PAGE>
The parties have executed this Agreement as of the date first set forth
above.
CUSTOMER: MANUFACTURER:
METAWAVE COMMUNICATIONS POWERWAVE TECHNOLOGIES, INC.
CORPORATION
By: ____________________________ By: __________________________
Name: Robert H. Hunsberger Name: __________________________
----------------------------
Title: Chief Executive Officer Title: __________________________
----------------------------
-13-
<PAGE>
Exhibit A
---------
Products
Customer P/N Manufacturer P/N Description
- -------------------------------------------------------------------------
127-0015-02 MCA9107-50 AMP,LPA,800-960MHZ,50W,FCC
127-0001-02 MCA9114-30 AMP,LPA,800-960MHZ,30W,EMI IMPROV
245-0006-01 MCR4100-4-4 LPA RACK ASSY
209-3004-01 600-00428-01 KIT,BRACKET,MATRIX INSTALLATION
-14-
<PAGE>
Exhibit B
---------
Product Specifications
Electrical 127-0015-02
[***]
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-15-
<PAGE>
Electrical 127-0001-02
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Parameter Min Max Unit Conditions
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frequency of operation 869 894 MHz All specifications shall be met across this range
unless otherwise specified.
- -------------------------------------------------------------------------------------------------------------------
Gain 56.5 57.5 dB Measured at 880MHz.
- -------------------------------------------------------------------------------------------------------------------
Gain Flatness 0 .5 dB
- -------------------------------------------------------------------------------------------------------------------
Gain Variation (Temp) -0.5 +0.5 dB From 25(degrees)C, across specified temperature range
- -------------------------------------------------------------------------------------------------------------------
Gain Variation (Volts) -0.2 +0.2 dB From 27V, across specified voltage range
- -------------------------------------------------------------------------------------------------------------------
Phase 175 185 Deg. Measured at 880MHz, 25(degrees)C, any power level.
Electrical delay of 50.772 nS.
- -------------------------------------------------------------------------------------------------------------------
Phase Tracking -10 +10 Deg. From 25(degrees)C, across specified temperature range
- -------------------------------------------------------------------------------------------------------------------
Output Power (avg.) 30 Watt 1 to 96 Carriers
- -------------------------------------------------------------------------------------------------------------------
IMD -57 dBc 4 carriers, phase peaked, equal carrier spacing
100KHz to 25 MHz. Any power up to maximum average
output power.
- -------------------------------------------------------------------------------------------------------------------
-60 dBc As above except 4 carriers, phase random.
- -------------------------------------------------------------------------------------------------------------------
Input Return Loss -12 dB At any output power level
- -------------------------------------------------------------------------------------------------------------------
Output Return Loss -18 dB At any output power level
- -------------------------------------------------------------------------------------------------------------------
Harmonic Output -50 dBc At any number of carriers, any power level
- -------------------------------------------------------------------------------------------------------------------
Spurious -60 dBc 820 MHz to 900 MHz
- -------------------------------------------------------------------------------------------------------------------
-50 dBc All other frequencies
- -------------------------------------------------------------------------------------------------------------------
Radiated Emissions -80 dBm Using calibrated close field probe in contact with any
external surface of the module
- -------------------------------------------------------------------------------------------------------------------
Power Supply Voltage 25 30 Volt 27V Nominal
- -------------------------------------------------------------------------------------------------------------------
Power Supply Current 20 Amp At maximum RF power out.
- -------------------------------------------------------------------------------------------------------------------
Communications RS485 interface for control and status
- -------------------------------------------------------------------------------------------------------------------
Alarming and status Visual indication on front panel and over
communications bus
- -------------------------------------------------------------------------------------------------------------------
Hot Swap Capable Unit shall be capable of being replaced without
shutting down power.
- -------------------------------------------------------------------------------------------------------------------
FCC Compliance CFR 47, Part22
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Mechanical/Environmental
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Parameter Requirement
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Humidity From 5% to 95% R.H. not to exceed .024 grams of water per gram of dry air
(non-condensing)
- -------------------------------------------------------------------------------------------------------------------
Operating temperature 0(degree) to +50(degrees) Celsius, room ambient
- -------------------------------------------------------------------------------------------------------------------
Storage temperature -40(degrees) to +65(degrees) Celsius, room ambient
- -------------------------------------------------------------------------------------------------------------------
Shock and vibration Belcore specification TR-NWT-000063 Zone 3 (no ceiling braces)
- -------------------------------------------------------------------------------------------------------------------
Acoustical noise Acoustic noise specification ISO-3743
- -------------------------------------------------------------------------------------------------------------------
Mounting Field replaceable, removable from front of 25-inch rack mounting frame
- -------------------------------------------------------------------------------------------------------------------
Weight No more than 35 lbs
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
-16-
<PAGE>
Exhibit C
---------
Pricing
Customer Part Number Manufacturer Part Number Price
- ----------------------------------------------------------------------------
[***]
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-17-
<PAGE>
EXHIBIT 10.12
Certain information in this Exhibit has been omitted and filed separately
with the Securities and Exchange Commission pursuant to a confidential treatment
request.
<PAGE>
Unredacted version filed confidentially with the Securities and Exchange
Commission
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION/
GTE Wireless Inc.
Purchase Agreement
Document Number #1003-PA
Metawave Communications Corporation
10735 Willows Road NE
Redmond, WA 98073-9769 USA
Tel. 425 702-5600
Fax 425 702-5970
http://www.metawave.com
<PAGE>
TABLE OF CONTENTS
1. AGREEMENT.............................................................. 3
2. DEFINITIONS............................................................ 3
3. PURCHASE ORDERS / CANCELLATIONS........................................ 5
4. SHIPPING, TITLE, RISK OF LOSS.......................................... 6
5. INVOICES AND PAYMENT................................................... 6
6. WARRANTY............................................................... 8
7. OBLIGATIONS OF CUSTOMER................................................ 9
8. INFRINGEMENT INDEMNITY................................................. 10
9. INDEMNIFICATION........................................................ 11
10. TERM AND TERMINATION................................................... 11
11. ASSIGNMENT............................................................. 11
12. NOTICES................................................................ 12
13. COMPLIANCE WITH LAWS................................................... 12
14. FORCE MAJEURE.......................................................... 12
15. GOVERNING LAW; DISPUTE RESOLUTION...................................... 13
16. CONFIDENTIALITY........................................................ 13
17. GENERAL PROVISIONS..................................................... 14
EXHIBIT A: PRODUCTS AND SERVICES PRICING
EXHIBIT B: PRODUCT SPECIFICATIONS
EXHIBIT C: PERFORMANCE ACCEPTANCE PROCEDURE
EXHIBIT D: PRODUCT MAINTENANCE PROGRAM
EXHIBIT E: SOFTWARE LICENSE
EXHIBIT F: COMMISSIONING CERTIFICATE
2
<PAGE>
METAWAVE COMMUNICATIONS CORPORATION
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made as of this eighth
day of September, 1998 (the "Effective Date") between Metawave
Communications Corporation, a Delaware corporation ("Seller"), and GTE
Mobilnet of California Limited Partnership, by GTE Wireless Incorporated,
its General Partner on its behalf and its Affiliates ("Customer").
The parties, in consideration of the mutual covenants, agreements and
promises of the other set forth in this Agreement and intending to be
legally bound, agree as follows:
1. AGREEMENT
Seller agrees to sell to Customer, and Customer agrees to purchase by
submitting a Customer Purchase Order to Seller, the Products and Services
identified on Exhibit A to this Agreement in accordance with the
specifications and the terms and conditions hereof and at the Purchase
Prices set forth in Exhibit A. Notwithstanding any other provision of this
Agreement or any other contract between the parties to the contrary, the
provisions of this Agreement shall apply to all Purchase Orders for the
Products and Services during the term of this Agreement unless the parties
expressly agree by written modification to this Agreement that the
provisions of this Agreement shall not apply. Any different or
inconsistent terms in any acknowledgment, confirmation, invoice, Purchase
Order or other communication from one party to the other shall be deemed
objected to without need of further notice of objection and shall be of no
effect and not in any circumstance binding upon either party unless
expressly accepted by both parties in writing.
2. DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings set forth below:
"Affiliate" shall mean any partnership, corporation or other entity
which is incorporated in the United States and in which GTE Wireless
Incorporated, directly or indirectly, owns more than fifty percent (50%) of
the voting shares, or owns a controlling interest.
"Change Order" shall mean any subsequent change to a Purchase Order
initiated by either party and mutually agreed to by both parties, including
but not limited to, changes in Site configuration and Products and Services
needed at the Site.
"Commissioning" shall mean the procedures required to place the
Product into commercial service at a particular Site as described in the
Product system manual and the
3
<PAGE>
completion of which for Follow-on Orders is shown by evidence of Customer's
signature on the Commissioning Certificate attached hereto as Exhibit F.
"Follow-on Order" shall mean any Purchase Order in excess of the
Initial Order submitted by Customer.
"Initial Order" shall mean Customer's initial purchase of one or more
Products (and any associated Services) for deployment in the Customer's
California market and ordered as a part of this Purchase Agreement and as
described in Exhibit A.
"Performance Acceptance" shall mean, for the Initial Order,
Customer's written notification to Seller of the Certificate of Performance
Acceptance specified in Exhibit C, that the Products satisfy the
Performance Criteria set forth in Exhibit C.
"Performance Acceptance Procedure" shall mean, for the Initial Order,
the testing procedures and protocols used to determine Product performance
levels as described in Exhibit C.
"Performance Criteria" shall mean the [**] set forth in Exhibit C,
Section 3.7.3. to be [**] for the [**] Products [**] Initial Order [**]
Performance Evaluation Period.
"Performance Evaluation Period" shall mean the [**] in Exhibit C
3.7.2.1. [**] Products will [**] in [**] Performance Criteria.
"Products" shall mean the SpotLight(TM) 2000 spectrum management
systems, consisting of hardware and Software, listed in Exhibit A hereto or
any additional products set forth in any amendments thereto as may be
subsequently agreed to from time to time by Seller and Customer.
"Purchase Order" shall mean any purchase order Customer may deliver to
Seller for the purchase of the Products and/or Services which incorporates
the terms and conditions of this Agreement and which has been accepted by
Seller.
"Purchase Price" shall mean the price of the Products and the price of
the Services shown in Exhibit A or any other amount set forth in any
amendments to Exhibit A as may be subsequently agreed to from time to time
by Seller and Customer.
"Services" shall mean the engineering services set forth in Exhibit A
or any additional services set forth in any amendments to Exhibit A as may
be subsequently agreed to from time to time by Seller and Customer.
"Site" shall mean each of the Customer cell site locations at which a
Product is installed.
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"Site Survey" shall mean the survey of a Site performed by Seller to
determine the Product configuration and scope of services required for the
proper installation and Commissioning of the Product.
"Software" shall mean the (i) object-code computer programs embedded
in the Product which control and monitor the operation of the Product
("Embedded System Software"), and (ii) the Lamplighter/TM/ PC-based
graphical user interface computer program for the Product, and all
Features, Major Releases, Point Releases, and Software Patches (as such
terms are defined in Exhibit D), other updates and modifications to such
Software (the "Software Updates") and any documentation in support thereof.
"Software License" shall mean the software license set forth in
Exhibit E.
"Specifications" shall mean the specifications for the Products set
forth in Exhibit B and incorporated herein.
3. PURCHASE ORDERS/CANCELLATIONS
a. When Customer wishes to purchase Products and Services pursuant to this
Agreement, Customer shall notify the Designated Representative of
Seller specified in Section 12 hereof. Seller's Designated
Representative (or his agents) shall, with a representative of
Customer, conduct a Site Survey for each Site to determine the
configuration, Products, scope of Services and any other ancillary
equipment required for each Site. The Designated Representative shall
then develop an equipment list and price sheet for the Products and
Services required for each Site using the prices set forth in Exhibit A
(the "Quotation").
b. Following receipt of the Quotation, Customer shall order Products and
Services by submitting a Purchase Order to which the Quotation shall be
attached and made a part thereof. The Purchase Order shall also include
the desired delivery date and whether partial deliveries are
acceptable. Purchase Orders should be submitted by Customer to Seller
at least 90 days prior to date of delivery for such Products and
Services. Upon receipt of the Purchase Order, Seller shall have five
(5) business days to accept or reject the Purchase Order in writing.
c. In the event that the Customer submits a Purchase Order without a
Quotation, such Purchase Order shall be subject to completion of a Site
Survey by Seller. If following the completion of the Site Survey,
Seller determines that Product configurations and or the Services set
forth in the Purchase Order must be changed, Seller shall, within ten
(10) days of completion of the Site Survey, notify Customer with a
written proposal for changes to the Purchase Order. Upon receipt,
Customer shall have five (5) business days to accept or reject the
written proposal for changes. If accepted, Customer shall execute a
written Change Order to reflect the required changes identified by the
Site Survey. If Customer rejects the Change Order Customer may cancel
the Purchase Order subject to Section 3(d) below.
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d. Customer may cancel or delay delivery of a Product contained in any
Purchase or Change Order prior to Seller's shipment of the Product
subject to the terms herein. Any such cancellation or delay must be
made by written notification. If Customer directs such cancellation or
delay with less than 30 days written notice from the delivery date
specified in Purchase Order or Change Order, Customer shall pay to
Seller any reasonable costs associated with such cancellation or delay
provided, however, that any such costs shall not exceed in the
aggregate ten percent (10%) of the Purchase Price of each canceled or
delayed Product. Customer shall not be obligated to pay any such costs
if Customer timely exercises its cancellation rights under section 3(c)
hereof.
e. Within thirty days following execution of this Agreement, Customer
shall give Seller a non binding forecast of Customer's estimated
requirements for the Products and Services for the forthcoming twelve
(12) months such forecast shall be updated by Customer on a monthly
basis.
4. SHIPPING, TITLE, RISK OF LOSS
a. Unless otherwise instructed by Customer, and subject to Section 3,
Seller shall ship all Products to the destination designated in a
Purchase Order on or before the delivery date(s) specified in a
Purchase Order and render invoices in accordance with Section 5 below.
Customer is responsible for the payment of all reasonable shipping
charges, except as noted in Section 4(b) below.
b. Products shall be packed by Seller, at no additional charge to
Customer, in containers adequate to prevent damage during reasonable
shipping, handling and storage. Customer shall be responsible for
payment of any warehousing or storage charges for the Products
following delivery of the Products to Customer.
c. For the Initial Order, title to and risk of loss or damage to Products
sold by Seller to Customer hereunder shall pass to Customer upon
Performance Acceptance. For all Follow-on Orders title to and risk of
loss or damage to Products sold by Seller to Customer hereunder shall
pass to Customer upon shipment of Products to Customer. Title to
Software shall remain with Seller in all cases pursuant to the terms of
the Software License attached as Exhibit E hereto.
5. INVOICES AND PAYMENT
a. For the Products in the Initial Order only, the payment schedule shall
be as follows:
1. Seller shall render an invoice for one hundred percent (100%) of
the Purchase Price of the Products and one hundred percent (100%)
of the Purchase Price of the Services associated with such Products
upon Performance Acceptance.
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2. In the event that Performance Acceptance for the Products in the
Initial Order does not occur and Seller has indicated in writing
that it will no longer pursue Performance Acceptance, Customer
shall have the option of either (i) completing the purchase of the
Products in which case Seller shall render an invoice for the
balance due or (ii) returning the Products to the Seller. If
Customer chooses to return the Products to Seller, Seller shall de-
install such Products at Seller's expense and repair any damage to
or reverse any modifications to the Customer's equipment at the
Site caused by Seller during installation of the Products and
during the Performance Evaluation Period. Seller shall arrange for
and pay the costs of shipping and assumes the risk of loss and
damage to Products during shipment of the Products back to its
headquarters in Redmond, Washington.
b. For Follow-on Orders for Products, to be installed by Seller, Seller
shall render invoices as follows: (i) [**] of the Purchase Price of
each Product upon shipment of a Product to Customer, and (ii) [**] of
the Purchase Price of each Product and one hundred percent (100%) of
any associated Services promptly following the Commissioning of a
Product. For Follow-on Orders, to be installed by Customer, Seller
shall invoice Customer for one hundred percent (100%) of the Purchase
Price of each Product upon shipment of Product to Customer.
c. For Follow-on-Orders for Services only, Seller shall render invoices
for 100% of the Purchase Price upon the completion of the Services, or
on alternative milestones based upon mutual agreement of the parties.
d. All invoices shall be computed on the basis of the prices set forth
in Exhibit A (including any applicable discounts) and shall identify
and show separately quantities of Products, type of Services, total
amounts for each item, shipping charges, insurance charges, applicable
sales or use taxes and total amount due. Customer shall promptly pay
Seller the amount due within thirty (30) days of the date of receipt of
the invoice, except for the Initial Order only which shall be due
ninety (90) days of the date of receipt of the invoice. Customer shall
pay a late fee at the rate of one and one-half percent (1.5%) of the
amount due for each month or portion thereof that the amount remains
unpaid.
e. Excluding income, business and licensing taxes, Customer shall be
responsible for the payment of all sales, use and any other taxes
applicable specifically to the sale of the Products and Services
provided by the Seller pursuant to this Agreement. When Seller is
required by law to collect such taxes, 100% thereof will be added to
invoices as separately stated charges and paid by Customer in
accordance with this section.
f. If Customer disputes any invoices rendered or amount paid, Customer
will so notify Seller, and the parties will use their reasonable
efforts to resolve such
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RESPECT TO THE OMITTED PORTIONS.
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dispute expeditiously. Provided that Customer so notifies Seller of a
disputed invoice and there is a good faith basis for such dispute, the
time for paying the portion of the invoice in dispute shall be extended
by a period of time equal to the time between Seller's receipt of such
notice from Customer and the resolution of such dispute.
6. WARRANTY
a. Seller warrants, for the Initial Order, for a period of [***] from the
date of Performance Acceptance and for all Follow-on Orders, for a
period of [***] from the shipment of a Product to Customer (the
"Warranty Period") that (i) all Products furnished hereunder will be
free from defects in materials, workmanship and title, (ii) all
Products will conform in all material respects to the documentation and
specifications provided by the Seller herein, (iii) the media on which
the Software is contained will be free from defects in material and
workmanship under normal use, and (iv) the Software will conform in all
material respects to the documentation provided by Seller. The
warranties in this Agreement are given in lieu of all other warranties
express or implied which are specifically excluded, including, without
limitation, implied warranties of merchantability and fitness for a
particular purpose.
b. Seller represents that, in connection with Calendar-Related data and
Calendar-Related processing of Date Data or of any System Date, the
Product will not malfunction, will not cease to function, will not
generate incorrect data, and will not produce incorrect results. Seller
further represents that, in connection with providing Calendar-Related
data to and accepting Calendar-Related data from other automated,
computerized, and/or software systems and users via user interfaces,
electronic interfaces, and data storage, the Product represents dates
without ambiguity as to century. Seller further represents that Seller
has verified through testing that the Products are century compliant
and that testing included, without limitation, each of the following
specific dates and the transition to and from each date: December 31,
1998; January 1, 1999; September 9, 1999; September 10, 1999; December
31, 1999; January 1, 2000; February 28, 2000; February 29, 2000; March
1, 2000; December 31, 2000; January 1, 2001; December 31, 2004; and
January 1, 2005. These representations survive the expiration or
earlier termination of this Agreement. For purposes of this section,
"Calendar-Related" refers to date values based on the Gregorian
calendar, as defined in Encyclopedia Britannica, 15th edition, 1982,
page 602, and to all uses in any manner of those date values, including
without limitation manipulations, calculations, conversions,
comparisons, and presentations; "Date Data" means any Calendar-Related
data value in the inclusive range January 1, 1900 through December 31,
2094, which the Product uses in any manner; and "System Date" means any
Calendar-Related data value in the inclusive range January 1, 1985
through December 31, 2094 (including the natural transition between
such values), which the Product shall be able to use as its current
date while operating.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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c. Customer and Seller shall handle all warranty claims in accordance with
the procedures set forth in Exhibit D hereto (Product Maintenance). The
actions taken by Seller under the Product Maintenance Program
procedures set forth in Exhibit D shall be the full extent of Seller's
liability and Customer's exclusive remedy with respect to a claim under
this Section 6.
d. This warranty does not apply to any claim which arises out of any of
the following: (i) the Product is used in other than its normal and
customary manner; (ii) the Product has been subject to misuse,
accident, neglect or damage by Customer; (iii) the Product has been
installed, Commissioned, optimized or moved from its original
installation site by any person other than Seller or a person who has
been certified by Seller through completion of a Seller-sponsored
training course to provide such services; (iv) unauthorized alterations
or repairs have been made to the Product, or parts have been used in
the Product which are not approved by Seller; (v) the Product is not
maintained pursuant to Seller maintenance programs or under the
supervision of a person who has been certified by Seller to provide
such maintenance service through completion of a Seller-sponsored
training course; (vi) an event of Force Majeure has occurred; (vii) the
failure of third party antennas, antenna lines or interconnection
facilities not provided by Seller at the Site.
7. OBLIGATIONS OF CUSTOMER
In addition to performing the other obligations set forth in this
Agreement, Customer shall:
a. Procure from appropriate regulatory authorities all zoning approvals,
necessary permits and station licenses as may be required to install
and operate Customer's wireless system incorporating the Products prior
to the date agreed by the parties for the commencement of installation
of those Products;
b. Prepare the Site for the installation of the Product and performance of
the Services as specified in the Scope of Work to be mutually agreed by
both parties for each Site prior to the date agreed by the parties for
the commencement of installation of those Products;
c. Agree with Seller on a date for the commencement of Services and in the
event that the commencement of Services is delayed due to the failure
of Customer to comply with the foregoing obligations, Seller shall be
entitled to recover reasonable costs and expenses associated with
mobilizing and compensating Seller personnel during the delay.
d. Provide safe and secure access to the Sites for Sellers employees
during the performance of Services.
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8. INFRINGEMENT INDEMNITY
a. Seller shall indemnify and hold harmless Customer against any and all
liabilities, losses, costs, damages and expenses, including reasonable
attorney's fees, associated with any claim or action for actual or
alleged infringement by any Product or Software supplied in accordance
with this Agreement of any United States patent, trademark, copyright,
trade secret or other intellectual property right incurred by Customer
as a result of Customer's use of such Products or Software in accordance
with this Agreement provided that (i) Customer promptly notifies Seller
in writing of the claim, (ii) Customer gives Seller full opportunity and
authority to assume sole control of the defense and all related
settlement negotiations, and (iii) Customer gives Seller information and
assistance for the defense (Customer will be reimbursed for reasonable
costs and expenses incurred in rendering such assistance, against
receipt of invoices therefor). Subject to the conditions and limitations
of liability stated in this Agreement, Seller shall indemnify and hold
harmless Customer from all payments, which by final judgments in such
claims, may be assessed against Customer on account of such alleged
infringement and shall pay resulting settlements, costs and damages
finally awarded against Customer by a court of law, arbitration or other
adjudication of the claim.
b. Customer agrees that if the Products or Software become, or in Seller's
opinion are likely to become, the subject of such a claim, Customer will
permit Seller, at Seller's option and expense, either to procure the
right for Customer to continue using such Products or Software or to
replace or modify same so that they become non-infringing as long as
they continue to conform in all material respects to the specifications
contained in this Agreement and Exhibits, and, if neither of the
foregoing alternatives is available on terms which are acceptable to
Seller, Customer shall at the written request of Seller, return the
infringing or potentially infringing Products or Software and all the
rights thereto at Seller's expense. Customer shall receive a refund of
the prorated undepreciated portion of the Purchase Price actually paid
by Customer to Seller for the returned portion of the Products. The
Purchase Price shall be straight-line depreciated over a five (5) year
period.
c. Seller shall have no obligation to Customer with respect to any claim of
patent or copyright infringement which is based upon (i) adherence to
specifications, designs or instructions furnished by Customer, (ii) the
combination, operation or use of any Products supplied hereunder with
products, software or data with which the Products are not intended to
be used or for which the Products are not designed, (iii) the alteration
of the Products or modification of any Software made by any party other
than Seller; or (iv) the Customer's use of a superseded or altered
release of some or all of the Software if infringement would have been
avoided by the use of a subsequent unaltered release of the Software
that is provided to the Customer.
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9. INDEMNIFICATION
Seller shall indemnify Customer, its employees and directors, and each
of them, against any loss, damage, claim, or liability, arising out of, as
a result of, or in connection with the use of the Product in accordance
with this Agreement or the acts or omissions, negligent or otherwise, of
Seller in the performance of this Agreement, or a contractor or an agent of
Seller or an employee of anyone of them, except where such loss, damage,
claim, or liability arises from the sole negligence or willful misconduct
of Customer, agents or its employees. Seller shall, at its own expense,
defend any suit asserting a claim for any loss, damage or liability
specified above, and Seller shall pay any costs, expenses and attorneys'
fees that may be incurred by Customer in connection with any such claim or
suit or in enforcing the indemnity granted above, provided that Seller (i)
is given prompt notice of any such claim or suit and (ii) full opportunity
to assume control of the defense or settlement. Customer shall, at its
discretion, have the right to reasonably participate in the defense and
settlement of any claim asserted against Customer, including, but not
limited to, choice of counsel and any settlement, but Seller shall have
final authority to choose counsel and determine whether or not to settle a
claim. Neither Seller nor Customer shall not be liable to the other for
indirect or consequential damages, including but not limited to lost
profits or revenue.
10. TERM AND TERMINATION
The term of this Agreement shall be three (3) years from the Effective
Date. If either party is in material default of any of its obligations
under this Agreement and such default continues for thirty (30) days after
written notice thereof by the party not in default, the nondefaulting party
may cancel this Agreement. In addition, a party may cancel this Agreement
if a petition in bankruptcy or under any insolvency law is filed by or
against the other party and is not dismissed within sixty (60) days of the
commencement thereof.
11. ASSIGNMENT
a. Any assignment by either party to this Agreement or any other interest
hereunder without the other party's prior written consent, shall be
void, except assignment to a person or entity who acquires all or
substantially all of the assets, business or stock of Seller, whether by
sale, merger or otherwise.
b. Customer shall not (i) assign, sublicense or otherwise transfer the
Software License set forth in Exhibit E, to any third party other than
an Affiliate without the prior consent of the Seller, (ii) purchase a
Product solely for the purpose of reselling or distributing it to
another party, (iii) transport, relocate, or otherwise transfer the
Products or the Software outside the United States, or (iv) permit its
directors, officers, employees, agents or any other third person to
modify, copy, decompile, disassemble or reverse engineer the Products or
the Software.
c. Subject to the provisions of paragraphs a, and b above, this Agreement
shall inure to the benefit of and be binding upon the respective
successors and assigns, if any, of the parties hereto.
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12. NOTICES
Except as otherwise specified in this Agreement, all notices or other
communications hereunder shall be deemed to have been duly given when made
in writing and delivered in person or deposited in the United States mail,
postage prepaid, certified mail, return receipt requested, or by a
reputable overnight courier service providing proof of delivery, or by
confirmed facsimile transmission and addressed as follows:
To Seller: To Customer:
Metawave Communications GTE Mobilnet of California
Corporation 12677 Alcosta Blvd
10735 Willows Road NE Dept. 500, PO Box 5011
Redmond, WA 98073 San Ramon, CA 94583-0811
Attn.: Richard Henderson Attn.: Hal Horton, Manager
VP, Sales Area Programs
Copy to: Kathy Surace-Smith Copy to: Randy Golden
General Counsel Regional Counsel
Fax: 425 702 5976 Fax: 925 904 3624
Seller's Designated Representative for Section 3 shall be Mike
Kavanagh or Mike Lewandowski.
The address to which notices or communications may be given to either
party or the names of the Designated Representatives may be changed by
written notice given by such party to the other pursuant to this Section
12.
13. COMPLIANCE WITH LAWS
Seller shall comply with all applicable federal, state and local laws,
regulations and codes, including the procurement of permits and licenses
when needed, in the performance of this Agreement.
14. FORCE MAJEURE
Except for payment of moneys due, neither party shall be liable for
delays in delivery or performance or for failure to manufacture, deliver or
perform resulting from acts beyond the reasonable control of the party
responsible for performance. Such acts shall include, but not be limited to
(a) acts of God, acts of a 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, and loss or damage to goods in
transit; or (b) inability to obtain necessary products, components,
services or facilities on account of causes beyond the reasonable control
of the delayed party or its suppliers. In the event of any such delay, the
date(s) of delivery or performance shall be extended for as many days are
reasonably required due to the delay. If
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such delay continues for 45 days, either party may terminate the Purchase
Order affected by the event by providing written notice.
15. GOVERNING LAW; DISPUTE RESOLUTION
a. This Agreement and each Purchase Order shall be construed in accordance
with the internal laws of the State of California, without regard to its
choice of law provisions.
b. Any and all disputes arising between the parties shall be resolved in
the following order: (i) by good faith negotiation between
representatives of Customer and Seller who have authority to fully and
finally resolve the dispute to commence within ten (10) days of the
request of either party; (ii) in the event that the parties have not
succeeded in negotiating a resolution of the dispute within ten (10)
days after the first meeting, then the dispute will be resolved by
nonbinding mediation to be held in a mutually agreed location in the
United States, using a mutually agreed upon non-affiliated neutral party
having experience with or knowledge in the wireless communications
equipment industry to be chosen within twenty (20) days after written
notice by either party demanding mediation (the costs therefor to be
shared equally); and (iii) if within sixty (60) days of the initial
demand for mediation by the parties, the dispute cannot be resolved by
mediation, then a party may institute litigation in a court having
subject matter jurisdiction, and the parties expressly consent and
submit themselves to the personal jurisdiction of such court. If
compliance with this section would result in expiration of any statute
of limitations for the filing of a court action, the statute of
limitations shall be tolled for the period of time required to comply
with this section.
16. CONFIDENTIALITY
a. During the term of this Agreement and thereafter it may be necessary for
Seller and Customer to mutually exchange certain information, data and
proprietary material relating to marketing, sales, technical, financial
and other matters involving the Products, this Agreement or the
relationship between the Seller and Customer. In order to be treated as
confidential hereunder ("Confidential Information"), information
disclosed in writing shall be marked as confidential or proprietary, and
the disclosing party shall indicate the confidential nature of oral
information at the time of disclosure and provide written confirmation
thereof within fifteen (15) days following such disclosure. All
Confidential Information shall:
1. Be received and retained in the strictest confidence by the parties
and will be deemed to be proprietary information of the disclosing
party and the recipient(s) agree(s) that it will not disclose it to
third parties and further will treat such information, data or
material as proprietary using the same degree of care that it (or
they) would normally use in protecting its (or their) own proprietary
information; and
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2. Be used by the parties hereto solely for the purpose of implementing
this Agreement.
b. This provision shall not apply to any Confidential Information which:
(i) is known by the receiving party prior to the date of disclosure by
the disclosing party, and is not subject to or in violation of an
obligation of confidentiality; (ii) is or become public knowledge other
than by default of the receiving party; (iii) is obtained by the
receiving party from a bona-fide third party having free right of
disposal of such information; (iv) is wholly and independently developed
by receiving party without reference to the Confidential Information; or
(v) the receiving party is required to disclose pursuant to any law,
regulation or a valid order of a court or other governmental body or any
political subdivision thereof, provided, however, that the recipient of
the information shall first have given notice to the disclosing party
and made a reasonable effort to obtain a protective order requiring that
the information and/or documents so disclosed be used only for the
purposes for which the order was issued.
c. Subject to the foregoing, this Agreement shall also be treated
confidentially by all parties hereto.
d. This section shall survive any termination of the Agreement for a period
of three (3) years.
17. GENERAL PROVISIONS
a. Seller and Customer may issue a joint press release concerning the
execution of this Agreement. Such press release shall be subject to
prior review and written approval by both parties, not to be
unreasonably withheld.
b. Any waiver by any party of any breach or failure to comply with any
provision of this Agreement by the other party must be in writing and
shall not be construed as, or constitute, a continuing waiver or such
provision, or a waiver of any other provision of this Agreement.
c. If any of the provisions of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate
or render unenforceable the entire Agreement, but rather the entire
Agreement shall be construed as if not containing the particular invalid
or unenforceable provisions, and the rights and obligations of Seller
and Customer shall be construed and enforced accordingly.
d. This Agreement, including all Exhibits which are attached to and hereby
incorporated into this Agreement, shall constitute the entire agreement
between Customer and Seller with respect to the subject matter hereof
and supersedes all prior agreements, covenants, arrangements,
communications, representations or warranties, whether oral or written,
by any party or any officer, employee or representative of any party
with respect to the subject matter hereof.
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e. Any amendment or modification of this Agreement or any Exhibit must be
in writing and signed by a duly authorized representative of each of the
parties.
f. This Agreement applies only to sales of Products and Services in the
United States.
g. Each party shall comply with all applicable U.S. and foreign export
control laws and regulations and shall not export or re-export any
technical data or products except in compliance with the applicable
export control laws and regulations of the U.S. and any foreign country.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized representatives.
Metawave Communications Corporation GTE Mobilnet of California Limited
Partnership by GTE Wireless, Inc., its
General Partner
By:/S/ Richard Henderson By: /S/ Annette M. Jacobs
Name: Richard Henderson Name: Annette M. Jacobs
Title: Vice President Sales Title: Area President, California
and Marketing
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SOFTWARE LICENSE AGREEMENT
EXHIBIT E
TO THE PURCHASE AGREEMENT
BETWEEN
METAWAVE COMMUNICATIONS CORPORATION ("SELLER")
AND
GTE ("CUSTOMER")
1. DEFINITIONS
"Agreement" shall mean the Purchase Agreement between Seller and Customer
executed concurrently herewith, and the Exhibits attached thereto,
including this Exhibit E (Software License).
