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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
(AMENDMENT NO. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED AUGUST 31, 1999
COMMISSION FILE NUMBER 0-29752
LEAP WIRELESS INTERNATIONAL, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 33-0811062
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10307 PACIFIC CENTER COURT, SAN DIEGO, CA 92121
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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(858) 882-6000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.0001 PAR VALUE
(TITLE OF CLASS)
PREFERRED STOCK PURCHASE RIGHTS
(TITLE OF CLASS)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filer pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of October 1, 1999, the aggregate market value of the registrant's
voting stock held by non-affiliates of the registrant was approximately
$421,641,000, based on the closing price of the Company's Common Stock on the
Nasdaq National Market on October 1, 1999 of $23.50 per share.
As of October 1, 1999, 18,428,411 shares of registrant's Common Stock,
$.0001 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated into this report by
reference:
1. Part II Registrant's Annual Report to Shareholders for the fiscal
year ended August 31, 1999.
2. Part III Registrant's definitive Proxy Statement which was filed
with the Securities and Exchange Commission within 120 days after the close
of the fiscal year.
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This Amendment No. 1 to the registrant's Annual Report on Form 10-K for the
fiscal year ended August 31, 1999 is being filed solely to amend Item 14(a)(3)
to refile Exhibit 10.27, Memorandum of Agreement, dated September 20, 1999, by
and between Ericsson Wireless Communications Inc., Leap Wireless International,
Inc. and Cricket Wireless Communications, Inc. Portions of this exhibit
(indicated by asterisks) have been omitted pursuant to a request for
confidential treatment pursuant to Rule 24b-2.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. FINANCIAL STATEMENTS:
The financial statements of Leap listed below are incorporated in this report
by reference to Leap's Annual Report to Shareholders for the fiscal year
ended August 31, 1999:
Consolidated Balance Sheets at August 31, 1999 and 1998
Consolidated Statements of Operations and Comprehensive Loss for each of the
three years in the period ended August 31, 1999
Consolidated Statements of Cash Flows for each of the three years in the
period ended August 31, 1999
Consolidated Statements of Stockholders' Equity for each of the three years
in the period ended August 31, 1999
Notes to Consolidated Financial Statements
Report of Independent Accountants
2. FINANCIAL STATEMENT SCHEDULES:
Report of Independent Accountants on Financial Statement Schedule
Schedule I -- Condensed Financial Information at August 31, 1999 and 1998,
and for each of the three years in the period ended August 31, 1999
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or
notes thereto.
3. EXHIBITS:
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EXHIBIT
NUMBER DESCRIPTION
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3.1(1) Form of Amended and Restated Charter of the Registrant
3.2(1) Form of Amended and Restated Bylaws of the Registrant
3.3(2) Form of Certificate of Designation of Series A Junior
Participating Preferred Stock of the Registrant
4.1(1) Form of Common Stock Certificate
4.2.1(3) Letter, dated as of May 5, 1999, from QUALCOMM Incorporated
("QUALCOMM") to the Registrant
4.2.2(9) Superceding Warrant, dated as of August 9, 1999, issued to
QUALCOMM
4.2.3(9) Form of Voting Agreement, dated as of April 1, 1999, between
the Registrant and various officers and directors of
QUALCOMM Incorporated
4.2.4(9) Amended and Restated Agreement Concerning Share Ownership,
dated as of August 4, 1999, between Registrant and QUALCOMM
Incorporated
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EXHIBIT
NUMBER DESCRIPTION
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4.3(2) Rights Agreement, dated as of September 14, 1998, between
the Registrant and Harris Trust Company of California
10.1(8) Separation and Distribution Agreement, dated as of September
23, 1998, between QUALCOMM and the Registrant
10.1.1(9) First Amendment to Separation and Distribution Agreement,
dated as of August 6, 1999, between Registrant and QUALCOMM
10.2(8) Credit Agreement, dated as of September 23, 1998, between
QUALCOMM and the Registrant
10.3(8) Tax Matters Agreement, dated as of September 23, 1998,
between QUALCOMM and the Registrant
10.4(8) Interim Services Agreement, dated as of September 23, 1998,
between QUALCOMM and the Registrant
10.5(8) Master Agreement Regarding Equipment Acquisition, dated as
of September 23, 1998, between QUALCOMM and the Registrant
10.5.1(9) First Amendment to Master Agreement Regarding Equipment
Procurement, dated as of August 6, 1999, between Registrant
and QUALCOMM
10.6(8) Employee Benefits Agreement, dated as of September 23, 1998,
between QUALCOMM and the Registrant
10.7(8) Conversion Agreement, dated as of September 23, 1998,
between QUALCOMM and the Registrant
10.8(8) Assignment and Assumption Agreement, dated as of September
23, 1998, between QUALCOMM and the Registrant
10.9(7) 1998 Stock Option Plan, as amended through April 13, 1999
10.10(1) Form of non-qualified/incentive stock option under the 1998
Stock Option Plan
10.11(1) Form of non-qualified stock option under the 1998 Stock
Option Plan granted to QUALCOMM option holders in connection
with the distribution of Registrant's common stock
10.12(1) Form of Registrant's 1998 Non-Employee Directors' Stock
Option Plan
10.13(1) Form of non-qualified stock option under the 1998
Non-Employee Directors' Stock Option Plan
10.14(1) Form of Registrant's Employee Stock Purchase Plan
10.15(1) Assignment and Assumption of Lease dated August 11, 1998
between QUALCOMM and Vaxa International, Inc.
10.16(1) Form of Indemnity Agreement to be entered into between the
Registrant and its directors and officers
10.17(4) Loan Agreement, dated as of September 28, 1998, between
Pegaso Comunicaciones y Servicios, S.A. de C.V. and the
Registrant
10.18(4) Promissory Note, executed September 25, 1998, payable to
Registrant by Pegaso Comunicaciones y Servicios, S.A. de
C.V.
10.19(4) Pledge Agreement, dated September 28, 1998, by and among the
Guarantors, the Issuers and Registrant
10.20(5) Asset Purchase Agreement, dated December 24, 1998, by and
among Chase Telecommunications Holdings, Inc., Anthony
Chase, Richard McDugald and Registrant
10.21.1(6) Stock Purchase Agreement, dated April 12, 1999, by and among
Inversiones Leap Wireless Chile S.A., Telex -- Chile S.A.,
and Chilesat S.A.
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EXHIBIT
NUMBER DESCRIPTION
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10.21.2(7) Novation and Assumption of Payment Obligation Agreement,
dated May 11, 1999, by and among Chilesat Telefonia Personal
S.A., Inversiones Leap Wireless Chile S.A. and Chilesat S.A.
(In Spanish and accompanied by a translation in English)
10.22(9) Cricket Communications, Inc. 1999 Stock Option Plan
10.23(9) Form of non-qualified/incentive stock option under the
Cricket Communications, Inc. 1999 Stock Option Plan
10.24(9) Employment offer letter to Susan G. Swenson from Registrant,
dated July 9, 1999
10.25(10) System Equipment Purchase Agreement, dated September 20,
1999, by and between Cricket Wireless Communications, Inc.
and Lucent Technologies, Inc. Portions of this exhibit
(indicated by asterisks) have been omitted pursuant to a
request for confidential treatment pursuant to Rule 24b-2.
10.26(10) Credit Agreement, dated as of September 29, 1999, among
Cricket Communications, Inc., Cricket Wireless
Communications, Inc., the Lenders party thereto, and Lucent
Technologies, Inc., as Administrative Agent. Portions of
this exhibit (indicated by asterisks) have been omitted
pursuant to a request for confidential treatment pursuant to
Rule 24b-2.
10.26.1(10) Exhibit A -- Form of Borrower Pledge Agreement
10.26.2(10) Exhibit B -- Form of Collateral Agency and Intercreditor
Agreement
10.26.3(10) Exhibit C -- Form of Guarantee Agreement
10.26.4(10) Exhibit D -- Form of Indemnity, Subrogation and Contribution
Agreement
10.26.5(10) Exhibit E -- Form of Parent Agreement
10.26.6(10) Exhibit F -- Form of Parent Pledge Agreement
10.26.7(10) Exhibit G -- Form of Perfection Certificate
10.26.8(10) Exhibit H -- Form of Security Agreement
10.26.9(10) Exhibit I -- Form of Subordination Agreement
10.27(11) Memorandum of Agreement, dated September 20 1999, by and
between Ericsson Wireless Communications Inc., Leap Wireless
International, Inc., and Cricket Wireless Communications,
Inc. Portions of this exhibit (indicated by asterisks) have
been omitted pursuant to a request for confidential
treatment pursuant to Rule 24b-2.
10.28(10) Second Amended and Restated Deferred Payment Agreement,
dated October 12, 1999, among Chilesat Telefonia Personal
S.A., Inversiones Leap Wireless Chile S.A., and QUALCOMM
Incorporated, as Vendor, Administrative Agent and Collateral
Agent
13.1(10) Portions of Registrant's Annual Report to Shareholders for
the Fiscal Year Ended August 31, 1999
21.1(10) Subsidiaries of the Registrant
23.1(10) Consent of PricewaterhouseCoopers LLP, independent
accountants
27.1(10) Financial Data Schedule
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(1) Filed as an exhibit to Leap's Registration Statement on Form 10, as amended
(File No. 0-29752), and incorporated herein by reference.
(2) Filed as an exhibit to Leap's Current Report on Form 8-K dated September
14, 1998, and incorporated herein by reference.
(3) Filed as an exhibit to Leap's Quarterly Report on Form 10-Q for the quarter
ended February 28, 1999, as filed with the Securities and Exchange
Commission on April 14, 1999, and incorporated herein by reference.
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(4) Filed as an exhibit to Leap's Annual Report on Form 10-K for the fiscal
year ended August 31, 1998, as filed with the Securities and Exchange
Commission on November 30, 1998, as amended, and incorporated herein by
reference.
(5) Filed as an exhibit to Leap's Quarterly Report on Form 10-Q for the quarter
ended November 30, 1998, as filed with the Securities and Exchange
Commission on January 14, 1999, and incorporated herein by reference.
(6) Filed as an exhibit to Leap's Current Report on Form 8-K dated May 4, 1999,
and incorporated herein by reference.
(7) Filed as an exhibit to Leap's Quarterly Report on Form 10-Q for the quarter
ended May 31, 1999, as filed with the Securities and Exchange Commission on
July 15, 1999, and incorporated herein by reference.
(8) Filed as an exhibit to Leap's Amendment No. 1 to Registration Statement on
Form S-1 (File No. 333-64459) dated October 13, 1998, and incorporated
herein by reference.
(9) Filed as an exhibit to Leap's Post-Effective Amendment No. 2 to
Registration Statement on Form S-1 (File No. 333-64459) dated August 10,
1999, and incorporated herein by reference.
(10) Filed as an exhibit to Leap's Annual Report on Form 10-K for the fiscal
year ended August 31, 1999.
(11) Filed herewith.
(b) REPORTS ON FORM 8-K
On July 6, 1999, Leap filed Amendment No. 1 to its previously filed Form
8-K dated April 19, 1999. Leap's April 19, 1999 Form 8-K reported the
acquisition by a wholly owned subsidiary of Leap of all of the shares of
Chilesat Telefonia Personal, S.A. that the Leap subsidiary did not already own.
Amendment No. 1 to the Form 8-K was filed to add pro forma financial statements
to the Form 8-K and also updated the Chilesat Telefonia Personal S.A. financial
statements contained in the Form 8-K to include unaudited financial information
with respect to the three month period ended March 31, 1999. The following
financial statements were included in the July 6, 1999 Amendment No. 1 to Form
8-K:
(1) Financial Statements of Business Acquired (i.e., Chilesat
Telefonia Personal S.A.)
Report of Independent Accountants
Balance Sheet at March 31, 1999 (unaudited) and December 31, 1998 and
1997
Statement of Income and Comprehensive Income for the three month
period ended March 31, 1999 and 1998 (unaudited), for the year
ended December 31, 1998, and for the periods from inception (March
3, 1997) to December 31, 1997, March 31, 1999 (unaudited), and
December 31, 1998
Statement of Cash Flows for the three month period ended March 31,
1999 and 1998 (unaudited), for the year ended December 31, 1998 and
for the periods from inception (March 3, 1997) to December 31,
1997, March 31, 1999 (unaudited), and December 31, 1998
Statement of Shareholders' Equity for the period from inception
(March 3, 1997) to December 31, 1998, and for the period January 1,
1999 to March 31, 1999 (unaudited)
Notes to the Financial Statements
(2) Pro Forma Financial Information of Leap Wireless International,
Inc.
Unaudited Pro Forma Statement of Operations for the six months ended
February 28, 1999
Unaudited Pro Forma Statement of Operations for year ended August 31,
1998
Unaudited Pro Forma Balance Sheet as of February 28, 1999
Notes to the Pro Forma Financial Statements
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 13th day of
December, 1999.
LEAP WIRELESS INTERNATIONAL, INC.