"Software" shall mean the (i) object-code computer programs embedded in the
SpotLight System which control the operation of the SpotLight System
("Embedded System Software"), and (ii) the LampLighter PC-based graphical
user interface computer program used to monitor the operation of a
SpotLight System and all Features, Major Releases, Point Releases, Software
Patches (as such terms are defined in Exhibit D Product Maintenance
Program), updates and modifications ("Software Updates") and any
documentation in support thereof.
"SpotLight System" shall mean a single SpotLight(TM) 2000 spectrum
management system as described in Exhibit B.
Any terms not defined herein shall have the same meanings as in the
Agreement and the Exhibits thereto.
2. SCOPE
Pursuant to the Agreement, Software will be delivered by Seller to Customer
for use with a SpotLight System according to the terms of the Agreement and
this Exhibit. Customer shall then become a licensee with respect to such
Software.
3. LICENSING GRANT
3.1 Concurrent with execution of the Agreement, and subject to the terms
and conditions set forth herein, Seller grants to Customer a
revocable, non-exclusive and non-transferable license under Seller's
applicable proprietary rights to use Software delivered to Customer
hereunder to routinely operate and monitor the SpotLight System with
which the Software was delivered.
3.2 The Software licensing fees for the most current versions of the
Embedded System Software and LampLighter Software (available at the
time of purchase of a
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SpotLight System) are included in the Purchase Price of a SpotLight
System. Software Updates are available under the Software Maintenance
Program described in Exhibit D or for additional licensing fees.
4. LIMITATIONS ON USE OF SOFTWARE
4.1 Without the prior written consent of Seller, Customer shall only use
the Software in conjunction with a single SpotLight System delivered
to Customer under the terms of the Agreement.
4.2 The license granted to Customer in Section 3 is personal and may only
be transferred to another SpotLight or site or another entity in
accordance with Section 11(b) of the Agreement.
4.3 The Software is subject to laws protecting patents, trade secrets,
know-how, confidentiality and copyright.
4.4 Customer shall not translate, modify, adapt, decompile, disassemble,
or reverse engineer the Software or any portion thereof.
4.5 Unless otherwise expressly agreed by Seller, Customer shall not permit
its directors, officers, employees or any other person under its
direct or indirect control, to write, develop, produce, sell, or
license any software that performs the same functions as the Software
by means directly attributable to access to the Software (e.g. reverse
engineering or copying).
4.6 Customer shall not export the Software from the United States without
the written permission of Seller. If written permission is granted for
export of the Software, then Customer shall comply with all U.S. laws
and regulations for such exports and shall hold Seller harmless,
including legal fees and expenses for any violation or attempted
violation of the U.S. export laws.
4.7 Customer acknowledges that Seller owns the Software and that any
rights therein not specifically granted in this License are the
exclusive property of Seller.
5. RIGHT TO COPY, PROTECTION AND SECURITY
5.1 Software provided hereunder may be copied (for back-up purposes only)
in whole or in part, in printed or machine-readable form for
Customer's internal use only, provided, however, that no more than
three (3) printed copies and three (3) machine-readable copies shall
be in existence at any one time without the prior written consent of
Seller, other than copies electronically resident in SpotLight
Systems.
5.2 With reference to any copyright notice of Seller associated with
Software, Customer agrees to include the same on all copies it makes
in whole or in part. Seller's copyright notice may appear in any of
several forms, including machine-readable form. Use of a copyright
notice on the Software does not imply that such has been published or
otherwise made generally available to the public.
5.3 Customer agrees to keep confidential, in accordance with the terms of
the Agreement or a non disclosure agreement signed by the parties, and
not provide or otherwise make available in any form any Software or
its contents, or any portion
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thereof, or any documentation pertaining to the Software, to any
person other than employees of Customer or Seller.
5.4 Software is the sole and exclusive property of Seller and no title or
ownership rights to the Software or any of its parts, including
documentation, is transferred to Customer.
5.5 Customer acknowledges that it is the responsibility of Customer to
take all reasonable measures to safeguard Software and to prevent its
unauthorized use or duplication.
6. REMEDIES
Customer acknowledges that violation of the terms of this Exhibit or the
Agreement shall cause Seller irreparable harm for which monetary damages
may be inadequate, and Customer agrees that Seller may, in addition to any
other legal or equitable remedy, seek temporary or permanent injunctive
relief without the need to prove actual harm in order to protect Seller's
interests.
7. TERM
Unless otherwise terminated, pursuant to Section 8 hereof, the term of the
license granted pursuant to Section 3 herein shall be perpetual.
8. TERMINATION
8.1 The license granted hereunder may be terminated by Customer upon one
(1) month's prior written notice.
8.2 Seller may terminate the license granted hereunder if Customer is in
material default of any of the terms and conditions of this Exhibit E
and such termination shall be effective if Customer fails to correct
such default within thirty (30) days after written notice thereof by
Seller, provided, however, that if such default cannot reasonably be
cured within thirty (30) days after written notice by Seller, and
Customer diligently commences to correct such default within such
thirty (30) days of written notice, the termination by Seller shall
become effective if Customer fails to correct such default within
ninety (90) days of such written notice. The provisions of Sections 4
and 5 herein shall survive termination of any such license.
8.3 In the event that Customer is required to return the Software,
pursuant to Section 8(b) of the Purchase Agreement, or in the event
that Customer returns a SpotLight System pursuant to Section 5(a)(2)
of the Purchase Agreement, this license shall terminate immediately
upon such return of the Software or Product to Seller.
8.4 Within one (1) month after termination of the license granted
hereunder, Customer shall furnish to Seller a document certifying that
through its best efforts and to the best of its knowledge, the
original and all copies in whole or in part of all Software, in any
form, including any copy in an updated work, have been returned to
Seller or destroyed. With prior written consent from Seller, Customer
may retain one (1) copy for archival purposes only.
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9. RIGHTS OF THE PARTIES
9.1 Nothing contained herein shall be deemed to grant, either directly or
by implication, estoppel, or otherwise, any license under any patents,
patent applications or copyrights of Seller except as expressly
granted herein.
9.2 Rights in programs or operating systems of third parties, if any, are
further limited by their license agreements with such third parties,
which agreements are hereby incorporated by reference thereto and made
a part hereof as if fully set forth herein. Customer agrees to abide
thereby.
9.3 During the term of the license granted pursuant to Section 3 herein
and for a period of one (1) year after expiration or termination,
Seller, and where applicable, its licensor(s), or their
representatives may, upon reasonable prior notice to Customer, a)
inspect the files, computer processors, equipment, facilities and
premises of Customer during normal working hours to verify Customer's
compliance with this Agreement, and b) while conducting such
inspection, copy and/or retain all Software, including the medium on
which it is stored and all documentation that Customer may possess in
violation of the license or the Agreement.
9.4 Customer acknowledges that the provisions of this Exhibit E are
intended to inure to the benefit of Seller and its licensors and their
respective successors in interest. Customer acknowledges that Seller
or its licensors have the right to enforce these provisions against
Customer, whether in Seller's or its licensor's name.
10. LIMITATIONS ON SOFTWARE
Customer understands that errors occur in Software and Seller makes no
warranty that the Software will perform without error. Customer agrees that
it is Customer's responsibility to select and test the Software to
determine that is meets Customer's needs. Customer accepts the Software "as
is" subject to the warranty set forth in Section 6 of the Purchase
Agreement.
11. SOFTWARE OBJECT CODE AND DOCUMENTATION
In the event Seller becomes insolvent, ceases to carry on business on a
regular basis or fails to perform its maintenance obligations herein and
Customer purchases Seller's annual Hardware and Software Product
Maintenance Program, then Seller shall immediately furnish to Customer the
latest version of Product object code and documentation, training materials
and any necessary information to enable Customer to maintain such Products
or contract with others for such work.
12. ENTIRE UNDERSTANDING
12.1 This Exhibit E is a part of, and is to be read together with, the
Agreement which contains additional terms and conditions, warranties
and indemnities applicable to the Software.
12.2 Notwithstanding anything to the contrary in other agreements,
purchase orders or order acknowledgments, the Agreement, the Software
specifications set forth in Exhibit B and this Exhibit E set forth
the entire understanding and obligations regarding use of Software,
implied or expressed.
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EXHIBIT 10.13
TECHNICAL COOPERATION AGREEMENT
THIS AGREEMENT is made as of the ______ day of ________________, 1998. by and
between
(i) Shanghai New Globe Company, with an office at __Rm. 1305, No. 1207,
Jiangning Road, Shanghai 200060, P.R. China (hereinafter "New
Globe");
(ii) Shanghai Post & Telecommunications Administration with an office at
_61 Sichuan N. Road, Shanghai 200085, P.R. China (hereinafter
"Shanghai Telecom");and
(iii) Metawave Communications Corporation, a Delaware corporation with an
office at 10735 Willows Road NE, Redmond, WA 98073 (hereinafter
"Metawave").
WHEREAS, Shanghai Telecom operates GSM networks in Shanghai, China:
WHEREAS, New Globe currently acts as a distributor of telecommunications
equipment to various entities, including Shanghai Telecom;
WHEREAS, Metawave is engaged in the business of, designing, developing,
manufacturing and selling, spectrum management systems, including the Spotlight
and Spotlight 2000 systems and wishes to develop a GSM compatible Spotlight
system (the "GSM Spotlight System"; and
WHEREAS, the Parties wish to enter into an agreement which, among other things,
will establish the duties and responsibilities of each Party in Metawave's
development and testing of an GSM Spotlight System between the Spotlight system
and certain GSM base stations utilized by Shanghai Telecom and support of
certain testing activities related to such GSM Spotlight Systems, all as more
specifically described herein;
NOW, THEREFORE, in consideration of the mutual covenants of the Parties and
other good and valuable consideration, the sufficiency of which is acknowledged,
the Parties agree as follows:
1.0 DEFINITIONS
"Base Station" means the GSM micro base station to be provided by Shanghai
Telecom pursuant to this Agreement.
"GSM Spotlight System" means the spectrum management system that is to be
designed by Metawave to be compatible with the GSM air protocol.
"Intellectual Property Rights" or "IPR" shall mean any rights related to trade
secrets, patents, copyrights, trademarks, know how, and mask work rights, and
similar rights of
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
any type under the laws of any governmental authority, domestic or foreign,
including all applications and registrations relating to any of the foregoing.
"Metawave Products" shall mean Metawave's Spotlight and Spotlight 2000 systems
the and the GSM Spotlight System to be developed.
"Parties" shall mean New Globe, Shanghai Telecom and Metawave and "Party" shall
mean each one of them.
2.0 TECHNICAL COOPERATION
2.1 Metawave will develop, [***], the GSM Spotlight System. New Globe
will join the development [***].
2.2 At its expense, Metawave will provide to New Globe and Shanghai Telecom
customer documentation on the Metawave Products. Metawave will provide standard
updates to all documentation provided.
2.3 New Globe shall make available to Metawave the services of two of its
engineering employees during the process of developing the GSM Spotlight System
at Metawave's headquarters in Redmond, WA, USA for, for up to a [***]. New Globe
shall be responsible [***] and Metawave shall provide [***].
2.4 New Globe shall deliver the Base Station to Metawave. Metawave shall have
the right to use the Base Station [***]. In addition, New Globe Telecom will
make available to Metawave, documentation, including installation and operation
documentation, for the Base Station and any updates that become available during
the term of this Agreement.
3.0 FIELD TRIAL
3.1 Following completion of development of a test unit of the GSM Spotlight
System, the Parties shall conduct certain tests of the GSM Spotlight System in
Shanghai Telecom's GSM network in accordance with a Test Plan to be mutually
agreed by the Parties (the "Field Trial"). Representatives of Shanghai Telecom
and New Globe shall assist Metawave with the Field Trial and shall provide
resources needed for the Field Trial. The responsibilities of each Party,
including costs and provision of resources and equipment, shall be set forth in
the Test Plan.
3.2 [***]
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3.3 Shanghai Telecom shall provide supervised access for Metawave and it
employees to the sites where the Field Trial is to be conducted. The GSM
Spotlight System shall remain at the site during the Field Trial and shall not
be moved without the consent of Metawave. Shanghai Telecom agrees not to allow
anyone other than employees of Metawave, Shanghai Telecom or New Globe to use or
analyze the GSM Spotlight System.
3.4 If the results of the Field Trial are successful, the Parties shall sign a
Certificate of Test Results and shall issue a press release announcing the Test
Results. Such press release shall be approved in writing by each of the
Parties.
4.0 FURTHER COOPERATION
4.1 Following successful completion of the Field Trial, New Globe shall
recommend to Shanghai Telecom, and Shanghai Telecom shall negotiated the
commercial conditions concerning the GSM Spotlight System with Metawave.
4.2 Following successful completion of the Field Trial, Metawave shall give New
Globe first priority for negotiating a distributorship arrangement for GSM
Spotlight System for certain geographical regions in China, and to negotiate
issues of joint manufacture in Shanghai at at an appropriate time in the future,
all to be set forth in a separate agreement between Metawave and New Globe.
4.3 Any publicity, including press releases, concerning this Agreement shall be
mutually agreed upon in advance by the Parties, except where disclosure of this
Agreement is required by law or government regulation, in which case the Party
required to make the disclosure shall inform the other Parties in advance of
such disclosure but shall not be required to obtain their consent.
5.0 CONFIDENTIAL INFORMATION
5.1 Confidential Information is confidential technical information,
specifications, business plans or other information which, at the time of
disclosure, (a) is the subject of reasonable efforts to maintain its
confidentiality, (b) derives value from not being readily ascertainable by
proper means by persons who can obtain value from its disclosure or use, and (c)
is disclosed by one Party to the other pursuant to activities carried out under
this Agreement, regardless of whether the information is proprietary to the
disclosing Party or held by the disclosing Party for another ("Confidential
Information"). If Confidential Information is disclosed by a Party to the other
Party in a writing or other tangible medium which the disclosing Party considers
to be and desires to be treated as confidential, such information shall be
clearly labeled or identified thereon as "confidential" or "proprietary"
information of the disclosing Party. If such Confidential Information is
disclosed orally, the disclosing Party shall so designate it at the time of
disclosure or within fifteen (15) business days thereafter, and shall, within
fifteen (15)
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business days of the designation, summarize such disclosure and confirm such
designation in writing labeled as provided above.
5.2 The Party receiving such Confidential Information shall limit disclosure of
the same to those of its employees or contractors to whom such disclosure is
necessary for the purposes of and in accordance with the obligations of this
Agreement, and shall ensure against further disclosure of the same by exercise
of the same degree of care it exercises to prevent disclosure of its own
confidential information of a similar nature; provided, however, that prior to
any disclosures to any contractors, the receiving Party shall notify the
disclosing Party of the name of any such contractor and shall enter into an
agreement with such contractor protecting the confidentiality of information
under terms substantially similar to those contained in Section 9.
5.3 For purposes of this Agreement, employees of the Parties shall be
authorized to have access to any Confidential Information of either Party as
described herein and subject to the limitations of this Agreement. Employees of
a Party shall be deemed to include employees of such Party's parent, or any
majority-owned subsidiary, affiliated or related companies, and contractors,
provided, however, that any disclosure to such other persons will be subject to
the confidentiality obligations and other restrictions of this Agreement.
5.4 Upon written request of the disclosing Party, all Confidential Information
disclosed hereunder, including copies thereof, shall be returned to the
disclosing Party, or verified to the disclosing Party as having been destroyed.
5.5 The foregoing obligations of the receiving Party with respect to
Confidential Information of the disclosing Party shall not apply to the extent
that such information:
(i) was or becomes publicly known other than as a result of a breach of this
Agreement;
(ii) was or becomes rightfully known to the receiving Party without an
obligation of confidentiality;
(iii) is developed by the receiving Party independently of such Confidential
Information; or
(iv) is approved by the disclosing Party for public disclosure or other use, or
(v) is disclosed pursuant to a valid order of a court or other governmental
body or any political subdivision thereof provided, however, that the Party
proposing to disclose such information shall first notify the other Party to
allow it an opportunity to obtain a protective order requiring that the
Confidential Information so disclosed be used only for the purpose for which
such protective order is issued; or
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(vi) is otherwise required by law to be disclosed.
6.0 INTELLECTUAL PROPERTY
6.1 Metawave owns all right, title and interest, including all Intellectual
Property Rights, in the GSM Spotlight System and in the Metawave documentation,
specifications and Metawave Confidential Information disclosed to New Globe and
Shanghai Telecom pursuant to this Agreement. Furthermore, each Party shall
retain sole ownership of all of its Intellectual Property Rights in its own
Products existing prior to this Agreement or generated under this Agreement by
such Party. No license rights in any Intellectual Property Rights are granted
or implied by Metawave to New Globe or Shanghai Telecom under this Agreement.
6.2 The Parties do not anticipate joint development activity pursuant to their
respective performances under this Agreement. Should joint development
nonetheless occur which is based upon Metawave Confidential Information, such
Intellectual Property Rights jointly generated under this Agreement by the
Parties shall be owned solely by Metawave, and New Globe and Shanghai Telecom
hereby assign all right, title and interest in such jointly generated
intellectual property rights and agree to cooperate reasonably, at Metawave's
expense, in perfecting such right, title and interest.
7.0 LEGAL RELATIONSHIPS
7.1 This Agreement is not intended to create, nor shall it be construed as
creating or constituting, by implication or otherwise, a joint venture,
partnership or other formal business organization between the Parties.
7.2 Each Party shall be solely responsible for all aspects of employment of its
employees, such as salaries, benefits, insurance coverage, including workers'
compensation, and taxes, including payment of any withholding taxes on salaries.
7.3 Each Party shall have written agreements with its employees and contractors
to ensure that Confidential Information is respected and protected as provided
herein.
NOTICES 8.0 NOTICES
8.1 Except as otherwise specified in this Agreement, all notices or other
communications hereunder shall be deemed to have been duly given when made in
writing and delivered in person or by a reputable overnight courier service
providing proof of delivery, or by confirmed facsimile transmission and
addressed as follows:
For Metawave:
Victor Liang, Sr. Vice President, GSM
Metawave Communications Corporation
10735 Willows Road NE
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<PAGE>
Redmond, Washington 98073
425-702-5978 fax
Copy to: General Counsel
For New Globe:
Shen Weikang, GM
Shanghai New Globe Telcomm. Co.,Ltd.
Rm 1305, No.1207, Jiangning Road.
Shanghai 200060, P.R.China
Tel.: +86 21 62761101
Fax: +86 21 62275258
For Shanghai Telecom:
Guo Jianhua, Vice-Chief Engineer
Shanghai Posts & Telecoms Administration
61 Sichuan Road(N.)
Shanghai 200085, P.R.China
Tel.: +86 21 63630012
Fax: +86 21 63248065
Either Party may change the address or designated representative by giving
written notice thereof to the other Party.
9.0 EXPORT; TAXES
9.1 The disclosure and transfer of technical information and the export of any
Metawave Product or the GSM Spotlight System for the Field Trial by Metawave
under this Agreement shall be subject to the then-existing United States export
control laws and regulations.
9.2 All customs and excise duties imposed upon Metawave equipment arising in
connection with the performance of this Agreement in the P.R.China and United
States shall be borne by [***]. All customs and excise duties imposed upon
New Globe equipment arising in connection with the performance of this Agreement
in the P.R.China shall be borne by New Globe. Each Party shall assist each
other with customs formalities, such as entrance and export requirements, which
apply to the equipment in the country in which such Party is registered.
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<PAGE>
10.0 TERM, TERMINATION AND SURVIVABILITY
10.1 Unless this Agreement is terminated or extended by the parties as provided
herein, the term of this Agreement shall commence on the Effective Date and
continue in full force for [***].
10.2 Each Party should not terminate their cooperation under this Agreement
solely for its convenience. But if any Party wishes to terminate the cooperation
under this Agreement, the Party must inform the other Parties [***] prior giving
written notice and must be agreed by the Parties.
10.3 If one Party is in material breach of any term of this Agreement and fails
to cure such breach within [***] of written notice by the Party not in breach
setting forth in detail the alleged breach, a Party not in breach may terminate
this Agreement immediately upon written notice to the breaching Party .
10.4 The rights and obligations of the Parties with respect to the following
Sections shall survive expiration or termination of this Agreement: 5 and 6.
10.5 [***]
10.6 Upon termination of this Agreement any and all copies of Confidential
Information, specifications and technical information in the possession of any
Party will on the written request of the disclosing Party, be delivered to
disclosing Party, by the receiving Party, at the expense of the receiving Party.
Where a Party does not request the return of the materials as set out above, the
receiving Party will destroy the Confidential Information and other such
specifications and all copies, modifications and documentation related thereto
according to the list provided by a Party and provide proof of such destruction
to disclosing Party within 30 days of termination.
11. ARBITRATION OF DISPUTES
11.1 All disputes arising out of or in connection with this Agreement, so far as
is reasonably possible, shall be settled amicably through friendly consultation
by the Parties.
11.2 In the event that the Parties are unable to settle any dispute within
[***] of a request by any Party that a dispute be settled by consultation, any
disputes, controversies or claims arising out of or in connection with this
Agreement, or the breach, termination or invalidity thereof, shall be settled by
final and binding arbitration in accordance with the Rules of Arbitration of the
International Chamber of Commerce (the "Rules of Arbitration").
11.3 The place of arbitration shall be in [***].
11.4 [Intentionally omitted]
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11.5 The decision made by the Tribunal shall be final and binding on the
Parties, and the Parties shall act accordingly.
11.6 Each party shall bear its own costs and expenses of arbitration (including
the reasonable fees and expenses of the attorneys appointed by each of the
Parties), unless it is otherwise decided by the Tribunal. The award shall be
made and shall be payable in US dollars free of any tax or any other deduction.
12.0 GENERAL
12.1 Any assignment by a party to this Agreement or any other interest
hereunder without the other parties' prior written consent, shall be void,
except assignment to a person or entity who acquires all or substantially all of
the assets, business or stock of Metawave, whether by sale, merger or otherwise.
12.2 No Party shall be liable to the others for any indirect, special, or
consequential damages resulting from any breach of this Agreement.
12.3 This document constitutes the entire agreement among the Parties with
respect to the subject matter hereof, and supersedes all previous
communications, representations, understandings and agreements, either oral or
written, between or among the Parties or any official or representative thereof.
12.4 Any term of this Agreement may be amended or waived only with the written
consent of the Parties or their respective permitted successors and assigns.
Any amendment or waiver effected in accordance with this Section 11 shall be
binding upon the Parties and their respective successors and assigns.
12.5 This Agreement has been executed in both the English and Chinese
languages.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the Effective Date hereof.
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<PAGE>
METAWAVE COMMUNICATIONS CORP.
Signature: /s/ Victor K. Liang
Name:
Title: Sr. VP GSM Product
SHANGHAI NEW GLOBE COMPANY
Signature: /s/ [Chinese ^^^]
Name:
Title:
SHANGHAI TELECOM
Signature: [Chinese ^^^]
Name:
Title:
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<PAGE>
EXHIBIT 10.15
VALUE ADDED RESELLER AGREEMENT
THIS AGREEMENT is entered into on this 4/th/ day of November, 1999
between:
(1) METAWAVE COMMUNICATIONS TAIWAN LTD., a Republic of China ("R.O.C.") company
with its principal office at 20F, No. 114, Hsin Tai Wu Road, Section 1,
Hsi-Chih, Taipei Hsien, Taiwan, R.O.C.("Company")
and
(2) COMMVERGE SOLUTIONS (ASIA), INC., a British Virgin Islands company with its
principal office at the office of Quorum Corporate Services Limited, Road
Town, Tortola, British Virgin Islands ("Value Added Reseller or VAR").
RECITALS
(A) Company manufactures and markets SpotLight GSM systems and desires to
promote and distribute its products in the Territory, as defined below in
Article 1.1; and
(B) VAR has represented that it possesses the necessary expertise and marketing
organization to promote and sell such products in the Territory; and
(C) Company and VAR have agreed that VAR shall be appointed as Company's non-
exclusive VAR of its products in the Territory.
NOW THEREFORE, the parties in good faith agree to the following:
1. DEFINITIONS
For purposes of this Agreement, the following words, terms and phrases,
where written with an initial capital letter, shall have the meanings
assigned to them unless the context otherwise requires:
1.1 "Products" - SpotLight GSM systems, spares, documentation, updates
and upgrades.
1.2 "Territory" - Asia, excluding Taiwan and China, Australia, and New
Zealand. It may also include specific regions within China and Taiwan
subject to mutual agreement.
1.3 "List Prices" - the prices being quoted by Company for sales of
Products.
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
1.4 "Quota" - the quantities of Products which VAR shall be expected to
purchase and resell in accordance with the terms and conditions of
Article 7 of this Agreement, to be measured by number of GSM sectors.
2. APPOINTMENT
2.1 Scope. Company hereby appoints VAR, and VAR hereby accepts
-----
appointment, as Company's non-exclusive distributor of the Products
in the Territory during the term of this Agreement, under Company's
name, trade name, logotypes and trademarks, subject to all the terms
and conditions of this Agreement.
2.2. No Agency. The appointment hereunder by Company of VAR as
---------
distributor of the Products in the Territory shall in no way
constitute, or be deemed to constitute, VAR as the agent of Company.
VAR shall have no authority to act, or to hold itself out as entitled
to act, for or on behalf of Company in any other capacity than as
distributor of the Products in the Territory, unless otherwise
mutually agreed.
2.3 Sub-distributors or sub-agents. VAR shall not, without the prior
------------------------------
written approval of Company, appoint any sub-distributors or sub-
agents to promote or distribute the Products in the Territory. With
such approval, VAR shall at all times remain fully liable for the
performance of its sub-distributors or sub-agents. VAR hereby agrees
to indemnify and hold Company harmless from all damages, losses,
costs or expenses arising in any manner from any act or omission on
the part of its sub-distributors or sub-agents.
2.4 VAR Not to Deal with Competitive Products. VAR shall not manufacture,
-----------------------------------------
sell or deal in any manner with, directly or indirectly, any products
similar to the Products or in any manner competitive with the
Products with the registered accounts in the territory without the
prior written consent of the Company. This clause shall remain in
effect during the term of this agreement.
2.5 Territory. VAR shall not sell nor attempt to sell the Products to
---------
customers outside the Territory or to any party within the Territory
who VAR knows intends to, or will likely, sell the Products outside
the Territory. Changes to the Territory shall be made with mutual
agreement of the parties.
2.6 Referral of Inquiries. VAR shall direct any inquiries originating
---------------------
from, customers outside of the Territory, or within the Territory,
in respect of sales of the Products proposed to be made outside of
the Territory, to Company.
2.7 Registration of Customers. VAR shall provide Company with the name,
-------------------------
address and Territory of each potential end user account at the time
it identifies such account. Company will then confirm or refuse VAR
permission to work with that end user account. If VAR has not made
substantial sales progress and received a purchase order from such
end user within 10 months from the time of approved
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<PAGE>
registration, Company may reregister the account with another
reseller or take over the account itself and sell directly to end
user.
3. TERM
3.1 Term. This Agreement shall take effect with respect to the Territory
----
as of the date first written and shall continue in force for a period
of [***]. Thereafter, this Agreement may be renewed in writing by
mutual agreement of the parties.
4. GENERAL OBLIGATIONS OF VAR
4.1 Marketing. VAR shall have the following obligations with respect to
---------
the marketing and distribution of Company's Products:
(a) To use its best efforts to further the promotion, marketing,
sale and other distribution of Products in the Territory;
(b) To promptly respond to all inquiries from customers, including
complaints, process all orders, and effect all shipments of the
Products located in the Territory directly sold by VAR;
(c) To diligently investigate all leads with respect to potential
customers referred to it by Company;
(d) To permit Company to visit VAR's place of business;
(e) To employ and maintain throughout the Territory an adequate
sales force dedicated to the sale of the Products. Sales staff
must be certified by Company;
(f) To employ throughout the Territory qualified technicians who
must be certified by Company;
(g) To participate actively in sales or merchandising programs
prepared by Company; to participate in all fairs and exhibitions
in the Territory where such participation will, in the judgment
of VAR, promote the Products; and to develop and implement sales
programs for the promotion of the Products;
(h) To provide Company with monthly sales reports, financial and
customer information, and direct access to customers for
marketing and product feedback purposes. Company shall have the
right to audit the sales records of VAR;
(i) To provide after-sales service and support to a standard set of
procedures defined by Company, on any and all Products sold to
customers; (Procedures To Be developed).
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<PAGE>
(j) To generally do all such other acts and things as the Company
may reasonably require which are in any way necessary or
incidental to sales of the Products in the Territory.
4.2 Advertising. VAR shall diligently advertise, promote, and generally
-----------
publicize the Products in the Territory.
4.3 Marketing Materials. Company shall furnish VAR, free of charge, with
-------------------
an agreed minimum quantity of Company's marketing and product
literature, including brochures, pamphlets and other information, in
the English language, for use by VAR in preparing its own advertising
materials. If VAR requires additional copies, they shall be paid for
by VAR at a prescribed price and any needed translations shall be
completed by VAR at its own expense. All advertising, marketing
materials and product literature must first be approved by Company.
4.4 Expenses. VAR and Company each assume full responsibility for all
--------
costs and expenses which each respectively incurs in carrying out its
obligations under this Agreement, including but not limited to
salaries, commissions, advertising, demonstration, travel and
accommodation expenses without the right to reimbursement for any
portion thereof from the other party.
5. COMPANY'S GENERAL OBLIGATIONS
5.1 Company shall have the following obligations with respect to the
marketing and distribution of Company's Products:
(a) Unless in accordance with Article 16 hereof, promptly deliver to
VAR those Products for which VAR places orders, by shipment to
such locations within the Territory, or to any person for direct
use if delivery thereof will be made to a location within the
Territory;
(b) [***]
(c) Provide all necessary support and assistance to VAR in the
advertising, promotion, sales and distribution of the Products
within the Territory;
(d) Develop and offer training and technical assistance to VAR and
its personnel in the sale and distribution of the Products.
Expenses for training, post-sales engineering services, site
walks, and site configurations, shall be borne by VAR except
that Company will provide personnel and technical support for,
and share the costs of, the first field trial and commercial
deployment of a system on a basis to be determined by the
parties prior to the commencement of the trial;
-4-
<PAGE>
(e) [***]
6. ORDERS FOR PRODUCTS AND SHIPMENT
6.1 Purchase Orders. VAR shall submit purchase orders for the Products to
---------------
Company's Cayman Islands affiliate company, who shall in turn submit
purchase orders to Company, all in writing by facsimile, mail, by
telex, telegram or cable which shall set forth, at a minimum:
(a) An identification of the Products ordered, including serial
numbers, if applicable;
(b) Quantity;
(c) Requested delivery dates;
(d) Shipping instructions and shipping address; and
(e) Proposed payment arrangements.
VAR shall ensure that its purchase orders are received by Company's
Cayman Islands affiliate company at least [***] days prior to the
delivery dates requested in the orders.
6.2 Provisional Confirmation of Orders. Each purchase order shall be
----------------------------------
deemed to be an offer by VAR to purchase the Products pursuant to the
terms of this Agreement. Upon receipt of such purchase order, Company
shall have [***] business days with which to provisionally
confirm the purchase order in writing by facsimile, or other suitable
transmission.
6.3 Final Confirmation . After receipt of an acceptable and proper letter
------------------
of credit, or other payment as required by section 8.3 hereof, for the
payment of the purchase order as detailed in Article 8 below, Company shall
be deemed to have accepted the purchase order, that shall give rise to a
contract under the terms set forth herein to the exclusion of any
additional or contrary terms set forth in the purchase order. Company
shall not unreasonably withhold its acceptance of the purchase order.
6.4 Delivery Terms. Unless otherwise agreed to by written agreement
--------------
between the parties, all deliveries of the Products shall be [***].
6.5 Modification of Orders. No received purchase order shall be modified
----------------------
or cancelled except upon written agreement of both parties, which
shall not be unreasonably withheld. VAR's purchase orders or mutually
agreed change orders shall be
-5-
<PAGE>
subject to provisions of this Agreement, whether or not the purchase
order or change order so states.
6.6 Discharge of Company's Obligation. Company's obligation to ship the
---------------------------------
Products shall be fully and completely discharged, and ownership,
legal title, and all risk of loss or damage during shipment shall
immediately pass to VAR at the time that the Products are delivered
[***]
7. RESELLER TARGET
VAR targets on the annual Quota of Products that VAR will purchase
and resell the following quantities of Products during each of the
calendar years 2000 and 2001:
[***]
[***]
7.1 Forecasts. VAR shall provide to Company [***] rolling forecasts,
---------
as accurate as possible based on customers' demands and project
implementation schedules, for each month of the term of this
Agreement.
7.2 Force Majeure. In the event demand for the Products materially
-------------
declines in the Territory by reason of any cause out of VAR's control
to such an extent that it becomes commercially unfeasible for VAR to
place orders in the amounts provided hereinabove for any particular
period, then VAR shall be relieved of said requirements for so long
as such cause continues.
7.3 Loss of Profits or Sales. Neither party shall be liable to the other
------------------------
for any losses in profits or sales of the Products in the Territory.
8. PRICES AND PAYMENTS
8.1 Prices. The prices to be paid by VAR for Products purchased pursuant
------
to this Agreement shall be List Prices (less any applicable discounts
for VAR) in effect at the time of acceptance of the relevant purchase
order submitted by VAR, except as provided in Article 8.2 below.
8.2 Price Increase, Decreases. Company may, at any time during the term
-------------------------
of this Agreement, increase its prices for the Products by providing
VAR with at least [***] days prior written notice. Increased prices
for the Products shall not apply to purchase orders accepted prior to
the effective date of the price increase. Price decreases with
respect to all Products shall be effective immediately upon written
notice to VAR on all such Products not yet delivered.
-6-
<PAGE>
8.3 Payment Terms. The schedule of payment by VAR to Company shall be one
-------------
of the following and shall be specified on each purchase order sent
by VAR to Company:
(a) [***] of the purchase price by irrevocable and confirmed letter
of credit, in a form and substance satisfactory to Company, at
sight opened in favor of Company's Cayman Islands affiliate at
VAR's expense which must be received by Company within [***]
weeks of the purchase order date; or
(b) By wire transfer of cash to the designated account of Company's
Cayman Islands affiliate as follows: [***] of the purchase price
set forth in the purchase order within [***] of the purchase
order date; an [***] of the purchase price no later than ten
days prior to the scheduled shipment date; and the [***]
or
(c) On an exceptional basis and on purchase orders exceeding [***]
in currency of the United States of America, VAR and Company may
agree to a special payment schedule.
In the event of the necessity of any amendment to the terms of a
letter of credit, or any extension of the letter of credit in order
for Company to obtain payment under the letter of credit, VAR agrees
to fully and completely cooperate with Company to make such amendment
or extension.
8.4 Failure to Pay. Should VAR fail to arrange and have in place an
--------------
acceptable letter of credit or pay by wire transfer within the [***]
period following: the purchase order dates as set forth in section
8.3 for any order of the Products, the Company shall, in addition and
without prejudice to any other remedy hereunder, be entitled to
refuse to deliver or ship any order for the Products placed with
Company by VAR and shall not be obliged to accept any further orders
for the Products from VAR.
8.5 Resale Prices. Recommended Resale prices for resale to end users and
-------------
discount levels are to be determined by Company and agreed upon by
VAR. VAR cannot sell the Products to end users for less than these
discounted Resale prices.
9. WARRANTY
9.1 Product Warranty. Company warrants the Products, if properly handled
----------------
and used only for the purpose they were designed for, to be free of
defects in workmanship and materials from the date of delivery for a
period of [***]. VAR hereby accepts the Company's published product
warranty with respect to the Products, a copy of which will be
provided to VAR by Company at the same time as the resale price list
set forth in section 7 hereof and agrees that said warranty shall be
extended by VAR to its customers. Company reserves the right to
change the terms and conditions of the said warranty at its sole
option. Any sales documents provided to the end-user customer by VAR
shall include this product
-7-
<PAGE>
warranty and end-user restrictions relating to intellectual property
rights and liability limitations as determined by Company.
9.2- Notice. Warranty claims hereunder must be made promptly in writing;
------
must recite the nature and details of the claim and the serial number
of the Product concerned.
9.3 Defective Products. Where the products are defective in material or
------------------
workmanship, VAR shall, at its discretion, file a claim with Company
and return the undamaged Products. All costs and expenses associated
therewith shall be borne by Company.
9.4 Indemnity. VAR shall indemnify Company and hold Company harmless from
---------
and against, and shall defend against, any and all claims and damages
of every kind for injury to or death of any person or persons and for
damage to or loss of property, arising out of or attributed, directly
or indirectly, to the conduct, operations or performance of VAR.
10. CONFIDENTIALITY
10.1 Confidential Information. Both Company and VAR acknowledge and agree
------------------------
that all information of the other party is confidential and
proprietary. Both Company and VAR agree not to use any of the other
parties' information during the term of this Agreement and for a
period of [***] years thereafter for any purpose other than as
permitted or required for performance by that respective party
hereunder. Company and VAR further agree not to disclose or provide
any of the other parties' information to any third party and to take
all necessary measures to prevent any such disclosure by its
employees, agents, contractors, or consultants during the term hereof
and for a period of [***] years thereafter. Nothing herein shall
prevent either Company or VAR from using, disclosing or authorizing
the disclosure of any of the other party's information which is, or
hereafter becomes, part of the public domain.
11. TRADEMARKS
11.1 Use of Trademarks. Company hereby grants to VAR a non-exclusive,
-----------------
non-transferable, and royalty-free right and license to use Company's
name, trademarks, trade names, and logos specified in Exhibit I
attached hereto, as such Exhibit may be modified from time to time
during the term of this Agreement, in connection with the sale or
other distribution, promotion, advertising, and maintenance of the
Products for so long as such name, trademarks, trade names, and logos
are used by VAR. VAR shall afford Company reasonable opportunities
during the term hereof to inspect and monitor the activities of VAR
in connection with the name, trademark, trade name, and logo usage.
-8-
<PAGE>
11.2 Restrictions. VAR shall acquire no right, title or interest in such
------------
Company name, trademarks, trade name, and logos other than the
foregoing limited license and VAR shall not use any Company
trademarks as part of VAR's corporate or trade name or permit any
third party to do so without the prior written consent of Company.
VAR shall not adopt, use or register any words, phrases or symbols
which are identical to or confusingly similar to any of Company's
trademarks.
11.3 Infringements. VAR shall promptly notify Company of any use by any
-------------
third party of Company's name, trademarks, trade name, and logos or
any use by such third parties of similar marks which may constitute
an infringement or passing off of Company's name, trademarks, trade
name, and logos. Company reserves the right in its sole discretion to
institute any proceedings against such third party infringers. VAR
agrees to cooperate fully with company in any action taken by Company
against such third parties, provided that all expenses of such action
shall be borne by Company.
12. INTELLECTUAL PROPERTY RIGHTS
12.1 Indemnification. Company shall, at its own expense, defend any suit
---------------
instituted against VAR which is based on an allegation that any
Products manufactured by Company and sold to VAR hereunder constitute
an infringement of any intellectual property right in the Territory
and shall indemnify and hold VAR harmless from and against any
claims, liabilities, costs and expenses, including but not limited to
reasonable attorney's fees, arising out of such infringement.
12.2 Ownership. VAR hereby acknowledges Company's exclusive right, title
---------
and interest in and to any and all intellectual property rights which
Company may have at any time adopted, used, registered or been issued
in the United States or in any other location (the "Intellectual
Property Rights"). VAR agrees that it shall not do, or cause to be
done, any acts or things contesting or in any way impairing or
tending to impair any portion of the Company's right, title and
interest in and to the Intellectual Property Rights. VAR further
acknowledges that, in connection with any reference to the
Intellectual Property Rights, VAR shall not in any manner represent
that is possesses any ownership interest in the Intellectual Property
Rights or the registration thereof, nor shall any action taken by VAR
or on VAR's behalf create in VAR's favor any right, title or interest
in and to the Intellectual Property Rights.
13. TAXES
13.1 Payment of Taxes. Company shall not be responsible for any local,
----------------
state, federal and other governmental taxes, duties, imposts, levies
or other charges or deductions or withholdings in the Territory
whatsoever imposed on Company or VAR as a result of the operation of
this Agreement or of the importation of the Products into the
Territory (exclusive of taxes based on Company's net income) and VAR
shall indemnify and hold Company harmless from and against any such
-9-
<PAGE>
taxes, duties, imposts, levies or other charges or deductions or
withholdings all of which shall be for the sole and exclusive account
of VAR.
14. LICENSES AND PERMITS
14.1 Import Documentation. VAR shall be responsible for obtaining all
--------------------
licenses and permits and for satisfying all formalities as may be
required to import Products into the Territory in accordance with
then prevailing laws or regulations. When necessary, Company shall
assist VAR in obtaining U.S. export licenses and permits as may be
required and appropriate.
14.2 Sales Permits. VAR shall be responsible for obtaining all licenses
-------------
and permits and for satisfying all formalities as may be required to
sell Products in the Territory.
15. TERMINATION
15.1 Termination. Notwithstanding the provisions of Article 3 above, this
-----------
Agreement may be terminated in accordance with the following
provisions:
(a) Either party hereto may terminate this Agreement at any time by
giving notice in writing to the other party, which notice shall
be effective upon dispatch, should the other party file a
petition of any type as to its bankruptcy, be declared bankrupt,
become insolvent, make an assignment for the benefit of
creditors, go into liquidation or receivership;
(b) Either party may terminate this Agreement by giving notice in
writing to the other party should an event of Force Majeure
continue for more than [***] months as provided in Article 6.2
above and Article 16 below;
(c) Either party may terminate this Agreement at any time for any
reason by giving [***] months' notice in writing to the
other party;
(d) Either party may terminate this Agreement at any time by written
notice in the event the other party is in material breach of
this Agreement and such breach is not cured by the defaulting
party within [***] of its receipt of the notice.
15.2 Rights and Obligations on Termination. In the event of termination
-------------------------------------
of this Agreement for any reason, the parties shall have the
following rights and obligations:
(a) Obligation to Ship. For any orders already placed by VAR and
------------------
finally confirmed and accepted by Company on or before the
effective termination date, Company shall be obligated to ship
such orders.
-10-
<PAGE>
(b) Right to Re-purchase Products. For a period of [***] days
-----------------------------
after the termination date, VAR shall be entitled to sell any
remaining inventory, if any, of the Products at the resale
prices set by Company pursuant to Article 8.5. Upon the expiry
of this [***] day period, Company shall have the right, at
its sole discretion, to buy back from VAR any then remaining
inventory of the Products at the price paid by VAR.
(c) Confidentiality. Confidentiality obligations pursuant to Article
---------------
10 hereof shall survive the termination of this Agreement and
continue to be binding on both parties;
(d) Return of Materials. All trademarks, trade names, patents,
-------------------
copyrights, designs, drawings, formulas or other data,
photographs, samples, literature, and sales aids of every kind
shall remain the property of Company. Within thirty (30) days
after the termination of this Agreement, VAR shall prepare all
such items in its possession for shipment to the Company, as
Company may direct, at Company's expense. VAR shall not make or
retain any copies of any confidential items or information that
may have been entrusted to it.
16. FORCE MAJEURE
16.1 Definition. Force Majeure shall mean any event or condition, not
----------
existing as of the date of signature of this Agreement, not
reasonably foreseeable as of such date and not reasonably within the
control of either party, which prevents in whole or in material part
the performance of one of the parties of its obligations hereunder or
which renders the performance of such obligations so difficult or
costly as to make such performance commercially unreasonable. Without
limiting the foregoing, the following shall constitute events or
conditions of Force Majeure: acts of State or governmental action,
riots, disturbance, war, strikes, lockouts, slowdowns, prolonged
shortage of energy supplies, epidemics, fire, flood, hurricane,
typhoon, earthquake, lightning and explosion.
16.2 Notice. Upon giving notice to the other party, a party affected by
------
an event of Force Majeure shall be released without any liability on
its part for the performance of its obligations under this Agreement,
except for the obligation to pay any amounts due and owing hereunder,
but only to the extent and only for the period that its performance
of such obligations is prevented by the event of Force Majeure. Such
notice shall include a description of the nature of the event of
Force Majeure, and its cause and possible consequences. The party
claiming Force Majeure shall promptly notify the other party of the
termination of such event.
16.3 Confirmation. The party invoking Force Majeure shall provide to the
------------
other party confirmation of the existence of the circumstances
constituting Force Majeure. Such evidence may consist of a statement
or certificate of an appropriate
-11-
<PAGE>
governmental department or agency where available, or a statement
describing in detail the facts claimed to constitute Force Majeure.
16.4 Suspension of Performance. During the period that performance by one
-------------------------
of the parties of its obligations under this Agreement has been
suspended by reason of an event of Force Majeure, the other party may
likewise suspend the performance of all or part of its obligations
hereunder to the extent that such suspension is commercially
reasonable.
16.5 Period of Force Majeure. Should the period of Force Majeure continue
-----------------------
for more than [***] consecutive months, either party may terminate
this Agreement without liability to the other party upon giving
written notice to the other party.
17. DISPUTE RESOLUTION AND GOVERNING LAW
17.1 Dispute Resolution. Any dispute, controversy or claim arising out of
------------------
or relating to this Agreement shall first be settled by non-binding
mediation. In the event mediation is unsuccessful, the matter shall
finally be settled by binding arbitration in [***] in accordance with
the Rules of Conciliation and Arbitration of the International
Chamber of Commerce in effect on the date of this Agreement and
judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. The arbitration shall be
conducted in the English language. Notwithstanding the above,
regarding intellectual property right claims, the Company reserves
the right to initiate and conduct litigation proceedings in any court
it deems appropriate.
17.2 Governing Law. The parties acknowledge that this Agreement shall be
-------------
governed by, interpreted, and construed in accordance with the laws
of [***] notwithstanding any law or regulation which would make the
laws of another jurisdiction applicable.
18. MISCELLANEOUS
18.1 No Foreign Corrupt Practices. VAR hereby represents, warrants and
----------------------------
agrees that VAR shall be bound and abide by and strictly comply with
both the letter and the spirit of the Foreign Corrupt Practices Act
of 1977 and any amendments thereto as the same is from time to time
in force in the United States of America.
Without limiting the generality of the foregoing, VAR has not made
and shall not make, in the performance of this Agreement, an offer,
payment, promise to pay or authorization of the payment of any money,
offer, gift, promise to give, or authorization of the giving of
anything of value, in order to assist with obtaining or retaining
business for or with, or directing business to, Company or any other
person or entity, directly or indirectly
-12-
<PAGE>
(a) to or for the use or benefit of any official or employee of any
government or the agencies or instrumentalities of such
government or any international organization, political party or
candidate for political office;
(b) to any other person if VAR or any partner, officer, director,
employee, agent, representative or shareholder of VAR knows or
has reason to suspect or know that any part of such money or
thing of value will be directly, or indirectly offered, given or
promised to any government office or employee, political party
or official thereof, or candidate for political office; or any
international organization; or
(c) to any other person or entity, the payment of which would
violate the laws or policies of the United States or of any
other government.
Upon request by Company, VAR shall furnish a certificate verifying
compliance with this Article. Notwithstanding Article 15.2, in the
event of termination of this Agreement by Company for VAR's breach of
this article, Company shall have no liability to VAR under Article
15.2 or any other article of this Agreement for any other loss, cost,
or damage resulting, directly or indirectly, to VAR from such
termination.
18.2 U.S. Export Restrictions. VAR shall not sell any of the Products to
------------------------
end-users who are subject to U.S. export restrictions. Company shall
be responsible for determining and monitoring which end-users, if
any, are subject to U.S. export restrictions. VAR is responsible for
providing the names of potential end users to Company for clearance
prior to entering into any purchase orders with such end users.
Company reserves the right to reject any purchase orders from end
users subject to U.S. export restrictions.
18.3 Relationship. This Agreement does not make either party the
------------
employee, agent or legal representative of the other for any purpose
whatsoever. Neither party is granted any right or authority to assume
or to create any obligation or responsibility, express or implied, on
behalf of or in the name of the other party. In fulfilling its
obligations pursuant to this Agreement each party shall be acting as
an independent contractor.
18.4 Assignment. Neither VAR nor Company shall assign any of its rights,
----------
obligations or privileges (by operation of law or otherwise)
hereunder without the prior written consent of the other party,
provided, however, that both VAR and Company shall have the right to
assign its rights, obligations and privileges hereunder without the
other party's consent to an assignee that acquires all or
substantially all of the assets, business or stock of VAR or Company,
whether by sale, merger or otherwise and who agrees in writing to be
bound by the terms and conditions of this Agreement. The terms and
conditions of this Agreement shall transfer to the benefit of and be
binding upon the respective permitted successors and assigns of the
parties.
-13-
<PAGE>
18.5 Notices. Notices permitted or required to be given hereunder shall
-------
be deemed sufficient if given by facsimile transmission to the
respective party, or by registered or certified air mail, postage
prepaid return receipt requested, addressed to the respective address
of the parties as first above written or at such other addresses as
the respective parties may designate by like notice from time to
time. Notices so given shall be effective upon receipt by the party
to which notice is given.
18.6 Entire Agreement. This Agreement, including any Exhibits and
----------------
Schedules attached hereto and incorporated as an integral part of
this Agreement, constitute the entire agreement of the parties with
respect to the subject matter hereof, and supersede all previous
distributorship agreements by and between Company and VAR as well as
all proposals, oral or written, and all negotiations, conversations
or discussions between the parties related to this Agreement. Each
party acknowledges that it has not been induced to enter into this
Agreement by any representations or statements, oral or written, not
expressly contained herein.
18.7 Amendment. This Agreement shall not be deemed or construed to be
---------
modified, amended, rescinded, canceled or waived, in whole or in
part, except by written amendment signed by the parties hereto.
18.8 Severability. In the event that any of the terms of this Agreement
------------
are in conflict with any rule of law or statutory provision or are
otherwise unenforceable under the laws or regulations of any
government or subdivision thereof, such terms shall be deemed
stricken from this Agreement, but such invalidity or unenforceability
shall not invalidate any of the other terms of this Agreement and
this Agreement shall continue in force, unless the invalidity or
unenforceability of any such provisions hereof does substantial
violence to, or where the invalid or unenforceable provisions
comprise an integral part of, or are otherwise inseparable from, the
remainder of this Agreement.
18.9 Counterparts. This Agreement shall be executed in two or more
------------
counterparts in the English language, and each such counterpart shall
be deemed an original hereof. In case of any conflict between the
English version and any translated version of this Agreement, the
English version shall govern.
18.10 Waiver. No failure by either party to take any action or assert any
------
right hereunder shall be deemed to be a waiver of such right in the
event of the continuation or repetition of the circumstances giving
rise to such right.
18.11 Remedies. The remedies granted to either party hereunder are
--------
cumulative and are not intended to be exclusive of any other remedies
to which they may respectively be lawfully entitled in case of any
breach of threatened breach by the other party of the terms and
provisions hereof.
-14-
<PAGE>
18.12 Subject Headings. The subject headings of the Articles of this
----------------
Agreement are included for the purpose of convenience only and shall
not affect the construction or interpretation of any of its
provisions.
18.13 Liability Limits. Neither party shall be liable for lost profits or
----------------
special, incidental or consequential damages, however arising,
including negligence, arising out of or in connection with, this
Agreement, even if the parties are aware of the possibility of such
damages. In no event shall either party be liable to the other party
in an amount greater than the amount received by Company from VAR for
the purchase of Products pursuant to this Agreement.
INTENDING TO BE LEGALLY BOUND, the parties have executed this Agreement on the
date first above written.
Metawave Communications Taiwan Ltd. CommVerge Solutions (Asia), Inc.
By: /s/: Victor Liang By: /s/: Edmund Wei
------------- -----------
Name: Victor Liang Name: Edmund Wei
------------- -----------
Title: President Title: President & CEO
---------- ----------------
-15-
<PAGE>
EXHIBIT 10.16
DISTRIBUTION AGREEMENT
THIS AGREEMENT is entered into on this 10/th/ day of February, 2000.
between:
(1) METAWAVE COMMUNICATIONS (CAYMAN ISLANDS), a Cayman Islands company having
its registered office at P.O. Box 1111, George Town, Grand Cayman, Cayman
Islands ("Company"), which is a subsidiary of Metawave Communications
Corporation, a corporation incorporated in the state of Delaware, the United
States of America; with offices located at 19735 Willows Road NE, Redmond,
Washington, USA, 98073.
and
(2) SEENODE CO., LTD., a Korean company with its principal office at 6TH Fl.
Yonsu District Office 923-5, Dongchun-dong, Yonsu-gu, Inchon, 406-130, Korea
("Distributor").
RECITALS
(A) Company manufactures and markets Spotlight(R) 2000 systems and desires to
promote and distribute its products in the Territory, as defined below in
Article 1.1; and
(B) Distributor has represented that it possesses the necessary expertise and
marketing organization to promote and sell such products in the Territory;
and
(C) Company and Distributor have agreed that Distributor shall be appointed as
Company's exclusive distributor of its products in the Territory.
NOW THEREFORE, the parties in good faith agree to the following:
1. DEFINITIONS
For purposes of this Agreement, the following words, terms and phrases,
where written with an initial capital letter, shall have the meanings
assigned to them unless the context otherwise requires:
1.1 "End User"--a third party who purchases a Product for its own internal
business
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
practices and not for distribution or resale.
1.2 "Products" - Spotlight 2000 CDMA-only systems, spares, documentation,
updates and upgrades.
1.3 "Territory" - South Korea, and End User accounts registered under
section 2.7 of this Agreement.
1.4 "Distributor List Prices" - the prices being quoted by Company for
sales of Products to its international distributors.
1.5 "Quota" - the minimum quantities of Products which Distributor shall
be expected to purchase from Company in accordance with the terms and
conditions of Article 7 of this Agreement.
2. APPOINTMENT
2.1 Scope. Company hereby appoints Distributor, and Distributor hereby
-----
accepts appointment, as Company's exclusive distributor of the Products to End
Users in the Territory during the term of this Agreement, under Company's name,
trade name, logotypes and trademarks, subject to all the terms and conditions of
this Agreement.
2.2 No Agency. The appointment hereunder by Company of Distributor as
---------
distributor of the Products in the Territory shall in no way
constitute, or be deemed to constitute, Distributor as the agent of
Company and Distributor shall have no authority to bind Company to any
contract or other undertaking or obligation, or to act, or to hold
itself out as entitled to act, for or on behalf of Company in any
other capacity than as distributor of the Products in the Territory.
2.3 Sub-distributors or sub-agents. Distributor shall not, without the
------------------------------
prior written approval of Company, appoint any sub-distributors or
sub-agents to promote or distribute the Products in the Territory.
Further, notwithstanding any such appointment, or Company's approval
thereof, Distributor shall at all times remain fully liable for the
performance of its sub-distributors or sub-agents, and Distributor
hereby agrees to indemnify and hold harmless Company from all damages,
losses, costs or expenses arising in any manner from any act or
omission on the part of its sub-distributors or sub-agents.
2.4 Distributor Not to Deal with Competitive Products. Distributor shall
-------------------------------------------------
not manufacture, sell or deal in an any manner with, directly or
indirectly, any products
-2-
<PAGE>
similar to the Products or in any manner competitive with the Products
without the prior written consent of the Company.
2.5 Territory. Distributor shall not sell nor attempt to sell the
---------
Products to customers outside the Territory or to customers within the
Territory who the Distributor knows intends to, or will likely, sell
the Products outside the Territory. Company reserves the right to
change the Territory by giving notice to the Distributor.
2.6 Referral of Inquiries. Distributor shall direct any inquiries
---------------------
originating from customers outside of the Territory, or within the
Territory, in respect of sales of the Products proposed to be made
outside of the Territory, to Company.
2.7 Identification of End User Accounts. Distributor shall provide
-----------------------------------
Company in writing with the name, address and Territory of each
potential End User account at the time it identifies the account.
Company will then evaluate the End User account and recommend to
Distributor in writing whether or not it should work with that End
User account. Distributor will then keep the Company regularly
informed of its progress on each End User account. If Distributor has
not made substantial progress, Company may request that Distributor
cease working with that End User and may make other arrangements for
selling to such End User.
3. TERM
3.1 Term. This Agreement shall take effect with respect to the Territory
----
as of the date first written and shall continue in force for a period
of [***] year. Thereafter, this Agreement may be renewed in writing by
mutual agreement of the parties [***] prior to end of the term.
4. GENERAL OBLIGATIONS OF DISTRIBUTOR
4.1 Marketing. Distributor shall have the following obligations with
---------
respect to the marketing and distribution of Company's Products:
(a) To use its best efforts to further the promotion, marketing, sale
and other distribution of Products in the Territory;
(b) To maintain an adequate and balanced inventory of Products;
(c) To promptly respond to all inquiries from customers, including
complaints, process all orders, and effect all shipments of the
Products located in the Territory directly sold by Distributor;
-3-
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(d) To diligently investigate all leads with respect to potential
customers referred to it by Company;
(e) To permit Company to visit Distributor's place of business and
inspect its inventories;
(f) To employ and maintain throughout the Territory an adequate sales
force dedicated on a full-time basis to the sale of the Products;
(g) To employ throughout the Territory qualified technicians who must
be certified by Company;
(h) To participate actively in sales or merchandising programs
prepared by Company; to participate in all fairs and exhibitions
in the Territory where such participation will, in the judgment
of Company, promote the Products; and to develop and implement
sales programs for the promotion of the Products;
(i) To provide Company with monthly sales reports, financial and
customer information, and direct access to customers for
marketing and product feedback purposes. Company shall have the
right to audit the sales records of Distributor;
(j) To provide after-sales service and support of any nature and
character, to a standard set by Company, of any and all Products
sold to customers; (Procedures To Be Decided).
(k) To generally to do all such other acts and things as the Company
may reasonably require which are in any way necessary or
incidental to sales of the Products in the Territory.
4.2 Advertising. Distributor shall diligently undertake to advertise,
-----------
promote, and generally publicize the Products in the Territory.
4.3 Marketing Materials. Company shall furnish Distributor, free of
-------------------
charge, with an agreed minimum quantity of Company's marketing and
product literature, including brochures, pamphlets and other
information, in the English language, for use by Distributor in
preparing its own advertising materials. If Distributor requires
additional copies, they shall be paid for by Distributor and any
needed translations shall be completed by Distributor at its own
expense. All advertising,
-4-
<PAGE>
marketing materials and product literature must first be approved by
Company.
4.4 Expenses. Distributor and Company each assume full responsibility
--------
for all costs and expenses which each respectively incurs in carrying
out its obligations under this Agreement, including but not limited to
salaries, commissions, advertising, demonstration, travel and
accommodation expenses without the right to reimbursement for any
portion thereof from the other party.
5. COMPANY'S GENERAL OBLIGATIONS
5.1 Company shall have the following obligations with respect to the
marketing and distribution of Company's Products:
(a) Unless excused by circumstances beyond Company's control in
accordance with Article 16 hereof, deliver to Distributor those
Products for which Distributor places orders, and which Company
has accepted, by shipment to such locations within the Territory,
or to any person for direct use if delivery thereof will be made
to a location within the Territory;
(b) Provide support and assistance to Distributor in the advertising,
promotion, sales and distribution of the Products within the
Territory;
(c) Develop and offer training and technical assistance to
Distributor and its personnel in the sale and distribution of the
Products at the prices set forth in the pricing document provided
separately, including, at the option of Distributor, engineering
services such as sales proposals, site walks, and site
configurations at the prices set forth in Schedule B, all of
which expenses shall be borne by Distributor;
(d) Provide technical support for Distributor's first field trial
with an End User as determined by Company;
(e) Exercise its best efforts to maintain an international
advertising program to develop a name identification and quality
image for Company's Products, and supply Distributor with the
sales material and data relating to its Products, when and as
requested by Distributor, in reasonable quantities.
6. ORDERS FOR PRODUCTS AND SHIPMENT
6.1 Purchase Orders. Distributor shall submit purchase orders for the
----------------
Products to Company's Cayman Islands affiliate company, who shall in
turn submit purchase
-5-
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orders to Company, all in writing by facsimile, mail, by telex,
telegram or cable which shall set forth, at a minimum:
(a) An identification of the Products ordered, including serial
numbers, if applicable;
(b) Quantity;
(c) Requested delivery dates; and
(d) Shipping instructions and shipping address.
Distributor shall ensure that its purchase orders are received by
Company at least [***] days prior to the delivery dates requested
in the order.
6.2 Provisional Confirmation of Orders. Each purchase order shall be
----------------------------------
deemed to be an offer by Distributor to purchase the Products pursuant
to the terms of this Agreement. Upon receipt of such purchase order,
Company shall have [***] business days with which to provisionally
confirm or reject the purchase order in writing by facsimile, or other
suitable transmission.
6.3 Final Confirmation. After receipt of an acceptable and proper letter
------------------
of credit for the payment of the purchase order as detailed in Article
8 below, the Company shall provide in writing its final acceptance or
rejection of the purchase order. Acceptance of the purchase order
shall give rise to a contract under the terms set forth herein to the
exclusion of any additional or contrary terms set forth in the
purchase order. Company shall not unreasonably withhold its acceptance
of the purchase order.
Delivery Terms. Unless otherwise agreed to by written agreement
--------------
between the parties, all deliveries of the Products shall be F.O.B.
Company (either Redmond, Washington or Taipei, Taiwan.).
6.4 Modification of Orders. No received purchase order shall be modified
----------------------
or cancelled except upon written agreement of both parties, which
shall not be unreasonably withheld. Distributor's purchase orders or
mutually agreed change orders shall be subject to provisions of this
Agreement, whether or not the purchase order or change order so
states.
6.5 Discharge of Company's Obligation. Company's obligation to ship the
---------------------------------
Products shall be fully and completely discharged, and ownership,
legal title, and all risk of loss or damage shall immediately pass to
Distributor at the time that the Products
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<PAGE>
are delivered F.O.B. Company.
7. MINIMUM PURCHASE REQUIREMENT
7.1 Quotas. Distributor shall purchase and take delivery of a
-------
predetermined Quota of Products during each quarterly period during
the term of this Agreement, which Quotas shall be established by
mutual agreement of the parties. Such Quotas shall be in number of
systems for Spotlight 2000 CDMA systems. The Quota for timeframes
shown shall be as indicated.
[***]
Distributor understands and agrees that the establishment and
achievement of the Quota is the essence of this Agreement, and that
failure by Distributor to satisfy its obligation under this Article 7
shall constitute a failure of consideration on the basis of which
Company shall be entitled to terminate this Agreement pursuant to
Article 15 hereof.
7.2 Forecasts. Distributor shall provide to Company 12-month rolling
---------
forecasts for each month of the term of this Agreement.
7.3 Loss of Profits or Sales. Neither party shall be liable to the other
------------------------
for any losses in profits or sales of the Products in the Territory.
8. PRICES AND PAYMENTS
8.1 Prices. The prices to be paid by Distributor for Products purchased
------
pursuant to this Agreement and discount levels are set forth in a
separate document, which shall be provided within two weeks of the
execution of the Agreement.
8.2 Price Increase, Decreases. Company may, at any time during the term
-------------------------
of this Agreement, increase its prices for the Products by providing
Distributor with at least [***] days prior written notice. Increased
prices for the Products shall not apply to purchase orders accepted
prior to the effective date of the price increase unless such orders
provide for delivery more than [***] days after the date of acceptance
of the order. Price decreases with respect to all Products shall be
effective immediately upon written notice to the Distributor on all
such Products not yet delivered.
-7-
<PAGE>
8.3 Payment Terms. Payments by Distributor shall be made by irrevocable
-------------
and confirmed letter of credit, in a form and substance satisfactory
to Company, at sight opened at Distributor's expense which must be
received by Company within two (2) weeks of the purchase order date.
[***]. In the event of the necessity of any amendment to the terms of
a letter of credit, or any extension of the letter of credit in order
for Company to obtain payment under the letter of credit, the
Distributor agrees to fully and completely cooperate with Company to
make such amendment or extension.
8.4 Failure to Pay. Should Distributor fail to arrange and have in place
--------------
an acceptable letter of credit within the two (2) week deadline for
any order of the Products, the Company shall, in addition and without
prejudice to any other remedy hereunder, be entitled to refuse to
deliver or ship any order for the Products placed with Company by
Distributor and shall not be obliged to accept any further orders for
the Products from Distributor.
8.5 Resale Prices. Discount levels for sale to End Users recommended by
-------------
Company are set forth in a separate document, which shall be provided
within two weeks of the execution of the Agreement.. List prices and
discount levels are to be recommended by Company and such
recommendations may be changed at any time on 30 days' written notice
to Distributor. The procedures for price changes set forth in section
8.2 above shall also apply to changes under this section.
9. WARRANTY
9.1 Product Warranty. Company warrants to Distributor that the Products,
----------------
if properly handled and used only for the purpose they were designed
for, will be free of defects in workmanship and materials [***]
Company does not extend any warranty directly to End User. Company
reserves the right to change the terms and conditions of the said
warranty at its sole option. Any sales documents provided to the End
User by Distributor shall include the End-User restrictions relating
to warranty, intellectual property rights and liability limitations
attached hereto as Schedule A.
-8-
<PAGE>
9.2 Warranty Claims. Warranty claims hereunder must be made promptly in
---------------
accordance with the procedures, terms and conditions specified by
Company in its Warranty Program Procedures to be provided to
Distributor. In the event of a warranty claim, Company shall either
repair the defective FRU or replace said FRU with a new or refurbished
FRU. The actions taken by Company under the Warranty Program
Procedures shall be the full extent of Company's liability and
Distributor's exclusive remedy with respect to a claim under this
Section 9.
9.3 After-Warranty Service. In addition to the warranty provided to
----------------------
Distributor, Distributor may purchase after-warranty service from
Company at the prices listed in the pricing document provided
separately. Distributor shall offer non-warranty technical service to
End Users on terms and conditions that have been approved by Company.
9.4 Non-Liability of Company. The Company shall not be liable for
-------------------------
consequential damages of any kind, whether as a result of loss by
Distributor of present or prospective profits, anticipated sales,
expenditures, investments, or commitments made in connection with this
Agreement. Company's liability under this Agreement shall be limited
to the amount received from Distributor for the purchase of Products
and in no event shall Company be liable to the Distributor for any
consequential or indirect damages.
10. CONFIDENTIALITY
10.1 Confidential Information. During the term of this Agreement and
------------------------
thereafter it may be necessary for Company and Distributor to mutually
exchange certain information, data and proprietary material relating
to marketing, sales, technical, financial and other matters involving
the Products, this Agreement or the relationship between the Company
and Distributor. In order to be treated as confidential hereunder
("Confidential Information"), information disclosed in writing shall
be marked as confidential or proprietary, and the disclosing party
shall indicate the confidential nature of oral information at the time
of disclosure and provide written confirmation thereof within fifteen
(15) days following such disclosure.
10.2 All Confidential Information shall be received and retained in the
strictest confidence by the parties and will be deemed to be
proprietary information of the disclosing party and the recipient
agrees that it will not disclose it to third parties and further it
will treat such information, data or material as proprietary using the
same degree of care that it would normally use in protecting its own
proprietary
-9-
<PAGE>
information for a period of three years; and be used by the parties
hereto solely for the purpose of implementing this Agreement or for
discussions relating to other products of Company or other business
relationships between Distributor and Company.
10.3 This provision shall not apply to any Confidential Information that
(i) is known by the receiving party prior to the date of disclosure by
the disclosing party, and is not subject to or in violation of an
obligation of confidentiality; (ii) is or become public knowledge
other than by default of the receiving party; (iii) is obtained by the
receiving party from a bona-fide third party having free right of
disposal of such information; (iv) is wholly and independently
developed by the receiving party without reference to the Confidential
Information; or (v) the receiving party is required to disclose
pursuant to any law, regulation or a valid order of a court or other
government body or any political subdivision, or other legal
requirement thereof, provided, however, that the recipient of the
information shall first have given notice to the disclosing party and
made a reasonable effort to obtain a protective order requiring that
the information and/or documents so disclosed be used only for the
purposes for which the order was issued.