By: /s/ HARVEY P. WHITE
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Harvey P. White,
Chief Executive Officer and Director
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EXHIBIT 10.27
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement (the "Memorandum of Agreement") is entered into as
of September 20, 1999 (the "Effective Date"), by and between Ericsson Wireless
Communications Inc. ("Ericsson"), Leap Wireless International, Inc. ("Leap") and
Cricket Wireless Communications, Inc. (Cricket Communications, Inc., together
with its affiliates developing wireless businesses in the United States are
collectively called "Cricket"), with regard to the following facts:
WHEREAS, Ericsson manufactures digital wireless communications equipment based
on technology known as Code Division Multiple Access ("CDMA") and is developing
products for use in wireless communications systems that are capable of
providing greater capacity and improved quality compared to other wireless
communications technology;
WHEREAS, it is Cricket's desire and intent to develop relationships with two (2)
primary vendors, and Cricket intends to utilize Ericsson as a preferred vendor
and purchase at least $330 Million of equipment and services from Ericsson and
its affiliates upon satisfaction of the conditions set forth herein;
WHEREAS, Cricket and Ericsson desire to negotiate the terms and conditions of
one or more definitive agreements (the "Definitive Agreements"), pursuant to
which (i) Cricket will purchase from Ericsson or its affiliate, Ericsson Inc.,
Products and Services for the deployment of mobile and fixed wireless
communications systems based on CDMA digital wireless communications technology
in markets in the United States; and (ii) Leap and Ericsson will further
document the amendment to the Master Agreement Regarding Equipment Procurement
dated September 23, 1998, which amendment is set forth herein;
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NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS. Except as defined elsewhere, capitalized terms used herein shall
have the meanings assigned to them in the System Equipment Purchase Agreement
attached hereto as Exhibit C (the "Form of Agreement"). The terms "Competitive
Factors," "Lowest Competing Infrastructure Bid," and "Infrastructure Prices"
have the meaning given to them in the Master Agreement Regarding Equipment
Procurement dated September 23, 1998, by and between Leap and Ericsson's
predecessor in interest, QUALCOMM Incorporated (the "Master Agreement").
2. NOTICES.
2.1. ERICSSON'S FIRST NOTICE. On or before twelve (12) months after the
Effective Date, Ericsson shall give to Leap and Cricket a notice (the "Ericsson
First Notice") that it will be capable of and intends to deliver to Cricket
within twelve (12) months after the date of the Ericsson First Notice Products
and Systems compliant with Minimum Equipment Specifications set forth on Exhibit
A to this Memorandum of Agreement (and, in the case that the notice is delivered
on or after the date six (6) months after the Effective Date, Equipment which
operates in accordance with all applicable 1XRTT standards). The notice shall
specify a date on which Ericsson will be ready to deliver the compliant Systems
(the "Delivery Date). The Delivery Date specified in the notice may not be less
than twelve (12) months after the date of the First Ericsson Notice or more than
twenty-four (24) months after the Effective Date. To be effective, the Ericsson
First Notice must include the detailed Product Specifications required for
Milestone 1 of Exhibit B. If Ericsson has not delivered the Ericsson First
Notice by the date twelve (12) months after the Effective Date, Cricket shall
give Ericsson notice of its failure to give the Ericsson First Notice and, if
Ericsson has not given the Ericsson First Notice within five (5) business days
after notice that the Ericsson First Notice is late, this Memorandum of
Agreement and the Definitive Agreements shall terminate without further
liability to either party.
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2.2. CRICKET NOTICE. No sooner than the date seven (7) months before the
scheduled Delivery Date but not later than six (6) months before the scheduled
Delivery Date set forth in the Ericsson First Notice, Cricket shall provide
notice (the "Cricket Notice") to Ericsson which notice shall contain each of the
following: (i) if Cricket contends the financing terms and conditions at the
time of the Cricket Notice offered by its Primary Vendor have materially changed
in Cricket's favor, Cricket shall notify Ericsson that it is requesting
comparable financing terms and conditions; and (ii) the price of Products,
Equipment and Systems as established pursuant to Section 3.5 below; if prices
have been agreed upon in the definitive agreement and Cricket contends the
financing terms and conditions at the time of the Cricket Notice offered by its
Primary Vendor have materially changed in Cricket's favor or, if no prices have
been agreed upon in the Definitive Agreements; and (iii) Cricket shall provide
Ericsson with a copy of its current business plan and financial information, so
as to enable Ericsson to evaluate and make an informed business decision with
regard to whether it wishes to offer the proposed vendor financing. The Cricket
Notice shall provide reasonable specificity as to the requested information.
Cricket further agrees to reasonably cooperate with Ericsson by providing any
non-confidential information reasonably requested by Vendor for purposes of
verifying the information contained in Cricket's Notice, and, if requested by
Ericsson, will allow the audit procedure set forth in the Master Agreement to be
followed to verify the pricing set forth in the Cricket Notice.
2.3. NOTICE OF TERMINATION. Through and including the date thirty (30)
calendar days after receipt of the Cricket Notice, Ericsson shall have the
option to terminate this Memorandum of Agreement and Definitive Agreements if
any of the following occur: (i) Ericsson's Board of Directors does not approve
the financing contemplated by Section 3.4; (ii) if Equipment or System prices
have changed from those set forth in the Definitive Agreements as provided in
Section 3.5, and Ericsson disapproves any such proposed new prices; (iii) if the
financing terms change from those
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set forth in the Definitive Agreements as provide in Section 3.4, and Ericsson
disapproves any such proposed new terms; or (iv) if Cricket's business plan or
financial information as provided by Cricket do not meet Ericsson's
satisfaction. Ericsson shall use commercial reasonable efforts to: (a) satisfy
the milestones; and (b) have its Board of Directors approve the financing. If
any of the items (i) through (iv) above within this Section occur, Ericsson may
terminate this Memorandum of Agreement and the Definitive Agreements by
providing written notice to Cricket (the "Ericsson Second Notice"). If Ericsson
exercises its termination option, the parties shall be relieved of all further
rights and obligations under this Memorandum of Agreement and the Definitive
Agreements; and Ericsson shall have no liability in connection with such
termination. If Ericsson fails to give the Ericsson Second Notice on or before
the date thirty (30) calendar days after receipt of the Cricket Notice, Cricket
shall give Ericsson notice of its failure to give the Ericsson Second Notice
and, if Ericsson has not given the Ericsson Second Notice within five (5)
business days after notice that the Ericsson Second Notice is late, then
Ericsson shall have been deemed to have terminated its obligations hereunder,
and the Memorandum of Agreement and the Definitive Agreements shall terminate
without further liability to either party.
3. PURCHASE OF EQUIPMENT. Unless the Memorandum of Agreement is terminated
pursuant to Section 2.3 above and subject to satisfaction of the conditions set
forth in this Section 3, Cricket agrees to purchase (or license in the case of
software) from Ericsson Products and Services for mobile and fixed wireless
communications Systems based on CDMA digital wireless communications technology
in markets in the United States, pursuant to the terms and conditions set forth
below. The minimum commitment of Cricket to purchase and Ericsson to sell shall
be $330,000,000 of total value. The purchase obligations of Cricket are subject
to: (i) the existence of Available Markets (as defined below) at any time after
Ericsson is prepared to deliver the first System for commercial operations; (ii)
Ericsson being prepared to deliver the first System for
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commercial operation within twenty-four (24) months from the Effective Date of
this Memorandum of Agreement and (iii) Ericsson complying with each of the other
terms set forth in this Section 3. If Ericsson fails to meet the milestones
and/or other requirements set forth in this Section 3, Cricket shall have the
option, as its sole and exclusive remedy to terminate this Memorandum of
Agreement and the Definitive Agreements without any further liability to either
party. The terms and conditions of such purchases shall be as follows:
3.1. TECHNICAL SPECIFICATIONS. The Systems to be purchased by Cricket
and sold by Ericsson shall comply with any specifications agreed to by the
parties in the Definitive Agreements and those additional specifications as
published by Ericsson from time to time thereafter. In addition, in all cases,
the Systems shall meet the "Minimum Equipment Specifications" as set forth on
Exhibit A to this Memorandum of Agreement.
3.2. DEVELOPMENT PROCESS AND MILESTONES. To demonstrate that the
Systems to be sold by Ericsson will meet the Minimum Equipment Specifications
set forth on Exhibit A, the parties agree that Ericsson shall follow the
"Procedures and Milestones for System Development and Monitoring Program" set
forth on Exhibit B.
3.3. DEFINITIVE AGREEMENTS. Within thirty (30) days after the Effective
Date, Ericsson and Cricket shall diligently and in good faith negotiate and
execute a System Equipment Purchase Agreement that shall be on the terms and
conditions set forth herein and on those additional terms contained in the Form
of Agreement. In the event of any inconsistency or conflict between the
Memorandum of Agreement and the Form of Agreement, the parties shall revise the
Form of Agreement to be consistent with the terms and concepts contained in this
Memorandum of Agreement. If the parties have not reached agreement on the
Definitive Agreements within thirty (30) days, the parties shall continue
efforts to negotiate the Definitive Agreements, and this Memorandum of Agreement
will continue in full force and effect. The parties shall complete negotiation
of those areas noted as open issues on the Form of Agreement (including but not
limited
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to missing or incomplete exhibits) and those other areas which require
modification to reflect unique aspects of the Ericsson System and procedures
provided that such modifications are not inconsistent with non-operational
issues provide that no such modification shall require Cricket to accept changes
which materially and adversely impact the cost of acquiring, installing,
maintaining or operating the System, unless such change was expressly
contemplated with regard to an unopen item. Other provisions of the Form of
Agreement shall not be subject to negotiation and the negotiation of open issues
(including prices) will not be inconsistent with terms established herein or in
the Form of Agreement which are not designated as "open."
3.4. VENDOR FINANCING. Ericsson shall provide to Cricket, vendor
financing in an amount not less than [*] of the purchase price of the System(s)
and Equipment acquired by Cricket from Ericsson on the terms and conditions set
forth in the term sheet attached hereto as Exhibit D, or such more favorable
terms as may be available to Cricket on the date of the Cricket Notice for
shipments on the date that Ericsson intends to first ship Products to Cricket,
if Cricket provides the Cricket Notice as provided above, the terms and
conditions of such financing shall be no less favorable in rates and terms and
conditions to Cricket (and its affiliates) than those terms and conditions
offered by Cricket's other Primary Vendor for comparable financing on the date
Cricket provides Cricket's Notice. "Primary Vendor" means Cricket's or its
affiliates then current primary (i.e., in terms of dollar cost of Equipment then
on order and which has been ordered within the previous three (3) months) vendor
for supplying the Systems. Within sixty (60) days after the Effective Date, the
parties agree to diligently and in good faith negotiate and execute: (i)
definitive form of loan documents, which are substantially similar to those loan
documents of Cricket's other Primary Vendor; and (ii) an intercreditor
agreement. Cricket shall diligently and in good faith attempt to obtain the
Primary Vendor's written approval to the form of an intercreditor agreement to
be used between
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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Ericsson and Primary Vendor. The parties agree to execute documents and
amendments as necessary to accomplish the foregoing.
3.5. PRICING. The price for the Systems to be purchased by Cricket
pursuant to this Memorandum of Agreement shall not be higher than the pricing
for comparable Systems available to Cricket from the Primary Vendor as of the
date of the Cricket Notice for Systems and Products to be delivered on the date
of first shipment of Ericsson Products to Cricket as established by Cricket
pursuant to the Cricket Notice provided as required by Section 2.2
above. The parties agree to use commercially reasonable efforts to cause the
determination of Ericsson's infrastructure prices versus the infrastructure
prices of the Primary Vendor, to be based on an "apples-to-apples" comparison
(taking into consideration not only the pricing of products and services, the
costs to obtain, install, maintain and operate the system, and the terms and
conditions of any other material consideration proposed to be given or received
by any competing bidder, including the financing terms and conditions and each
of the Competitive Factors (as that term is defined in the Master Agreement).
3.6. VENDOR PREFERENCE. Provided that: Ericsson (i) has given a
timely Ericsson First Notice; (ii) has satisfied the conditions of Section 3
above; and (iii) has not given an Ericsson Second Notice, Cricket shall purchase
from Ericsson a System for the next Available Market (the "Test Market")
deployed by Cricket or its affiliates after the earlier of: (a) the date
twenty-four (24) months after the Effective Date; or (b) twelve (12) months
after the gives the Ericsson First Notice. "Available Market" means any market
where Cricket or any of its affiliates have acquired a license to build and
operate a System, which is not yet deployed and whether such market currently
exists as of the Effective Date or is acquired thereafter; provided however, it
excludes any Contiguous Markets. A "Contiguous Market" means a market owned by
Cricket or any of its affiliates that is geographically close or proximate to
an existing market where Cricket or any of its affiliates have deployed a
System, and where operating synergies would be
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gained or capital expenditures would be avoided by deploying additional Systems
identical to those in the existing market (i.e., Salt Lake City, UT would be
considered a Contiguous Market to Provo, UT, since operating efficiencies would
exist). The System deployed in the Test Market will be subject to a "soak"
period, whereby it will be operated for six (6) months after the Substantial
Completion date (the "Test Period") in order to determine whether it is
operating in accordance with the Definitive Agreements and the Specifications.
Provided the System in the Test Market has operated in accordance with the
Specifications and Definitive Agreements during the Test Period, thereafter
Cricket shall purchase from Ericsson any additional Products and Services for
deployment in its remaining Available Markets in accordance with the following:
(i) if as of the expiration of the Test Period the projected cost (as reasonably
set forth in Cricket's business plan) to deploy Products and Services in all of
the remaining Available Markets is equal to or greater than $330,000,000 (less
the price of the Products and Services previously deployed in the Test Market),
then Cricket agrees to purchase a minimum of $330,000,000 (less the price of the
Products and Services previously deployed in the Test Market) of Products and
Services for deployment in such remaining Available Markets; or (ii) if as of
the expiration of the Test Period the projected cost (as reasonably set forth in
Cricket's business plan) to deploy Products and Services in all of the remaining
Available Markets is less than $330,000,000 (less the price of the Products and
Services previously deployed in the Test Market), then Cricket shall purchase
from Ericsson all of its Products and Services requirements for the Remaining
Markets until such time as Cricket has purchased from Ericsson Products and
Services with an aggregate total cost of $330,000,000 (less the price of the
Products and Services previously deployed in the Test Market). Cricket agrees
that it will deploy its Products and Services in good faith in a commercially
reasonable manner and will not arrange the deployment schedule so as to deploy
Products and Services in the Contiguous Markets where the purpose is to delay
the deployment of Ericsson's Products and Services in the Test Market.
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<PAGE> 9
4. EFFECT ON MASTER AGREEMENT REGARDING EQUIPMENT PROCUREMENT. The parties
agree that this Memorandum of Agreement and the purchases described hereunder
satisfies the obligations of the parties under the Master Agreement as it
relates to the Request for Proposal issued by Cricket prior to the Effective
Date. In addition, as further consideration for the purchase commitments of
Cricket as set forth in this Memorandum of Agreement, Ericsson agrees that upon
the earlier of: (i) execution of the Definitive Agreements; or (ii) thirty (30)
days after the Effective Date of this Memorandum of Agreement; (y) the
provisions of Section 2.4.4 of the Master Agreement be and hereby are terminated
and such Section shall be of no further force or effect; and (z) for all future
purchases by Leap and/or Cricket and/or their affiliates under Section 2 of the
Master Agreement, Ericsson's price must be not higher than the Lowest Competing
Infrastructure Bid (defined in the Master Agreement) or there shall be no
obligation to award any procurement to Ericsson (i.e., the parties hereby
eliminate the provisions in Section 2 that require Leap and/or Cricket and/or
their affiliates in certain circumstances to purchase Infrastructure Equipment
(defined in the Master Agreement) from Ericsson if the Ericsson Infrastructure
Prices (defined in the Master Agreement) are within 110% of the Lowest Competing
Infrastructure Bid). Without affecting the immediate enforceability of the
forgoing, the parties agree to negotiate and execute a more formal amendment to
the Master Agreement that will memorialize the foregoing amendments and which
shall be executed concurrently with the Definitive Agreements. Except as set
forth above, the term and provisions of the Master Agreement shall continue in
full force and effect. Notwithstanding the foregoing, pricing and purchase terms
for purchases made under this Memorandum of Agreement and the Definitive
Agreements are not affected by the Master Agreement.
5. SCOPE. It is the intent and understanding of the parties that this
Memorandum of Agreement shall be binding on both parties notwithstanding the
fact that the parties intend to negotiate one (1) or more Definitive Agreements
and the Master Agreement
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Amendment to document the terms of the transaction outlined herein and intend
that the final terms of any business arrangements between the parties with
respect to the subject matter hereof shall be set forth in the Definitive
Agreements and the Master Agreement Amendment.
6. TERM. This Memorandum of Agreement shall become effective as of the
Effective Date and remain in effect for twenty-four (24) months thereafter. Once
the Definitive Agreements and Master Agreement Amendment are executed, this
Memorandum of Agreement shall be superseded and of no further force or effect.
7. PUBLICITY. Except as may otherwise be required by law or except as may
otherwise be permitted by this Memorandum of Agreement, each party shall keep
this Memorandum of Agreement and its provisions confidential, and shall not
disclose or publicize any information contained herein without first obtaining
the written consent of the other party. The parties however intend to make a
public announcement of this Memorandum of Agreement and agree to work together
to promptly agree on the terms and conditions of that announcement and to cause
that announcement to be promptly published concurrently (i.e., the same day) as
the press release made by Cricket regarding its new agreement with its other
vendor. Said public announcement including questions and answers will be
pre-approved and substantially in the form of the attached hereto as Exhibit E.
8. NOTICES. All notices and billings shall be in writing and sent by
registered or certified mail, postage prepaid, or via facsimile with
confirmation to the following addresses:
TO ERICSSON: TO LEAP AND/OR CRICKET:
Ericsson Wireless Cricket Wireless Communications, Inc.
Communications Inc. 10307 Pacific Center Court
6455 Lusk Boulevard San Diego, CA 92121
San Diego, CA 92121 ATTN: President
ATTN: President
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Facsimile No.: 858-332-7188 Facsimile No.: 858-882-6040
WITH A COPY TO: General Counsel WITH A COPY TO: General Counsel
at the same address at the same address
Facsimile No.: 858-332-7189
9. ASSIGNABILITY. Neither of the parties to this Memorandum of Agreement
shall assign any of its rights or delegate any of its obligations under this
Memorandum of Agreement without the prior written consent of the other party.
Notwithstanding the foregoing, Ericsson shall have the right to assign this
Memorandum of Agreement to its affiliate, Ericsson Inc.; provided, however, such
assignment shall not relieve Ericsson of its obligations hereunder or cause
Cricket to incur any additional costs or expenses.
10. ENTIRE AGREEMENT; MODIFICATION. This Memorandum of Agreement constitutes
the entire agreement between the parties and supersedes all prior negotiations,
representations and agreements between the parties with respect to the subject
matter hereof. No modification, variation or amendment of this Memorandum of
Agreement shall be effective unless made in writing and signed by both parties
to this Memorandum of Agreement.
11. CAPITALIZED TERMS. Except as defined elsewhere, capitalized terms used
herein shall have the meanings assigned to them in the Form of Agreement.
12. INDEPENDENT CONTRACTOR. The parties expressly intend and agree that each
is acting as an independent contractor and not as an agent or employee of the
other. This Memorandum of Agreement shall not be construed as a partnership
agreement. Neither party shall have responsibility for any of the other party's
debts, liabilities, or other obligations nor for any acts or omissions of the
other party or any of its employees or agents.
13. GOVERNING LAW; VENUE. This Memorandum of Agreement shall be governed by
the laws of the State of California, United States of America (without regard to
its conflict-of-laws provisions), and any legal proceeding arising out of or
relating to this
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Memorandum of Agreement shall be heard only before a court of competent
jurisdiction in San Diego County, California.
14. SEVERABILITY. Any provision of this Agreement which is declared
unenforceable in any jurisdiction by a court or other governmental entity of
competent jurisdiction therein shall be ineffective in such jurisdiction,
without invalidating any other provision hereof and without affecting the
validity or enforceability of such provision in any other jurisdiction.
15. NON-EXCLUSIVE RELATIONSHIP. Without limiting or otherwise affecting the
rights under Section 3.6, nothing in this Memorandum of Agreement shall be
construed to create an exclusive relationship between Ericsson and Cricket or to
prevent Ericsson or Cricket from entering into any discussion, negotiation or
relationship with any other party.
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of
Agreement as of the Effective Date.
ERICSSON WIRELESS COMMUNICATIONS INC. CRICKET WIRELESS COMMUNICATIONS, INC.
By: /s/ AKE PERSSON By: /s/ SUSAN SWENSON
------------------------------- ----------------------------------
Ake Persson, President Susan Swenson,
Chief Executive Officer
LEAP WIRELESS INTERNATIONAL, INC.
By: /s/ SUSAN SWENSON
-------------------------------
Susan Swenson, President
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<PAGE> 13
Exhibit A
Minimum Equipment Specifications
[Four Pages of Text Deleted Pursuant to Confidential Treatment Request]
<PAGE> 14
EXHIBIT B
PROCEDURES AND MILESTONES
FOR SYSTEM DEVELOPMENT AND MONITORING PROGRAM
[Four Pages of Text Deleted Pursuant to Confidential Treatment Request]
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EXHIBIT C
SYSTEM EQUIPMENT PURCHASE AGREEMENT
This System Equipment Purchase Agreement is made and is effective as
of _________ __, 1999 (the "Effective Date"), by and between Cricket Wireless
Communications, Inc. a Delaware corporation (the "Owner"), and Ericsson Wireless
Communications Inc., a Delaware corporation (the "Vendor").
RECITALS:
A. WHEREAS, the Owner desires to purchase CDMA PCS systems
for U.S. based markets pursuant to this Contract; and
B. WHEREAS, the Vendor desires to provide such CDMA PCS systems to
the Owner, as described in Exhibit A, including but not limited to the Vendor's
obligation to develop, manufacture, engineer, equip, integrate, install, test
and provide technical assistance for said PCS systems in accordance with the
terms and conditions set forth herein; and
C. WHEREAS, the mutual goal of the parties hereto is to build CDMA
PCS systems that are capable of integrating new technologies while reducing
costs over time in a highly competitive marketplace;
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth in this Contract, the Owner and the Vendor hereby agree as
follows:
SECTION 1. DEFINITIONS
1.1 Definitions. In addition to the terms listed below, certain
additional terms are defined elsewhere in this System Equipment Purchase
Agreement and in the Exhibits, and all definitions are subject to the provisions
of subsection 1.2 hereof. As used in this Contract, the following terms have the
following meanings:
"Annual Release Maintenance Fee" means, with respect to each System,
those recurring annual fees of the Vendor as described on Exhibit ___. [TO BE
NEGOTIATED]
"Applicable Laws" mean, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, all U.S. or foreign laws, treaties, ordinances, judgments, decrees,
injunctions, writs, orders and stipulations of any court, arbitrator or
governmental agency or authority and statutes, rules, regulations, orders and
interpretations thereof of any federal, state, provincial, county, municipal,
regional, environmental or other Governmental Entity, instrumentality, agency,
authority, court or other body: (i) applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is subject;
or (ii) having jurisdiction
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over all or any part of a System or the Work to be performed pursuant to the
terms of this Contract.
"Applicable Permits" mean any waiver, exemption, zoning, building,
variance, franchise, permit, authorization, approval, license or similar order
of or from any country, federal, state, provincial, county, municipal, regional,
environmental or other Governmental Entity, instrumentality, agency, authority,
court or other body having jurisdiction over all or any part of a System or the
Work to be performed pursuant to the terms of this Contract.
"Available Market" is defined in subsection 2.1
"AXE Switch" means Vendor's CDMA version of its switch.
"Backwards Compatible" or "Backwards Compatibility" means: (i) with
respect to new Software Maintenance Releases, Software Upgrades, Software
Combined Releases and Software Enhancements, the ability of each of the two (2)
prior older versions of Software to remain fully functional in accordance with
and up to the performance levels to which each was performing immediately prior
to the integration with the new Software Maintenance Release, Software Upgrade,
Software Combined Releases and/or Software Enhancement, and the ability of such
new Software Maintenance Release, Software Upgrade, Software Combined Release
and/or Software Enhancement to interoperate and be compatible with all such
functionality of such prior Software versions and with all existing in-service
Vendor provided Products already installed in the System; (ii) with respect to
all Equipment Upgrades, and Equipment Combined Releases to the extent of that
portion of the Equipment Combined Release which is the Equipment Upgrade or the
use of which by Owner is not optional without losing the benefit of the
Equipment Upgrade (for purposes of this Contract, a "New Equipment Release"
means collectively the Equipment Upgrade and such non-optional portion of the
Equipment Combined Release), the ability of the existing infrastructure to
remain fully functional in accordance with and up to the performance levels to
which it was performing immediately prior to the integration with the New
Equipment Release, and the ability of the New Equipment Release to interoperate
and be fully compatible with all such functionality of such existing
infrastructure; and (iii) with respect to each of Software Maintenance Releases,
Software Upgrades, Software Combined Releases, Software Enhancements and New
Equipment Releases, the ability of such Products to comply with the existing
interfaces to other third party equipment already deployed in the System and
with respect to which Vendor is already in compliance prior to the introduction
of the Software Maintenance Releases, Software Upgrades, Software Combined
Releases, Software Enhancements and New Equipment Releases.
"Base Station ("BTS")" means the radio Products that handle the
Owner's PCS radio traffic in a designated cell. The Base Station includes all
amplification, modulation, synchronization and other circuitry required to
process a radio signal.
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"Base Station Controller ("BSC")" means the radio Products that
control the Owner's PCS radio traffic.
"Beta Testing" means pre-launch testing conducted by Owner in
respect of which no payment from customers is made to the Owner for the Services
provided in connection therewith.
"Business Day" means any day of the year other than a Saturday,
Sunday or a United States Federal holiday.
"Capacity Guarantee" is defined in subsection 16.3.
"Certificate of Final Acceptance" is defined in subsection 10.1(f).
"Certificate of Substantial Completion" is defined in subsection
10.1(d).
"Change Orders" are defined in subsection 11.1.
"Claim" is defined in subsection 15.2.
"Claim Notice" is defined in subsection 15.2.
"Contiguous Market" is defined in subsection 2.12.
"Contract" means this System Equipment Purchase Agreement, together
with all Exhibits, Schedules and Specifications hereto, together with all
amendments, modifications and supplements.
"Contract Term" means the period commencing on the Effective Date
and ending seven (7) years therefrom, unless terminated earlier in accordance
with the terms and conditions hereof, or unless extended by the mutual written
consent of the parties hereto.
"Core System" means that collection or aggregation of Products,
which are designed by Vendor to operate as a functional entity in accordance
with the applicable Specifications or otherwise represented by Vendor in its
published information as being capable of operating as a functional entity. By
way of example and not limitation, a circuit pack or connecting cable which is
an OEM item, and which forms part of Vendor's CDMA version of the AXE switch
("AXE Switch") would form part of a Core System, whereas a call center system or
voice mail system, though it interfaces with the System, would not be part of a
Core System, since various call center systems or voice mail systems
manufactured by several alternate manufacturers could be utilized by Owner, and
operated functionally independent of the selection of Vendor's Equipment for the
MSC.
[DELETION OF DEFINITION RELEVANT TO CALCULATION OF THE ANNUAL
RELEASE MAINTENANCE FEE. ARMF FEE STRUCTURE, AS WELL AS OTHER CONCEPTS IN THIS
CONTRACT
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PERTAINING TO SOFTWARE, MAY NEED TO BE MODIFIED TO REFLECT A MUTUAL
UNDERSTANDING AND THE CONSIDERATION OF VENDOR'S SOFTWARE STRUCTURE, RELEASE AND
FEE STRUCTURE. TO BE NEGOTIATED.]
"Cricket Notice" is defined in subsection 1A.2.
"Customer Price Guide" means the Vendor's published price
notification release or releases furnished for the purpose of communicating to
customers the Vendor's list pricing or pricing related items applicable to
Products. [TO BE NEGOTIATED.]