10.4 Subject to the foregoing, this Agreement shall also be treated
confidentially by all parties hereto. This section shall survive any
termination of the Agreement for a period of three (3) years.
11. TRADEMARKS
11.1 Use of Trademarks. Company hereby grants to Distributor a
-----------------
non-exclusive, non-transferable, and royalty-free right and license to
use Company's name, trademarks, trade names, and logos specified in
Exhibit I attached hereto, as such Exhibit may be modified from time
to time during the term of this Agreement, in connection with the sale
or other distribution, promotion, advertising, and maintenance of the
Products for so long as such name, trademarks, trade names, and logos
are used by the Distributor. Distributor shall afford Company
reasonable opportunities during the term hereof to inspect and monitor
the activities of Distributor in connection with the name, trademark,
trade name, and logo usage.
11.2 Restrictions. Distributor shall acquire no right, title or interest
------------
in such Company name, trademarks, trade name, and logos other than the
foregoing limited license and Distributor shall not use any Company
trademarks as part of Distributor's corporate or trade name or permit
any third party to do so without the prior written consent of Company.
Distributor shall not adopt, use or register any words, phrases or
symbols which are identical to or confusingly similar to any of
-10-
<PAGE>
Company's trademarks. Distributor shall not private label the
Products.
11.3 Infringements. Distributor shall promptly notify Company of any use
-------------
by any third party of Company's name, trademarks, trade name, and
logos or any use by such third parties of similar marks which may
constitute an infringement or passing off of Company's name,
trademarks, trade name, and logos. Company reserves the right in its
sole discretion to institute any proceedings against such third party
infringers. Distributor agrees to cooperate fully with Company in any
action taken by Company against such third parties, provided that all
expenses of such action shall be borne by Company.
12. INTELLECTUAL PROPERTY RIGHTS
12.1 Ownership. Distributor hereby acknowledges Company's exclusive right,
---------
title and interest in and to any and all intellectual property rights
which Company may have at any time adopted, used, registered or been
issued in the United States or in any other location (the
"Intellectual Property Rights"). Distributor agrees that it shall not
do, or cause to be done, any acts or things contesting or in any way
impairing or tending to impair any portion of the Company's right,
title and interest in and to the Intellectual Property Rights.
Distributor further acknowledges that, in connection with any
reference to the Intellectual Property Rights, Distributor shall not
in any manner represent that is possesses any ownership interest in
the Intellectual Property Rights or the registration thereof, nor
shall any action taken by Distributor or on Distributor's behalf
create in Distributor's favour any right, title or interest in and to
the Intellectual Property Rights.
13. TAXES
Payment of Taxes. Company shall not be responsible for any local, state,
-----------------
federal and other governmental taxes, customs, duties, imposts, levies or
other charges or deductions or withholdings in the Territory whatsoever
imposed on Company or the Distributor as a result of the operation of this
Agreement or of the importation of the Products into the Territory and the
Distributor shall indemnify and hold Company harmless from and against any
such taxes, duties, imposts, levies or other charges or deductions or
withholdings all of which shall be for the sole and exclusive account of
the Distributor. Company is responsible for the payment of taxes outside
the Territory.
14. LICENSES AND PERMITS
14.1 Import Documentation. Distributor shall be responsible for obtaining
--------------------
all licenses and permits and for satisfying all formalities as may be
required to import Products
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<PAGE>
into the Territory in accordance with then prevailing laws or
regulations.
14.2 Licenses and Permits. Distributor shall be responsible for obtaining
--------------------
all licenses and permits and for satisfying all formalities as may be
required to sell, install and operate Products in the Territory. If
this Agreement is not renewed pursuant to section 3.1, the fees for
any licensing and testing of the Products incurred by Distributor
shall be reimbursed by Company to Distributor in an amount [***] In
the event of nonrenewal and termination of this Agreement, all
licenses and permits obtained by Distributor for the Products shall be
transferred to Company or its assignee or otherwise terminated at
Company's option.
15. TERMINATION
15.1 Termination. Notwithstanding the provisions of Article 3 above, this
-----------
Agreement may be terminated in accordance with the following
provisions:
(a) Either party hereto may terminate this Agreement at any time by
giving notice in writing to the other party, which notice shall
be effective upon dispatch, should the other party file a
petition of any type as to its bankruptcy, be declared bankrupt,
become insolvent, make an assignment for the benefit of
creditors, go into liquidation or receivership, or otherwise lose
legal control of its business, or should the other party or a
substantial party of its business come under control of a third
party;
(b) Either party may terminate this Agreement by giving notice in
writing to the other party should an event of Force Majeure
continue for more than six (6) months as provided in Article 6.2
above and Article 16 below;
(c) Either party may terminate this Agreement at any time without
notice in the event the other party is in breach of this
Agreement.
15.2 Rights and Obligations on Termination. In the event of termination
-------------------------------------
of this Agreement for any reason, the parties shall have the following
rights and obligations:
(a) Obligation to Ship. For any orders already placed by
-------------------
Distributor and finally confirmed and accepted by Company on or
before the effective termination date, which acceptance includes
receipt of an acceptable and proper letter of credit pursuant to
the terms of Article 6.3, Company shall be obligated to ship
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<PAGE>
such orders.
(b) Right to Re-purchase Products. For a period of ninety (90) days
-----------------------------
after the termination date, Distributor shall be entitled to sell
any remaining inventory of the Products at the resale prices set
by Company pursuant to Article 8.5. Upon the expiry of this
ninety (90) day period, Company shall have the right, at its sole
discretion, to buy back from Distributor any then remaining
inventory of the Products at one-half (1/2) the price paid by
Distributor.
(c) Confidentiality. Confidentiality obligations pursuant to
---------------
Article 10 hereof shall survive the termination of this Agreement
and continue to be binding on both parties.
(d) Return of Materials. All trademarks, trade names, patents, copy
-------------------
rights, designs, drawings, formulas or other data, photographs,
samples, literature, and sales aids of every kind shall remain
the property of Company. Within thirty (30) days after the
termination of this Agreement, Distributor shall prepare all such
items in its possession for shipment to the Company, as Company
may direct, at Company's expense. Distributor shall not make or
retain any copies of any confidential items or information that
may have been entrusted to it.
16. FORCE MAJEURE
16.1 Definition. Force Majeure shall mean any event or condition, not
----------
existing as of the date of signature of this Agreement, not
reasonably foreseeable as of such date and not reasonably within the
control of either party, which prevents in whole or in material part
the performance of one of the parties of its obligations hereunder or
which renders the performance of such obligations so difficult or
costly as to make such performance commercially unreasonable. Without
limiting the foregoing, the following shall constitute events or
conditions of Force Majeure: acts of State or governmental action,
riots, disturbance, war, industry-related strikes, lockouts,
slowdowns, prolonged shortage of energy supplies, epidemics, fire,
flood, hurricane, typhoon, earthquake, lightning and explosion.
16.2 Notice. Upon giving notice to the other party, a party affected by
------
an event of Force Majeure shall be released without any liability on
its part for the performance of its obligations under this Agreement,
except for the obligation to pay any amounts due and owing hereunder,
but only to the extent and only for the period that its performance
of such obligations is prevented by the event of Force Majeure. Such
notice shall include a description of the nature of the event of
Force Majeure, and
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<PAGE>
its cause and possible consequences. The party claiming Force Majeure
shall promptly notify the other party of the termination of such
event.
16.3 Confirmation. The party invoking Force Majeure shall provide to
------------
the other party confirmation of the existence of the circumstances
constituting Force Majeure. Such evidence may consist of a statement
or certificate of an appropriate governmental department or agency
where available, or a statement describing in detail the facts
claimed to constitute Force Majeure.
16.4 Suspension of Performance. During the period that performance by
-------------------------
one of the parties of its obligations under this Agreement has been
suspended by reason of an event of Force Majeure, the other party may
likewise suspend the performance of all or part of its obligations
hereunder to the extent that such suspension is commercially
reasonable.
16.5 Period of Force Majeure. Should the period of Force Majeure
-----------------------
continue for more than [***] either party may terminate this
Agreement without liability to the other party upon giving written
notice to the other party.
17. DISPUTE RESOLUTION AND GOVERNING LAW
17.1 Dispute Resolution. Should any dispute, controversy or claim arise
------------------
out of or relating to this Agreement, the parties shall endeavour to
reach an amicable settlement through negotiation. If the parties are
unable to reach an amicable settlement through negotiation within 20
days after receipt of notification from the other party of the
existence of the dispute, then each party shall have the right to
request non-binding mediation. In the event mediation is unsuccessful
within 20 days of the commencement of mediation proceedings, the
matter shall finally be settled by binding arbitration in Seattle,
Washington, U.S.A,in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce in effect on the
date of this Agreement and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof. The arbitration shall be conducted in the English language.
Notwithstanding the above, regarding intellectual property right
claims, the Company reserves the right to initiate and conduct
litigation proceedings in any court it deems appropriate.
17.2 Governing Law. The parties acknowledge that this Agreement shall be
--------------
governed by, interpreted, and construed in accordance with the laws
of the state of Delaware, the United States of America, without
regard to its choice of law provisions. The terms and condition of
the United Nations Convention on the International Sale of Goods are
excluded from application under this Agreement.
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<PAGE>
18. MISCELLANEOUS
18.1 No Foreign Corrupt Practices. Distributor hereby represents,
----------------------------
warrants and agrees that Distributor shall be bound and abide by and
strictly comply with both the letter and the spirit of the Foreign
Corrupt Practices Act of 1977 and any amendments thereto as the same
is from time to time in force in the United States of America.
Without limiting the generality of the foregoing, Distributor has not
made and shall not make, in the performance of this Agreement, an
offer, payment, promise to pay or authorization of the payment of any
money, offer, gift, promise to give, or authorization of the giving
of anything of value, in order to assist with obtaining or retaining
business for or with, or directing business to, Company or any other
person or entity, directly or indirectly
(a) to or for the use or benefit of any official or employee of any
government or the agencies or instrumentalities of such
government or any international organization, political party or
candidate for political office;
(b) to any other person if Distributor or any partner, officer,
director, employee, agent, representative or shareholder of
Distributor knows or has reason to suspect or know that any part
of such money or thing of value will be directly or indirectly
offered, given or promised to any government officer or employee,
political party or official thereof, or candidate for political
office or any international organization; or
(c) to any other person or entity, the payment of which would violate
the laws or policies of the United States or of any other
government.
Upon request by Company, Distributor shall furnish a certificate
verifying compliance with this Article. Notwithstanding Article 15.2,
in the event of termination of this Agreement by Company for
Distributor's breach of this Article, Company shall have no liability
to Distributor under this Agreement for any loss, cost or damage
resulting, directly or indirectly, to Distributor from such
termination.
18.2 U.S. Export Restrictions. Distributor shall not sell any of the
------------------------
Products to end-users who are subject to U.S. export restrictions.
18.3 Relationship. This Agreement does not make either party the
------------
employee, agent or legal representative of the other for any purpose
whatsoever. Neither party is granted any right or authority to assume
or to create any obligation or responsibility, express or implied, on
behalf of or in the name of the other party. In
-15-
<PAGE>
fulfilling its obligations pursuant to this Agreement each party
shall be acting as an independent contractor.
18.4 Assignment. After obtaining written permission from Company,
----------
Distributor shall be entitled to assign any or all of its rights and
obligations hereunder, provided that such party shall remain fully
liable for the performance of all its obligations hereunder. Any
prohibited assignment shall be null and void. Company may assign the
Agreement to another company which acquires all or substantially all
of the assets, business, or stock of the Company.
18.5 Notices. Notices permitted or required to be given hereunder shall
-------
be deemed sufficient if given by facsimile transmission to the
respective party, or by registered or certified air mail, postage
prepaid return receipt requested, addressed to the respective address
of the parties as first above written or at such other addresses as
the respective parties may designate by like notice from time to
time. Notices so given shall be effective upon receipt by the party
to which notice is given.
18.6 Entire Agreement. This Agreement, including any Exhibits and
----------------
Schedules attached hereto and incorporated as an integral part of
this Agreement, constitute the entire agreement of the parties with
respect to the subject matter hereof, and supersede all previous
distributorship agreements by and between Company and the Distributor
as well as all proposals, oral or written, and all negotiations,
conversations or discussions between the parties related to this
Agreement. Each party acknowledges that it has not been induced to
enter into this Agreement by any representations or statements, oral
or written, not expressly contained herein.
18.7 Amendment. This Agreement shall not be deemed or construed to be
---------
modified, amended, rescinded, canceled or waived, in whole or in
part, except by written amendment signed by the parties hereto.
18.8 Severability. In the event that any of the terms of this Agreement
------------
are in conflict with any rule of law or statutory provision or are
otherwise unenforceable under the laws or regulations of any
government or subdivision thereof, such terms shall be deemed
stricken from this Agreement, but such invalidity or unenforceability
shall not invalidate any of the other terms of this Agreement and
this Agreement shall continue in force, unless the invalidity or
unenforceability of any such provisions hereof does substantial
violence to, or where the invalid or unenforceable provisions
comprise an integral part of, or are otherwise inseparable from, the
remainder of this Agreement.
18.9 Counterparts. This Agreement shall be executed in two or more
------------
counterparts in the
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<PAGE>
English language, and each such counterpart shall be deemed an
original hereof. In case of any conflict between the English version
and any translated version of this Agreement, the English version
shall govern.
18.10 Waiver. No failure by either party to take any action or assert any
------
right hereunder shall be deemed to be a waiver of such right in the
event of the continuation or repetition of the circumstances giving
rise to such right.
18.11 Remedies. The remedies granted to either party hereunder are
--------
cumulative and are not intended to be exclusive of any other
remedies to which they may respectively be lawfully entitled in case
of any breach of threatened breach by the other party of the terms
and provisions hereof.
18.12 Subject Headings. The subject headings of the Articles of this
----------------
Agreement are included for the purpose of convenience only and shall
not affect the construction or interpretation of any of its
provisions.
INTENDING TO BE LEGALLY BOUND, the parties have executed this Agreement on the
date first above written.
Metawave Communications
Cayman Islands Seenode Co., Ltd.
By: /s/ Victor K. Liang By: /s/ David Kim
---------------------- -----------------------
Name: Victor Liang Name: David Kim
------------------- ---------------------
(please print) (please print)
Title: Sr. V.P. Title: Managing Director
------------------ --------------------
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EXHIBIT 1
---------
TRADEMARKS
----------
Metawave
--------
Cube Logo
---------
SpotLight
---------
SiteSculptor
------------
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<PAGE>
SCHEDULE A
----------
END USER RESTRICTIONS
---------------------
All End User sales and licenses of the Product shall include provisions
that:
(1) the End User is granted only a nontransferable, nonexclusive right to
use the Product only for its internal business purposes;
(2) the Company and its licensors (if any) retain all of their intellectual
property rights in the Products, and no title to such intellectual property is
transferred to the End User;
(3) the End User agrees not to reverse assemble, decompile, or otherwise
attempt to derive source code from the Products;
(4) the End User agrees to comply with all export and re-export
restrictions and regulations of the Department of Commerce or other United
States agency or authority, and not to transfer, or authorize the transfer, of
the Products to a prohibited country or otherwise in violation of any such
restrictions or regulations;
(5) the End User receives a warranty on the Product from the Distributor,
and the Company makes no warranties to the End User in connection with the
Product, and expressly disclaims any implied warranties of merchantability or
fitness for a particular use; and
(6) the Company shall not be liable to the End User for any indirect,
consequential, incidental or special damages arising out of the use or license
of the Product, regardless of the theory of liability (including negligence and
strict liability).
-19-
<PAGE>
PRICING DOCUMENT
----------------
To be provided separately by Company to Distributor, and updated on a regular
basis.
-20-
<PAGE>
EXHIBIT 10.17
------------
GENERAL EQUIPMENT - MASTER PURCHASE AGREEMENT
This Master Purchase Agreement (the "Agreement") is entered into
as of this _______day of ________, 1999 ("Effective Date"),
by and among
Metawave Communications
a Delaware Corporation with its principal place of business at
10735 Willows Road NE
Redmond, WA 98073-9769
("Supplier")
AND
"Customer," Airtouch Support Services, Inc., a Delaware corporation
and wholly-owned subsidiary of Airtouch Communications, Inc.,
on behalf of itself and any Affiliates, with a place of business at
255 Parkshore Drive, Folsom, California 95630
FOR
Spotlight 2000 Smart Antenna Products, Accessories & Supporting Equipment
PROPRIETARY INFORMATION
Not for use or disclosure outside
Customer and Supplier Except
under written agreement.
Confidential--Disclose and distribute solely to those individuals who have a
need to know.
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
A. DEFINITIONS..................................................................................... 1
B. PURCHASE PROVISIONS............................................................................. 3
B.1 SCOPE OF AGREEMENT.............................................................................. 3
B.2 TERM OF AGREEMENT............................................................................... 3
B.3 ORDER OF PRECEDENCE............................................................................. 4
B.4 PRICES AND TERMS................................................................................ 4
B.5 ORDERING LEAD TIMES............................................................................. 5
B.6 DELIVERY, TRANSPORTATION AND SHIPPING........................................................... 5
B.7 WARRANTIES...................................................................................... 6
B.8 SPARE PARTS..................................................................................... 8
B.9 SOFTWARE SUPPORT SERVICES....................................................................... 9
B.10 DOCUMENTATION................................................................................... 9
B.11 PRODUCT SUPPORT................................................................................. 10
B.12 SPECIAL PROVISIONS.............................................................................. 11
B.13 DISASTER AVAILABILITY........................................................................... 11
C. GENERAL PROVISIONS.............................................................................. 11
C.1 DISPUTE RESOLUTION.............................................................................. 11
C.2 TAXES AND OTHER CHARGES......................................................................... 14
C.3 CHANGES REQUIRED TO MEET CODES, LAWS OR REGULATIONS............................................. 14
C.4 NOTICES......................................................................................... 14
C.5 YEAR 2000 DATE CHANGE WARRANTY.................................................................. 15
C.6 ENTIRE AGREEMENT................................................................................ 15
C.7 EXCEPTIONS...................................................................................... 16
C.8 COUNTERPARTS.................................................................................... 17
EXHIBIT A-- DOMESTIC PRODUCT AND PRICE LIST......................................................... 18
EXHIBIT B-- DISCOUNT SCHEDULE AND ORDER CONFIGURATION............................................... 19
EXHIBIT C-- SPECIFICATIONS.......................................................................... 20
EXHIBIT D-- WARRANTY................................................................................ 21
EXHIBIT E-- SOFTWARE LICENSE........................................................................ 22
EXHIBIT F-- VENDOR MONTHLY REPORT REQUIREMENTS......................................................
EXHIBIT G-- AFFILIATE AND SUBSIDIARY LIST........................................................... 24
EXHIBIT H-- MUTUAL NONDISCLOSURE.................................................................... 25
Exhibit I-- PRODUCT MAINTENANCE PROGRAM............................................................. 28
EXHIBIT J-- COMMISSIONING CERTIFICATE............................................................... 29
EXHIBIT K-- DIVISION OF RESPONSIBILITY.............................................................. 30
EXHIBIT XX-- TERMS AND CONDITIONS.................................................................... 31
EXHIBIT Y2K--COMPLIANCE CRITERIA... ................................................................. 32
</TABLE>
Confidential--Disclose and distribute solely to those individuals who have a
need to know.
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GENERAL EQUIPMENT - MASTER PURCHASE AGREEMENT
THIS AGREEMENT No. _____________ ("Agreement"), effective ______, 1999, is
between Metawave Communications, a Delaware corporation ("Supplier"), AND
"Customer," comprised of AirTouch Support Services, Inc., a Delaware corporation
and wholly-owned subsidiary of AirTouch Communications, Inc., on behalf of
itself and its Affiliates, with a place of business at 255 Parkshore Drive,
Folsom, California 95630.
Whereas, Supplier has offered to sell to AirTouch Support Services, Inc.,
Spotlight 2000 antenna products, accessories, and supporting equipment described
herein for installation and use in the United States at the discounts and prices
specified herein based upon the volume purchases during this term of this
Agreement that are committed by AirTouch Cellular;
Whereas, AirTouch Support Services, Inc., wishes to take advantage of the
discounts and prices on Products and related services offered by Supplier;
Now Therefore, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
A. DEFINITIONS
For the purposes of this Agreement, the following terms and all other terms
defined in this Agreement shall have the meanings so defined unless the context
clearly indicates otherwise. A term defined in the singular shall include the
plural and vice versa when the context so indicates.
"Actual Contract Volume" means the total number of Products purchased or
deemed to be purchased during the term of the Agreement by Customer and its
Affiliates hereunder.
"Affiliate" means any parent, U.S subsidiary or successor of AirTouch
Support Services, Inc., or any partnership, corporation or other entity
operating in the United States in which AirTouch Support Services, Inc., or a
parent, subsidiary or successor of Customer, directly or indirectly, owns at
least ten percent (10%) equity interest, or has at least ten percent (10%)
voting control.
"Anniversary" means the annual occurrence of the Effective Date of this
Agreement.
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need to know.
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"Commercial" refers to any Product intended for sale to wireless service
providers, produced with production tooling, regardless of production volume
levels.
"Commitment" means the agreed upon quantity of Products (i.e., CDMA
SpotLight Smart Antenna systems) to be ordered by Customer and installed by
Supplier during the period of time commencing on or before the Effective Date of
this Agreement and ending on or before June 30th, 2000.
"Customer" means AirTouch Support Services, Inc., acting in its individual
capacity and as a representative for its respective Affiliates and their
assigns, in accordance with the section titled "ASSIGNMENT."
"Effective Date" means the date of this Agreement as specified on the cover
sheet of this Contract.
"Information" means specifications, drawings, sketches, models, samples,
tools, computer programs, technical information, and other confidential business
information of, Supplier or Customer or personnel information or data, whether
written, oral or otherwise.
"Products" means equipment, components, devices, and accessories thereof
including documentation as well as it may include Services and a license to use
Software, as described in this Agreement, provided by Supplier hereunder to
Customer as described in Exhibit A, as the same may be modified, added or
discontinued upon written mutual agreement of the parties during the term of
this Agreement.
"Purchase Order" means each written order executed hereunder ordering
Products and Services which shall be deemed to incorporate (1) the provisions of
this Agreement (including the exhibits attached hereto), as it may from time to
time be amended, (2) the Specifications applicable to such Purchase Order, and
(3) any subordinate documents attached to or referenced in this Agreement or
such Purchase Order or Specifications, if agreed to in writing by both parties.
Each such Purchase Order shall be deemed to be a separate and independent
agreement between the parties with respect to the subject matter thereof.
"Required Delivery Date" means the date on which all Products on a Purchase
Order are to arrive at the location or locations specified on such Purchase
Order, if agreed to by Supplier.
"Services" means all services described in the applicable Purchase Order
and provided by Supplier hereunder to Customer including, but not limited to,
technical product support and repair services relating to the warranty
provisions set forth herein.
"Software" (if applicable for this agreement) shall mean all computer
programs, excluding source codes, consisting of a series of logical instructions
and tables of
Confidential--Disclose and distribute solely to those individuals who have a
need to know.
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information which guide the functioning of a processor, contained in the
Products. Such programs 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.
"Specifications" means (1) Supplier's published specifications, (2) the
equipment manufacturer's specifications (if Supplier is not the equipment
manufacturer), and (3) any other specifications for Products and Services agreed
to by the parties which are attached to or referenced in and made a part of the
applicable Purchase Order.
"Warranty" means the Products warranty provided pursuant to Section B.8.
"Warranty Period" means the period during which a Product is covered by
Supplier's warranties under the section entitled "WARRANTIES."
B. PURCHASE PROVISIONS
B.1 SCOPE OF AGREEMENT
This Agreement establishes the general terms and conditions under which
Customer may purchase Products from Supplier. The products, which means the
equipment, components, devices, accessories thereof including documentation as
well as it may include Services and a license to use Software as indicated in
the Agreement, all of which are manufactured, produced or performed by Seller or
procured by Seller from sub-sellers or sub-contractors. Exhibits A and B to this
Agreement contains the unit prices and discount schedules for the purchase
Commitment of [***] CDMA SpotLight systems to be supplied under this Agreement.
Customer may elect to purchase additional Products beyond the Commitment of
[***] systems and may purchase other Products from Supplier.
B.2 TERM OF AGREEMENT
Unless sooner terminated in accordance with the provisions of this
Agreement or extended by amendment, the initial term of this Agreement shall
commence on _______, 1999, ("Effective Date"), and extend through [***] unless
amended by both parties in writing. Except as set forth in this Agreement, the
Termination of this Agreement shall not affect the obligations of any party
pursuant to any purchase commitments or any Purchase Orders previously executed
hereunder, and the terms and conditions of this Agreement shall continue to
apply to such Purchase Orders as if this Agreement had not been Terminated.
Customer shall pay Supplier for all work performed prior to the effective date
of Termination.
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need to know.
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B.3 ORDER OF PRECEDENCE
This Agreement supersedes all agreements, correspondence or statements,
whether oral or written, in whatever form made by either Party prior to the
effective date of the Agreement, except to the extent such documents are
incorporated into this Agreement in an Exhibit. In case of any discrepancies
between individual documents governing the relationship between the Parties, the
following order of precedence shall apply:
Highest priority to lowest priority:
. The Agreement
. Exhibits to the Agreement
. Change Orders
. Purchase Orders
. Exhibits to Purchase Orders
. Written correspondence between the Parties
B.4 PRICES AND TERMS
a. Price Increases. The list prices for Products which are set forth in
----------------
Exhibit A [***] are valid from the effective date of the Agreement through
[***], subject to adjustment in accordance with the section entitled "PRICE
PROTECTION."
b. Volume Commitment. During the period of time commencing on or before
------------------
the Effective Date of this Agreement and ending on or before June 30, 2000,
Customer agrees to order from Supplier [***] CDMA SpotLight Smart Antenna
systems, as more fully described in Exhibit A, and Supplier hereby agrees to
provide and install such systems ordered by Customer within the above described
period of time. [***] no further action is required. In the event that [***]
Supplier and Customer agree to [***]. In the event that actual volume of
Customer's orders falls short of the [***] CDMA SpotLight Smart Antenna systems,
Customer will [***]
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need to know.
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B.5 ORDERING LEAD TIMES
CDMA Spotlight 2000 Smart Antenna systems ordered under the Contract
Volume Commitment of [***] systems will have a lead time of [***] days from
Supplier's acceptance of purchase order, unless otherwise confirmed by Supplier.
B.6 DELIVERY, TRANSPORTATION AND SHIPPING
a. All products shall be delivered F.O.B. destination. Subject to the
provisions of this section entitled "DELIVERY, TRANSPORTATION AND SHIPPING,"
Customer shall bear the transportation charges for each Product from Supplier's
United States location to Customer's designated location as set forth in the
Purchase Order, which may include, but not be limited to, Customer's or
Affiliate's warehouse. Supplier shall ship Products in accordance with
instructions, if any, from Customer with transportation charges prepaid by
Supplier. Supplier shall invoice Customer for any such transportation charges
required to be paid by Customer hereunder. Such prepaid charges shall be at
actual cost and added to and stated separately on the invoice for such Product.
If requested by Customer, Supplier shall provide legible copies of prepaid
freight bills, express receipts, or bills of lading supporting the invoice
amounts. Customer will have the option to arrange and pay for its own shipping.
b. Customer may request that Products purchased under a single Purchase
Order be shipped to [***] provided that Customer submits instructions regarding
multiple delivery in the Purchase Order or other written notice at least ten
(10) business days prior to the requested Shipment Date.
c. Supplier shall use the [***]. All containers shipped by Supplier shall
utilize the specifications, [***]. This standard addresses the transaction
label, which provides information for receiving shipments using bar code
technology. The transaction label should be affixed on final shipping
containers, boxes, cartons, pallets, cases, barrels, etc.. Customer requires bar
code labels to be on each product as well as shipping containers for inventory
management. Information on the bar codes shall be specified by Customer at a
later date.
d. Supplier shall, at its own expense, properly pack each Product in
accordance with Supplier's standard domestic packing practices, in connection
with the shipment of such Product to Customer's site. Payment for such
additional packing expenses shall be upon mutual agreement of the parties. If
such Product is returned to Supplier because of rejection in accordance with the
Exhibit XX section entitled "ACCEPTANCE" or cancellation pursuant to the
provisions of this Agreement, Supplier shall bear all
Confidential--Disclose and distribute solely to those individuals who have a
need to know.
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<PAGE>
transportation charges relating to the return of such Products. If Customer has
already paid Supplier for such charges, Supplier shall refund such payment to
Customer.
e. Unless Customer specifies the carrier, Supplier shall be responsible
for dealing with carriers to coordinate delivery of shipments, locating missing
or late shipments, resolving billing disputes for transportation charges, and
submitting and resolving all insurance claims arising from loss of or damage to
such shipments. If Customer chooses the carrier, Supplier's sole responsibility
shall be assisting Customer with any claims or issues against such carrier.
f. If Customer gives Supplier no fewer than [***] days advance
written notice of shipping delay, no storage charges shall apply for Customer
requested changes to delivery shipment dates up to [***] days requested
delay. This applies only to orders that Customer delays prior to shipment from
Supplier's location.
B.7 WARRANTIES
Seller represents and warrants that the following statements are true on
the date of execution of this Agreement and at all times during the term hereof,
except as may be expressly provided otherwise:
a. General Warranty of Quality. In addition to all other Warranties set
---------------------------
forth herein, Supplier warrants to Customer, for a period of [***] months,
commencing on either; (i) date of receipt by Customer (where Customer shall
perform the installation) or, (ii) completion by Supplier of installation and
commissioning and Product acceptance by Customer at Customer's site as defined
in Exhibit J, of a Product to Customer, that all Products purchased under this
Agreement will be safe for their intended purpose and will be free from defects
in design, material and workmanship and will conform to and perform in
accordance with Supplier's Specifications and other provisions under this
Agreement set forth in Exhibit C ("Specifications") and Supplier warranty set
forth in Exhibit D. All products shall be of the latest design for that
particular product or model as then currently produced and made generally
commercially available to customer by Supplier or its suppliers, unless
identified as otherwise. The Software provided by Supplier, if applicable for
this Agreement, shall perform the functions described in Exhibit E. Where
Supplier performs Installation Services, the workmanship shall conform with good
engineering practices and shall be accomplished in a workmanlike fashion.
Supplier shall be responsible for removing debris, packing material, waste,
etc., resulting from its work and shall leave the premises in a neat and orderly
fashion. Supplier warrants to Customer that all Services provided hereunder
shall be performed in a workmanlike manner and in accordance with applicable
Specifications. All warranties shall survive inspection, acceptance and payment.
In the event that a Customer purchases linear power amplifiers (LPA's)
directly from a third party supplier, and not from Metawave, such LPA's shall be
subject to the
Confidential--Disclose and distribute solely to those individuals who have a
need to know.
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warranty given by the third party supplier. However, this separate warranty
shall not affect Supplier's warranty set forth above with respect to the
Products or to provide technical support for the Products as outlined in Section
B.11 of this Agreement.
b. Repair and Replacement by Supplier. For Products that fail to comply
----------------------------------
with the Initial Warranty, when the failure occurs prior to installation,
Supplier may, at Supplier's option, repair, replace or refund the full price at
no cost to Customer. For Products that fail to comply with the Initial
Warranty, when the failure occurs after installation of Product, in addition to
the remedy immediately set forth above, Supplier shall remove Product in breach
and replace or repair it. Supplier shall have the right to inspect suspected
defective Product prior to removal from site location to determine reason for
failure. Where replacement of Product not meeting the warranties is made
thereunder, replacement shall include, at Customer's option, expedited
deliveries at a mutually agreed charge to Customer. Supplier shall not be
responsible for defects in material or workmanship that would not have occurred
but for Customer's improper use of Product. Any warranty provided hereunder
does not extend to any Product or Service which has been misused, modified,
repaired, improperly installed or otherwise abused.
c. If Product does not comply with the foregoing warranty and Supplier has
not remedied or attempted to remedy such noncompliance as set forth in B.7 (a)
within a reasonable time (not to exceed [***] calendar days from Customer's
notice to Supplier of the nonconformity) or if [***] Customer can, at its
option, Terminate this Agreement and Commitments, or its Forecasts, and/or any
outstanding Purchase Orders for any other Products affected by such breach.
d. If a breach of warranty is determined to result from a manufacturing
problem that effects Product not yet in nonconformance with the warranty, the
parties shall negotiate in good faith to develop a replacement plan ("recall").
Supplier shall pay all of Customer's out-of-pocket costs, including but not
limited to, removal and installation costs for all Products still under warranty
associated with such recall if such recall is classified an "A" or "AC" change
as defined per BELLCORE document GR-209-CORE "GENERIC REQUIREMENTS FOR PRODUCT
CHANGE NOTICES."
e. Repair or Replacement by Customer. In the event that Supplier is
---------------------------------
unable to fulfill its undertakings under this Section B.7, Customer may, after
expiration of the notice periods as outlined under paragraph "c" of this Section
B.7, at the expense of Supplier, undertake the corrective measures itself. In
this event, Customer shall be entitled to either be reimbursed for the direct
costs related thereof, or to set off an amount corresponding to Customer's costs
for the corrective measures against any sums due to Supplier under this
Agreement. Customer will give Supplier [***] advance notice of its intention to
undertake corrective measures itself. In situations where time is of the essence
due to the nature of the fault, Customer will give Supplier [***] advance notice
of its intention to undertake corrective measures itself.
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need to know.
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f. Supplier represents and warrants that it has good title to Products and
the right to sell them to Customer free of any of the proprietary rights listed
in Exhibit XX section entitled "INTELLECTUAL PROPERTY INDEMNIFICATION," and upon
payment in full by Customer, such Products shall not be encumbered with any
security interest, lien or any other encumbrance whatever.
g. At the request of Customer, prior to the purchase of Products, Supplier
may provide Customer with optional extended warranty coverage for Products in
[***] as set forth in Exhibit I, at additional costs or discounts, as
applicable, from the full invoice price, as mutually agreed upon by Customer and
Supplier and set forth in attached Exhibit A.
h. Supplier's warranty shall remain in effect if Product is moved and
reinstalled by Customer or Customer's subcontractor during the Warranty Period,
unless damage to Product is inflicted by Customer or Customer's subcontractor
during move or reinstallation.
i. All items that are reasonably suspected of being not in conformance
with the warranty will be returned to Supplier by Customer, unless Supplier
waives this requirement based on individual incidents. Supplier will determine
if Product is in fact defective due to Supplier's fault and will report the
results of these findings to Customer. If Product is not defective, Customer
will bear the cost of shipping the item to Supplier. In addition, if Supplier
has sent out emergency replacements, and upon subsequent review finds that the
failure was not due to Suppliers Product, Customer agrees to pay for the
replacement in addition to the original item.
j. Service Warranty. If applicable, Services shall be performed
----------------
promptly, diligently, and in a competent and professional manner, in accordance
with the descriptions of such Services in the applicable Purchase Order and to
Customer's satisfaction.
k. Disclaimer of Implied Warranties: Sole Remedy. Except As Provided In
---------------------------------------------
This Section, Supplier Makes No Other Warranty, Express Or Implied. All
Warranties Of Merchantability And Fitness For A Particular Purpose Are Hereby
Expressly Disclaimed. This Warranty Contains Customer's Sole And Exclusive
Remedies And Is Expressly In Lieu Of All Other Remedies Based In Law Or Equity.
B.8 SPARE PARTS
For a period of [***] after the sale of a Product or discontinuance of a
Product, whichever is later, Supplier shall make spare parts available, or in
the event of a Product discontinuance, a good faith effort to make spare parts
available, to Customer and its Affiliates. The price for spare parts [***] If
Supplier discontinues the supply of spare parts at any time thereafter, and such
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spares are not available from another Supplier, then Supplier shall use its best
efforts to obtain, engage, license or otherwise provide for a third party to
manufacture and supply to Customer or its Affiliates such spares. If Supplier is
unable to secure such third-party manufacturer then Supplier shall provide at no
charge to Customer all technical information and any other rights required so
Customer can manufacture (if permitted by law to do so), have manufactured, or
obtain such parts from other sources. Any information provided by Supplier to
Customer pursuant to this Agreement shall be used solely by Customer for this
purpose and shall remain confidential upon termination or expiration of this
Agreement.
B.9 SOFTWARE SUPPORT SERVICES
If applicable for the products designated in this Agreement, for a period
of [***] from the date of this Agreement, and on the condition that Customer
continues to license the newest Software releases (or additional features or
functionality in existing Software releases) from Supplier no later than [***]
from the date they are first made available by Supplier and [***], Supplier
shall provide support services for the Software licensed to Customer under this
Agreement on terms and conditions (including pricing) which are no less
favorable than Supplier's offerings of support services for the same or similar
software to Supplier's other customers, taking into account local costs, and
other local conditions.
In the event that Supplier ceases to make new Software releases (or
additional features or functionality in existing Software releases) available to
Customer, then Supplier shall for a period of [***] from the date of
the Supplier's last Software release to Customer, continue to provide support
services for the last Software release licensed to Customer under this Agreement
on terms and conditions (including pricing) which are no less favorable than
Supplier's offerings of support services for the same or similar software to
Supplier's other customers in U.S., taking into account local costs, other local
conditions.
B.10 DOCUMENTATION
Supplier shall provide Customer as required, complete sets of standard
documentation, including product specifications as part of Exhibit C, one (1)
set for AirTouch Corporate operations, and one (1) set for each AirTouch
regional headquarters were Product is being or has been deployed. Supplier shall
include one complete set of product and installation documentation with each
CDMA SpotLight system shipped to Customer. Documentation shall be in a format
acceptable to Customer (i.e., printed, CD ROM, HTML, or PDF file format).
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need to know.
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B.11 PRODUCT SUPPORT
a. Technical Support and Training. At the reasonable request of the
------------------------------
Customer, Supplier shall promptly make available at the installation site a
field engineer to render installation assistance as required by Customer. The
foregoing will be provided at the charges set forth in Exhibit A to Customer,
not withstanding the foregoing, within the first 60 days of the warranty period
following installation, as set forth in Section B.7. a, [***] assistance. After
the first sixty (60) of the warranty period following installation, this field
installation assistance shall be paid for by the [***].
b. Supplier shall provide on-going 24-hour technical telephone support,
including field service and assistance during out of service conditions.
Supplier shall maintain an 8:00 a.m. to 5:00 p.m. PST technical product support
telephone hot line (1-(888) 642-2455 and 1-(425) 702-5975 FAX) Monday through
Friday. Supplier shall provide Customers with an emergency reach telephone
number to obtain support for out of service conditions during hours in which the
telephone hot line is not manned or operational. Customer, by calling this
number, shall have the ability to receive detailed technical Product support and
answers to technical questions involving Product operation, fault diagnosis,
interoperability and other technical aspects of Products.
Such telephone technical support shall be provided [***] Customer shall pay
Supplier's reasonable costs and expenses incurred by Supplier in providing any
on-site technical support, including, without limitation, air fare, lodging,
ground transportation, and labor expenses, when these services are identified
and ordered by a Purchase Order or service authorization letter.
c. If requested by Customer, Supplier shall; [***]
Classes shall be available prior to the commercial deployment of Product
and shall be conducted at reasonable intervals at locations agreed upon by
Supplier and Customer, or (ii) at the option of Customer, Supplier shall provide
to Customer training modules or manuals and any necessary assistance, covering
those areas of interest outlined above, in detail, format, and quantity to allow
Customer to develop and conduct a training program.
The foregoing will be provided at the charges set forth in Exhibit A to
Customer, unless otherwise specified in advance by Supplier.
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d. The availability or performance of this technical support and training
service shall not be construed as altering or affecting Supplier's warranties or
any other obligation of Supplier under this Agreement.
B.12 SPECIAL PROVISIONS
a. Invoices. Customer shall receive an [***]
B.1 DISASTER AVAILABILITY
If any Standard Products are rendered inoperative as a result of a natural
or other disaster or emergency, Supplier will make all reasonable efforts to
supply or help locate backup or replacement Products for Customer's use and at
Customer's cost. Supplier must support out of service conditions as a priority
by either maintaining pre-determined inventory or an expedited manufacturing
priority process. Either process selected should typically result in shipment
of product within twenty four (24) hours of out of service notification.
Customer shall pay to Supplier (if required by special circumstance) mutually
agreed expedite charges as needed.
C. GENERAL PROVISIONS
C.1 DISPUTE RESOLUTION
a. In the event that a dispute arises over the interpretation or
application of any provision of this Agreement or the grounds for termination
hereof, any party may request that the parties meet within [***] of such request
and seek to resolve the dispute by negotiation [***]. Such meetings shall be
attended by individuals with decision-making authority, to attempt in good faith
to negotiate a resolution of the dispute prior to pursuing other available
remedies. If, [***] after the first such meeting, the parties have not
succeeded in negotiating a resolution of the dispute, a party may request that:
[***]
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[***]
b. If the attempts to resolve a dispute described in subsections a. [***]
of this section fail, then the dispute will be mediated by [***] after written
notice by either party demanding mediation. [***]
c. [***]
[***]
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[***]
d. [***]
Nothing in this section will prevent any party from seeking injunctive
relief in a judicial proceeding if interim relief from a court is necessary to
preserve the status quo pending resolution or to prevent serious and irreparable
injury to that party or others.
e. The parties shall continue to perform all obligations under the
Agreement pending the above-described dispute resolution proceedings, subject to
full reservation of rights at law or under this Agreement.
C.2 TAXES AND OTHER CHARGES
a. Supplier's prices are exclusive of charges for freight and insurance.
Supplier shall bear the cost of all taxes, import and export duties, and other
governmental fees of whatever nature, except sales and use taxes levied by
states, municipalities or governmental authorities which shall be added to the
prices as applicable and stated as separate items on the invoice applicable to
each Purchase Order.
b. Supplier agrees to pay, and to hold Customer harmless from and against,
any penalty, interest, additional tax or other charge that may be levied or
assessed as a result of the delay or failure of Supplier for any reason to pay
any tax or file any return or information required by law, rule or regulation or
by this Agreement to be paid or filed by Supplier.
c. Upon Customer's request, the parties shall consult with respect to the
basis and rates upon which Supplier shall pay any taxes for which Customer is
obligated to reimburse Supplier under this Agreement. If Customer determines
that, in its opinion, any such taxes are not payable or should be paid on a
basis less than the full price or at rates less than the full tax rate, Supplier
shall comply with such determinations. If collection is sought by the taxing
authority for a greater amount of taxes than that so determined by Customer,
Supplier shall promptly notify Customer. If Customer desires to contest such
collection, Customer shall promptly notify Supplier. Although Supplier shall
cooperate with and provide reasonable assistance to Customer, Customer shall
direct the conduct of any proceedings, hearings or litigation involved in any
contest with respect to taxes for which Customer is obligated to reimburse
Supplier under this Agreement. Customer shall reimburse Supplier for any taxes,
interest or penalties which Supplier may be required to pay as a result of
Supplier's complying with Customer's determinations with respect to the payment
or contesting of any such taxes.
d. If any taxing authority advises Supplier that it intends to audit
Supplier with respect to any taxes for which Customer is obligated to reimburse
Supplier under this
Confidential--Disclose and distribute solely to those individuals who have a
need to know.
13
<PAGE>
Agreement, Supplier shall (i) promptly so notify Customer, (ii) afford Customer
an opportunity to participate on an equal basis with Supplier in such audit with
respect to such taxes, and (iii) keep Customer fully informed as to the progress
of such audit. Each party shall bear its own expenses with respect to any such
audit, and the responsibility for any additional tax, penalty or interest
resulting from such audit, shall be determined in accordance with the applicable
provisions of this section.
C.3 CHANGES REQUIRED TO MEET CODES, LAWS OR REGULATIONS
During the Warranty period at no additional cost to Customer, provided
Customer promptly notifies Supplier of any pending Legislation that the Customer
is aware of that could impact the Products at the time a relevant Purchase Order
is issued to the Supplier or subsequently thereafter as the Customer becomes
aware of such Legislation, Supplier shall make any changes to the Products or
will provide mutually agreed replacements which are required by United States
laws (i) in effect on the Delivery Date of such Equipment, or (ii) enacted
within seven (7) years of such Delivery Date, provided that the enactment of
such law requires retroactive compliance and the enactment of such law was or
could reasonably have been anticipated by Supplier at the time of the original
Delivery Date. Customer agrees to negotiate with Supplier an equitable
adjustment in prices as required by this provision if the Products are out of
Warranty or extraordinary circumstances occur during the Warranty period that
impact the Supplier's ability to anticipate the required changes.
This provision shall not apply to Products, Affiliates or foreign laws to
which Products are or become subject unless and until Customer or Affiliate
affected by any such law has informed Supplier of any applicable Products laws
that are or shall be enacted in the jurisdictions in which Products are intended
to be shipped or used.
C.4 NOTICES
Except as otherwise provided in this Agreement, all notices or other
communications hereunder shall be deemed to have been duly given; (i) when made
in writing and mailed by certified mail, return receipt requested; (ii) upon
transmission when made by facsimile; or (iii) upon confirmation of receipt, when
made by overnight courier or hand delivery to the parties at the addresses set
forth below or at such other addresses as may be designated by the parties in
writing:
Supplier shall send notices to Customer at the following addresses:
Confidential--Disclose and distribute solely to those individuals who have a
need to know.
14
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<TABLE>
<S> <C>
AirTouch Support Services, Inc. With a copy to:
255 Parkshore Drive
Folsom, California 95630 AirTouch Communications
Attn: Director, Strategic Supplier Relations 2999 Oak Road, MS 1025
Infrastructure Procurement Walnut Creek, CA 94596
Phone: (916) 357-3806 Attention: Legal Department
Fax: (916) 357- 3807 Fax: 925-210-3599
Customer shall send notices to Supplier at the following addresses:
Metawave Communications Corp. With a copy to:
10735 Willows Road N.E Metawave Communications Corp.
Redmond, WA 98052 10735 Willows Road N.E
Attn.: Richard Henderson Redmond, WA 98052
Title: VP, Sales & Marketing Attention: Legal Department
Phone: (425) 702-6515 Phone: (425) 702-5648
Fax: (425) 702-5976 Fax: (425)702-5978
</TABLE>
The address to which notices or communications may be given by either party
may be changed by written notice given by such party to the other pursuant to
this section entitled "NOTICES".
C.5 YEAR 2000 DATE CHANGE WARRANTY
Supplier warrants by the year 1998, that the software, which is licensed to
Customer hereunder and used by Customer prior to, during or after the calendar
year 2000, includes, at no added cost to Customer, design and performance
according to Customer's "Year 2000 Compliance Standard" as shown in the attached
Exhibit I. This is to ensure Customer shall not experience software abnormally
ending and/or invalid and/or incorrect results from the software in the
operation of the business of Customer. The software design to ensure year 2000
compatibility shall include, but not be limited to, date data century
recognition, calculations that accommodate same century and multicentury
formulas and date values, and date data interface values that reflect the
century.
C.6 ENTIRE AGREEMENT
This Agreement including Exhibits A, B, C, D, E, F, G, H, I, J, K, Exhibit
XX and Exhibit Y2K and each Purchase Order and Acknowledgment issued hereunder
constitutes the entire agreement between the parties with respect to the subject
matter thereof. All prior agreements, representations, statements,
negotiations, understandings and undertakings are superseded hereby.
Confidential--Disclose and distribute solely to those individuals who have a
need to know.
15
<PAGE>
C.7 EXCEPTIONS
The following modifications to Exhibit XX entitled "Terms and Conditions"
have been accepted and supersede the corresponding section printed within
Exhibit XX:
Section 1:2: Add the following sentence: "Supplier shall have the right to
-----------
refuse to do business and reject Purchase Orders from Affiliates for valid
business reasons."
Section 1.4 paragraph c: third paragraph: Change [***]
-----------------------
Section 1.4 paragraph g: second sentence: Change "dollars" to "numbers of
-----------------------
"Products".
Section 1.5: Replace the term "prices" throughout the section with the
------------
words "aggregate prices, terms, warranties and benefits"
Section 1.6 paragraph d: Delete the entire paragraph and replace with the
------------------------
following: [***]
Section 1.7 paragraph c: Add at the end of the sentence the words "in
-------------------------
Exhibit G".
Section 1.9: Delete the first sentence and replace with the following
-------------
words: "Customer shall inspect all Products shipped and, unless rejected at
the time of delivery, such product shall deemed accepted by the Customer".
Section 1.10 paragraph a: Change [***]
-------------------------
Confidential--Disclose and distribute solely to those individuals who have a
need to know.
16
<PAGE>
Section 1.11: Delete the rest of the sentence following the word "Customer"
-------------
in the second line.C.8 COUNTERPARTS
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original and all of which taken together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized representatives.
AirTouch Support Services, Inc.
- ----------------------------------
- ----------------------------------
By: /s/ Richard Henderson By: /s/ Richard Henderson
------------------------------- -----------------------------
Name: Richard Henderson Name: Gary Schindler
----------------------------- ---------------------------
Title: V.P. of Sales and Marketing Title: Executive Vice President,
---------------------------- --------------------------
Shared Services
Confidential--Disclose and distribute solely to those individuals who have a
need to know.
17
<PAGE>
EXHIBIT 10.19
GENERAL PURCHASING AGREEMENT
BETWEEN CELLCO PARTNERSHIP
AND
METAWAVE COMMUNICATIONS CORPORATION
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
TERMS AND CONDITIONS APPLICABLE TO
THE ENTIRE AGREEMENT
<TABLE>
<CAPTION>
SECTION TITLE PAGE
- ------- ----- ----
<S> <C> <C>
PREAMBLE 9
1. DEFINITIONS 9
2. TERM OF AGREEMENT 10
3. ORDERS 10
4. TERMINATION OF ORDERS 10
5. PRICING AND DELIVERY 11
6. INVOICES AND PAYMENT 11
7. PRICE PROTECTION 12
8. MOST FAVORED CUSTOMER 13
9. AUDIT 13
10. TERMINATION 13
11. TRAINING 14
12. MANUALS AND DOCUMENTATION 14
13. WARRANTIES 15
14. BENCHMARK TESTING, PRODUCT & SOFTWARE TRIAL 16
15. FORCE MAJEURE 16
16. TAXES 17
17. NOTICE 18
18. INDEPENDENT CONTRACTORS 18
19. INDEMNIFICATION 18
20. INFRINGEMENT 19
21. USE & PROTECTION OF INFORMATION 20
22. METAWAVE'S INFORMATION 21
23. AVAILABILITY 21
24. LICENSES 21
25. ASSIGNMENT 21
26. SUBCONTRACTING 22
27. PUBLICITY AND ADVERTISING 22
28. CHOICE OF LAW 22
29. WAIVER AND ESTOPPEL 22
30. SEVERABILITY 22
31. HEADINGS 23
32. INSURANCE 23
33. RELEASES VOID 24
</TABLE>
2
<PAGE>
ARTICLE I - cont.
TERMS AND CONDITIONS APPLICABLE TO
THE ENTIRE AGREEMENT
<TABLE>
<CAPTION>
SECTION TITLE PAGE
- ------- ----- ----
<S> <C>
34. OCCUPATIONAL SAFETY & HEALTH ACT (OSHA) 24
35. NON-DISCRIMINATION COMPLIANCE 24
36. SUCCESSORS & ASSIGNS 24
37. BAM'S PROPERTY 24
38. LAWS, RULES & REGULATIONS 24
39. ATTORNEYS FEES & COSTS 25
40. COUNTERPARTS 25
</TABLE>
3
<PAGE>
ARTICLE II
EQUIPMENT ACQUISITION
<TABLE>
<CAPTION>
SECTION TITLE PAGE
- ------- ----- ----
<S> <C> <C>
1. SCOPE 26
2. FORM OF ORDER 26
3. SITE PREPARATION 26
4. TRANSPORTATION 27
5. TITLE AND RISK OF LOSS 27
6. INSTALLATION AND COMMISSIONING 27
7. SELF INSTALLATION 28
8. INSTALLATION, ASSISTANCE & TECHNICAL SUPPORT 28
9. STANDARD OF PERFORMANCE FOR ACCEPTANCE 29
10. CABLES AND RELATED ITEMS 29
11. ENGINEERING CHANGES 29
12. TRADE - IN 29
13. RELOCATION OF EQUIPMENT 29
14. SUPPLIES AND/OR REPLACEMENT PARTS 30
15. CONVERSION OF FINANCIAL ARRANGEMENT 30
16. TRANSFER OF TITLE TO A THIRD PARTY 30
17. NEW EQUIPMENT 30
18. REMOVAL OF EQUIPMENT 30
</TABLE>
4
<PAGE>
ARTICLE III
TERMS AND CONDITIONS APPLICABLE TO THE
METAWAVE'S HARDWARE MAINTENANCE PROGRAM
<TABLE>
<CAPTION>
SECTION TITLE PAGE
- ------- ----- ----
<S> <C> <C>
1. SCOPE 31
2. FORM OF ORDER 31
3. AVAILABILITY OF MAINTENANCE AND SPARE PARTS 32
4. METAWAVE'S RESPONSIBILITIES FOR TYPE 1 EMERGENCY 33
5. METAWAVE'S RESPONSIBILITIES FOR TYPE 2 EMERGENCY 33
6. BAM'S RESPONSIBILITIES 33
7. ON -SITE MAINTENANCE 34
8. NOTIFICATION AND RESPONSE 34
9. MAINTENANCE TERM AND MAINTENANCE CHARGES 34
10. ENGINEERING COMPLAINTS 35
11. ENGINEERING CHANGES 35
12. EQUIPMENT NONPERFORMANCE CREDIT 35
13. REMEDIES FOR EQUIPMENT FOR FAILURE TO MEET 36
OPERATION LEVEL
14. WARRANTY 36
15. ESCALATION GUIDELINES 36
16. PROCEDURES FOR METAWAVE'S HMP 36
</TABLE>
5
<PAGE>
ARTICLE IV
TERMS AND CONDITIONS APPLICABLE TO ANY PURCHASE THAT
INCLUDES LICENSED SOFTWARE AND/OR MAINTENANCE SERVICE
<TABLE>
<CAPTION>
SECTION TITLE PAGE
- ------- ----- ----
<S> <C> <C>
1. SCOPE 39
2. DEFINITIONS 39
3. FORM OF ORDER 39
4. LICENSE 40
5. LICENSE TERM 41
6. LICENSE FEE 41
7. SOFTWARE DELIVERY 41
8. RISK OF LOSS 42
9. INSTALLATION 42
10. STANDARD OF PERFORMANCE FOR ACCEPTANCE 42
11. NEW RELEASES 42
12. SOFTWARE MAINTENANCE 43
13. SOFTWARE MAINTENANCE CHARGE 44
14. TERMINATION OF MAINTENANCE 45
15. OBJECT CODE AND TECHNICAL DOCUMENTATION 45
16. RELOCATION OF SOFTWARE 45
17. ENHANCEMENT OF SERVICES 45
18. SOFTWARE EVALUATION 46
19. SOFTWARE VIRUS PROTECTION 46
</TABLE>
6
<PAGE>
ARTICLE V
ENTIRE AGREEMENT
<TABLE>
<CAPTION>
SECTION TITLE PAGE
- ------- ----- ----
<S> <C> <C>
1. ENTIRE AGREEMENT 61
2. SIGNATURES 61
SCHEDULE A PRODUCT AND RELATED SERVICES - DESCRIPTION AND PRICE LIST
SCHEDULE B MUTUAL NONDISCLOSURE AGREEMENT
SCHEDULE C NONDISCRIMINATION COMPLIANCE UNDERTAKING
EXHIBIT 1 COMMISSIONING CERTIFICATE
</TABLE>
7
<PAGE>
ARTICLE I
TERMS AND CONDITIONS APPLICABLE TO
THE ENTIRE AGREEMENT
THIS GENERAL PURCHASE AGREEMENT is between Cellco Partnership, a
Delaware Limited Partnership, doing business as Bell Atlantic Mobile,
(hereinafter called "BAM") having an office and place of business at 180
Washington Valley Road, Bedminster, New Jersey 07921, on behalf of itself and
its Affiliates and Metawave Communications Corporation, a Delaware Corporation,
having its principal office and place of business at 10735 Willows Road NE,
Redmond, Washington 98073 (hereinafter called "Metawave").
WHEREAS, BAM may place Orders for the purchase of Product, Software
and/or Related Services from Metawave; and
WHEREAS, BAM and Metawave each desire that the terms and conditions
controlling all such purchases be consistent, uniform, and agreed to by both
parties in advance of the placement of any such Orders; and
WHEREAS, this Agreement is intended to establish consistent and
uniform terms and conditions for all purchases that BAM may make from Metawave;
NOW, THEREFORE, in consideration of the mutual promises, covenants,
and conditions herein contained, BAM and Metawave agree as follows:
1. DEFINITIONS
1.1 "Affiliate" refers to any parent, U.S. subsidiary or successor of
BAM, or any partnership, corporation or other entity operating in the U.S. in
which BAM, or a parent, subsidiary or successor of BAM, directly or indirectly,
owns at least fifty percent (50%) equity interest, or has at least fifty percent
(50%) voting control.
1.2 "Agreement" refers to this General Purchase Agreement.
1.3 "Commissioning" refers to the procedures described in Metawave's
Product system manual to place the Equipment into commercial service at a
particular site which is documented by BAM's signature on the Commissioning
Certificate attached hereto as Exhibit 1.
1.4 "Equipment" refers to goods, including software necessary for the
operation of the equipment, available from Metawave hereunder.
1.5 "Order" refers to a written order from BAM for the purchase,
lease or license from Metawave of a Product and/or Related Services.
1.6 "Outstanding Order" refers to an Order for which
title/lease/license to the Product and/or license to Software described therein
has not passed to BAM or for which any Related Services described therein have
not been accepted.
1.7 "Party" refers to either BAM or Metawave, as the context
requires; both BAM and Metawave may be collectively referred to as the
"Parties."
1.8 "Product" refers to the Equipment and Software described on
Schedule A hereto.
<PAGE>
1.9 "Related Services" means those services such as installation,
technical support, development, maintenance, and training, which Metawave will
provide to BAM hereunder. Those Related Services which will be provided by
Metawave, and the charges therefore, if any, are set forth on Schedule A.
1.10 "Software" refers to software purchased by or provided to BAM
including (i) computer programs embedded in the Equipment or Product which
control and monitor the operation of the Equipment ("Embedded System Software"),
as described in Schedule A; and (ii) the PC-based graphical user interface
computer program for the Equipment, and all Features, Major Releases, Point
Releases, Software Patches (as defined in Article IV), and other updates and
modifications to such Software and any documentation in support thereof.
1.11 "Subcontractor" means any person who or entity which enters into
a contract with Metawave but with whom BAM has no contractual relationship, and
all employees, agents and representatives of that person or entity.
1.12 "Worcester Equipment" refers to Product tested by BAM pursuant
to the Test Agreement with Metawave dated December 29, 1998 attached hereto as
Exhibit 2.
2. TERM OF AGREEMENT
This Agreement shall be effective on ________, 1999 (the "Effective
Date"). Unless terminated in accordance with Section 10 of this Article
(Termination), this Agreement shall continue in effect for [***] from the
Effective Date ( the "Term"), and will be automatically renewed for subsequent
one-year terms at each annual anniversary of the "Effective Date" (a "Renewal
Term").
3. ORDERS
3.1 All Orders made by BAM from Metawave shall be in the form of a
BAM purchase order document that contains the items in the Section "Form of
Order" located in each Article of this Agreement. Each Order shall reference
and be deemed to incorporate the specifications applicable to the Product or
Related Services being ordered and any special terms, in addition to those set
forth in this Agreement made in writing by Metawave in BAM and accepted by BAM.
3.2 If notice of rejection of an Order is not received by BAM within
[***] days from the date of the Order, such Order shall be deemed to have been
accepted by Metawave.
3.3 Whenever the provisions of an Order conflict with the provisions
of this Agreement, the provisions of the Order which are not preprinted as part
of a form shall control. Printed provisions on the reverse side of BAM's Orders
and all provisions on Metawave's forms whether in Metawave's notice of
acceptance, catalogue, invoice, confirmation, or otherwise, shall be deemed
deleted and of no force or effect. An Order may be modified only by a written
instrument signed by BAM and Metawave.
3.4 It is expressly understood and agreed that this Agreement is
intended solely to establish uniform and consistent terms and conditions for any
Orders BAM may choose to place with Metawave on behalf of itself and its
Affiliates, that BAM is not obligated to place any Orders with Metawave and that
this Agreement does
-9-
<PAGE>
not grant Metawave an exclusive privilege to sell to BAM any or all Products,
Software and/or Related Services which BAM may require by contract with other
manufacturers and suppliers for the procurement of comparable products, software
and/or services. By incorporating the terms and conditions of this Agreement,
any Affiliate may order Products from Metawave by issuance of a Purchase Order.
BAM shall not be liable for purchases made directly by Affiliates. Affiliates
shall be solely liable for compliance with this Agreement. Metawave shall have
the right to refuse to do business with and reject Purchase Orders from
Affiliates for valid business reasons.
3.5 BAM assumes no liability for Product produced, processed or
shipped in excess of the amount specified in the Order placed with Metawave.
3.6 If following the completion of the site survey, Metawave
reasonably determines that Equipment configuration or the Related Services set
forth in the Order must be changed, Metawave shall notify BAM with a written
proposal for changes to the purchase Order. Upon receipt, BAM shall have [***]
business days to accept or reject the written proposal for changes. If accepted,
BAM shall execute a written change Order to reflect the required changes
identified by the site survey. If BAM rejects the written proposal for changes,
BAM may terminate the purchase Order subject to Section 4 of Article I.
3.7 The terms and conditions of this Agreement also apply to the
Worcester Equipment upon completion of testing. The Test Agreement shall
terminate upon completion of testing and this Agreement shall supersede and
replace the Test Agreement, including the Survival provisions of section 27 of
the Test Agreement.
4. TERMINATION OF ORDERS
BAM, prior to delivery, may terminate any Order, or portion thereof.
In the event BAM terminates an Order or portion thereof, the following table
will determine termination charges for undelivered Product. No termination
charge shall apply to Software not delivered or Related Services not performed.
Time of Cancellation Prior to | Maximum Termination Charge
Requested Delivery Date | (% of Price)
[***] [***]
[***] [***]
[***] [***]
Before Metawave applies these cancellation charges it will take into
consideration Metawave's ability to recommit such Product toward the fulfillment
of order(s) from other customers; and Metawave agrees to use every reasonable
effort to recommit such equipment.
5. PRICING AND DELIVERY
5.1 Upon placement by BAM of an Order, Metawave agrees to sell to BAM
those Products and/or Software specified on the Order for the applicable price
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<PAGE>
set forth on Schedule A. The price in Schedule A is exclusive of such taxes as
may be applicable pursuant to Section 16 of Article 1 (Taxes).
5.2 Metawave shall arrange for the delivery, and, if applicable,
installation of the Product or Provision of the Related Services on the date(s)
specified in the Order. Time is of the essence as to all dates for provision,
delivery and installation, unless mutually agreed to by both Parties.
6. INVOICES AND PAYMENT
6.1 Invoices shall be sent to the billing address noted on the Order
and shall contain a detailed list of charges which shall include, where
applicable, type, description, and serial number of Equipment, Software,
description of Related Services, basic charge for the Equipment, Software, or
Related Service, and other applicable charges. Any taxes, transportation costs
or other associated costs billable hereunder are to be stated separately.
Applicable sales/use taxes shall be paid to the state in which taxable items are
delivered, based on final destination as noted in the Order for each item. If
Order requires shipment to multiple states, than each item invoiced must
indicate final shipping destination. Metawave shall attach to the invoices a
copy of bills of lading and shipping notice showing through routing and weight.
Each invoice shall be paid within thirty (30) days of receipt unless it is
disputed by BAM.
For all Orders, Metawave shall render invoices as follows: for
Equipment to be installed by Metawave, [***] for Equipment to be installed by
BAM, [***] and for Related Services, [***] unless otherwise agreed to by both
Parties.
6.2 The following detailed information is required on each invoice in
order to assure prompt remittance:
(1) BAM's Order number
(2) Metawave's invoice number.
(3) Quantity and price of each item shipped.
(4) Applicable sales/use tax:
i) the value of the taxable Product/Related Service by
individual taxing jurisdiction;
ii) the sales/use tax for each such Product/Related
Service by individual taxing jurisdiction;
iii) the value of nontaxable Product/Related Services; and
iv) Metawave's sales/use tax registration number for each
applicable taxing jurisdiction.
(5) Other charges (if applicable).
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<PAGE>
(6) Final total cost.
(7) Contract number.
6.3 Charges payable by BAM will apply and shall be calculated from
the date of acceptance for Equipment or Software and the commencement date for a
Service. For any period of less than a calendar month, the charges shall be
prorated on the basis of a thirty (30) day month.
7. PRICE PROTECTION
Metawave shall not increase the prices for any Equipment, Software
and/or Related Services set forth on Schedule A during the Term. During a
Renewal Term, if any, Metawave may increase the price of Product, Software
and/or Related Service not more than [***] in any annual Renewal Term effective
upon sixty (60) days prior written notice and such increased price shall apply
only to Orders placed after the effective date of such price increase.
8. [***]
For the Term and each Renewal Term of this Agreement, Metawave shall
treat BAM [***] Metawave represents that all of the [***] by Metawave hereunder
are [***]. If during the Term or any Renewal Term of this Agreement Metawave
[***] then:
(1) Metawave shall, within thirty (30) calendar days after the
effective date of such [***]
(2) This Agreement and all applicable Orders shall [***]; and
(3) [***]
Metawave's compliance with this paragraph shall be subject, at BAM's option, to
independent verification in accordance with Section 9 of this Article (Audit).
9. AUDIT
Metawave shall prepare and maintain complete, legible, and accurate
records relating to this Agreement during the Term and maintain such for two (2)
years from the date of termination. BAM shall have the right, through its
designated representatives, to examine and audit, at all reasonable times, all
such records and such other records and accounts as may, under recognized
accounting practices, contain information bearing upon this Agreement.
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<PAGE>
10. TERMINATION
This Agreement may be terminated, by written notice only, as follows:
a. By either Party, at least [***] with such termination being
effective as of the end of the Term or Renewal Term. BAM shall have the right to
place Purchase Orders up until the effective date of the termination, and
termination of this Agreement pursuant to this subsection (a) shall not affect
any Outstanding Purchase Order as of the effective date of the termination.
b. By either Party, in the Event of Default or breach of this
Agreement and/or Order by either Party, when the breach or Default has not been
cured after thirty (30) day written notice by the non-breaching Party. Any of
the following shall be considered an "Event of Default":
i) Either Party is judged bankrupt or insolvent; or
ii) Either Party makes a general assignment for the
benefit of its creditors; or
iii) A trustee or receiver is appointed for either
Party or for any of its property; or
iv) Any petition by or on behalf of either Party is
filed to take advantage of any debtor's act or to
reorganize under the bankruptcy or similar laws;
or
v) Either Party disregards laws, ordinances, rules,
regulations or orders of any public authority.
In the event of termination pursuant to this subsection (b), BAM shall have the
right, at its option, to confirm in whole or in part any Outstanding Order, in
which case Metawave shall be obligated to fulfill the Order to the extent it is
confirmed, or to cancel, in whole or in part, any outstanding Order without any
liability to BAM. The foregoing right is in addition to, and not in limitation
of, any other remedy BAM may have at law or equity.