"Defects and Deficiencies", "Defects or Deficiencies" or "Defective"
means any one (1) or a combination of the following items or other items of a
substantially similar nature:
(a) when used with respect to the performance of Services, that such
Services are not provided in a careful and workmanlike manner and in
accordance with the Specifications, using material which is free from
defects;
(b) when used with respect to structures, materials or Products,
that such items: (i) are not new and of good quality and free from defects
in materials and workmanship; or (ii) do not conform to the
Specifications; or (iii) with respect to Software, that such Software does
not process dates correctly; or
(c) with respect to all other Work, that the same: (i) are not free
of defects in workmanship and materials; or (ii) do not conform to the
Specifications.
"Delivery Date" is defined in subsection 1A.1.
"Discontinued Products" are defined in subsection 12.1.
"Documentation" means the Operating Manuals, the Maintenance and
Instruction Manuals, the Training manuals, the "as-built" Site parameters and
all other documentation necessary for the operation of the System, any
Expansions and/or any material part thereof.
"Dollars" or "U.S. $" or "$" means the lawful currency of the United
States of America.
"Equipment" means all equipment, hardware and other items of
personal property (including, without limitation, any Documentation furnished
hereunder in respect thereof) which are required to be furnished by the Vendor
in accordance with the terms and conditions of this Contract, including repair
and replacement parts.
"Equipment Combined Release" is defined in subsection 14.2.1.
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<PAGE> 19
"Equipment Enhancements" mean modifications or improvements made to
the Equipment which improve the performance or capacity of such Equipment
(sometimes referred to by the Vendor as its "Class B" changes).
"Equipment Upgrade" means a change or modification in any delivered
Equipment which fixes or otherwise corrects faults, design shortcomings or
shortcomings in meeting the Specifications, required to correct Defects of a
type that result in inoperative conditions, unsatisfactory operating conditions,
or which is recommended to enhance safety (sometimes referred to by the Vendor
as its "Class A" changes).
"Expansions" mean any additional Products or Services ordered by the
Owner from the Vendor, which may include growth to existing Systems and
additional Products, Services and Systems.
"FCC" means the Federal Communications Commission.
"Final Acceptance" means, with respect to any System, the date that
Owner signs the Certificate of Final Acceptance.
"Fit" means physical size or mounting arrangement (for example,
electrical or mechanical connections).
"Force Majeure" is defined in Section 17.
"Form" means physical shape.
"Function" means Product features and performance, or with respect
to other items, the features and performance of such items.
"Funds" are defined in subsection 2.10.
"Governmental Entity" means the United States federal government or
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranteed Substantial Completion Date" means, with respect to a
System, the date by which Substantial Completion must be achieved by the Vendor.
The Guaranteed Substantial Completion Date is determined based on the Site that
is identified by the Owner in writing to be the last Site to be included in the
definition of such System (i.e., all previous Sites in such system have been
completed) (the "Last Site"). If the Owner has issued a Purchase Order to the
Vendor to proceed with Site Preparation activities with respect to the Last
Site, the Guaranteed Substantial Completion Date shall be the date which is
sixty (60) calendar days after the later of the date of such Purchase Order or
the date that written notice identifying the Last Site was issued.
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<PAGE> 20
If the Owner has performed the Site Preparation activities with respect to
the Last Site, the Guaranteed Substantial Completion Date shall be the date
which is thirty (30) calendar days after the date the Owner issues a Site
Preparation Substantial Completion Certificate with respect to the Last Site to
the Vendor; provided that in all of the foregoing circumstances, the Guaranteed
Substantial Completion Date shall be delayed to a date mutually acceptable to
Vendor and Owner, acting reasonably, in the event that:
i. Owner has not satisfied its obligations, if any, for Site
Preparation for the installation of the switch by at least twelve
(12) weeks prior to the Substantial Completion Date (in this case,
the parties agree that the period of delay shall be equal to the
number of days that the Owner's Site Preparation obligations, if
any, are delayed beyond such date which is twelve (12) weeks prior
to the Substantial Completion Date); or
ii. extreme weather and other unusual environmental conditions beyond
Vendor's reasonable control delays Vendor's completion of
Substantial Completion activities (in this case the parties agree
that the period of delay shall be equal to the period of time
associated with the duration of such extreme or unusual
condition(s)); or
iii. Vendor is not provided with all necessary and reasonable access to
the System and each Site; or
iv. at the time Owner identifies the Last Site, more than 10% of the
total number of Sites for the System are also identified
contemporaneously therewith.
Owner shall also involve Vendor through all stages of the Site Acquisition
process. In all cases, Owner shall be responsible for the provisioning of
backhaul facilities required at all Sites. Such provisioning must be completed
prior to the start of Equipment integration by the Vendor at each site.
"Hazardous Materials" mean material designated as a "hazardous
chemical substance or mixture" by the Administrator, pursuant to Section 6 of
the Toxic Substance Control Act, a "hazardous material" as defined in the
Hazardous Materials Transportation Act (49 U.S.C. 1801, et seq.), or a
"hazardous substance as defined in the Occupational Safety and Health Act
Communication Standard (29 CFR 1910.1200).
"In Revenue Service" or "In Revenue" means, with respect to a
System, the commercial operation of such System, exclusive of operation for
purposes of determining compliance with this Contract or Beta Testing, whether
or not revenue is actually being generated.
"Initial Period" is defined in subsection 10.1(f).
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"Initial Software Features" mean those Software features contained
in Vendor's standard base generic software releases together with those
additional optional software features listed in Exhibit C.
"Installation and Integration" are defined in Exhibit F.
"Intellectual Property Rights" are defined in subsection 15.2.
"Interoperability" means the ability of the Products to operate with
other Products and to operate with and within a System, and are in accordance
with the Specifications.
"Liquidated Damages" is defined in subsection 16.1.
"List Price" means Vendor's published "network wireless systems
price reference guide" or other price notification releases furnished by Vendor
for the purpose of communicating Vendor's prices or pricing related information
to Vendor's customers; however this does not include firm price quotation.
"Losses" mean any claims, demands, suits, proceedings, causes of
action, damages, costs, expenses, liabilities, reasonable attorneys' fees and
amounts paid in settlement.
"Major Outage" means the cessation of operation of a System or
System Element caused by a Defect or Deficiency attributable solely to Vendor,
which has a material adverse impact on Owner's ability to operate or maintain
such System, render billings to Owner's subscribers, or which causes a material
interruption in Owner's ability to continue to furnish or offer service
functionalities and features to such subscribers. In addition, the following
capacity and/or coverage impairment conditions shall be considered a "Major
Outage":
(i) Any impairment caused by a Defect or Deficiency
attributable solely to Vendor that has the effect of reducing by
greater than [*] the number of traffic channel resources available
in the System for access by Owner's subscribers; and/or
(ii) Any impairment caused by a Defect or Deficiency
attributable solely to Vendor that has the effect of rendering
greater than [*] of the equipped antenna sectors in the System
unable to process origination, termination or hand-off requests; or
that reduces the forward channel power of more than [*] of the
equipped sectors in the System by greater than [*]; and/or
(iii) The persistent occurrences of an impairment referenced
in paragraphs (i) or (ii) above which, although each occurrence
falls below the [*] threshold, each occurrence exceeds a threshold
of greater than [*]
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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of the applicable metric set forth above, and the total number of
such occurrences is greater than [*] events during the Initial
Period;
provided, however, that the foregoing definition shall only be applicable for
purposes of this Contract for the issuance of a Certificate of Final Acceptance
at the end of the Initial Period.
"Maintenance and Instruction Manuals" mean the manuals listed in
Exhibit P and prepared by the Vendor and delivered to the Owner pursuant to
Section 9.
"Manufacturing" means the fabrication of the Equipment.
"Master Agreement" means the Master Agreement Regarding Equipment
Procurement dated September 23, 1998, by and between Leap and Vendor's
predecessor in interest, QUALCOMM Incorporated.
"Material Adverse Effect" is defined in subsection 24.2(b).
"Milestones" mean the performance milestones set forth in the
Exhibits.
"Minimum Equipment Specification" means [SEE MOA].
"Minimum Purchase Commitment" is defined in subsection 5.1(i).
"MSC" means a mobile switching center.
"Network Planning" means Work related to the design and engineering
of a System, including frequency clearance.
"Operating Affiliates" mean a subsidiary or affiliate of Owner which
is authorized to operate a PCS System and which places Purchase Orders pursuant
to this Contract.
"Operating Manuals" mean the operating and configuration manuals
listed in Exhibit P to be prepared by the Vendor and delivered to the Owner
pursuant to Section 9 containing detailed procedures and specifications for the
operation of any System, AXE SWITCH any Expansions and/or any part thereof
including but not limited to BTS manuals and BSC manuals.
"Operator" shall mean the Owner, a Related Operator, an Operating
Affiliate or any independent contractor appointed by the Owner, which operates a
System.
"Optimization Services" mean the RF optimization services described
on Exhibit G.
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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"Optional Software Features" mean Software features for PCS Products
available to Owner on a optional, separate fee basis.
"PCS" means personal communication services authorized by the
Federal Communications Commission.
"Person" means an individual, partnership, limited partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Entity or other
entity of whatever nature.
"Primary Vendor" is defined in subsection 2.10.
"Products" mean the collective reference to the Equipment and the
Software provided by the Vendor or any Subcontractor.
"Proprietary Information" is defined in subsection 26.18.
"Punch List" means that list prepared in conjunction with any
certificate which contains one (1) or more immaterial non-service-affecting
items which have not been fully completed as of the date of the accompanying
certificate; provided that such incomplete portion of the Work shall not, during
its completion, materially impair the normal daily operation of a System in
accordance with the Specifications.
"Purchase Order" means a written notice given by the Owner to the
Vendor in compliance with the provisions of this Contract specifying the
Products, Services or other items of Work that the Vendor is authorized to
supply or commence in compliance with the terms of this Contract.
"Purchase Order Date" means the date on which any Purchase Order is
issued by the Owner in accordance with the terms of this Contract.
"Related Operator" means an entity (other than Owner) which holds a
license issued by the FCC permitting the holder to provide wireless PCS
services, which has entered into a contract with Owner to provide management
responsibilities with respect to the operation of such a service, which may
include agreements pursuant to which Owner resells to or shares with such entity
capacity on the Owner's System as, for example, when the Related Operator's cell
site equipment is interconnected with the Owner's MSC.
"RF" means radio frequency.
"RTM License" is defined in subsection 13.6.
"RTU License" is defined in subsection 13.1.
"Services" mean the collective reference to all of the services to
be furnished by the Vendor as part of the Work including but not limited to all
design, engineering,
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network planning, construction, interoperability, supply, delivery,
installation, testing, training, repair, maintenance, technical and other
support services, and any and all other services to be furnished by the Vendor
as part of the Work in accordance with the terms of this Contract.
"Site" means the physical location of a System Element Facility.
"Site Acceptance Certificate" means a document submitted by the
Vendor to the Owner and signed by an authorized representative of the Owner and
an authorized officer of the Vendor stating that, in accordance with the
requirements of this Contract, the Vendor has successfully completed all Site
Acceptance Tests with respect to the Sites specified therein.
"Site Acceptance Tests" mean the collective reference to the
performance and reliability demonstrations specified in the Exhibits to
determine whether a site meets the Specifications and other requirements of this
Contract.
"Site Acquisition" means the activities to be performed by the Owner
and/or its subcontractors in connection with identifying and acquiring
sufficient rights to Sites.
"Site Acquisition Substantial Completion" means, with respect to any
System, the point at which the Owner shall have: (i) acquired, by purchase,
lease or otherwise, rights to a sufficient number of Sites in the judgment of
the Owner; and (ii) that, with respect to all Sites within such System, all land
use and/or lease requirements necessary to be satisfied prior to the start of
construction activities in accordance with Applicable Laws have been satisfied.
"Site Acquisition Substantial Completion Date" means, with respect
to any System, the date on which the Owner shall have achieved Site Acquisition
Substantial Completion.
"Site Preparation" means the demolition, construction and renovation
work (for example, roads, grading, fencing and structural improvements,
including but not limited to any buildings, towers and commercial power) and the
preparation of co-location sites necessary for the installation of Equipment or
the operation of the System, Expansions and/or any part thereof.
"Site Preparation Substantial Completion" means the completion of
all Site Preparation with respect to a Site except for Punch List items.
"Site Preparation Substantial Completion Certificate" is defined in
subsection 10.1(b).
"Software" means: (i) the computer software licensed to the Owner
pursuant to the terms of this Contract; (i) any Software Enhancements, Software
Maintenance
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Releases, Software Combined Releases and Software Upgrades; and (iii) any
Documentation furnished hereunder in respect of clauses (i) and/or (ii) of this
definition.
"Software Combined Release" means a Software Upgrade, which is at
any time combined with any Software Enhancement.
"Software Enhancements" means modifications or improvements made to
the Software relating to Products which improve performance, capabilities or
capacity of the Software revision level with which it is associated or which
provide additional functions to the Software. [To be negotiated.][.
"Software Maintenance Release" means issues of Software which
correct defects in preceding versions of Software.
"Software Upgrades" mean periodic updates to the Software issued by
the Vendor to the Owner under Warranty and Software maintenance obligations
[correct defects in the Software, or otherwise to correct shortcomings in the
Software. [To be negotiated.]
"Source Code" means any version of Software incorporating high level
or assembly language that generally is not directly executable by a processor.
"Spares" is defined in Exhibit K.
"Specifications" means the collective reference to the
specifications and performance standards (including all of the Services and
Products) as set forth in this Contract, including but not limited to Exhibit I,
Exhibit J, Exhibit M; provided that: (i) the Specifications shall be deemed to
include a requirement that all of the Products and Services shall be in
accordance with ANSI standards except when otherwise stated in a specific
Exhibit or otherwise agreed by the parties; and (ii) with respect to Services
and Products for which specifications and performance standards are not provided
and listed in a specific Exhibit, the term "Specifications" shall refer to
Vendor's published specifications in respect thereof.
"Subcontractor" means a contractor, vendor, supplier, licensor or
other Person, having a direct or indirect contract with the Vendor or with any
other Subcontractor of the Vendor who has been hired to assist the Vendor in the
performance of its obligations under this Contract.