11. TRAINING
11.1 Metawave shall, at Metawave's published rates, provide
sufficient training, training materials and technical support to BAM to enable
BAM to properly and effectively use the Product. Such training shall be
conducted at a site selected by BAM, or at Metawave's offices located in
Redmond, Washington, and on dates that are mutually agreed to.
11.2 Metawave shall provide a training class on site in each BAM MSA
where Equipment is installed. Additionally, Metawave shall provide a Refresher
course annually at a site selected by BAM. The content of each course shall
include, but not be limited to site preparation, installation, remedial
maintenance, failure recovery/backup, failure repair techniques, test equipment,
diagnostic software use, and full documentation requirements, and may be changed
by Metawave when, in its judgment, such change is warranted. Metawave shall
provide sufficient personnel to conduct said course and shall furnish, at no
additional cost, instructional aids appropriate for each course, including
books, pamphlets and diagrams.
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<PAGE>
11.3 BAM may reproduce any training materials originated by Metawave
for the purpose of training BAM personnel. Any such reproductions shall include
any copyright or similar proprietary notices contained in the items being
reproduced.
12. MANUALS AND DOCUMENTATION
12.1 Metawave shall provide, on or before the installation date for
Product and at no additional charge, an updated CD Rom covering the
installation, maintenance and operation of the Equipment and Software for every
Spotlight ordered. Metawave shall provide all future updates of such CD Rom at
Metawave's then published rates.
12.2 BAM may reproduce any manuals for the purpose of installing,
maintaining and operating the Equipment and Software. Any such reproductions
shall include copyright or similar proprietary notices contained in the items
being reproduced. BAM may purchase additional sets of manuals at Metawave's
published rates.
13. WARRANTIES
13.1 Metawave at no cost to BAM, warrants to BAM that the Equipment
and Software furnished will be free from defects in design (except to the extent
designed by BAM), material and workmanship and will conform to and perform in
accordance with the specifications and documentation. Metawave also warrants to
BAM that Services will be performed in a fully workmanlike manner to BAM's
reasonable satisfaction. In addition, if Equipment or Software furnished
contains one or more manufacturers' warranties, Metawave hereby assigns such
warranties to BAM. All warranties shall survive inspection, acceptance and
payment. Equipment or Software not meeting the warranties will, at BAM's option,
be repaired, adjusted or replaced by at no cost to BAM.
13.2 Except as otherwise stated herein, the warranty period for
purchased Equipment (other than Linear Power Amplifiers (LPA)), Software or
Related Services will be in effect for [***] months after the date of
acceptance or execution of the Commissioning Certificate, where applicable. LPAs
will be warranted by Third Party Suppliers or Metawave as detailed in Schedule
D. However, such warranty period shall be extended by a period equal to the time
during which such Equipment or Software or LPA is not operational as a result of
such Equipment or Software or LPA not meeting its warranties. The warranty
period for replacement Product shall be the remaining warranty period of the
replaced Product or ninety (90) days, whichever is greater.
13.3 If any breach of warranty occurs with respect to Equipment or
Software and if such breach has not been corrected within a reasonable time (not
to exceed thirty (30) days from BAM notice to Metawave of the breach) or if two
(2) or more such breaches of warranty occur within any thirty (30) day period,
BAM may cancel any Outstanding Orders covering such defective Equipment or
Software and any other Outstanding Orders for Equipment or Software affected by
such breach. In the event a breach occurs during the warranty period on accepted
Equipment or Software, and Metawave is unable to correct such breach through the
procedures set forth in Articles III and IV within [***] days from BAM
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notice to Metawave of the breach, Metawave shall promptly remove such defective
portion of Equipment or Software and refund to BAM all monies previously paid to
Metawave for such defective portion of Equipment or Software affected by the
uncorrected breach.
13.4 Metawave warrants that BAM shall acquire good and clear title to
any Product purchased hereunder, free and clear of all liens and encumbrances
and with respect to Software which is licensed, Metawave warrants BAM shall
acquire all rights and interests to use such Software.
13.5 Metawave represents and warrants to BAM that at the time of
delivery, all Products and Software delivered hereunder shall be "CALEA
Compliant," meaning that they shall not adversely affect BAM's ability to comply
with the provisions of Pub L. 103-414, Title 1, October 25, 1994, 108 Stat 4279
as it may be amended from time to time as well as any regulations or industry
standards implementing the provisions of the law.
13.6 Repair or replacement of Equipment under warranty, shall be
performed by Metawave within a period not to exceed [***] business days, from
the date Metawave receives the defective Equipment from BAM. Repair or
replacement of Equipment outside the warranty period, shall be performed by
Metawave within a period not to exceed [***] business days from the date
Metawave receives the defective Equipment from BAM.
13.7 In the event that the quantity of Equipment returned for repair
or replacement is greater than thirty (30) units at any one time, Metawave and
BAM shall agree upon a repair schedule.
13.8 This warranty does not apply to any claim which arises out of
any of the following: (i) the Equipment has been subject to unreasonable misuse,
neglect, damage by BAM or a third party; (ii) only in the event the installation
was provided by someone other than Metawave and the Equipment has not been
installed or optimized according to Metawave's guidelines, or parts have been
used in the Equipment which caused damage to the Equipment; (iii) the Equipment
is not maintained pursuant to Metawave's Maintenance Procedures only in the
event the maintenance was provided by someone other than Metawave; (iv) in the
event of Force Majeure has occurred; and (v) the Equipment is non-performing as
a result of the failure of third party equipment or services including but not
limited to antennas, antenna lines or interconnection facilities not provided by
Metawave at the site.
13.9 THE WARRANTIES IN THIS AGREEMENT ARE GIVEN IN LIEU OF ALL OTHER
WARRANTIES EXPRESS OR IMPLIED WHICH ARE SPECIFICALLY EXCLUDED, INCLUDING,
WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTIBILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
14. BENCHMARK TESTING, PRODUCT AND SOFTWARE TRIAL
14.1 Upon BAM's request, and subject to availability, Metawave shall,
before BAM places an Order, demonstrate any additional functional capabilities
of Equipment and Software at agreed times and places. The result of this
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demonstration or benchmark test may, at BAM's option, be incorporated into the
Order.
14.2 Upon BAM's request, and subject to availability, Metawave shall,
at no additional charge, provide BAM with the use of products similar to
Equipment and Software ordered by BAM, but not yet installed, for purposes of
program testing, conversion, compiling and other activities if Metawave normally
provides similar use of such products to its other customers.
14.3 Metawave and BAM may agree to an Equipment and Software trial(s)
to demonstrate additional functionality which shall be governed by the following
provisions:
(1) Metawave shall bear all expenses related to the trial of
the Equipment and Software, including the cost of
transportation, installation, deinstallation, modification,
repair, maintenance, packing, and unpacking, unless
otherwise agreed to by the Parties.
(2) The trial period will begin the day following BAM's receipt
of Metawave's notice that all Equipment and Software
subject to the trial have been installed and are ready for
testing. The trial will continue for the period agreed to
by Metawave and BAM.
(3) At the end of the trial period, BAM shall notify Metawave
whether or not BAM will order the trialed Equipment and
Software. For any Equipment and Software not ordered by
BAM, Metawave shall remove such Equipment or Software
within seven (7) days after Metawave's receipt of the
notice, and BAM will promptly return any Software to
Metawave.
(4) If, during the trial, BAM decides the trial Equipment and
Software are not performing satisfactorily, BAM may request
the Metawave remove the Equipment and Software and Metawave
shall comply with this request within seven (7) days after
receipt; or BAM may permit Metawave to repair or modify the
Equipment and Software so they perform in a manner
satisfactory to BAM. The trial period may be extended for
this purpose. No repair or modification under this
paragraph shall obligate BAM to order the Equipment and
Software.
15. FORCE MAJEURE
Neither BAM nor Metawave shall be liable or deemed in default for any
delay or failure in performance of an Order or any part of this Agreement to the
extent that such delay or failure is caused by accident, fire, industry-wide
strike, embargo, act of the government, war or national emergency requirement,
act of God, or act of the public enemy ("Force Majeure Conditions").
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If any Force Majeure Condition occurs, the Party delayed or unable to perform
shall promptly give notice to the other Party. The Party affected by the other
Party's delay or inability to perform may elect to:
(1) Terminate the Order or part thereof as to Product or Related
Services not already received; or
(2) Suspend the Order for the duration of the Force Majeure
Condition, and resume performance once the Force Majeure
Condition ceases.
Until notice is given otherwise, option (2) shall be deemed selected.
16. TAXES
16.1 Metawave shall bear the cost of all taxes, including but not
limited to gross receipt taxes, imposed upon Metawave. Metawave shall be
responsible to invoice BAM and remit to the appropriate government authorities
all applicable sales and use taxes imposed by law. BAM shall be responsible to
reimburse Metawave for applicable sales and use taxes billed and remitted as
required hereunder.
16.2 Metawave shall provide to BAM a sales and use tax registration
number for each state in which Related Services are performed or that is the
final destination, as set forth on the Order, of Product provided under this
Agreement. The registration number for each applicable state will be added to
every invoice issued by Metawave to BAM hereunder. Metawave shall remit the
sales/use tax to the state of final destination of Product, or the state in
which the Related Services are performed. Metawave shall notify BAM of any state
for which Metawave does not bill and remit sales/use taxes because Metawave does
not have nexus with that state.
16.3 If any of the Related Services include contractor services,
Metawave shall comply with any applicable state's resident and non-resident
contractor laws. Metawave will be responsible for its subcontractors compliance
with such laws. Metawave shall provide BAM with documentation of such compliance
(including subcontractor documentation), which, at minimum, shall include a copy
of the non-resident compliance certificate issued by each applicable state.
16.4 Each invoice issued by Metawave hereunder shall separately set
forth; (i) the value of the taxable Product/Related Service by individual taxing
jurisdiction, (ii) the sales/use tax for each such Product/Related Service by
individual taxing jurisdiction, and (iii) the value of nontaxable
Product/Related Services.
16.5 Metawave agrees to pay, and hold BAM harmless from and against,
any penalty, interest, tax or other charge that may be levied or assessed as a
result of the delay or failure of Metawave for any reason to pay any tax or file
any return or information required by law, rule or regulation or by contract. If
BAM believes that Metawave has failed to comply with any of the terms of this
Section 16, BAM shall discuss such failure with Metawave, and upon the
presentation of evidence that such failure has in fact occurred, BAM may
withhold up to ten percent (10%) of any invoice affected by such noncompliance.
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17. NOTICE
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed given when either personally served or
mailed by certified, registered mail, return receipt requested, or delivered by
a reputable overnight delivery service, or by facsimile transmission confirmed
by another form of delivery within one (1) business day, to:
BAM: Bell Atlantic Mobile Copy to: Bell Atlantic Mobile
180 Washington Valley Road General Counsel
Bedminster, New Jersey 07921 180 Washington Valley Rd.
Attention: Senior RF Engineer Bedminster, NJ 07921
Metawave: Metawave Copy to: Metawave
10735 Willows Road NE General Counsel
Redmond, Washington 98073 10735 Willows Road NE
Attention: V.P. of Sales & Marketing Redmond, WA 98073
If either Party changes its address during the term hereof, it shall
so advise the other Party in writing, and all notices thereafter required to be
given shall be sent to such new address.
18. INDEPENDENT CONTRACTORS
Neither Metawave nor its officers and directors and its associated
personnel and employees shall be deemed to be employees or agents of BAM, it
being understood that Metawave is an independent contractor for all purposes and
at all times. Metawave shall be solely responsible for the safety and
supervision of its employees as well as for the withholding or payment of all
federal, state and local personal income taxes, social security, unemployment
and sickness disability insurance and other payroll taxes with respect to its
employees, including contributions from them as required by law.
19. INDEMNIFICATION
19.1 Metawave shall defend, indemnify, and hold harmless BAM, its
parents, subsidiaries and affiliates and their directors, officers, agents and
employees from any and all liabilities, claims or demands whatsoever, (including
the costs, expenses and reasonable attorney's fees incurred on account thereof)
that may be made: (i) by any person, specifically including, but not limited to,
Metawave, its agents or subcontractors, for injuries including bodily injury
(including death to persons) or damage to property (including theft) occasioned
by or alleged to have been occasioned by the acts or omissions of the Metawave
its agents or subcontractors whether negligent or otherwise; or (ii) by persons
furnished by Metawave or any subcontractors under Worker's Compensation or
similar acts, except to the extent such liability, claim, or demand arises in
whole or in part from the negligence or willful misconduct of BAM, its agents or
employees.
19.2 Metawave shall defend BAM against any such liability, claim or
demand and control the litigation, settlement and defense thereof. The foregoing
indemnification shall apply whether the death, injury or property damage is
caused
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by the sole acts or omissions of Metawave or by the concurrent acts or
omissions of BAM or Metawave hereunder, except Metawave shall not be responsible
for that portion of any liability, claim or demand to the extent that it arises
from the negligence or willful misconduct of BAM, its employees or agents BAM
agrees to notify Metawave promptly of any written claim or demands against BAM
for which Metawave is responsible hereunder.
19.3 The supplied Equipment, Hardware, Software, Product and Related
Services provided hereunder (i) shall perform on and after January 1, 2000 in as
good a manner as before such date, and (ii) shall at all times manage,
manipulate and report data involving dates (including the year 2000, dates
before and after the year 2000, and single-century and multi-century formulas)
without generating incorrect values or dates or causing an abnormally-ending
scenario within an application. Metawave shall provide BAM with evidence of
successful completion of laboratory testing, that the supplied Equipment,
Hardware, Software, Product and Related Services provided hereunder properly
performs all internal and external time and date processing. Such certification
shall be provided no later than thirty (30) days after the execution of this
Agreement. In addition, Metawave agrees to cooperate with BAM in conducting
Year 2000 interoperability tests to ensure that the supplied Equipment,
Hardware, Software, Product and Related Services do not adversely affect the
operation, output, functionality or other elements of BAM's operation. Further,
Metawave agrees to cooperate with BAM in providing information to third parties,
such as customers, regulatory bodies, and auditors, regarding Metawave's Year
2000 compliance as it relates to the supplied Equipment, Hardware, Software,
Product and Related Services. Metawave shall indemnify BAM and for any loss,
cost, or damages (including attorney's fees) sustained because of Metawave's
Year 2000 noncompliance.
20. INFRINGEMENT
20.1 The following terms apply to any infringement, suit for or claim
or allegation of infringement of any United States patent, trademark, copyright,
trade secret or other proprietary interest (collectively referred to as "IP
Claim") based on the manufacture, use, sale, resale, or importation into the
United States of any Equipment, Software, Related Service, documentation or
other item furnished to BAM under or in contemplation of this Agreement.
Metawave shall indemnify and hold harmless BAM and any of its affiliates,
customers, officers, directors, employees, assigns and successors for any loss,
damage, expense, cost (including, but not limited to, any attorney's fees
incurred in the enforcement of this indemnity) or liability that may result by
reason of any such IP Claim, and Metawave shall defend or settle, at its own
expense, any such IP Claim against BAM.
20.2 BAM shall provide Metawave with prompt written notice of any IP
Claim that identifies Equipment, Software or Related Service provided to BAM
hereunder and tender to Metawave control of any such action or settlement
negotiations to the extent covered by the indemnification provided herein.
Metawave shall keep BAM advised of the status of any such IP Claim and of its
defense and/or negotiation efforts and shall afford BAM reasonable opportunity
to review and comment on significant actions planned to be taken by Metawave on
behalf of BAM. If any such IP Claim involves other vendors of BAM, Metawave
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shall cooperate as reasonably necessary to effectively defend BAM. BAM shall, at
Metawave's expense, reasonably cooperate with Metawave in the defense of BAM.
20.3 If the use, manufacture, sale, or importation in the United
States of any Equipment, Software, or Related Service furnished hereunder
becomes subject to an IP Claim, Metawave shall, at BAM's option and at no
expense to BAM, (i) by license or other release from claim of infringement
obtain for BAM and BAM's customers the right to make, use, sell and/or import
into the United States the Product, Software or Related Service, as appropriate;
or (ii) substitute an equivalent non-infringing Product, Software or Related
Service reasonably acceptable to BAM, which meets the specifications for the
Product, Software or Related Service, and extend this indemnity thereto; or
(iii) modify such Product, Software, or Related Service to make it non-
infringing but continue to meet the specifications therefore, and extend this
indemnity thereto.
20.4 Metawave shall have no obligation to BAM with respect to any
claim of patent or copyright infringement which is based upon (i) adherence to
specifications, designs, or instructions furnished by BAM, unless such
specifications, designs, or instructions are incorporated into Product made
generally available to Metawave's customers, (ii) the combination, operation or
use of any Equipment supplied hereunder with products, software, or data with
which the Equipment is not intended to be used or for which the Equipment is not
designed, unless at Metawave's direction, (iii) the alteration of the Equipment
or modification of any Software made by any party other than Metawave, unless at
Metawave's direction, or (iv) BAM's use of a superseded or altered release of
some or all of the Software if infringement would be avoided by the use of a
subsequent, unaltered release of the Software that is provided to BAM by
Metawave.
21. USE AND PROTECTION OF INFORMATION
The "Non-Disclosure Agreement" executed by the parties on April 23,
1997 as amended is attached hereto as Schedule B. If in the course of
performance of this Agreement Metawave needs to disclose BAM Confidential
Information to a subcontractor or agent, the agent/contractor shall be provided
a copy of the executed "Non-Disclosure Agreement" and shall execute an
"Acknowledgement" in the form attached to the "Non-Disclosure Agreement" as
Exhibit B of Schedule B.
22. METAWAVE'S INFORMATION
No specifications, drawings, sketches, models, samples, tools,
computer programs, technical information, business information, or data, other
than that specified in Section 21 of this Article, written, oral or otherwise,
furnished by Metawave to BAM hereunder or in contemplation hereof shall be
considered by BAM to be confidential or proprietary unless so agreed to by BAM
in writing at the time an Order is placed.
23. AVAILABILITY
The Equipment and Software listed on Schedule A shall be available for
purchase by BAM from Metawave for as long as this General Purchase Agreement is
in effect. During the term of this Agreement, Metawave shall notify BAM in
writing
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if any of the Equipment is to be materially changed technically which affects
the form, fit or function of the Equipment or of any plans to suspend or close
down manufacturing of the Equipment, in order for BAM to place consolidated
Orders for its future demands. BAM shall be entitled to place Orders for the
Equipment within six (6) months of such notice, for delivery within six (6)
months of the date of such an Order. Metawave shall provide out-of-warranty
repair parts and services at Metawave's then current prices for each Equipment
for a minimum of five (5) years after the date of termination or expiration of
this Agreement for each Product as then supplied. .
24. RIGHTS IN INFORMATION
If BAM has contracted with and is paying Metawave for engineering
development pursuant to paragraph 11.3 of Article II and III of this Agreement,
then Metawave agrees that if any inventions, discoveries or improvements
relating solely to BAM peripheral equipment and infrastructure, are conceived,
first reduced to practice, made or developed, in the course of, or as a result
of, or in the preparation for, the performance of services by Metawave and its
employees, contractors, agents and subcontractors and their employees,
contractors and agents under this Agreement, Metawave hereby does assign and
will assign to BAM all right, title and interest in and to such inventions,
discoveries and improvements and any patents, copyrights or other forms of legal
protection that may be granted thereon in any country.
25. LICENSES
No licenses, express or implied, under any patents, trademarks or
copyright are granted by BAM to Metawave. No licenses, express or implied, under
any patents, trademarks or copyright are granted by Metawave to BAM except for
Software licenses contained in Article IV.
26. ASSIGNMENT
26.1 Any assignment of the work to be performed, in whole or in part,
or of any other interest hereunder by Metawave without the prior written consent
of BAM, except an assignment confined solely to monies due or to become due,
shall be void. It is expressly agreed that any such assignment of monies shall
be void to the extent that it attempts to impose upon BAM obligations to the
assignee additional to the payment of such monies, or to preclude BAM from
dealing solely and directly with Metawave in all matters pertaining hereto,
including the negotiation of amendments or settlements of amounts due. BAM, upon
five (5) days prior written notice to Metawave, may assign all its rights,
duties and obligations under this Agreement to an affiliate or affiliates of BAM
or to a partnership or partnerships to which BAM or its affiliate has an
ownership interest.
26.2 BAM shall not (i) assign, sublicense or otherwise transfer the
Software license set forth in Article IV, to any third party without the prior
consent of the Metawave, except as permitted in Section 25.1, (ii) purchase the
Equipment solely for the purpose of reselling or distributing it to a third
party (third party does not include BAM's affiliates); or (iii) permit its
directors, officers, employees, agents or any other third person to reverse
engineer the Equipment or the Software.
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27. SUBCONTRACTING
Metawave shall not, without BAM's prior written approval, subcontract
any portion of the work to be performed on BAM property hereunder, except for
the purchase of standard commercial supplies and materials.
28. PUBLICITY AND ADVERTISING
Metawave shall submit to BAM all advertising, sales promotion, press
releases and other publicity matters relating to the Equipment or Software
furnished or the Related Services performed by Metawave under this Agreement
wherein BAM's name, marks or the name or mark of any Bell Atlantic Company is
mentioned or language from which the connection of said names or marks therewith
may be inferred or implied. Metawave shall not publish or use such advertising,
sales promotion, press releases, or publicity matters without BAM's prior
written approval. Metawave shall post no signs at any site at which Equipment or
Software is being installed or serviced except those required by local, state or
federal law.
29. CHOICE OF LAW
This Agreement shall be governed by the laws of the State of New York
without reference to its conflicts of law provisions and the Software shall have
the definition of goods under the U.C.C. The exclusive jurisdiction for any
legal proceeding regarding this Agreement shall be the state or federal courts
in New York and the Parties expressly submit to the jurisdiction of said courts.
30. WAIVER AND ESTOPPEL
Either Party's failure at any time to enforce any of the provisions of
this Agreement or any right with respect thereto, or to exercise any option
herein provided, will in no way be construed to be a waiver of such provisions,
rights, or options or in any way to affect the validity or enforcement of this
Agreement. The exercise by either Party of any right or options under the terms
or covenants herein shall not preclude or prejudice the exercising thereafter of
the same or any other right under this Agreement.
31. SEVERABILITY
If any provision or portion of a provision of this Agreement is
invalid under applicable statute or rule of law, it is only to that extent to be
deemed omitted, and such unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall then be construed as if such
unenforceable provision(s) had never been contained herein.
32. HEADINGS
The headings in this Agreement are for convenience only and shall not
be construed to define or limit any of the terms herein.
33. INSURANCE
33.1 Metawave shall maintain, during each Term and Renewal Term of
this Agreement, at its own expense, the following insurance:
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a. Worker's Compensation insurance as prescribed by the law of
the state in which the work is performed;
b. Employer's liability insurance with limits of at least
$1,000,000 each occurrence:
c. Comprehensive general liability insurance (including
products liability insurance) and, if the use of automobiles
is required, comprehensive automobile liability insurance,
each with limits of at least $1,000,000 for bodily injury,
including death, to any one person, and $1,000,000 on
account of any occurrence, and $1,000,000 for each
occurrence of property damage; and
d. Excess liability insurance with a combined single limit of
$5,000,000.
33.2 The insuring carriers and the form of the insurance policies
shall be subject to approval by BAM. BAM shall be named as an additional
insured on all such policies. Metawave shall furnish to BAM certificates of
such insurance within ten (10) days of the execution of this Agreement. The
certificates shall provide that ten (10) days prior written notice of
cancellation or material change of the insurance to which the certificates
relate shall be given to BAM. The fulfillment of the obligations hereunder in
no way modify Metawave's obligations to indemnify BAM.
33.3 Metawave shall also require Metawave's subcontractors, if any,
who may enter upon BAM's premises to maintain similar insurance and to agree to
furnish BAM, if requested, certificates or adequate proof of such insurance.
Certificates furnished by Metawave's subcontractors shall contain a clause
stating that BAM is to be notified in writing at least ten (10) days prior to
cancellation of, or any material change in, the policy.
33.4 BAM may reasonably require Metawave at any time, and from time
to time, subject to Metawave's ability to obtain such additional insurance, to
obtain and maintain in force additional insurance with coverage or limits in
addition to those above described. However, the additional premium costs of any
such additional insurance required by BAM shall be borne by BAM, and Metawave
shall arrange to have such costs billed separately and directly to BAM by the
insuring carrier(s). BAM shall be authorized by the Metawave to confer directly
with the agent or agents of the insuring carrier(s) concerning the extent and
limits of Metawave's insurance coverage in order to assure the sufficiency
thereof.
34. RELEASES VOID
Neither Party shall require waivers or releases of any personal rights
from representatives or customers of the other in connection with visits to its
premises and both Parties agree that such releases or waivers shall not be
pleaded by them or by third persons in any action or proceeding.
35. OCCUPATIONAL SAFETY AND HEALTH ACT (OSHA)
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Metawave shall be responsible for the safety of its work and shall
maintain all lights, guards, signs, temporary passages, and any other necessary
protection and precautions for that purpose. Metawave and its Subcontractors
shall give access to the authorized representatives of the Secretary of Labor or
any state or local official for the purpose of inspecting or investigating or
carrying out of any of the duties under the Occupational Safety and Health Act
of 1970, and any amendments thereto, or any applicable state, or local laws,
rules, or regulations affecting safety and health. Metawave shall be
responsible for any violation by it or its subcontractors of any safety or
health standards issued thereunder, shall immediately remedy any citation giving
rise to such violations, and Metawave shall defend, indemnify, and hold harmless
BAM from any penalty, fine or liability in connection therewith.
36. NON-DISCRIMINATION COMPLIANCE
The applicable provisions in Schedule C, entitled "Non-Discrimination
Compliance Agreement" shall form a part of this Agreement and any amendments
thereto.
37. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of, and shall be binding
upon the Parties hereto and their respective successors and permitted assigns.
38. BAM'S PROPERTY
38.1 Title to all property owned by BAM and furnished to Metawave
shall remain in BAM.
38.2 Any property to which BAM has title and which is in Metawave's
possession or control shall be used only in the performance of this Agreement
unless authorized in writing by BAM. Metawave shall adequately protect such
property, and shall deliver or return it to BAM or otherwise dispose of it as
directed by BAM.
39. LAWS, RULES AND REGULATIONS
39.1 Metawave shall comply, at its own expense, with the applicable
provisions of the EEO, Fair Labor Standards Act of 1938, as amended, The
Occupational Safety and Health Act, and all other applicable federal, state and
local laws, ordinances, regulations and codes including identification and
procurement of required permits, certificates, approvals and inspections in
performance under this Agreement.
39.2 The employee and agents of each Party shall, while on the
premises of the other, comply with all governmental rules and regulations in
effect at such premises, including security requirements. Metawave's right of
entry shall be subject to applicable governmental security laws.
39.3 Both Parties agrees to indemnify and hold the other Party
harmless for any loss or damage that may be sustained by reason of any failure
to comply with this Section 39.
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40. ATTORNEYS' FEES AND COSTS
In the event that this Agreement or any Order is breached by Metawave,
then, in addition to all other rights and remedies BAM may have, at equity and
in law, Metawave shall be liable for BAM's reasonable attorneys' fees and costs
incurred in collecting any sums that are due and owing under this Agreement or
in taking any legal action that is necessary in order to enforce the terms and
conditions of this Agreement.
41. COUNTERPARTS
This Agreement may be executed in counterparts, all of which shall be
considered an original and together they shall constitute one (1) agreement.
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ARTICLE II
TERMS AND CONDITIONS APPLICABLE TO
EQUIPMENT ACQUISITION
1. SCOPE
Metawave shall provide to BAM the Equipment and Related Services as
described in the Orders BAM may from time to time place hereunder.
2. FORM OF ORDER
Each Order for Equipment and Related Services shall contain the
following:
(1) Date of Order and Order Number;
(2) The incorporation by reference of this Agreement:
(3) The incorporation by reference of specifications which differ
from those in published guides;
(4) A detailed list of the Equipment or Related Services that are
required. Such list is to include where applicable quantities,
model numbers, features, descriptions, specifications, prices,
charges, purchase option credits, and discounts. The last will
indicate which equipment is purchased and which is leased;
(5) The billing and delivery addresses;
(6) The required dates for delivery and installation of Equipment or
Related Services;
(7) The name and telephone number of the BAM person to contact
regarding delivery and the coordination of other activities; and
(8) Any other special terms and conditions that are not provided for
elsewhere in the Order or this Agreement.
3. SITE PREPARATION
3.1 Metawave shall promptly perform a site survey and shall promptly
furnish to BAM site preparation specifications in such detail as to ensure that
the Equipment to be installed shall operate efficiently from an environmental
point of view. BAM shall prepare the site at its own expense and in accordance
with the site specifications. Metawave shall reimburse BAM for any site
preparation expenses needlessly incurred because of inaccurate site preparation
specifications, or because the site was prepared for Equipment which was
returned for failure to conform to the provisions of this Agreement.
3.2 The following items are not included in the prices shown on
Schedule A and are the responsibility of BAM: [***]
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3.3 BAM shall use reasonable efforts to provide safe and secure
access to the sites for Metawave's employees during the performance of Services.
BAM shall make each site available to Metawave during a mutually agreed upon
period of time.
3.4 If performance of Services by Metawave is delayed for reasons
beyond the control of Metawave, or if additional Services are required by BAM,
the prices for Services shown herein may be adjusted accordingly upon mutual
written consent of the parties.
3.5 Performance of the Services set forth herein is dependent on BAM
and/or Metawave obtaining any and all necessary licenses, permits and
governmental approvals required to perform the Service. Metawave shall be held
liable for any non-performance due to delays in obtaining any of the above
documentation and/or approvals which are the responsibility of BAM.
4. TRANSPORTATION
4.1 Metawave shall deliver the Equipment complete and in accordance
with BAM instructions, if any, with transportation charges prepaid by Metawave.
Metawave shall deliver the Equipment in sufficient time to meet the required
installation date. BAM may delay the delivery of the Equipment by giving the
Metawave notice prior to shipment.
4.2 Metawave shall, at no additional charge, properly pack the
Equipment in connection with the shipment of such Equipment to the delivery
location and in connection with the removal of such Equipment, if such Equipment
is returned to Metawave pursuant to this Agreement.
4.3 Unless BAM provides special shipping instructions, transportation
charges shall not exceed the cost of shipment via surface common carrier between
the delivery location and Metawave's facility. BAM shall reimburse Metawave for
such transportation charges for the shipment of the Equipment to the delivery
location. BAM shall reimburse Metawave for rigging and drayage costs incurred
at the delivery location.
4.4 If Metawave removes or replaces any Equipment because such
Equipment is non-conforming with the provisions of this Agreement, Metawave
shall bear all transportation charges including rigging and drayage costs. If
BAM has already paid Metawave for such charges, Metawave shall promptly refund
such payment.
4.5 Metawave shall be responsible for dealing with carriers to ensure
delivery of shipments, locating missing or late shipments, resolving billing for
transportation charges, and submitting and resolving all claims arising from
loss of or damage to such shipments.
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4.6 Claims for transportation damage shall be filed and processed by
Metawave. Without cost to BAM, and at BAM's option, damaged Product, Software
shall be promptly repaired to the satisfaction of BAM or replaced, with all
replacement parts to be handled on an expedited shipping basis.
5. TITLE AND RISK OF LOSS
On all Orders for Equipment title shall vest in BAM and risk of loss
pass to BAM only when Equipment has been delivered at the F.O.B. point of
destination.
6. INSTALLATION AND COMMISSIONING
6.1 Metawave shall install the Equipment, perform its standard test
procedures and prepare the Equipment for Commissioning, all on or before the
ordered Commissioning date and Metawave shall certify to BAM that such Equipment
is ready for the Commissioning. There shall be no installation or Commissioning
charges associated with any Equipment except those charges that are listed in
the Order. Metawave shall remove and dispose of all packing materials and other
surplus materials upon completion of the installation.
6.2 No Equipment shall be deemed to be installed until all Equipment
and all Software required by the Order has been installed. However, the Parties
may agree that Commissioning can be certified on a site by site basis.
6.3 If Metawave fails to complete such Commissioning and deliver to
BAM its certification of Commissioning on or before the ordered Commissioning
date, BAM may either cancel the Order or extend such ordered Commissioning date
to a subsequent date. If BAM elects to extend the ordered Commissioning date,
the Parties agree that BAM will be damaged in an amount which will be difficult
to determine with certainty. Therefore, Metawave agrees to pay BAM as a late
Commissioning-charge, and not as a penalty, an amount equal to one percent (1%)
of the purchase price for each week or part thereof of delay occurring after the
ordered Commissioning date originally specified on the Order until either the
Commissioning date or the date on which BAM cancels the Order, whichever first
occurs. Such late Commissioning-charge shall not accrue beyond twelve (12) weeks
of delay and shall take the form of a credit against the purchase price of the
Equipment in favor of BAM.
6.4 The foregoing not withstanding, in the event that construction
delays or other causes not covered by Section 15 of Article I (Force Majeure)
and not within the reasonable control of Metawave, force postponement of the
installation of a Product, the Product, shall be stored until installation can
be resumed. Transfer and storage charges incurred shall be paid by BAM. Labor
costs for loading and unloading shall be based upon an hourly rate to be
determined by agreement between BAM and Metawave. The cost of special services,
such as design, warehousing, inventory, etc., shall be negotiated between BAM
and Metawave prior to placement of the Order.
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7. SELF INSTALLATION
7.1 BAM may, at its option, install the Equipment. Such election
shall be stated in the Order or anytime prior to delivery. If BAM so elects to
install the Equipment, Metawave shall, if requested by BAM, provide services
relating to installing, Commissioning, and optimizing, at a mutually agreed upon
rate.