"Substantial Completion" means the time at which the Owner signs the
Certificate of Substantial Completion.
"System" means the Sites identified by the Owner to the Vendor in
writing as collectively comprising a System.
"System Element" means the Products required to perform radio,
switching and/or system element functions for a System and/or any Expansions.
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"System Element Facility" means the structures, improvements,
foundations, towers, and other facilities necessary to house or hold any System
Element and any related Products to be located at a particular location.
"Taxes" is defined in subsection 5.2.
"Test Market" is defined in subsection 2.12.
"Test Period" is defined in subsection 2.12.
"Training" is defined in subsection 9.4.
"Vendor Developments" is defined in subsection 14.3.1.
"Vendor Financing" means a loan to be provided by the Vendor or its
affiliates to the Owner pursuant to documentation acceptable to both parties.
"Vendor First Notice" is defined in subsection 1A.1.
"Vendor Second Notice" is defined in subsection 1A.3.
"Warranty" means any one (1) or more of the Equipment and Services
Warranty, Expansions Warranty, Software Warranty, Software Backwards
Compatibility Warranty, Equipment Backwards Compatibility Warranty, Compliance
Warranty and the Year 2000 Warranty.
"Warranty Period" is defined in subsection 18.1.
"Work" means the furnishing of Products hereunder, and the
performance of work, engineering services, installation services and all other
related activities and obligations required to be performed by the Vendor
pursuant to this Contract.
1.2 Other Definitional Provisions. (a) When used in this Contract,
unless otherwise specified therein, all terms defined in this Contract shall
have the defined meanings set forth herein. Terms defined in the Exhibits are
deemed to be terms defined herein; provided that in the case of any terms that
are defined both in this Contract and/or an Exhibit, the definitions contained
in this Contract shall supersede such other definitions for all purposes of this
Contract; provided further, that definitions contained in any Exhibit shall
control as to such Exhibit.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Contract refer to this Contract as a whole and
not to any particular provision of this Contract and section, subsection,
schedule and exhibit references are to this Contract unless otherwise specified.
Reference herein to Section shall mean any and all subsections thereof.
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(c) The meanings given to terms defined in this Contract are
applicable to both the singular and plural forms of such terms.
1A Notices.
[THIS SECTION IS TO BE REVISED TO INCLUDE THE RELEVANT SECTIONS OF THE
EXECUTED MEMORANDUM OF AGREEMENT]
SECTION 2. SCOPE OF WORK, RESPONSIBILITIES AND PROJECT MILESTONES
2.1 Purchase of Equipment. Cricket agrees to purchase (or license in
the case of Software) from Vendor Products and Services for mobile and fixed
wireless communications Systems based on CDMA digital wireless communications
technology in markets in the United States, pursuant to the terms and conditions
set forth below. The minimum commitment of Cricket to purchase and Vendor to
sell shall be $330,000,000 of total value. The purchase obligations of Cricket
are subject to: (i) the existence of Available Markets at any time after Vendor
is prepared to deliver the first System for commercial operations; (ii) Vendor
being prepared to deliver the first System for commercial operation within
twenty-four (24) months from September 20, 1999; and (iii) Vendor complying with
Specifications, the milestones, Vendor Financing and pricing. If Vendor fails to
meet the Specifications, milestones, Vendor Financing and/or pricing, Cricket
shall have the option, as its sole and exclusive remedy to terminate this
Contract without any further liability to either party. [TO BE REVISED PER MOA]
2.1.A. Scope of Work. During the Contract Term and in accordance
with Purchase Orders issued to Vendor from time to time, the Vendor shall
engineer, design, plan, manufacture, construct, install, test and perform all
Work. The terms of this Contract shall also apply to Purchase Orders issued by
Operating Affiliates and by Owner, for and on behalf of its Related Operators,
provided that in each case, the Purchase Orders are made pursuant to and
incorporate by reference the terms of this Contract. The Vendor shall be
responsible for providing in accordance with the terms of this Contract any and
all items and services which are expressly included by the terms of this
Contract or in the Exhibits. The Vendor shall furnish all labor, materials,
tools, transportation and supplies required to complete its obligations in
accordance with this Contract.
In instances where Purchase Orders are placed by Owner for or on behalf of
a Related Operator, Owner shall be considered the purchaser for purposes of
placing all orders, addressing invoices and the obligation of payment. Owner
agrees to be obligated hereunder with respect to all payments which become due
hereunder with respect to Purchase Orders placed by it for or on behalf of a
Related Operator, including but not limited to all payments for Products. In
addition, Owner shall be considered the purchaser for purposes of passage of
title and risk of loss with regard to Products and Software which are delivered
to it, even though such are subsequently re-delivered to another entity.
2.1.1 Technical Specifications. [TO BE REVISED PER MOA]
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2.1.2 Development Process and Milestones. To demonstrate that the System to be
sold by Vendor will meet the Specifications, the parties agree that Vendor shall
follow the "Procedures and Milestones for System Development and Monitoring
Program" set forth in Exhibit A1.
2.2 [INTENTIONALLY BLANK]
2.3 Site Acquisition. The Owner shall acquire all Sites. The Vendor,
at its request, shall be kept informed of the progress made on ongoing Site
Acquisition activity. As the Site Acquisition progresses, the Vendor agrees to
alter regularly the engineering plan to determine a new search ring or rings to
take into account any changes or modifications requested by the Owner due to the
Owner's inability to acquire sufficient rights to a location which could
constitute a Site in a timely or economic manner; provided that all such
alterations requested by Owner shall be considered by Owner and addressed
pursuant to the Change Order provisions described in Section 11 below. Vendor
shall offer to Owner Site Acquisition services as defined on Exhibit E and
according to the pricing set forth on Exhibit B-7. When making changes to the RF
engineering plan, the Vendor shall take into account the Site Acquisition
already completed by the Owner. Upon Site Acquisition Substantial Completion,
Owner shall notify Vendor of the Site Acquisition Substantial Completion Date.
2.4 Expansions. During the five (5) year period commencing on the
delivery of the first System for commercial operations, the Owner may, from time
to time, order Expansions from the Vendor, subject to the provisions of Section
12. The price and terms of such Expansions shall be as set forth in Exhibits B
and B-1 through and including B-8 (collectively, the "B Exhibits").
2.5 Review of Contract. Each party has examined in detail and
carefully studied and compared the Contract with all other information furnished
by the other party and has promptly reported to the other party any material
errors, inconsistencies or omissions so discovered or discovered by any of its
Subcontractors.
2.6 Eligibility under Applicable Laws and Applicable Permits. The
Vendor shall be responsible for ensuring that the Vendor and its Subcontractors
are and remain eligible under all Applicable Laws and Applicable Permits to
perform the Work under this Contract in the various jurisdictions involved
including, to the extent that Vendor will be responsible for construction for
any particular component of the Work, all such construction will be done in
accordance with all applicable Federal Communications Commission requirements.
Each of the Owner and the Vendor shall be responsible for obtaining and
maintaining in full force and effect the Applicable Permits listed as its
responsibility in the applicable Exhibits. Owner shall use its best efforts to
obtain such approvals, licenses, permits, tariffs, and/or other authorities from
the Federal Communications Commission and state and local public utilities
commissions as may be necessary for construction and operation of a PCS System.
Vendor reserves the right to self-insure its obligations hereunder.
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2.7 Further Assurances. The Vendor shall execute and deliver all
reasonable further instruments and documents, and will, in good faith, consider
all reasonable requests for further action, including but not limited to
assisting the Owner in filing notices of completion with the appropriate state
and local Governmental Entity, that may be necessary or that the Owner may
reasonably request in order to enable the Owner or the Vendor to complete
performance of the Work or to effectuate the purposes or intent of this
Contract. All such requests shall be addressed pursuant to the Change Order
procedures described below in Section 11.
2.8 Liens and Other Encumbrances. (a) The Vendor covenants and
agrees, subject to Vendor's receipt from Owner of full payment in respect
thereof, to:
(i) protect and keep free all Systems, Expansion and/or
any and all interests and estates therein acquired from the Vendor, and
all improvements and materials now or hereafter placed thereon under the
terms of this Contract, from any and all claims, liens, charges or
encumbrances of the nature of mechanics, labor or materialmen liens or
otherwise arising out of or in connection with performance by any
Subcontractor, including services or furnishing of any materials
hereunder, and to promptly have any such lien released by bond or
otherwise; and
(ii) give notice of this subsection to each
Subcontractor before such Subcontractor furnishes any labor or materials
for any System.
(b) If any laborers', materialmen's, mechanics', or other similar
lien or claim thereof is filed by any Subcontractor, the Vendor shall cause such
lien to be satisfied or otherwise discharged, or shall file a bond in form and
substance satisfactory to the Owner in lieu thereof within ten (10) Business
Days of the Vendor's receipt of notice of such filing. If any such lien is filed
or otherwise imposed, and the Vendor does not cause such lien to be released and
discharged forthwith, or file a bond in lieu thereof, then, without limiting the
Owner's other available remedies, the Owner has the right, but not the
obligation, to pay all sums necessary to obtain such release and discharge or
otherwise cause the lien to be removed or bonded to the Owner's satisfaction
from funds retained from any payment then due or thereafter to become due to the
Vendor.
(c) The Owner reserves the right to post or place within any System
notices of non-responsibility or to do any other act required by Applicable Law,
to exempt the Owner from any liability to third parties by reason of any work or
improvements to be performed or furnished hereunder; provided that failure by
the Owner to do so shall not release or discharge the Vendor from any of its
obligations hereunder.
2.9 Duty To Inform Itself Fully; Waiver of Defense. (a) Each party
shall be deemed to have notice of and to have fully examined and approved the
Specifications, the Exhibits and all other documents referred to herein, and all
drawings, specifications, schedules, terms and conditions of this Contract,
regulations and other information in relation to this Contract and/or any
amendments, modifications or supplements thereto at
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any time on or after the Effective Date and to have fully examined, understood
and satisfied itself as to all information of which it is aware and which is
relevant as to the risks, contingencies and other circumstances which could
affect this Contract and in particular the installation of any System or any
part thereof.
2.10 Special Provisions Regarding Vendor Financing.
2.11 Pricing.
2.12. Vendor Preference.
SECTION 3. PURCHASE ORDERS AND SCHEDULES
3.1 Purchase Orders. The Owner and any Operating Affiliate may
deliver Purchase Orders to the Vendor at any time and from time to time during
the Contract Term. Such Purchase Orders shall be sent to the Vendor either by
certified mail, electronic transmission or another mutually acceptable manner to
the address specified in Exhibit L of this Contract. All Purchase Orders shall
be governed by the terms and conditions of this Contract, unless otherwise
agreed by the parties in writing. Each Purchase Order shall specify, in
reasonable detail, the Products, Services or other items of Work to be provided
by the Vendor.
3.2 Delivery under the Contract. The Vendor shall complete the Work
specified in each Purchase Order in accordance with the terms and conditions of
this Contract.
3.3 Order Acceptance. All Purchase Orders submitted by Owner shall
be deemed to incorporate and be subject to the terms and conditions of this
Contract unless otherwise agreed in writing. All Purchase Orders, including
electronic orders, shall contain the information necessary for Vendor to fulfill
the order. All schedules and requested dates are subject to Vendor's
concurrence, provided that if orders are made within the agreed to lead times
specified in Exhibit L, Vendor shall not withhold its concurrence to the
requested dates. No provision or data on any Purchase Order or contained in any
documents attached to or referenced in any Purchase Order, or any subordinate
document (such as shipping releases), which is inconsistent with the terms of
this Contract shall be binding, except data necessary for Vendor to fill the
order. All such other data and provisions are hereby rejected. Electronic orders
shall be binding on Owner notwithstanding the absence of a signature, provided
that the parties have implemented a mutually acceptable electronic order process
and such orders deemed to be binding have been issued by Owner and accepted by
Vendor in accordance with the process agreed upon by the parties. Order
acceptance provisions, together with delivery schedules and intervals and
forecast requirements are set forth in Exhibit L.
While it is Vendor's objective to provide Owner with an acknowledgment of
each Purchase Order received, Owner shall advise Vendor to the extent that Owner
becomes
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aware of any missing or late notifications to ensure that the Purchase Order has
not been lost.
Changes made by Owner to an accepted Purchase Order shall be treated as a
separate order unless the parties expressly agree otherwise. If any such change
affects Vendor's ability to meet its obligations under the original Purchase
Order, any price, shipment date, or completion date quoted by Vendor with
respect to such original order is subject to change and shall be addressed
pursuant to the Change Order provisions below in Section 11.
3.4 Forecasts. Owner shall provide to Vendor regular forecasts of
Owner's annual Product and Services needs. If the quantities ordered are more
than [*] greater than forecast quantities, Vendor shall be permitted a
reasonable extension of time to fulfill such orders and achieve the Milestones
required of Vendor hereunder.
3.5 Deployment Plans and Milestones. The deployment plans and
intervals, together with the key milestones, order lead times, in respect of
each System, are set forth in Exhibit L.
3.6 Inventory Control and Bar-coding. Vendor shall, at no additional
charge, pack and mark shipping containers in accordance with its standard
practices for domestic shipments. Where in order to meet Owner's requests,
Vendor packs and/or is required to mark shipping cartons in accordance with
Owner's specifications, Vendor shall invoice Owner additional charges for such
packing and/or marking. Vendor shall: (i) enclose a packing memorandum with each
shipment and, if the shipment contains more than one package, identify the
package containing the memorandum; and (ii) mark Products as applicable for
identification in accordance with Vendor's marking specifications (for example,
model/serial number and month, year of manufacture).
SECTION 4. SUBCONTRACTORS
4.1 Subcontractors. The Vendor may subcontract any portion of its
obligations under this Contract, but no such subcontract shall relieve Vendor
from primary responsibility and liability for the performance of Vendor's
covenants and obligations under this Contract. Regardless of whether or not the
Vendor obtains approval from the Owner or a Subcontractor or whether the Vendor
uses a Subcontractor recommended by the Owner, use by the Vendor of a
Subcontractor shall not, under any circumstances: (i) give rise to any claim by
the Vendor against the Owner if such Subcontractor breaches its subcontract or
contract with the Vendor; (ii) give rise to any claim by such Subcontractor
against the Owner; (iii) create any contractual obligation by the Owner to the
Subcontractor; (iv) give rise to a waiver by the Owner of its rights to reject
any Defects or Deficiencies or Defective Work; or (v) in any way release the
Vendor from being solely responsible to the Owner for the Work to be performed
under this Contract.
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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4.2 Vendor's Liability. The Vendor is responsible for all of its
obligations under this Contract, including the Work, regardless of whether a
subcontract or supply agreement is made or whether the Vendor relies upon any
Subcontractor to any extent. The Vendor's use of Subcontractors for any of the
Work shall in no way increase the Vendor's rights or diminish the Vendor's
liabilities to the Owner with respect to this Contract, and in all events,
except as otherwise expressly provided for herein, the Vendor's rights and
liabilities hereunder with respect to the Owner shall be as though the Vendor
had itself performed such Work. The Vendor shall be liable for any delays caused
by any Subcontractor as if such delays were caused by the Vendor.
4.3 No Effect of Inconsistent Terms in Subcontracts. The terms of
this Contract shall in all events be binding upon the Vendor regardless of and
without regard to the existence of any inconsistent terms in any agreement
between the Vendor and any Subcontractor whether or not and without regard to
the fact that the Owner may have directly and/or indirectly had notice of any
such inconsistent term.
4.4 Assignability of Subcontracts to Owner. Vendor shall use
reasonable efforts to have each agreement between the Vendor and a Subcontractor
contain a provision stating that, in the event that the Vendor is terminated for
cause, convenience, abandonment of this Contract or otherwise then: (i) each
Subcontractor shall continue its portion of the Work as may be requested by the
Owner; and (ii) such agreement permits assignment thereof without penalty to the
Owner and, in order to create security interests, to third parties designated by
Owner, in either case at the option of the Owner and for the same price and
under the same terms and conditions as originally specified in such
Subcontractor's agreement with the Vendor.
4.5 Removal of Subcontractor or Subcontractor's Personnel. The Owner
has the right at any time to request removal of a Subcontractor and/or any of a
Subcontractor's personnel from Work on the System upon reasonable grounds and
reasonable prior notice to Vendor. Such request (a "Request for Removal") shall
be in writing and shall specify the Owner's reasoning therefor. The Vendor
promptly shall issue a written response to any such Request for Removal,
specifying the reasoning for its disagreement or agreement, as the case may be,
with the reasoning contained in the Request for Removal. If the parties fail to
agree, this matter shall be handled in accordance with the dispute resolution
procedures in Section 23. The exercise of such right by the Owner shall have no
effect on the provisions of subsections 4.1 and 4.2.
4.6 Subcontractor Insurance. The Vendor shall require its
Subcontractors to obtain, maintain and keep in force, during the time they are
engaged in providing Products and Services hereunder, insurance coverage of the
types and levels customary in the industry (provided that the maintenance of any
such Subcontractor insurance shall not relieve the Vendor of its other
obligations pursuant to this Contract). The Vendor shall, upon the Owner's
request, furnish the Owner with evidence of such insurance in form and substance
reasonably satisfactory to the Owner.
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4.7 Review and Approval not Relief of Vendor Liability. No
inspection, review or approval by the Owner permitted under this Contract of any
portion of the Work shall relieve the Vendor of any duties, liabilities or
obligations under this Contract, but nothing contained in this subsection shall
be deemed a bar of any waiver given by the Owner to the Vendor pursuant to and
in accordance with the terms of this Contract.
4.8 Vendor Warranties. Except as otherwise expressly provided in
Section 18, the warranties of the Vendor pursuant to Section 18 shall be deemed
to apply to all Work performed by any Subcontractor as though the Vendor had
itself performed such Work and to all Products supplied by any third-party
vendor or other subcontractor as though the Vendor itself had supplied such
Products. Except as otherwise specifically provided in Section 18, the parties
agree that such warranties shall not be enforceable merely on a "pass-through"
basis but that Owner may, but shall not be obligated to, enforce such warranties
of any Subcontractor to the extent that the Owner determines that the Vendor is
not paying and/or performing its warranties; provided that any such election by
the Owner shall not relieve the Vendor from any obligations or liability with
respect to any such warranty.
4.9 Payment of Subcontractors. The Vendor shall make all payments it
is contractually required to make to all Subcontractors (except in the case of
legitimate disputes between the Vendor and any such Subcontractor arising out of
the agreement between the Vendor and such Subcontractor) in accordance with the
respective agreements between the Vendor and its Subcontractors such that no
Subcontractor shall be in a position to enforce any liens and/or other rights
against the Owner, the System, any Products or any part thereof.
4.10 Copies. Subject to any confidentiality obligations insisted
upon by third party providers, including Subcontractors, Vendor will use its
good faith, reasonable efforts to provide Owner with any and all relevant
agreements, understandings, subcontracts and other documents pertaining to the
provision of Products or Services by a Subcontractor which Owner may reasonably
require in order for it to be provided with the information necessary to
exercise any of its rights under this Contract.
4.11 Benefit of Subcontracts. In addition to anything else provided
for in this Contract, the Owner shall be entitled to the following benefits and
rights of the Vendor under its contracts with any applicable third-party vendors
or other Subcontractors: all rights to conduct in-house tests, to receive notice
of upgrades and enhancements and to purchase spare parts; provided however, that
the Vendor shall maintain sole responsibility for all obligations and other
duties under all such contracts.
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SECTION 5. PRICES AND PAYMENT
5.1 Prices; Minimum Purchases. (i) The prices for the Products,
Services and other items of Work for the Contract Term are set forth in the B
Exhibits. The prices for Expansions are also set forth in the B Exhibits. The
Owner agrees that the aggregate amount of all payments to the Vendor pursuant to
Purchase Orders delivered to the Vendor during the Contract Term shall be not
less than Three Hundred Thirty Million Dollars ($330,000,000) (the "Minimum
Purchase Commitment").
(ii) MOST FAVORED CUSTOMER STATUS. [OPEN ISSUE]
5.2 Taxes. The Owner shall reimburse Vendor for all present or
future taxes, levies, imposts, deductions, charges, withholdings and liabilities
("Taxes") imposed on the Vendor by any Governmental Entity relating to the
provision of Products and Services by the Vendor to the Owner under this
Contract, provided, however, that the Owner shall not be liable for and shall
not pay or reimburse Vendor for any Taxes on or measured by the income or
receipts of the Vendor. If the Owner shall pay Taxes for which the Vendor
receives a credit, then the Vendor shall reimburse to the Owner an amount equal
to such credit.
5.3 Payment. Payment for the Products and Services to be supplied
pursuant to this Contract shall occur as follows (in each case following
submission of an invoice by the Vendor which shall properly document, to the
reasonable satisfaction of the Owner, all the items included):
(a) Products for Systems: except as set forth in subsections (b) and
(c) below,
(i) [*] of the amount of all Purchase Orders completed by the
Vendor with respect to a Site shall be invoiced upon shipment of the
Products in respect of such Purchase Orders;
(ii) [*] of the amount of all Purchase Orders completed by the
Vendor with respect to a Site shall be invoiced upon completion of
Installation and Integration of the Products with respect to each Site;
(iii) [*] of the amount of all Purchase Orders completed by
the Vendor with respect to a Site shall be invoiced upon the date Owner
signs a Certificate of Substantial Completion with respect to the Products
forming part of such Purchase Orders; provided that in the event that a
Certificate of Substantial Completion is not issued within five (5)
Business Days after the Guaranteed Substantial Completion Date because of
a delay in reaching Substantial Completion solely attributable to the
failure or lack of performance of Owner to satisfy its obligations and
commitments in a timely manner, such amount shall be invoiced on the fifth
(5th) Business Day following Substantial Completion; and
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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(iv) the balance of all amounts due Vendor pursuant to
completed Purchase Orders with respect to Products for a System shall be
invoiced upon Final Acceptance of such System.
(b) Services: Services shall be invoiced as performed, or as soon
thereafter as practical but in no event more frequently than monthly, provided
that Installation and Integration Services and Optimization Services will only
be invoiced after the Owner signs a Certificate of Substantial Completion in
respect of the System for which such Services are rendered; provided that in the
event that a Certificate of Substantial Completion is not issued within five (5)
Business Days after the Guaranteed Substantial Completion Date because of a
delay in reaching Substantial Completion solely attributable to the failure or
lack of performance of Owner to satisfy its obligations and commitments in a
timely manner, such amount shall be invoiced on the fifth (5th) Business Day
following Substantial Completion.
(c) Optional Software Features and Spares. The purchase price for
the initial Optional Software Features and Spares shall be invoiced after the
Owner signs a Certificate of Substantial Completion in respect of the System for
which such initial Optional Software Features and Spares are furnished; provided
that in the event that a Certificate of Substantial Completion is not issued
within five (5) Business Bays after the Guaranteed Substantial Completion Date
because of a delay in reaching Substantial Completion attributable solely to the
failure or lack of performance of Owner to satisfy its obligations and
commitments in a timely manner, such amount shall be invoiced on the fifth (5th)
Business Day following Substantial Completion.
(d) Expansions. [To be negotiated.]
(i) [*] of the amount of all Purchase Orders completed by the
Vendor with respect to Products for which Vendor provides installation
Services pursuant to an Expansion shall be invoiced upon delivery of such
Products; and
(ii) [*] of the amount of all Purchase Orders completed by
Vendor with respect to Products for which Vendor provides installation
Services pursuant to an Expansion shall be invoiced upon completion of
installation of such Products; and
(iii) [*] of the amount of all Purchase Orders completed by
the Vendor with respect to Products for which Vendor provides no
installation Services pursuant to an Expansion shall be invoiced upon
delivery of such Products.
(e) Payment of Invoices. Owner shall pay the invoiced amounts, less
any disputed amounts, within ten (10) days from the date of transmission of
Vendor's invoice. Delinquent payments are subject to a late payment charge after
thirty (30) days at the rate of [*] per month, or portion thereof, of the amount
due (but not to exceed the maximum lawful rate). Any disputed items which are
determined to be validly billed are due for payment based upon the original
invoice date.
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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5.5 No Payment in Event of Material Breach. Subject to subsection
24.5, the Owner shall have no obligation to make any payment for any Work with
respect to which the Vendor is in material breach of this Contract until and
unless such breach is cured or waived by the Owner in accordance with the terms
of this Contract.
5.6 In Revenue Payments. At any time during a period of delay the
Owner may, in its sole discretion, decide to place a System which is subject to
such delay into In Revenue Service. Such placement into In Revenue Service shall
constitute Substantial Completion only for purposes of the payment obligations
above, but shall not in any way relieve the Vendor of any of its obligations
under this Contract, including without limitation achieving a Guaranteed
Substantial Completion Date nor shall such In Revenue Service trigger the
commencement of the Initial Period.
5.7 Currency and Place of Payment. Payments under this Contract
shall be made in U.S. Dollars and if such method of payment is acceptable to
Owner, Owner shall pay all amounts due Vendor hereunder using Electronic Funds
Transfer ("EFT"). EFT payments by Vendor shall be made to the following account
of Vendor or such other account as is subsequently designated by Vendor in
writing and, concurrent with the EFT payment, Owner shall fax a copy of the
remittal to Vendor's manager of cash operations at _________:
Account Name:
Acct.:
ABA
SECTION 6. AVAILABILITY OF IOS
6.1 Availability of IOS. [*]
SECTION 7. [INTENTIONALLY DELETED].
SECTION 8. SERVICES
8.1 Transportation. The Vendor shall at the Vendor's sole cost and
expense provide for the transportation and delivery to the Sites within the
U.S., of all the Products to be delivered pursuant to, and in accordance with,
each Purchase Order and the terms of this Contract. In the event of any unusual
Site selections or requirements which require
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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transportation arrangements out of the ordinary course having regard to normal
industry standards and practices (such as non-standard crane requirements,
helicopter transportation requirements to a remote setting, etc.), Vendor shall
arrange, subject to Owner's prior approval, for such exceptional transportation
requirements from local staging facilities or warehouse locations to the unusual
Site. Vendor shall notify Owner that it believes, in good faith, that
exceptional transportation arrangements are necessary under the circumstances,
and Vendor will consult with Owner on an approved course of action to complete
delivery. Owner shall be responsible for all costs with respect to such
exceptional transportation requirements in excess of transportation costs
applicable to a standard Site.
8.2 Services. The Vendor shall provide the Services ordered by Owner
in accordance with the provisions of the Exhibit hereto in respect of such
Services, including, without limitation, the following Services: (i)RF Design
Services as stated in Exhibit D; (ii) construction management and site
construction services as stated in Exhibit E; (iii) architectural & engineering
services as stated in Exhibit E; (iv) spectrum clearing and microwave relocation
services as stated in Exhibit E; (v) Optimization Services as set forth in
Exhibit G; (vi) Installation and Integration services as set forth in Exhibit F;
and (vi) wireless support Services as stated in Exhibit H.
8.3 No Interference. The Vendor shall install all Equipment and
build each of the Systems so as to cause no unauthorized interference with or
obstruction to lands and thoroughfares or rights of way on or near which the
installation work may be performed. The Vendor shall exercise every reasonable
safeguard to avoid damage to existing facilities, and if repairs or new
construction are required in order to replace facilities damaged by the Vendor
due to its carelessness, negligence or willful misconduct, such repairs or new
construction shall be at the Vendor's sole cost and expense. Vendor understands
that many of the Sites may be co-located with other RF transmission facilities
and Vendor shall take all necessary precautions and safety measures to ensure
the safety of all of Vendor's and Subcontractors' personnel at such Sites. The
Owner shall use its reasonable best efforts to ensure that no other third
parties employed or engaged by the Owner hinder or delay the Vendor in the
performance of its installation obligations hereunder.