7.2 If BAM elects to install the Equipment and Metawave fails to
deliver the Equipment by the ordered delivery date, Metawave shall be subject to
a late delivery charge in the form of a credit against the purchase price of the
Equipment as provided for in Section 6 of this Article (Installation and
Commissioning), except that the calculation of damages will be based on the
delay occurring after the ordered delivery date until the actual delivery date
rather than after the ordered Commissioning date. In addition, BAM may cancel
the Order.
8. INSTALLATION, ASSISTANCE AND TECHNICAL SUPPORT
8.1 At the reasonable request of BAM, Metawave shall promptly make
available at the installation site a field engineer to render installation
assistance as required by BAM. Such service shall be as referenced in
Section 7.
8.2 Metawave shall provide BAM with ongoing technical support,
including, field service and assistance. During the Warranty period, such
technical support shall be provided without charge to BAM, unless otherwise
specified in Schedule A. The availability or performance of this technical
support service shall not be construed as altering or affecting Metawave's
warranties or any other obligation of Metawave under this Agreement.
9. CABLES AND RELATED ITEMS
An Order shall be deemed to include all items necessary for the proper
operation of the Equipment as ordered by BAM, provided by Metawave, and includes
any other components or materials necessary to enable the operation of the
Equipment in accordance with the specifications.
10. ENGINEERING CHANGES
10.1 If any engineering change(s) is generally adopted by Metawave
affecting the Products hereunder, BAM will be notified of such engineering
change(s). Engineering changes which are (i) generally made available by
Metawave to customers on the same Equipment provided hereunder and (ii) are
intended to correct defects in the Equipment, shall, with the consent of BAM, be
made by Metawave to the Equipment at no charge. The administration and
installation of engineering changes shall be accomplished by Metawave, unless
otherwise agreed to by the Parties.
10.2 Engineering changes which correct a safety defect shall be made
as soon as possible at no charge. Metawave shall notify BAM of any such safety
defect and recommended interim safety measure to be taken.
10.3 Any change occurring in BAM peripheral equipment and
infrastructure which affect the form, fit or function of the supplied Equipment
(e.g. engineering changes or adjustment to Products that may be required by BAM)
shall be addressed
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by the Metawave within thirty (30) days following written notification by BAM.
Depending on the nature and scope of such change, Metawave will advise BAM of
lead-time and any costs, if necessary, to provide engineering changes.
[***]
12. RELOCATION OF EQUIPMENT
BAM may move Equipment from one location to another. At BAM's request,
Metawave shall arrange for and supervise the dismantling, packing and moving of
any purchased Equipment and shall inspect and reinstall such Equipment at the
new location. In addition, Metawave shall specify to BAM, prior to any move,
which of the existing cables and ancillary equipment associated with the
Equipment to be moved are reusable at the new site. BAM shall pay Metawave for
such Related Services at Metawave's published rates.
13. SUPPLIES AND/OR REPLACEMENT PARTS
Metawave shall provide BAM with specifications for all supplies or
replacement parts which are used or required to operate any Equipment. The
relevant supplies shall be available from Metawave upon BAM request for a
minimum of [***] years following the acquisition of the Equipment.
14. CONVERSION OF FINANCIAL ARRANGEMENT
BAM may elect to convert any part or all of an Order for purchase
Equipment, any time prior to shipment to a third party lease, or, subject to
availability by Metawave, to any of Metawave's purchase, installment sale,
lease, rental plan, or other marketing pricing policy and may do so with no
liability.
15. TRANSFER OF TITLE TO A THIRD PARTY
In connection with the financing of Equipment, BAM may request
Metawave to pass title to the Equipment directly to an assignee designated by
BAM. If BAM requests, Metawave shall execute a bill of sale conveying title to
the Equipment to the assignee. In such event, the assignee shall succeed to all
of BAM's rights under the Order with respect to the Equipment, although BAM
shall continue to exercise such rights on behalf of the assignee until Metawave
is otherwise notified. Notwithstanding the foregoing, BAM guarantees payment of
the purchase price for the Equipment to Metawave. The right of BAM to request
Metawave to pass title to the Equipment to the assignee shall include the right
to sublicense any licensed Software relating to the Equipment without the
payment of any additional license fees to Metawave.
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16. NEW EQUIPMENT
Metawave warrants that the Equipment shall be new and of original
manufacture in the United States.
17. REMOVAL OF EQUIPMENT
17.1 Promptly after the cancellation of an Order, pursuant to this
Agreement Metawave shall, at its expense, pack and remove the Equipment affected
thereby. In addition, Metawave shall make all necessary transportation
arrangements to ship the Equipment away from BAM premises.
17.2 If Metawave for any reason does not remove the Equipment within
ten (10) days after the cancellation of an Order or the termination of a lease,
BAM may, at Metawave's expense and risk, arrange to have the Equipment packed
and shipped to Metawave. In such event, Metawave shall promptly, after receipt
of BAM invoices, reimburse BAM for any costs which may thereby be incurred.
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ARTICLE III
TERMS AND CONDITIONS APPLICABLE TO THE METAWAVE'S HARDWARE
MAINTENANCE PROGRAM
1. SCOPE
1.1 Metawave shall provide to BAM Metawave's Hardware Maintenance
Program ("HMP") which is necessary to maintain the Equipment in accordance with
its specifications and to keep the same in good working order and operating
condition as described in the Orders BAM may from time to time place hereunder.
1.2 Equipment maintained hereunder shall include Equipment ordered
under this Agreement, and Metawave's equipment acquired from other sources which
has been maintained to Metawave's specifications, inspected by Metawave and
refurbished, as necessary, to specifications by Metawave at Metawave's published
rates.
1.3 Metawave shall make available to BAM, prior to commencement of
HMP, at Metawave's published rates, documentation to facilitate installation,
operation and preventive and remedial maintenance. If the originally produced
documentation is changed as a result of the application of an engineering change
to a field installation, BAM shall be provided with the updated documentation at
no charge.
1.4 Pursuant to the terms of this Agreement, Metawave shall provide
BAM with Metawave owned or licensed diagnostic software which is made available
by Metawave for commercial use and which is necessary for BAM's maintenance of
the Equipment.
2. FORM OF ORDER
Each Order for maintenance Related Services or HMP shall contain the
following:
(1) Date of Order and Order Number;
(2) The incorporation by reference of this Agreement;
(3) The billing and Equipment location addresses;
(4) The required commencement dates for maintenance Related Services,
and the length of term for such Related Services;
(5) The name and telephone number of the BAM contact person regarding
the coordination of the activities;
(6) A detailed list of the Equipment to be maintained. Such list is
to include serial number, quantities, model numbers, features,
descriptions and maintenance charges; and
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(6) Any other special terms and conditions that are not provided for
elsewhere in the Order or this Agreement.
3. AVAILABILITY OF MAINTENANCE AND SPARE PARTS
3.1 Metawave shall assist BAM in determining BAM's requirements for
an inventory of spare parts by providing BAM with a standard spare parts list
and the current usage statistics for such parts.
3.2 Metawave shall make available to BAM spare parts and HMP for a
period of not less than [***] from the date of the each Order. The price for
such spare parts and HMP will be listed in Metawave's published rates. If
subsequent to such [***] period Metawave no longer makes available a spare part,
Metawave shall notify BAM one (1) year in advance of its decision to discontinue
the spare part. If during the seven (7) year period, Metawave fails to provide
such HMP or spare parts or is unable to obtain an alternate source acceptable to
BAM, then such inability shall be deemed noncompliance with this Agreement. In
addition to the other rights and remedies BAM may have at law and equity under
this Agreement, BAM shall have the right to require Metawave, without charge, to
provide technical information and any other rights to allow BAM to obtain such
HMP and spare parts through its own manufacture or contracts with other vendors.
3.3 The technical information noted above shall include, but is not
limited to: (a) manufacturing drawings and specifications of raw materials and
components comprising such parts; (b) manufacturing drawings and specifications
covering special tooling and the operation thereof; (c) a detailed list of all
commercially available parts and components purchased by Metawave on the open
market disclosing the part number, and name and location for the purchase
thereof; and (d) one (1) complete set of equipment diagrams and maintenance
procedures.
3.4 Metawave shall provide spare parts on an emergency basis to BAM
through Metawave's field service channels upon request on an overnight basis.
Such parts may be new or refurbished parts and may be exchanged at Metawave's
standard exchange rates.
3.5 Throughout the warranty period, Metawave shall repair or replace,
and return to BAM within thirty (30) days defective parts which are shipped to
Metawave. The estimated cost of repair shall be specified at the time the
request for repair is made by BAM. If during the repair of the part Metawave
determines that the cost of repair will deviate by ten percent (10%) or more
from the estimate, Metawave shall notify BAM. If a part is deemed irreparable,
Metawave shall notify BAM.
3.6 The Party shipping any part under this Section 3 shall bear the
cost of transportation and risk of loss.
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3.7 Metawave shall use only new parts or parts of equal quality and
operating specifications in performing maintenance. Parts that are removed and
replaced shall become the property of Metawave. All parts placed into operation
shall become the property of the owner of the Equipment.
4. METAWAVE RESPONSIBILITIES FOR TYPE 1 EMERGENCY
4.1 During the warranty period or subsequent HMP, Metawave shall
provide telephone support for Type 1 Emergencies during Metawave's normal hours
of operation. Type 1 Emergencies are defined as those incidences that are non-
Service affecting. Response time shall be within one (1) hour from the time BAM
makes contact with Metawave. Telephone support shall include, but not be limited
to: engineering change information, diagnostic error interpretation, diagnostic
updates information, etc. Metawave shall provide BAM with the procedure and name
of the responsible contact for providing requested telephone support.
4.2 If required, Metawave shall respond to an emergency repair
request for Type 1 Emergency by dispatching qualified personnel within twenty-
four (24) hours of the time the request is placed with Metawave. Metawave shall
make available such technical support for Type 1 Emergencies during Metawave's
normal hours of operation.
5. METAWAVE RESPONSIBILITIES FOR TYPE 2 EMERGENCY
5.1 During the warranty period or subsequent HMP, Metawave shall
provide telephone support for Type 2 Emergency on a twenty-four (24) hour per
day basis, seven (7) days a week. Type 2 Emergencies are defined as those
incidences that prohibit or severely limit BAM's ability to provide services.
Response time shall be within one (1) hour from the time BAM makes contact with
Metawave. Telephone support may include, but not be limited to: engineering
change information, diagnostic error interpretation, diagnostic updates
information, etc. Metawave shall provide BAM with the procedure and name of the
contact responsible for providing requested telephone support.
5.2 If required, Metawave shall respond to an emergency repair
request for Type 2 Emergencies by dispatching qualified personnel within eight
(8) hours of the time the request is placed with Metawave. Metawave shall make
available technical support for Type 2 Emergencies twenty-four (24) hours per
day, seven (7) days a week.
5.3 On all requests for Type 2 Emergencies, Metawave shall provide
continuous effort until the Equipment is restored to operational condition.
Metawave's escalation guidelines as specified in Section 15 of this Article 3
(Escalation Guidelines) shall apply from the time the Metawave's representative
arrives at BAM's site.
6. BAM's RESPONSIBILITIES
6.1 Unless otherwise requested of Metawave by BAM, BAM shall perform
all preventive and remedial maintenance.
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6.2 BAM shall maintain, at BAM's site or within a convenient
distance, an inventory of spare parts including tools, documentation,
diagnostics, and test equipment for all Equipment covered hereunder and shall
continually replenish the inventory based upon, but not necessarily in
conformity with, Metawave's recommended level. Access to and use of the parts
shall be provided to Metawave when providing HMP hereunder.
7. ON-SITE MAINTENANCE
7.1 BAM may order dedicated On-Site field engineers at Metawave's
published rates. These rates shall be provided to BAM upon request.
7.2 On-Site maintenance coverage shall include for the charge
specified in the Order, any time during a consecutive ten (10) hour period,
daily, Mondays through Fridays, excluding New Year's Day, Washington's Birthday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Unless otherwise specified in that Order, such ten (10) hour period shall be
from 7:00 a.m. to 5:00 p.m. local time, with one (1) hour for lunch normally
taken between 12:00 noon and 1:00 p.m.
7.3 On-Site maintenance coverage may be extended to include
additional time periods and weekends at an additional charge and may be
increased to twenty-four (24) hours a day seven (7) days a week for three
hundred sixty-five 365 days a year.
7.4 Any absences from the shift described herein shall be by mutual
agreement prior to such absences with credit on invoices for such absences. For
any extended absences such as during vacation periods, Metawave agrees to assign
an alternate resident field engineer for the duration of such absences.
7.5 Additional temporary support personnel shall be sent to support
the resident field engineer when this requirement is deemed necessary to assure
continued efficient operation.
7.6 On-Site maintenance coverage shall be at the direction of BAM.
7.7 The coverage period for On-Site maintenance may be changed by BAM
upon thirty (30) days prior notice to Metawave, subject to the terms of Section
7.2 of this Article.
8. NOTIFICATION AND RESPONSE
8.1 Metawave shall furnish its designated point of contact to enable
BAM to promptly notify Metawave of the need for maintenance.
8.2 Metawave shall provide continuously updated charts on its
maintenance organization up to and including the national support level. Such
charts shall include twenty-four (24) hour contact information.
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9. MAINTENANCE TERM AND MAINTENANCE CHARGES
9.1 Metawave's HMP is included in the purchase Price of each piece of
Equipment purchased by BAM and shall extend throughout the duration of the
Warranty Period, as set forth in Section 13.2 of Article 1 ("Initial HMP").
Following the expiration of the Initial HMP, BAM has a choice of (i) subscribing
to Metawave's HMP on an annual basis pursuant to the terms herein and at the HMP
fees set forth in Schedule A ("Extended HMP") for the duration of the term of
the Agreement and thereafter at Metawave's then current HMP fees, or (ii) having
defective Field Replaceable Units ("FRUs") repaired or replaced with refurbished
FRUs at Metawave's then current repair rates.
9.2 The HMP charge set forth in Schedule A is not subject to increase
during the initial maintenance term. Thereafter the HMP charge is subject to
change by Metawave upon ninety (90) days prior written notice to BAM; provided,
however, that such HMP unit charge shall not be increased more than once in any
twelve (12) month period and in no event shall any increase exceed five percent
(5%) of the HMP unit charge applicable to the preceding year.
9.3 Metawave shall have no responsibility to repair or replace FRUs
which have been repaired or altered in an unauthorized manner not in accordance
with Metawave's Maintenance Program, or which have had the bar code, serial
number, or other identifying mark modified, removed or obliterated through an
intentional action by BAM. In the event that BAM sends a FRU to Metawave for
which no defects or failures can be found, Metawave may invoice BAM at the then
current fee for the services rendered during the evaluation process. Such
charges shall only be rendered after three (3) such occurrences within a sixty
(60) day period.
10. ENGINEERING COMPLAINTS
10.1 Receipt of an engineering complaint from BAM shall be
acknowledged by Metawave within fifteen (15) days. Such acknowledgment shall
include the proposed resolution of the stated problem, or the date by when a
solution might be expected. In the event that Metawave anticipates that the
solution to the engineering complaint will exceed thirty (30) days, then
Metawave shall issue biweekly progress reports to BAM, reporting actions taken
and progress made during the reporting period. In addition, such reports will
indicate the approximate date by which Metawave anticipates that the ongoing
engineering complaint may be successfully resolved.
10.2 In the event that the engineering complaint is marked service
emergency, then Metawave agrees to exert effort which goes beyond that which is
customarily provided to resolve engineering complaints. Metawave further agrees
to provide status reports to BAM's Manager, Engineering/Inspection Coordination,
as frequently as may be mutually determined.
10.3 BAM's point of contact for all engineering complaint information
and correspondence shall be BAM CTO, 180 Washington Valley Road, Bedminster, New
Jersey 07921. All such engineering complaints should be directed to the numbers
identified in 16.1 of this Article.
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11. ENGINEERING CHANGES
11.1 Engineering changes which are (i) generally made available by
Metawave to customers on the same Equipment provided hereunder and (ii) are
intended to correct defects in the Equipment shall, with the consent of BAM, be
made by Metawave to the Equipment at no charge. The administration and
installation of engineering changes shall be accomplished by Metawave, unless
otherwise agreed to by the Parties.
11.2 Engineering changes which correct a safety defect shall be made
as soon as possible at no charge. Metawave shall notify BAM of any such safety
defect and recommended interim safety measure to be taken.
11.3 Any change occurring in BAM peripheral equipment and
infrastructure which affect the form, fit or function of the supplied Equipment
(e.g. engineering changes or adjustment to the Products that may be required by
BAM) shall be addressed by Metawave within thirty (30) days following written
notification by BAM. Depending on the nature and scope of such change, Metawave
will advise BAM of lead-time and any costs, if necessary, to provide engineering
changes.
12. EQUIPMENT NON-PERFORMANCE CREDIT
If any Equipment furnished by Metawave hereunder for commercial
service experiences Equipment non-performance period(s) due to malfunction of
Equipment as specified below, the credits contained in this Article 3, Section
12, shall apply to BAM's HMP monthly maintenance charge. If the Equipment is
operating at less than [***] call processing capacity, (as measured by traffic
usage over the previous thirty (30) day period) (i) for any eight (8)
consecutive hour period or (ii) for a more than twenty-four (24) total hours in
any thirty (30) day period, then Metawave shall grant BAM a credit against the
HMP monthly maintenance charge for each such hour in the amount of [***] of the
monthly maintenance charge for such defective Equipment. An Equipment non-
performance period shall begin upon BAM's notification to Metawave and shall end
when the Equipment has achieved [***] call processing capacity. BAM shall issue
a debit memorandum and associated documentation to Metawave reflecting the
amount of such credit. The Equipment non-operational periods shall be for
periods of time directly caused by the non-performance of the Equipment. Any
non-performance caused by third party equipment, force majeure or other events
outside the control of Metawave shall not be counted toward non-operational
periods. If BAM receives a credit under this Article III, Section 12, for a
particular non-performance period, then BAM shall not be eligible to receive a
credit under Article IV, Section 12.7. If the non-performance is caused by both
Equipment nonperformance and Software nonperformance, BAM shall receive the
higher credit.
13. REMEDIES FOR EQUIPMENT FOR FAILURE TO MEET OPERATIONAL LEVEL
If any Equipment maintained hereunder fails to perform at an
operational level of as defined in Article III, Section 12, during two (2)
consecutive calendar months, BAM may, at its option, require Metawave to within
thirty (30) days after notification to Metawave, replace such Equipment at no
additional cost to BAM. Any Equipment that cannot be restored to good working
order and operating condition shall be removed at Metawave's expense.
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14. WARRANTY
14.1 In lieu of the warranty period specified in Section 13 of
Article I (Warranties), the warranty period for spare parts under this Article
III shall be for ninety (90) days from the date shipment to BAM.
14.2 Metawave's responsibility under this warranty shall be to either
replace or repair the defective spare part.
15. ESCALATION GUIDELINES
Metawave shall endeavor to initiate support within the specified
response time. If the trouble has not been corrected within twenty-four (24)
hours after the request for support, the trouble shall be escalated to
Metawave's engineering laboratories. No charge will be made for any escalation.
16. PROCEDURES FOR METAWAVE'S HMP
16.1 Metawave's Customer Support
Customer Support can be reached by call the following numbers:
Domestic phone: 888-642-2455
International phone: 425-702-6550
16.2 Return Material Authorization (RMA)
BAM must contact Customer Support via telephone, e-mail or fax to
obtain a Return Material Authorization (RMA) number. Metawave may return
shipments without a RMA number to the BAM unrepaired and at BAM's expense. The
RMA number must be clearly written on the outside of the package. A RMA number
will not be issued until an Order is provided for the repair price for those
items not covered under warranty.
16.3 Return Address
All Field Replaceable Units (FRUs) must be shipped to:
Metawave Communications Corporation
10735 Willows Road N.E.
Redmond, WA 98073-9769 USA
c/o BAM Returns
16.4 Packing Instructions
BAM must pack all returned equipment in a manner no less protective to
such Equipment than the manner in which Metawave packages similar equipment.
16.5 Repair Purchase Orders
Repair purchase orders are required in the following instances:
When BAM returns out of warranty FRUs for repair; or
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When Metawave sends pre-exchange FRU to BAM prior to the defective FRU
being received by Metawave, and if defective FRU is not received within five (5)
days of shipment of replacement FRU.
Under these circumstances, a facsimile copy of the purchase order may
be transmitted to Metawave and followed up by a confirming hard copy in the
mail.
16.6 Expedite Service
In an emergency situation that requires an expedited shipment,
Metawave offers Expedite Services upon BAM's request at no additional charge
except that BAM shall pay for additional expedite freight charges, if any. If
the HMP has expired, such expedite service will carry an additional fee of $300
plus freight charges (plus the price of FRU if out of warranty) per FRU.
16.7 Invoices and Payment
Invoices are payable in accordance with the terms of the Agreement
between Metawave and BAM. In the event pre-exchanged FRU's are not returned by
BAM to Metawave within five (5) days then Metawave shall invoice BAM for the
amount of the exchanged FRU's.
16.8 Duties and Taxes
All duties, customs clearance fees and any and all taxes will be the
responsibility of the Customer.
16.9 Non-compliance
Failure to comply with any of the procedures may result in delay or
non-delivery of the FRUs.
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ARTICLE IV
TERMS AND CONDITIONS APPLICABLE TO
ANY PURCHASE THAT INCLUDES LICENSED SOFTWARE
AND/OR SOFTWARE MAINTENANCE SERVICE
1. SCOPE
Metawave shall provide to BAM Metawave's Software and Related Services
as described in Orders BAM may from time to time place hereunder.
2. DEFINITIONS
Terms which are capitalized have the meanings set forth below or,
absent definition herein, as contained in the Agreement.
2.1 "Feature" refers to an innovation or performance improvement to
Software that is made available to all users of the current Software release.
Features are licensed to BAM individually and may be at additional cost.
2.2 "Major Release" indicates a new version of Software that adds new
Features (excluding Optional Features) or major enhancements to the currently
existing release of Software.
2.3 "Point Release" indicates a modification to Software resulting
from planned revisions to the current release, or corrections and/or fixes to
the current release of Software.
2.4 "Software Patch" refers to software that corrects or removes a
reproducible anomaly or "bug" in an existing Major Release.
3. FORM OF ORDER
Each Order for Software and Related Services shall contain the
following:
(1) Date of Order and Order Number;
(2) The incorporation by reference of this Agreement;
(3) The incorporation by reference of additional specifications;
(4) If, applicable, a detailed list of the Software or Related
Services that are required. Such list is to include
quantities, descriptions, specifications, prices, charges,
and discounts;
(5) The billing and delivery addresses;
(6) The required dates for delivery and installation of the
Software, commencement dates for licenses or Related
Services, and the length of term for licenses or Related
Services;
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(7) The name and telephone number of the BAM person to contact
regarding the coordination of activities; and
(8) Any other special terms and conditions that are not provided for
elsewhere in the Order or this Agreement.
4. LICENSE
4.1 Metawave grants to BAM a non-exclusive, nontransferable license,
except as otherwise provided herein, for the use including remote access usage
of Metawave's Software ordered hereunder, to routinely operate and monitor the
Equipment with which the Software was delivered. During the warranty period, all
purchased future releases, patches, fixes, corrections, enhancements,
improvements and updates relating to such Software are included. Thereafter, all
such fixes and enhancements shall be made available to BAM under Metawave's
Software Maintenance Program as described herein. Remote access functionality
requires the purchase of the Remote Software option.
4.2 With each license of Software ordered hereunder, Metawave shall
provide BAM documentation which either is provided by Metawave to any of its
other customers for the Software or is reasonably necessary to enable BAM to
adequately use such Software. Documentation shall comply with commonly accepted
industry standards with respect to content, size, legibility and
reproducibility.
4.3 BAM shall have the right to reproduce all documentation including all
machine-readable documentation for the Software, provided that such reproduction
is made solely for BAM's permitted use hereunder. Any such reproductions shall
include any copyright or similar proprietary notices contained on the items
being reproduced.
4.4 Metawave warrants that it has the sole and exclusive right to grant
the licenses ordered thereunder.
4.5 No title or ownership rights to the Software or any of its parts,
including documentation, except as provided herein, is transferred to BAM.
4.6 BAM acknowledges that it is the responsibility of BAM to take
reasonable measures to safeguard Software and to prevent its unauthorized use,
distribution, or duplication.
4.7 BAM shall not reverse engineer, decompile, disassemble, or modify the
Software or any portion thereof.
5. LICENSE TERM
5.1 The license term for Software shall commence on the date of
acceptance for the Initial Order and upon shipment for all other Orders of the
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Equipment and Software and shall continue perpetually or until canceled or
terminated as provided herein.
5.2 BAM may terminate the license term of any Software by giving
Metawave thirty (30) days prior written notice. Termination of such license term
shall also automatically terminate any maintenance Related Services for such
Software.
5.3 Metawave may terminate the license granted hereunder if BAM is in
material default of any of the terms and conditions of this License Agreement
and such termination shall be effective if BAM fails to correct such default
within sixty (60) days after written notice thereof by Metawave.
5.4 In the event that BAM is required to return the Software,
pursuant to the Agreement or in the event that BAM returns the Equipment, this
license shall terminate immediately upon such return of the Software or
Equipment to Metawave.
5.5 Within one (1) month after termination of the license granted
hereunder, BAM shall furnish to Metawave a document certifying that through its
best efforts and to the best of its knowledge, the original and all copies in
whole or in part of all Software, in any form, including any copy in an updated
work, have been returned to Metawave or destroyed.
6. LICENSE FEE
6.1 The Software licensing fees for the most current versions of the
Software (available at the time of purchase of Equipment) are included in the
purchase price of the Equipment. Software Updates are available under the
Software Maintenance Program described herein for additional licensing fees.
6.2 If the license term is not perpetual, the license fee set forth
in the Order is not subject to increase during the first year. Thereafter, the
license fee may be changed by Metawave following the end of the initial license
term upon ninety (90) days prior written notice to BAM; provided, however, that
such license fee shall not be increased more than once in any twelve (12) month
period and in no event shall any increase exceed [***] of the
license fee applicable to the preceding year.
7. SOFTWARE DELIVERY
7.1 Metawave shall deliver the Software complete and in accordance
with BAM's instructions, if any, with transportation charges paid by Metawave.
Metawave shall deliver the Software in sufficient time to meet the required
delivery date. BAM may delay the delivery of the Software by giving the Metawave
notice prior to shipment. BAM shall arrange and pay for transportation for
Software required to be returned to Metawave under this Agreement.
7.2 If Metawave fails to complete such delivery of Software ordered
by BAM on or before the ordered delivery date, BAM may either cancel the Order
or extend such ordered installation date to a subsequent date. If BAM elects to
extend
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the ordered installation date, the Parties agree that BAM will be damaged in an
amount difficult to determine with certainty. Therefore, Metawave agrees to pay
BAM as a late delivery charge, and not as a penalty, an amount equal to [***] of
the purchase price for that Software Feature for each week, or part thereof, of
delay occurring after the ordered delivery date originally specified. Such late
delivery charge shall not accrue beyond twelve (12) weeks of delay and shall
take the form of a credit against the purchase price of the Software or any
future Software in favor of BAM.
8. RISK OF LOSS
8.1 Metawave shall bear the risk of loss of or damage to the Software
during shipment. Metawave shall promptly replace such Software when lost or
damaged at no additional charge.
8.2 BAM shall bear the risk of loss or damage to the Software media
or documentation in its possession. Metawave shall promptly replace the
Software, Software media or documentation when lost or damaged at the charge for
the media or documentation. No additional license fee will be charged for
replacement of the Software.
9. INSTALLATION
Metawave shall install the embedded Software on the Equipment
specified on the Order, perform its standard test procedures and prepare the
Software required for Commissioning. With respect to the Initial Order, when
Metawave certifies that the Software has passed all of Metawave's acceptance
testing, the Software shall be certified as ready for BAM's acceptance testing,
in accordance with Article V.
10. NEW RELEASES
10.1 During the warranty period and if BAM elects to purchase
Software Maintenance, new versions of any Software to be provided as a generic
release common to all licensees of such Software, shall be supplied at the
prices specified in Schedule A or at Metawave's then current published rates.
10.2 Metawave shall support the current Major Release and associated
Point Releases and Features for a minimum period of two (2) years after the
issuance of such Software. However, any support provided for Software older than
two (2) years from the issue date may be on a time and material basis. An Order
is required to render such service.
11. SOFTWARE MAINTENANCE
During the warranty period and if BAM elects to purchase Software Maintenance
the following shall apply:
11.1 Metawave shall provide maintenance described herein including
error corrections, upgrades and modifications to keep the Software in good
working order and operating condition or to restore such Software to good
working order and operation condition.
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11.2 BAM will be responsible for problem identification of
reproducible Software malfunctions. In the event of any such Software
malfunction, BAM shall notify Metawave promptly of the failure through calling
Metawave's Customer Support.
11.3 Metawave shall provide a telephone contact point to which BAM
can notify Metawave of the need for maintenance Related Services twenty-four
(24) hours per day, seven days (7) per week. Within one (1) hour of
notification, a trained, knowledgeable, technically qualified Metawave
representative will respond. Such response will serve to acknowledge receipt of
notification and to obtain a verbal description of the nature of the need for
maintenance Related Services.
11.4 Metawave shall correct any and all errors in the Software in
accordance with this Section 12. For major errors substantially effecting
Equipment performance, Metawave shall continue error correction activity on a
twenty-four (24) hour basis until a permanent correction is made. If Metawave
determines that such errors cannot be corrected within twenty-four (24) hours,
Metawave shall immediately initiate an escalation procedure to:
(1) Immediately assign sufficient skilled personnel to correct
the error; and
(2) Immediately notify Metawave management personnel that such
error has not been corrected and that the escalation
procedure has been activated; and
(3) Metawave will provide verbal status reports on errors at
intervals of not less that twice per day to BAM on the
status of each error correction.
11.5 BAM shall provide Metawave, at the time of the notification,
data required by Metawave to properly analyze the error condition and to provide
the proper resolution.
11.6 Metawave shall give notice, on each error reported, to all BAM
locations of Software upon receipt by Metawave and error corrections will be
transmitted to all such locations.
11.7 If any Equipment furnished by Metawave hereunder experiences
non-performance periods due to malfunction of the Software, as specified below,
the credits contained herein shall apply to BAM's Software monthly maintenance
charge. If the Equipment is operating at less than fifty percent (50%) call
processing capacity (as measured by traffic usage over the previous thirty (30)
day period), (i) for any eight (8) consecutive hour period or (ii) for a period
more than twenty-four (24) hours in any thirty (30) day period, then Metawave
shall grant BAM a credit against the Software monthly maintenance charge for
each such hour in an amount of one-half (1/2) of one percent (1%) of the monthly
Software maintenance charge for such defective Equipment. A non-performance
period shall begin upon BAM's notification to Metawave and shall end when the
Equipment has achieved ninety
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<PAGE>
percent (90%) call processing capacity. BAM shall issue a debit memorandum and
associated documentation to Metawave reflecting the amount of such credit. The
Equipment non-operational periods shall be for periods of time directly caused
by the non-performance of the Software on the Equipment. Any non-performance
caused by third-party equipment or software, force majeure or other events
outside the control of Metawave shall not be counted toward non-performance
periods. If BAM receives a credit under this section, for a particular non-
performance period, then BAM is not able to receive a credit under Article III,
Section 12.
11.8 Unless requested by BAM or necessary to correct performance
failures or degradation, Metawave shall introduce maintenance releases no more
than once per calendar quarter. Such maintenance releases shall include program
code changes and revised documentation necessitated by correction of such error
condition. Maintenance releases shall include improvements and updates relating
to the Software which are developed by Metawave. Metawave shall notify BAM the
expected date of release and the error corrections or improvements to be
included.
12. SOFTWARE MAINTENANCE CHARGE
12.1. The annual charge for Software Maintenance is specified in the
Price List attached hereto as Schedule A. Metawave's Software Maintenance is
included in the purchase Price of each piece of Equipment purchased by BAM and
shall extend throughout the duration of the Warranty Period, as set forth in the
Warranty section of the Agreement. Thereafter, Software Maintenance is provided
by Metawave to BAM pursuant to the terms herein and is included in the Software
Maintenance charges set forth in Schedule A for a period of 12 months. Any
Software provided to BAM during the term of the Software Maintenance will be
provided pursuant to this Software License Agreement.
12.2 The Software maintenance charge is not subject to increase
during the first twelve months following the commencement of such charge. The
Software maintenance charge is subject to change by Metawave following the end
of such twelve (12) month period upon ninety (90) days prior written notice;
provided, however, that such Software maintenance charge shall not be increased
more than once in any twelve (12) month period and in no event shall any
increase exceed [***] of the Software maintenance charge applicable to the
preceding year, for like volumes of Equipment. The total increase for Software
Maintenance charges shall not exceed [***] for the term plus any subsequent
renewal term for like volumes not to exceed [***] per market system per year as
defined in Schedule A.
12.3 During the term of Software Maintenance, all Major Releases,
Point Releases, Software Patches and standard Features made generally available
by Metawave shall be available to BAM at no additional charge. BAM shall
promptly install such Software.
12.4 Optional Features and certain significant enhancements shall be
made available to BAM at an additional charge and are not include in the price
of Software Maintenance.
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12.5 Certain optional Features shall be sold on a per-unit basis and
may have price levels that reflect unit capacity.
13. TERMINATION OF MAINTENANCE
13.1 BAM may terminate maintenance for Software by giving Metawave
thirty (30) days prior written notice.
13.2 Metawave may terminate maintenance for Software by providing one
(1) year prior notice of its intent to terminate. In such event, Metawave shall
furnish the latest version of Software object code, operating and design
documentation, training material and any other necessary information to enable
BAM to maintain and enhance such Software or to contract with others for such
work.
14. OBJECT CODE AND TECHNICAL DOCUMENTATION
In the event Metawave becomes insolvent, ceases to carry on business
on a regular basis or fails to perform its maintenance obligations herein,
Metawave shall furnish the latest version of Software object code, operating and
design documentation, training material and any other necessary information to
enable BAM to maintain and enhance such Software or to contract with others for
such work.