Vendor represents and warrants that all Products furnished hereunder
shall comply, to the extent required, with the requirements of Part 24 of the
Federal Communication Commission's Rules and Regulations (the "FCC Rules")
pertaining to personal communications services in effect upon delivery of such
Product. In addition, Vendor represents and warrants that a Product furnished
hereunder shall comply, to the extent required, with the requirements of Subpart
J of Part 15 of the FCC Rules in effect upon delivery of such Product, including
those sections concerning the labeling of such Product and the suppression of
radio frequency and electromagnetic radiation to specified levels. Vendor makes
no undertaking with respect to harmful interference caused by (i) unauthorized
installation, repair, modification or change or Products not furnished by
Vendor; (ii) Products being subject to misuse, neglect, accident or abuse by
other than Vendor; (iii) Products being used in a manner not in accordance with
operating instructions or in a suitable installation environment or operations
of other equipment in the frequency ranges reserved for Owner within the
applicable licensed area. Vendor assumes no
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responsibility under this clause for items not specified or supplied by Vendor.
The foregoing warranties are collectively referred to as the "Compliance
Warranty".
Vendor shall, when appropriate, have reasonable access to Owner's
premises during normal business hours and at such other times as may be agreed
upon by the parties in order to enable Vendor to perform its obligations under
this Contract. Vendor shall coordinate such access with Owner's designated
representative prior to visiting such premises. Vendor agrees to instruct its
employees to comply with all site rules while on Owner's premises. The employees
and agents of Vendor shall, while on the Owner's premises, comply with all site
rules and guidelines including but not limited to where required by government
regulations, submission of satisfactory clearance from U.S. Department of
Defense and other governmental authorities concerned. Neither party shall
require waivers or releases of any personal rights from representatives of the
other in connection with visits to its premises, and no such releases or waivers
shall be pleaded by either party in any action or proceeding.
For purposes of this Section, all references to "Owner's premises"
and other similar references shall be deemed to refer to any location where a
Site is to be located, which may include land or buildings owned or leased by
Owner. To the extent that Owner does not own the premises, Vendor's obligations
to adhere to site rules and guidelines shall include, without limitation, those
rules and guidelines required by the owner, landlord or property manager having
care and control of such premises, which Owner has provided to Vendor in advance
of the commencement of the applicable Work hereunder.
SECTION 9. MANUALS, ENGINEERING DRAWINGS AND TRAINING
9.1 Documentation. The Vendor shall provide the Documentation in the
amounts and formats listed in Exhibit P. The Documentation shall be prepared in
accordance with the relevant Specifications. Operating Manuals with up-to-date
(but not "as-built") drawings, specifications and design sheets shall be
available for the Training as set forth in subsection 9.4.
9.2 Standards for Manuals. All Operating Manuals and Maintenance and
Instruction Manuals required to be provided by the Vendor pursuant to this
Contract shall be:
(a) detailed and comprehensive and prepared in conformance with the
Specifications and generally accepted national standards of professional
care, skill, diligence and competence applicable to telecommunications and
operation practices for facilities similar to the Systems;
(b) consistent with good quality industry operating practices for
operating personal communications service systems of similar size, type
and design;
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(c) sufficient to enable the Owner through reasonably competent
personnel to operate and maintain each System on a continuous basis; and
(d) prepared subject to the foregoing standards with the goal of
achieving operation of each System at the capacity, efficiency,
reliability, safety and maintainability levels contemplated by this
Contract and required by all Applicable Laws and Applicable Permits.
9.3 Equipment and Data. The Vendor shall furnish all drawings,
specifications, specific design data, preliminary arrangements and outline
drawings of the Equipment and all other information as required in accordance
with this Contract in sufficient detail to indicate that the Equipment and
fabricated materials to be supplied under this Contract comply with the
Specifications.
9.4 Training. As more fully described in Exhibit O, the Vendor shall
provide to the Owner a Training program with respect to each System
(collectively, the "Training"). Promptly upon execution of this Contract, the
Vendor shall establish a training coordinator, whose responsibility shall be to
work with the Owner to ensure that the Owner receives the Training. Such
coordinator (or his or her replacement) shall continue in such assignment until
the receipt by the Owner of all of the Training required to be provided.
9.5 Manuals and Training. The Training and the Documentation
provided in connection herewith, including, without limitation, all
Documentation provided in CD-ROM format, and pursuant to subsections 9.2, 9.3
and 9.4 shall be updated in reasonable quantities at no additional cost to Owner
pursuant to and in accordance with all Product upgrades and/or modifications
applicable to any System and/or any part thereof.
SECTION 10. ACCEPTANCE PROCEDURES
10.1 Acceptance Procedures. Depending upon the specific Products and
Services to be furnished by Vendor, and those tasks for which Owner shall assume
responsibility, the parties, directly or through third-party vendors or other
Subcontractors, as the case may be, shall carry out the following procedures.
Certain of the tests below will apply to purchases of Products and Services
which comprise a System, while certain other tests will apply to tests for
Product and Service purchases for Expansions
(a) Factory Tests Owner may, at Owner's option and cost, be present
at any factory testing conducted by Vendor. Vendor shall give the Owner ten (10)
Business Days advance notice of any such factory testing relating to the
Products or Services furnished by Vendor hereunder. Vendor shall cooperate with
Owner to facilitate Owner's observation of such tests. Regardless of whether or
not Owner observes any factory testing, Vendor agrees to, within a reasonable
period of time in view of the nature and urgency of the request, upon written
request by Owner, provide Owner with copies of all documentation relating to
factory testing of the Product specified by Owner, including without limitation
copies of test procedures, test results and FCC compliance certifications.
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(b) Site Preparation Substantial Completion Upon completion of all
Site Preparation with respect to each Site for which the Owner has issued a
Purchase Order directing the Vendor to proceed with Site Preparation activities,
the Vendor shall issue a Site Preparation Substantial Completion Certificate
("Site Preparation Substantial Completion Certificate") certifying that all Site
Preparation specified in the Purchase Order is substantially complete. Such
certificate shall be accompanied by a Punch List of all incomplete items which
items shall be completed by the Vendor prior to Final Acceptance. Vendor shall
offer Construction Management, Architectural & Engineering, Site Civil
Construction and Antenna Installation and Testing as provided for in Exhibit E
and at pricing consistent with that set forth in Exhibit B-7. In the event the
Owner performs Site Preparation with respect to a Site, the Owner shall issue
the Site Preparation Substantial Completion Certificate.
(c) Site Installation and Integration Completion Certificate. Upon
completion of the installation of the BTS and other Products and the completion
of integration activities in accordance with Exhibit F the Vendor shall issue a
Site Installation and Integration Substantial Completion Certificate certifying
that all installation and integration activities specified in the Purchase Order
are substantially complete. Such certificate shall be accompanied by a Punch
List of all incomplete items which items shall be completed by the Vendor prior
to Final Acceptance.
(d) Certificate of Substantial Completion. Upon completion of
Optimization Services and all testing with respect to a System in accordance
with Exhibit G, the Vendor shall issue a Certificate of Substantial Completion,
which shall be in the form of a checklist listing all tests performed and the
results thereof, and shall be accompanied by a Punch List of outstanding items
(the "Certificate of Substantial Completion"). Upon its reasonable satisfaction
that the Certificate of Substantial Completion is correct and complete, the
Owner shall promptly sign the Certificate of Substantial Completion.
(e) Beta Testing. Upon written notice to the Vendor, the Owner shall
be entitled, in its sole discretion to conduct Beta Testing, and in connection
therewith the Owner shall be entitled to add appropriate items to the Punch List
prior to Final Acceptance.
(f) Certificate of Final Acceptance. During the [*] day period
following Substantial Completion (as extended as described below, the "Initial
Period"), the Vendor shall complete all outstanding Punch List items and the
Owner and the Vendor shall monitor the System for outages and compliance with
the Specifications. In event that all Punch List items have been completed
during the Initial Period, all testing specified in Exhibit G has been
satisfactorily completed and there have been no Major Outages, then at the end
of the Initial Period the Vendor shall issue a Certificate of Final Acceptance
certifying the same. Upon its reasonable satisfaction that the Certificate of
Final Acceptance is correct and complete, the Owner shall sign the Certificate
of Final Acceptance. In the event that a Major Outage occurs during the Initial
Period, the Initial Period shall be extended (each, an "Extension Period") as
follows: (i) if a Major Outage occurs on or prior to [*] days after the
commencement of the Initial Period, the
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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Initial Period shall be extended for an additional [*] days; (ii) if a Major
Outage occurs after [*] days but on or prior to [*] days after the commencement
of the Initial Period, the Initial Period shall be extended for an additional
[*] days; and (iii) if a Major Outage occurs after [*] days but on or prior to
[*] days after the commencement of the Initial Period, the Initial Period shall
be extended for an additional [*] days. In the event a Major Outage occurs
during any Extension Period, the Initial Period shall be further extended by an
additional period of [*]. Owner shall issue a Certificate of Final Acceptance
not later than the end of the Initial Period (as extended) after receipt of
notice of Vendor that it corrected the problem giving rise to the Major Outage
or Major Outages. Documentation not already delivered to the Owner pursuant to
the terms of this Contract shall be delivered to the Owner within [*] Business
Days of Final Acceptance. With respect to each System, the Owner shall not be
required to sign the Certificate of Final Acceptance until all such
documentation has been so delivered (and Final Acceptance shall not be deemed to
have occurred earlier than the date that is [*] Business Days prior to the date
of delivery of such documentation). In addition to, and without limiting the
requirements set forth in the preceding sentence, the Operating Manuals and the
Maintenance and Instruction Manuals shall be submitted to the Owner in CD-ROM
format (when available) in addition to hard-copy volume format if so requested
by the Owner.
10.2 Costs and Expenses. The costs and expenses of complying with
all acceptance procedures set forth above shall be borne by the Vendor, provided
that Owner remains responsible for completing those items identified as Owner's
responsibility in the Exhibits.
SECTION 11. CHANGE ORDERS AND SCHEDULING
11.1 Change Orders. The Owner has the right to request expansions,
other revisions and/or modifications to any Purchase Order or to the Work
("Changes"), including but not limited to the Specifications, the manner of
performance of the Work or the timing of the completion of the Work. All Changes
shall be subject to the prior written consent of the Vendor. All Changes shall
be documented in a written order ("Change Order") which shall be executed by the
Owner and the Vendor and shall contain any adjustments to pricing, Milestone or
other aspect of the Work as mutually agreed by the parties. The Vendor shall
promptly notify the Owner of any such requested Changes which may materially
affect the operation and/or maintenance of any System or any part thereof. In
the event that the parties cannot agree on a Change Order within fifteen (15)
days of submission of a Change Order by the Owner to the Vendor, the matter
shall then be referred to dispute resolution pursuant to Section 23. Nothing
contained in this subsection is intended to limit the Vendor's right, from time
to time, to make suggestions for modifications to the Work or the
Specifications, provided that in any such event the Owner, in its sole and
absolute discretion pursuant to the terms of this Contract may refuse to make
any such modification or otherwise agree to issue a Change Order incorporating
any such Vendor suggestion.
11.2 Cancellation. Owner may at any time to cancel, in whole or in
part, any Purchase Order or Change Order upon advance written notice to the
Vendor. In the
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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event of such cancellation, the Owner shall pay to the Vendor cancellation
charges in accordance with the Exhibits.
SECTION 12. DISCONTINUED PRODUCTS AND CONTINUING PRODUCT SUPPORT
12.1 Notice of Discontinuation. For a period of [*] for the
AXE switch and [*] for all other Products furnished hereunder after the
Effective Date, but in no event less than [*] after the date of shipment,
the Vendor agrees to provide the Owner, or its affiliates as the case may be,
not less than one (1) year notice before the Vendor discontinues a Product
("Discontinued Products") furnished under this Contract. With respect to
Products manufactured by a third party vendor, the notice period may vary. Where
the Vendor offers a product for sale that is equivalent in Form, Fit and
Function in accordance with and pursuant to the Specifications, the notification
period may vary but in no event shall be less than sixty (60) days. In the event
of the foregoing, the Vendor shall continue to furnish Products fully compatible
with the relevant System Elements within the System at such time during the
appropriate [*] and [*] periods referenced above; provided that nothing
herein shall bar the Vendor from discontinuing individual items of Products as
provided in and pursuant to this subsection. In the event that Vendor
discontinues a Product, Vendor will meet with Owner and use reasonable, good
faith efforts to develop a mutually acceptable transition plan that takes into
account the Owner's existing investment in the item scheduled for
discontinuance.
In addition to repairs provided for under any applicable Warranty,
Vendor shall offer repair Services and repair parts in accordance with Vendor's
repair and repair parts practices and terms and conditions then in effect, for
Vendor-manufactured Equipment furnished pursuant to this Contract. Such repair
Services and repair parts shall be available while Vendor is manufacturing or
stocking such Products or repair parts, but in no event less than [*] for
the AXE switch and [*] for all other Products after such Product's discontinued
availability effective date. Vendor may use either the same or functionally
equivalent products or parts which are new, remanufactured, reconditioned or
refurbished in the furnishing of repairs or replacements under this Contract.
If during the agreed-to support period following the issuance of
notice of discontinuance, Vendor fails to provide repair parts and or repair
Services and a functionally equivalent replacement has not been designated,
Vendor shall so advise Owner, to allow Owner to plan appropriately, and if
Vendor is unable to identify another source of supply for such repair parts or
services, Vendor shall, in addition to any other right or remedy available to
Owner at law or in equity, provide Owner, at no additional charge to Owner, upon
request, with non-exclusive licenses for Product manufacturing to the extent
Vendor can grant such licenses, so that Owner will have sufficient information,
ability and rights to have such Discontinued Products manufactured, or obtain
such repair Service or repair parts from other sources. Such license shall
include appropriate non-disclosure and confidentiality covenants.
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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12.2 Discontinuation During Warranty Period. If Vendor discontinues
the availability of a Product during that Product's Warranty Period and Owner is
required to purchase a replacement Product to replace the Discontinued Product
in order to maintain the same functionality of the Discontinued Product in a
System, Vendor agrees to grant Owner an additional [*] discount to be applied
against the net price of all Products required to be purchased by Owner as
replacements for such Discontinued Product, which additional discount shall be
applied after the determination of the lowest price available to Owner pursuant
to this Contract.
SECTION 13. SOFTWARE; CONFIDENTIAL INFORMATION
13.1 RTU License. Upon delivery of the Software, but subject to
payment of the license fees specified in Exhibit B-5, the Owner is hereby
granted a personal, non-exclusive, fully paid-up, multi-site (capability to move
Software from site to site on prior notice to Vendor) right to use license for
the Software ("RTU License"), to operate the specific Equipment, processor or
product line for which the licenses to use the Software are initially granted,
or temporarily on any comparable replacement if any such Equipment, processor or
product line becomes inoperative. Owner shall use such Software only for its own
internal business operation. The RTU License grants Owner no right to, and Owner
will not, sublicense such Software or modify, decompile, or disassemble Software
furnished as object code to generate corresponding source code provided in each
of the Systems. Except as provided below, no license is granted to Owner to use
the Software outside of the United States.
In the event that Owner wishes to use the Software on associated
equipment outside of the United States or to transfer Software to an affiliate
or third party transferee located outside the United States, Vendor shall not
unreasonably withhold its consent to such use or transfer, provided that Vendor
or the transferee, as the case may be, enters into an appropriate license
agreement with an affiliate of Vendor carrying on business in the territory in
which the Software is to be located, on terms substantially similar to the RTU
License terms set forth herein, provided, however, that Owner acknowledges and
agrees that support and maintenance obligations set forth herein are only
applicable for Software resident on Equipment located within the United States.
Support and maintenance Services offered by Vendor's affiliates differs in
various different territories, and will be subject to the local practices
maintained in such territory.
13.2 Owner's Obligations. The Owner agrees that the Software,
whether or not modified, and all copies thereof made by Owner, shall be treated
as proprietary to the Vendor, its Subcontractors or its suppliers, as
appropriate and the Owner shall:
(a) Utilize the Software solely in conjunction with a System;
provided that the Vendor acknowledges that the Software shall be integrated
across interfaces with systems, equipment and software provided by other
suppliers and customers;
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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(b) Ensure that all copies of the Software shall, upon any
reproduction by the Owner authorized by the Vendor and whether or not in the
same form or format as such Software, contain the same proprietary,
confidentiality and copyright notices or legends which appear on the Software
provided pursuant hereto; and
(c) Hold secret and not disclose the Software to any person, except
to (i) such of its employees, contractors, agents or affiliates that are
involved in the operation or management of a System and need to have access
thereto to fulfill their duties in such capacity, or (ii) other Persons who need
to use such Software to permit integration of a System with systems and software
of other suppliers and customers; provided that such persons agree, or are
otherwise obligated, to hold secret and not disclose the Software to the same
extent as if they were subject to this Contract, and provided further that if
any such Person is a competitor of Vendor involved in the manufacture of
communications equipment, software or related services, Vendor must approve such
use on a case-by-case basis on commercially reasonable terms and such use shall
be subject to an appropriate non-disclosure agreement.
(d) When and if the Owner determines that it no longer needs the
Software or if the Owner's license is canceled or terminated pursuant to the
terms of this Contract, return all copies of such Software to the Vendor or
follow reasonable written disposition instructions provided by the Vendor. If
the Vendor authorizes disposition by erasure or destruction, the Owner shall
remove from the medium on which Software resides all electronic evidence of the
Software, both original and derived, in such manner that prevents subsequent
recovery of such original or derived Software.
(e) Owner shall not copy Software embodied in firmware and unless
otherwise specifically provided in this Contract, Owner is not granted any right
to modify Software furnished by Vendor under this Contract.
13.3 Backwards Compatibility. The Vendor represents and warrants
(the "Software Backwards Compatibility Warranty") that each Software Maintenance
Release, Software Upgrade and Software Enhancement will be Backwards Compatible.
[***] Notwithstanding the foregoing, the Software Backwards Compatibility
Warranty does not apply to Products developed AXE in accordance with standards
not yet finalized as of the date hereof.
13.4 Transfer and Relocation. (a) In the event the Owner or any
successor to the Owner's title in the Products: (i) elects to transfer a Product
to a third party, and where such Product shall remain in place and used for
substantially the same purpose as used by the Owner and where such third party
resides in the United States and is not a direct competitor of the Vendor
involved in the manufacture of communications equipment, software or related
services; or (ii) elects to transfer Products to an affiliate, the Owner may
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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transfer its RTU License for the Software furnished under this Contract for use
with such Product, without the payment of any additional Software right-to-use
fees by the transferee provided that Annual Maintenance Fees shall continue to
be calculated on the same basis. For example, if the RTU License for the
Software contains usage or per subscriber limits, or the processor to be used by
transferee requires additional memory or hard disk space additional payments or
purchases may be required. The following conditions shall apply to transfers and
relocations pursuant to this subsection 13.4:
(A) The right to use such Software may be transferred only
together with the Products with which the Owner has a right to
use such Software, and such right to use the Software shall
continue to be limited to use with such Products;
(B) Before any such Software is transferred, the Owner shall
notify the Vendor of such transfer and the transferee shall
have agreed in writing (a copy of which shall be provided to
the Vendor) to keep the Software in confidence and to
corresponding conditions respecting possession and use of
Software as those imposed on the Owner in this Contract; and
(C) The transferee shall have the same right to Software warranty
and Software maintenance for such Software as the transferor,
provided the transferee continues to pay the fees, including
recurring fees, if any, associated with such Software warranty
or maintenance pursuant to this Contract.
(b) Except as otherwise provided in this Contract, the Owner or any
successor to the Owner's title in the Products shall have no right to transfer
Software furnished by the Vendor under this Contract without the consent of the
Vendor, which consent shall not be unreasonably withheld. If the Owner or such
successor elects to transfer a Product purchased under this Contract for which
it does not under this Contract have the right to transfer related Software, the
Vendor agrees that upon written request of the transferee of such Product, or of
the Owner or such successor, the Vendor shall not without reasonable cause fail
to grant to the transferee a license to use such Software with the Products,
whether to be located within the United States or elsewhere, upon payment of a
relicensing fee to the Vendor on commercially reasonable terms acceptable to
Vendor.
13.5 Termination and Survival. The rights and obligations of the
Owner under the RTU License shall survive the termination of this Contract,
regardless of the cause of termination provided Owner has met its material
obligations hereunder and has rendered all payments in accordance with this
Contract. In the event that Owner persistently and materially breaches its
confidentiality obligations hereunder with respect to the Software
notwithstanding the fact that Vendor will have provided Owner with prior written
notice describing the alleged material breaches and will have given Owner a
reasonable time, and in no event less than thirty (30) days, to cure any such
breaches, Vendor may terminate Owner's RTU License. In the event that Owner
fails to pay the Annual Release
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Maintenance Fees (other than with respect to any periods for which no payment
for Annual Release Maintenance Fees are due pursuant to this Contract), Vendor
may terminate Owner's right to use the Software to which such fees apply. In no
event other than as set forth in this subsection 13.5 may Vendor terminate
Owner's right to use the Software. Notwithstanding any other provision of this
Contract, if there is a dispute, pending final resolution of such dispute, all
of Owner's rights under this Contract shall continue in full force and effect,
and Vendor will not terminate the RTU License, and so long as Owner continues to
pay Vendor applicable Annual Maintenance Release Fees, Vendor will not
terminate, suspend, interrupt or delay maintenance and support of the Software.
13.6 Access to Source Codes. The Vendor represents and warrants that
as of the date hereof, Vendor has not established a Source Code escrow for any
of its existing customers. In the event that Vendor establishes a Source Code
escrow in the future which applies to any of the Software furnished to Owner
hereunder, Vendor shall add Owner as a beneficiary of such Source Code escrow,
and Owner shall be entitled to receive a copy of the escrowed Source Code in the
event of the occurrence of any of the events set out below. In addition to the
foregoing, the Vendor shall immediately deliver and hereby grants the Owner a
right to access the Source Code and to modify the Software (the "RTM License")
for the maintenance, enhancement and support of those Products purchased from
the Vendor and owned or operated by the Owner under the following circumstances,
provided that any such released Source Code shall be subject to the
confidentiality provisions set forth in this Contract:
(i) if the Vendor becomes insolvent, makes a general
assignment for the benefit of creditors, files a voluntary petition in
bankruptcy or an involuntary petition in bankruptcy is filed against the
Vendor which is not dismissed within sixty (60) days, or suffers or
permits the appointment of a receiver for its business, or its assets
become subject to any proceeding under a bankruptcy or insolvency law,
domestic or foreign, or has liquidated its business, or the Vendor, or a
business unit of the Vendor that is responsible for maintenance of the
Software, ceases doing business without providing for a successor, and the
Owner has reasonable cause to believe that any such event shall cause the
Vendor to be unable to meet its Warranty service or support requirements
hereunder; or
(ii) if the Vendor ceases to maintain or support a
previously supported version of the Software and Owner cannot obtain, with
Vendor's assistance (for example, by providing a third party with Source
Code or by any other appropriate method) the same support services the
Vendor is required to provide under this Contract from another entity
(either working with or independently from Vendor) at a price that is
equal to or less than the prices for such support as provided herein, or
there is a persistent and material failure by Vendor to provide the
Warranty service or support it is required to provide pursuant to the
terms of this Contract.
13.7 Ownership of Intellectual Property. The Vendor shall own all
forms of intellectual property rights (including, but not limited to, patent,
trade secret, copyright and
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mask rights) pertaining to the Software, and shall have the right to file for or
otherwise secure and protect such rights. The foregoing notwithstanding, the
parties understand and agree that from time to time the Owner may devise,
develop or otherwise create ideas or other concepts for services or new products
which are patentable or otherwise capable of receiving protection from
duplication. In such event, the Owner shall have the right to apply for a patent
in accordance with applicable law, provided, however, that notwithstanding this
subsection, the Vendor does not hereby relinquish or release any of its
intellectual property rights.
SECTION 14. SOFTWARE AND EQUIPMENT CHANGES
14.1 Software.
14.1.1 Software Upgrades, Software Maintenance Releases, Software
Enhancements and Combined Releases. During the Contract Term, upon payment of
the Annual Release Maintenance Fees, calculated pursuant to Exhibit B-5, Owner
shall receive all base Software releases and all Software Maintenance Releases,
Software Upgrades, Software Enhancements and Software Combined Releases
applicable to Software for Products for which the Owner has obtained a RTU
License at such times as they become generally available to the Vendor's
customers. Owner shall also be entitled to receive Optional Software Features
upon payment of the appropriate fees determined in accordance with Exhibit B-5.
Owner may elect to purchase such features on a per feature basis, or purchase
annual buy-out rights on a per market basis, permitting Owner to select those
features it wishes to deploy in the relevant market.
14.1.2 Notice. The Vendor shall give the Owner, or cause the Owner
to be given not less than ninety (90) days prior written notice of the
introduction of any Software Enhancement release or any Software Combined
Release or any optional Software release. In addition, in each February and
August of each year during the term of this Contract, the Vendor shall provide,
or cause to be provided, to the Owner a forecast of future Software Enhancement
releases, Software Upgrades, or Software Combined Releases or any optional
Software release, as the case may be, then currently being developed by or on
behalf of the Vendor.
14.1.3 Installation, Testing and Maintenance. The installation and
testing of the Software by the Vendor and the acceptance thereof by the Owner
shall be performed in accordance with the criteria set forth in Exhibit G.
14.1.4 Software Fixes. In the event that any Software Maintenance
Release, Software Upgrade, Software Enhancement or Software Combined Release
supplied by the Vendor during the term of this Contract has the effect of
preventing any System or any part thereof from satisfying, or performing in
accordance with the Specifications or the Exhibits or otherwise adversely
affects the functionality or features of any System or any part thereof, then
the Vendor shall promptly retrofit or take such other corrective action as may
be necessary to ensure that any System or any such affected part, as modified to
include each
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such Software Maintenance Release, Software Upgrade, Software Enhancement or
Software Combined Release, shall satisfy, and perform in accordance with, the
Specifications and the Exhibits and restore all pre-existing functionality and
features as well as provide any new features and functionality provided by any
of the foregoing modifications, in each case without any charge to the Owner
(other than payment of the applicable fees pursuant to the terms of this
Contract). Notwithstanding anything contained herein in this subsection to the
contrary, Owner shall be responsible for the cost of any additional Equipment
required to accommodate additional capacity, memory or processing requirements
necessitated by any new Software feature or Optional Software Feature which
Owner elects to use (provided such use by Owner is optional without losing the
benefit of the Software Maintenance Release or Software Upgrade) which are
contained in any such Software Upgrade, Software Enhancement or Software
Combined Release; provided, however, that Owner shall not be required to pay for
any additional Equipment required to accommodate additional capacity, memory or
processing requirements necessitated by implementation of a required Software
Maintenance Release, whether or not such Software Maintenance Release is issued
as a stand-alone release, or is contained within a Software Upgrade, Software
Enhancement or Software Combined Release.
14.2 Equipment.
14.2.1 Equipment Upgrades. (a) Equipment Upgrades will be provided
to the Owner by the Vendor at no charge to the Owner as provided in subsection
14.2.1(b) below. Equipment Enhancements must be provided to the Owner by the
Vendor, if requested by the Owner, and the Owner is obligated to make payment
therefor in an amount that is specified on the B Exhibits. If the