15. RELOCATION OF SOFTWARE
BAM may redesignate the location at which the Software will be used,
and shall notify Metawave of the new location and the effective date of the
relocation. Concurrent operation of the Software at a second location for a
period not to exceed ninety (90) days to achieve uninterrupted operation and
orderly cut over shall not require an additional license.
16. ENHANCEMENT OF SERVICES
16.1 BAM may request Metawave to make changes to the Software. Such
requests will describe in detail the changes to the Software desired by BAM.
16.2 Metawave will respond within sixty (60) days of receipt of such
request, and if the response indicates a development cost to BAM, such response
shall provide estimates of time and costs to develop the change described in the
request.
16.3 BAM, at its option, may provide Metawave authorization to
proceed with the work described in Metawave's response by placing an Order.
17. SOFTWARE EVALUATION
17.1 Metawave, at no charge, will provide new Software features and
functionality on a trial basis to allow BAM to evaluate the applicability of
such Software to its business needs and purposes.
(1) BAM shall issue an Order to Metawave in accordance with this
Agreement.
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(2) The term of the evaluation shall be thirty (30) days unless
otherwise stated in the Order.
(3) BAM shall use the Software provided under this Section 18for
the sole purpose of evaluation. Use of the Software for
evaluation shall not obligate BAM to license Software for
future use.
17.2 BAM shall promptly return the Software and accompanying
documentation to Metawave upon completion of the evaluation period or shall
notify Metawave of its intent to license the Software. If BAM intends to license
such Software, BAM shall issue an Order.
17.3 BAM shall not duplicate the Software, any portion thereof, or
any associated documentation, unless necessary for the evaluation.
18. SOFTWARE VIRUS PROTECTION
18.1 Metawave represents and warrants to BAM that the Software
provided to BAM by Metawave does not contain or will not contain any Self-Help
Code or any Unauthorized Code (defined below).
18.2 As used in this Agreement, "Self-Help Code" means any back door,
"time bomb", drop dead device, or other software routine designed to disable a
computer program automatically with the passage of time or under the positive
control of a person other than a licensee of the program. Self-Help Code does
not include software routines in a computer program, if any, designed to permit
the licenser of the computer program (or other person acting by authority of the
licensor) to obtain access to a licensee's computer system(s) (e.g., remote
access via modem) for purposes of maintenance or technical support.
18.3 As used in this Agreement, "Unauthorized Code" means any virus,
Trojan horse, worm, or any other software routines or hardware components
designed to permit unauthorized access to disable, erase, or otherwise harm
software, hardware, or data or to perform any other such actions. The term
Unauthorized Code does not include Self-Help Code.
18.4 Metawave shall remove promptly any such Self-Help Code or
Unauthorized Code in the Software of which it is notified or may discover.
18.5 Metawave shall indemnify BAM against any loss or expense arising
out of any breach of this warranty.
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<PAGE>
ARTICLE V
ENTIRE AGREEMENT
1. ENTIRE AGREEMENT
1.1 This Agreement, together with all Orders, Articles, and subordinate
documents incorporated by reference and all descriptions, drawings,
specifications, and other literature published by Metawave in connection with or
in contemplation of any Order or of this Agreement shall constitute the entire
agreement between the Parties with respect to the subject matter.
1.2 This Agreement may not be modified except by an instrument in writing
signed by a duly authorized representative of each of the Parties.
2. SIGNATURES
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized officers or representatives.
Cellco Partnership Metawave Communications Corporation
by Bell Atlantic Mobile, Inc.
its managing general partner
/s/ Richard J. Lynch /s/ Robert H. Hunsberger
By:______________________________ By:______________________________
Robert H. Hunsberger
Richard J. Lynch Name:____________________________
President and CEO
Executive VP & CTO Title:___________________________
12/16/1999 12/20/1999
Date:_____________________________ Date:____________________________
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Schedule A
1. Product Pricing Summary
The prices shown below are fixed and net of all discounts. They are in
consideration of BAM's commitment and are applicable up to 200 SpotLight
Systems.
[***]
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[***]
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EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the 7th
day of July, 1995, by and between Douglas O. Reudink ("Employee") and METAWAVE
COMMUNICATIONS, INC., a Delaware corporation (the "Company"). In consideration
of the mutual covenants and conditions set forth herein, the parties hereby
agree as follows:
1. Employment. Company hereby employs Employee to serve as its Chief
Technical officer and Employee hereby accepts such employment. In such capacity,
Employee shall perform such duties during the term hereof as the Board of
Directors of the Company shall, from time to time, reasonably direct. Employee
agrees to utilize his skills and to render services to the best of his ability
on a full-time basis during the term of this Agreement.
2. Term. Employee's employment hereunder shall continue until terminated
pursuant to the provisions of paragraph 6 below.
3. Compensation. For all services rendered by Employee under this
Agreement, Employee shall receive a monthly salary at an annual rate of
$144,000, or such annual rate as the Board of Directors of the Company may from
time to time establish in its sole discretion, provided, that the Investors and
the Founders (as defined in the Founders Stock Repurchase Agreement dated as of
the date hereof,) hereby agree to work in good faith within the six (6) months
after the date of this Agreement to develop an executive compensation plan to
consist of salary and a bonus based on performance. In addition, Employee shall
receive such bonuses as may be declared from time to time by the Board of
Directors in its sole discretion and shall be eligible for consideration for
participation in stock option or stock purchase plans adopted by the Company, in
the sole discretion of the Board of Directors consistent with the terms of such
plans and applicable law.
4. Benefits. During the term of employment hereunder, Employee shall be
entitled to participate fully in any benefits and policies,. including, but not
limited to, vacation and sick leave and group medical and life insurance which
may be made available to the employees of the Company generally. The Company
shall pay or reimburse Employee for all reasonable travel and other expenses
incurred or paid by Employee in connection with the performance of services
under this Agreement upon presentation of expense vouchers and such other
supporting information as the company may from time to time reasonably request.
5. Warranties and Indemnification. Employee represents to the Company
that Employee is free to enter into this Agreement and that Employee has no
commitment, arrangement or understanding to or with any third party which
restrains or is in conflict with this
<PAGE>
Agreement or which would operate to prevent Employee from performing the
services to the Company which employee hereby has agreed to provide. Employee
agrees to indemnify and hold the Company harmless from and against any and all
liabilities or claims, including costs, expenses and reasonable attorney's fees
arising out of any acts by Employee which, the foregoing representation or
warranty to the contrary notwithstanding, shall be in violation of or shall
constitute a breach of any such commitment, arrangement or understanding. The
provisions of this Paragraph 5 shall survive any termination of this Agreement
for any reason. Employee agrees to execute the Company's Proprietary Information
Agreement upon his acceptance of employment with the Company. Employee further
agrees that at all times both during his employment by the Company and after its
termination, he will keep in confidence and trust, and will not use or disclose,
any confidential or proprietary information of the Company.
6. Termination.
(a) Employee's employment hereunder may be terminated by Employee or
Company at any time for any reason, with or without Cause by delivering to the
other party written notice of such termination; provided however:
(b) All other compensation and benefits will terminate upon the
effective date of termination of Employee's employment. Notwithstanding the
foregoing, Company's obligations to continue Employee's salary will immediately
terminate upon Employee's breach of his obligations pursuant to paragraph 7 of
this Agreement. Notwithstanding anything herein to the contrary, (other than the
immediately preceding sentence) if the Company terminates Employee's employment
without cause prior to the first anniversary of the execution of this agreement,
Employee shall be entitled to receive the salary and benefits referred to in
paragraphs 3 and 4 for a period of one year following such termination. If the
Company terminates Employee's employment without cause after the first
anniversary of the date of this Agreement, Employee shall be entitled to
benefits provided in paragraphs 3 and 4 for a period of 6 months following such
determination.
(c) Company's obligation to pay salary, benefits, and any and all
other forms of compensation to Employee shall immediately terminate on the
effective date of Employee's voluntary termination of employment or any
termination of Employee's employment for Cause. For purposes of this Agreement,
"Cause" shall mean (i) the Employee's engaging in misconduct which is
demonstrably injurious to Company; (ii) the Employee's being convicted of a
felony; (iii) any act of Employee, which in the reasonable judgment of a
majority of the Board of Directors of the Company, constitutes dishonesty,
larceny, fraud, deceit or gross negligence by Employee in the performance of his
duties to the Company, or willful misrepresentation to shareholders, directors
or officers of the Company; or (iv) the Employee's breach of this-
<PAGE>
Employment Agreement or any confidentiality or proprietary information agreement
between the Employee and Company.
(d) In the event of Employee's death during the Employment Period,
Company shall pay to Employee's estate within ten (10) days of Employee's death
any unpaid salary earned by Employee through the date of Employee's death. All
other payments shall cease.
(e) Termination by Employee. Employee may terminate his employment at
any time upon at least fifteen (15) days written notice. Einployee's right to
the benefits described in paragraphs 3 and 4 above shall terminate upon the
effective date of such termination.
7. (a) Covenant Not to Compete. For a period beginning on the date of
this Agreement and ending one year following the date of termination of
Employee's employment hereunder for any reason, Employee hereby agrees that he
will not, directly or indirectly, enter into the employment of, render services
to or acquire any interest whatsoever in (whether for his own account as an
individual proprietor, or as a partner, associate, shareholder, officer,
director, consultant, trustee or otherwise), any person or entity engaged in any
operations in competition in North America, Asia, Europe or Latin America, with
any aspect of the business of the Company as presently conducted and as said
businesses may evolve in the ordinary course of business between the date of
this Agreement and the termination of Employee's employment hereunder (including
products under active development at such time); provided, however, that nothing
herein shall prevent the purchase or ownership by Employee, by way of
investment, shares of any class stock with a value of $100,000 or less at the
time of investment, in any publicly-held corporation, or prevent the employment
of or the rendering of services by Employee where he does not contribute to the
development or sale of products which compete with products of the Company. The
parties agree that the areas within which these business activities are carried
on and where the goodwill of the Company has been established reasonably
includes North America, Asia, Europe and Latin America.
(b) Non-solicitation. Without limiting the foregoing, Employee
agrees that he will not call on or otherwise solicit business from any of the
customers or potential customers of the Company which, at the time of
termination of his employment, were listed (or ought to have been listed) in the
Company's records, as to any product that competes with any product provided or
marketed by or actually under development by the Company at the time of
Employee's termination. Employee further agrees that he will not solicit the
employment of or hire any employee of the Company throughout the term of this
covenant.
8. Remedies. Employee agrees that damages for breach of his covenants
under paragraph 7 above will be difficult to determine and inadequate to remedy
the harm which may
<PAGE>
be caused thereby, and therefore consents that these covenants may be enforced
by temporary or permanent injunction without the necessity of bond. such
injunctive relief shall be in addition to and not in place of any other remedies
available at law or in equity. Employee believes that the provisions of this
Agreement are reasonable and that Employee is capable of gainful employment
without breaching this Agreement. However, should any court or tribunal decline
to enforce any provision of paragraph 7 of this Agreement as written, the
parties hereby agree that this Agreement shall, to the extent applicable to that
circumstance before such court, be deemed to be modified to restrict Employee's
competition with the Company to the maximum extent of time, scope and geography
which the court shall find enforceable, and such provisions shall be so
enforced. The prevailing party in any enforcement proceedings hereunder shall be
awarded its costs and reasonable attorneys' fees at all levels of such
proceedings.
9. Agreement Relating to Sale and Repurchase of Shares. As a condition
of the employment of Employee by the Company, Employee agrees to execute and
deliver an agreement in substantially the form of Exhibit B attached hereto.
10. Entire Agreement: Modification. The provisions and documents
contained and referenced herein constitute the entire Agreement between the
parties with respect to the subject matter hereof and any waiver, alteration or
modification of any provisions of this Agreement, or the replacement of this
Agreement, shall not be valid unless in writing and signed by all the parties
signing hereunder.
11. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Washington.
12. No Waiver. No waiver or modification of any of the terms or
provisions hereof shall be valid unless in writing signed by the party against
which the enforcement of such waiver or modification is sought, nor shall any
waiver or failure to enforce any right hereunder be deemed to be a waiver of the
same or any other right in any other instance.
13. Arbitration. Employee agrees that any and all disputes that Employee
has with the Company or any of its employees, which arise out of Employee's
employment, the termination of employment or otherwise under the terms of this
Agreement shall be resolved through final and binding arbitration. This shall
include, without limitation, disputes relating to this Agreement, any disputes
regarding Employee's employment by the Company or the termination thereof,
claims for breach of contract or breach of the covenant of good faith and fair
dealing, and any claims of discrimination or other claims under any federal,
state or local law or regulation now in existence or hereinafter enacted and as
amended from time to time concerning in any way the subject of Employee's
employment with the Company or its termination. The only claims not covered by
this paragraph 13 are claims for benefits under the workers'
<PAGE>
compensation laws or unemployment insurance laws. Binding arbitration will be
conducted in Seattle, Washington, in accordance with the rules and regulations
of the American Arbitration Association then in effect. Each party will bear
one-half of the cost of the arbitration filing and hearing fees, and the cost of
the arbitrator; each side will bear its own attorneys' fees, unless otherwise
decided by the arbitrator. Employee understands and agrees that the arbitration
shall be instead of any civil litigation and that the arbitrator's decision
shall be final and binding to the fullest extent permitted by law and
enforceable by any court having jurisdiction thereof.
Signed by the parties as of the date first written above.
METAWAVE COMMUNICATIONS CORPORATION
By /s/ Thomas Huseby
----------------------------------
Its Chairman/Secretary
EMPLOYEE:
/s/ Douglas O. Reudink
--------------------------------------
Douglas O. Reudink
Address: c/o Riddell Williams et al.
1001 Fourth Avenue Plaza
Suite 4400 ,
Seattle, Washington 98154
Signature:____________________________
<PAGE>
EXHIBIT 10.21
METAWAVE
COMMUNICATIONS CORPORATION
June 27, 1997
Mr. Robert H. Hunsberger
3408 Mount Vernon Way
Plano, Texas 75025
Dear Bob:
On behalf of Metawave Communications Corporation, it is my pleasure to offer you
the position of President and Chief Executive Officer, as detailed in this
letter, with a start date of July 28, 1997.
Base compensation for your duties will be $220,000.00 per year for the first two
years of employment, subject to federal income tax and other normal withholding,
to be paid on Metawave's regularly scheduled pay days. After your second year
of employment, your base salary will be set by the Board of Directors.
You have also been granted a guaranteed bonus (i) for the first year of your
employment in the amount of $130,000.00 which will be paid (net of taxes and
other normal withholding) on a prorated monthly basis, (ii) for the second year
of your employment in the amount of $65,000.00 to be paid (net of taxes and
other normal withholding) again monthly. After your second year of employment,
any bonus to be awarded will be determined by the Board of Directors.
A recommendation will be made to the Board of Directors that you be granted an
option to purchase 900,000 shares of Metawave common stock at the exercise price
of $0.62 per share. Under our current plan, one quarter of the shares vest
after one year of employment with the remaining three quarters progressively
vesting on a monthly basis over the next three (3) subsequent years.
Metawave has also granted to you $50,000.00 in relocation assistance. This
figure represents the relocation assistance after it has been grossed up for tax
purposes (tax equalized). It will be paid to you in four equal installments of
$12,500.00 each with your first four regular pay checks. Should you leave the
company prior to completing 12 months of employment, you will be required to
repay Metawave this relocation amount on a prorated basis.
In the event that the Company terminates your employment without cause, you will
receive a lump sum severance payment within 30 days of such termination equal to
12 months' base salary ($220,000.00) and continuation of benefits for twelve
months.
You are eligible for our Medical, Dental and Life insurance starting on the
first day of the month following your hire date. You are also eligible to
participate in our 401(K) program. Details about these benefits may be obtained
from the Human Resources Department.
<PAGE>
Mr. Robert H. Hunsberger
Page 2
June 27, 1997
It is the policy of Metawave that employees not disclose nor use any
confidential information from prior employment while employed by Metawave. If
you have entered into specific NonDisclosure agreements, non-competitive
agreements, or any other agreements with any previous employer that might affect
or restrict your employment with us, please provide us with a copy so that we
can ensure that both you and Metawave abide by the terms thereof.
Employment with Metawave is at the mutual consent of each employee and the
company. Accordingly, while Metawave has every expectation that employment
relationships will be mutually beneficial and rewarding, both you and Metawave
retain the right to terminate the employment relationship at will, at any time,
with or without cause.
This offer represents the entire offer of Metawave and supersedes any prior
verbal or written agreements. This offer will remain open until June 29, 1997.
As a condition of your employment, you are required to sign a copy of the
enclosed Confidentiality and Inventions Agreement and provide proof of your
right to work in the United States to Human Resources on your first day of work.
Bob, we are excited about you leading our team and we hope you will be able to
achieve both your personal and professional objectives here at Metawave. If I
can answer any questions, please feel free to call me.
Please sign below and fax this letter to me and also return the original to me
by mail. The copy is for your records.
Welcome aboard!
Sincerely,
METAWAVE COMMUNICATIONS CORPORATION
/s/ Douglas O. Reudink
________________________________________
By: Douglas 0. Reudink, Chairman of the Board
This will acknowledge my acceptance of this offer of employment.
/s/ Robert H. Hunsberger
________________________________________
Robert H. Hunsberger
June 27, 1997
Date
<PAGE>
EXHIBIT 10.22
July 12, 1999
Mr. Andy Merrill
1615 Wilt Road
Fallbrook, CA 92028
Dear Andy:
On behalf of Metawave Communications Corporation, it is my pleasure to offer you
the position of Vice President, Customer Operations, as detailed in this letter.
You will report to Bob Hunsberger, Chief Executive Officer and President. This
offer is contingent on a start date on or before August 16, 1999.
Base compensation for your duties will be $ [***] per year, equivalent to
$ [***] per pay period, subject to federal income tax and other normal
withholding. Metawave has a bi-weekly payroll schedule where paydays occur
every other Thursday.
Metawave's current bonus plan targets a bonus for your position of 25% of your
base salary. Metawave reserves the right to change it's bonus program from
year to year. For calendar year 1999, you will not be eligible for Metawave's
regular bonus plan; however, you will be eligible for the bonus plan in years
subsequent. For calendar year 1999, however, you will be eligible to
participate in the Key Contributors Stock Bonus Program. This program is in
lieu of a cash bonus program for 1999. A recommendation will be made to the
Board of Directors that you be granted an option to purchase [***] shares of
Metawave common stock at a price of $[***]/share. The vesting for this program
is 5 years from the date of grant. Vesting would be accelerated under the
following conditions:
. 50% upon completion of IPO and 50% one year after IPO
or
. 50% upon change in control and remaining 50% after 1 year assuming continued
employment in similar capacity
. if not employed in a similar capacity, remaining 50% becomes vested upon
termination for other than cause or change in employment status.
Additionally, a recommendation will be made to the Board of Directors that you
be granted an option to purchase [***] shares of Metawave common stock at the
price in effect at the Board Meeting following your first date of employment.
(The recommendation we make to the board will be a price not to exceed
$[***]/share). Under our current plan, one quarter of the shares vest after one
year of employment with the remaining three quarters progressively vesting on a
monthly basis over the next three (3) subsequent years.
[***] CERTAIN INFORMATION ON THIS PAGE(S) HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
Page 2
Andy Merrill
July 12, 1999
Metawave is prepared to assist you in your move to the Seattle-area by paying
the costs of moving your household goods from Fallbrook, CA to Washington.
These costs include packing, transporting, insurance and unloading of your
household goods. This includes moving two automobiles. Relocation costs
include 60 days of storage for your household goods upon arrival in Washington.
In addition, Metawave will pay you $ [***] gross, in relocation assistance,
less required taxes, for miscellaneous expenses associated with your move. It
will be paid to you with your first paycheck as described above. Metawave will
also pay for up to 60 days of temporary living upon your arrival in the Seattle
area. (Temporary living is defined as reasonable apartment rent.)
Additionally, Metawave is prepared to pay for expenses associated with the sale
of your home in California and the purchase of a new residence in the Seattle
area, as follows:
Closing costs for sale of California home
- -----------------------------------------
. Appraisal fees
. Lawyer fees
. Title insurance
. Revenue stamps
. Recording fees
. Brokerage fees
. Unique closing costs
Closing costs for purchase of home in Seattle area
- --------------------------------------------------
. Appraisal fees
. Lawyer fees
. Title insurance
. Revenue stamps
. Recording fees
. Unique closing costs including county fees
. Inspection fees
. Buyers points/origination fees not to exceed $6,000. This will not be
grossed up.
Any fees or costs that are not tax deductible will be grossed up, otherwise
actual expenses will be reimbursed. This represents Metawaves complete
commitment to relocation expenses. Should you leave the company prior to
completing 12 months of employment, you will be required to repay Metawave (on a
prorated basis).
Should your employment with Metawave be terminated for reasons other than cause,
Metawave will pay you six months of severance.
<PAGE>
Page 3
Andy Merrill
July 12 1999
You are eligible for our Medical, Dental and Life insurance starting on the
first day of the month following or equivalent to your hire date. The effective
date for your insurance plans will be the first of the month following or
coinciding with your hire date. You are also eligible to participate in our
401(K) program. The enrollment date will be the first day of the quarter
following your hire date. These programs are, of course, subject to change. A
summary outlining the Metawave benefit package is enclosed.
Your performance and salary will be reviewed once per year. Your first review
will occur in January 2000 and any salary adjustment will be effective January
1, 2000. Since you will have been employed less than one year, any salary
increase will be prorated based on the length of time from your date of hire.
It is the policy of Metawave that employees not disclose nor use any
confidential information from prior employment while employed by Metawave. If
you have entered into specific Non-Disclosure agreements, non-competitive
agreements, or any other agreements with any previous employer that might affect
or restrict your employment with us, please provide us with a copy so that we
can ensure that both you and Metawave abide by the terms thereof.
Employment with Metawave is at the mutual consent of each employee and the
company. Accordingly, while Metawave has every expectation that employment
relationships will be mutually beneficial and rewarding, both you and Metawave
retain the right to terminate the employment relationship at will, at any time,
with or without cause. In addition, you will be required to read and comply
with the policies and procedures as outlined in the Metawave Employee Handbook
during your employment with the company.
This offer represents the entire offer of Metawave and supersedes any prior
verbal or written agreements. This offer will remain open until July 16, 1999.
As a condition of your employment, you are required to sign a copy of the
enclosed Confidentiality Agreement (which should be returned to Human
Resources). You will be required to provide your proof of identification and
your proof of your right to work in the United States to Human Resources by your
third day of employment.
<PAGE>
Andy Merrill
Page 4
July 12, 1999
Andy, we are excited about you joining our team, and we hope you will be able to
achieve both your personal and professional objectives here at Metawave. If we
can answer any questions, please feel free to call Bob Hunsberger at (425) 702-
5623.
Please sign below and return the original to Human Resources. The copy is for
your records.
Sincerely,
METAWAVE COMMUNICATIONS CORPORATION
_____________________________________
Monica Chester-Bristow
Director of Human Resources
This will acknowledge my acceptance of this offer of employment.
/s/ Andy Merrill
_____________________________________
NAME
____________________________________
Date
<PAGE>
EXHIBIT 10.23
October 27, 1997
Richard Henderson
3704 Roxbury
Plano, TX 75025
Dear Richard:
This letter supercedes the previous letter dated September 24, 1997. On behalf
of Metawave Communications Corporation, it is my pleasure to offer you the
position of Vice President of Sales and Marketing, as detailed in this letter.
You will report directly to me, with a mutually agreed upon start date.
Base compensation for your duties will be $150,000 per year, subject to federal
income tax and other normal withholding, to be paid on Metawave's regularly
scheduled pay dates twice monthly.
In addition to the base compensation, you will receive a bonus in the amount of
$25,000 (net of taxes and other normal withholding), payable with your first pay
check. For fiscal/calendar year 1998, you will be covered by a sales commission
plan with a target income of $75,000.
A recommendation will be made to the Board of Directors that you be granted an
option to purchase 150,000 shares of Metawave common stock at a price of $1.20
per share. Under our current plan, one quarter of the shares will vest after
one year of employment with the remaining three quarters progressively vesting
on a monthly basis over the next three (3) subsequent years.
Metawave is prepared to assist you in your relocation to the Seattle area by
reimbursing actual expenses incurred according to the following guidelines. Our
relocation assistance will include paying the closing costs on the sale of your
current home, the moving of your household goods and the closing costs of your
new home in the Seattle-area (not to include expenses related to points or
origination fees). You will also be reimbursed for temporary living costs for
up to three months at a maximum rate of $3000 per month. In addition, we will
pay for two house-hunting trips, storage of household goods for 90 days and
reasonable travel expenses associated with the relocation. For any relocation
expenses subject to tax withholding, Metawave will gross up the relocation
amount at a 35% rate intended to cover the tax liability. Should you leave the
company prior to completing 12 months of employment, you will be required to
repay Metawave on a prorated basis for actual expenses incurred.
You are eligible for our Medical, Dental and Life insurance starting on the
first day of the month following or equivalent to your hire date. You are also
eligible to participate in our 401(K) program. These programs are, of course,
subject to change.
Your performance and salary will be reviewed once per year. Your first review
will occur in June, 1998 and any salary adjustment will be effective July 1,
1998. Since you will have been employed less than one year, any salary increase
will be prorated based on the length of time from your date of hire.
It is the policy of Metawave that employees not disclose nor use any
confidential information from prior employment while employed by Metawave. If
you have entered into specific Non-Disclosure agreements, non-competitive
agreements, or any other agreements with any previous employer that might affect
or restrict your employment with us, please provide us with a copy so that we
can ensure that both you and Metawave abide by the terms thereof. As a
condition of your employment, you are required to sign a copy of the enclosed
Confidentiality Agreement and return it to Human Resources.
<PAGE>
Richard Henderson
Page 2
October 27, 1997
Employment with Metawave is at the mutual consent of each employee and the
company. Accordingly, while Metawave has every expectation that employment
relationships will be mutually beneficial and rewarding, both you and Metawave
retain the right to terminate the employment relationship at will, at any time,
with or without cause.
In the event that the Company terminates your employment without cause, you will
receive a lump sum severance payment within 30 days of such termination equal to
six months' base salary ($75,000), in exchange for executing the normal
severance release agreement.
This offer represents the entire offer of Metawave and supersedes any prior
verbal or written agreements. This offer will remain open for one month or until
otherwise withdrawn by Metawave. You will be required to provide your proof of
identification and your proof of your right to work in the United States to
Human Resources by your third day of employment.
Richard, we are excited about you joining our team and we hope you will be able
to achieve both your personal and professional objectives here at Metawave. If
we can answer any questions, please feel free to call me at (425) 702-5623.
Please sign below and return the original to Human Resources. The copy is for
your records.
Welcome aboard!
Sincerely,
METAWAVE COMMUNICATIONS CORPORATION
/s/ Shannon Dillingham for
Robert H. Hunsberger
_____________________________________
Robert H. Hunsberger
President and CEO
This will acknowledge my acceptance of this offer of employment.
/s/ Richard Henderson
_____________________________________
Richard Henderson
10/29/97
____________________________________
Date
<PAGE>
EXHIBIT 10.24
July 23, 1998
Mr. Victor Liang
6233 NE 191st Street
Seattle, WA 98155
Dear Victor:
On behalf of Metawave Communications Corporation, it is my pleasure to offer you
the position of Senior Vice President of Metawave Communications as detailed in
this letter. You will also be the President of the entity we will establish to
develop the Company's GSM products. You will report directly to me with a start
date of July 20, 1998.
Base compensation for your duties will be $190,000 per year, equivalent to
$7,307.69 per pay period, subject to federal income tax and other normal
withholding. Metawave has a bi-weekly payroll schedule with pay days on every
other Thursday. Your target bonus will be equal to 30% of your base annual
salary and will be pro-rated for 1998.
Metawave is prepared to assist you in your move from Seattle to Taiwan by paying
reasonable costs of relocation for you and your family.
You are eligible for our Medical, Dental and Life insurance starting on the
first day of the month following or equivalent to your hire date. The scheduled
effective date for your insurance plans is August 1, 1998. You are also
eligible to participate in our 401(K) program, with an enrollment date of
October 1, 1998. These programs are, of course, subject to change. A summary
outlining the Metawave benefit package is enclosed.
Your performance and salary will be reviewed once per year. Your first review
will occur in January, 1999 and any salary adjustment will be effective January
1, 1999. Since you will have been employed less than one year, any salary
increase will be prorated based on the length of time from your date of hire.
A recommendation will be made to the Board of Directors that you be granted an
option to purchase 300,000 shares of Metawave common stock at the price
determined by the Board of Directors at the next Board Meeting following your
first date of employment. Of these 300,000 shares, 150,000 will vest in
accordance with the Company's normal vesting schedule which is one quarter of
the shares vesting on the first anniversary of your first date of employment,
and the remaining three quarters will vest on a monthly basis over the next
three (3) subsequent years. The remaining 150,000 options will vest 100% on the
seventh anniversary date of your first date of employment. However, accelerated
vesting may occur with respect to 50% of these options in the year 2000, and 50%
in the year 2001, upon the achievement of certain mutually agreed objectives for
the years 2000 and 2001.
It is the policy of Metawave that employees not disclose nor use any
confidential information from prior employment while employed by Metawave. If
you have entered into specific Non-Disclosure agreements, non-competitive
agreements, or any other agreements with any previous employer that might affect
or restrict your employment with us, please provide us with a copy so that we
can ensure that both you and Metawave abide by the terms thereof.
<PAGE>
Page 2
Mr. Victor Liang
July 23, 1998
Employment with Metawave is at the mutual consent of each employee and the
company. Accordingly, while Metawave has every expectation that employment
relationships will be mutually beneficial and rewarding, both you and Metawave
retain the right to terminate the employment relationship at will, at any time,
with or without cause.
In the event that the Company terminates your employment without cause within
the first two years, you will receive a lump sum severance payment within 30
days of such termination equal to six months' base salary [***], in exchange
for executing the normal severance release agreement.
This offer represents the entire offer of Metawave and supersedes any prior
verbal or written agreements. As a condition of your employment, you are
required to sign a copy of the enclosed Confidentiality Agreement (which should
be returned to Human Resources). You will be required to provide your proof of
identification and your proof of your right to work in the United States to
Human Resources by your third day of employment.
Victor, we are excited about you joining our team and we hope you will be able
to achieve both your personal and professional objectives here at Metawave. If
I can answer any questions, please feel free to call me at (425)702-5623.
Please sign below and return the original to Human Resources. The copy is for
your records.
Welcome aboard!
Sincerely,
METAWAVE COMMUNICATIONS CORPORATION
/s/ Bob Hunsberger
_____________________________________
Bob Hunsberger
Chief Executive Officer
This will acknowledge my acceptance of this offer of employment.
/s/ Victor Liang
_____________________________________
Victor Liang
July 23, l998
____________________________________
Date
<PAGE>
EXHIBIT 21.1
Metawave Communications Corporation International
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our reports dated February 11, 2000 in the Registration Statement
(Form S-1) and related Prospectus of Metawave Communications Corporation dated
February 16, 2000.
ERNST & YOUNG LLP
Seattle, Washington
February 16, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 20,165
<SECURITIES> 0
<RECEIVABLES> 11,648
<ALLOWANCES> (908)
<INVENTORY> 4,149
<CURRENT-ASSETS> 35,054
<PP&E> 12,177
<DEPRECIATION> (6,285)
<TOTAL-ASSETS> 40,946
<CURRENT-LIABILITIES> 12,194
<BONDS> 2,503
143,945
157
<COMMON> 2,810
<OTHER-SE> (120,663)
<TOTAL-LIABILITY-AND-EQUITY> 40,946
<SALES> 22,596
<TOTAL-REVENUES> 22,596
<CGS> (22,236)
<TOTAL-COSTS> (22,236)
<OTHER-EXPENSES> (38,938)
<LOSS-PROVISION> (215)
<INTEREST-EXPENSE> (4,339)
<INCOME-PRETAX> 1,165
<INCOME-TAX> 0
<INCOME-CONTINUING> (41,967)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99.1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
ON FINANCIAL STATEMENT SCHEDULE
We have audited the consolidated financial statements of Metawave
Communications Corporation as of December 31, 1999 and 1998, and the related
consolidated statements of operations, shareholders' deficit, and cash flows
for each of the three years in the period ended December 31, 1999 and have
issued our report dated February 11, 2000, (included elsewhere in this
Registration Statement). Our audits also included the financial statement
schedule listed in Item 16(b) of this Registration Statement. This schedule is
the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits.
In our opinion, the consolidated financial statement schedule referred to
above, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Seattle, Washington
February 16, 2000
<PAGE>
EXHIBIT 99.2
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
METAWAVE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Additions
---------------------
Balance Charged
at Charged to to Other Balance at
Beginning Costs and Accounts- Deduction- End of
Description of Period Expenses Describe Describe period
----------- --------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1999
Reserve and allowances
deducted from asset
accounts: Account
receivable
Allowance for
uncollectible accounts (693,177) (214,918) (908,095)
Year ended December 31,
1998
Reserve and allowances
deducted from asset
accounts: Account
receivable
Allowance for
uncollectible accounts (41,508) (651,669) (693,177)
Year ended December 31,
1997
Reserve and allowances
deducted from asset
accounts: Account
receivable
Allowance for
uncollectible accounts -- (41,508) (41,508)
Year ended December 31,
1999
Reserve and allowances
deducted from asset
accounts: Inventory
Allowance for
obsolenscence (829,388) (2,188,806) (3,018,194)
Year ended December 31,
1998
Reserve and allowances
deducted from asset
accounts: Inventory
Allowance for
obsolescence (550,000) (279,388) (829,388)
Year ended December 31,
1997
Reserve and allowances
deducted from asset
accounts: Inventory
Allowance for
obsolescence -- (550,000) (550,000)
</TABLE>
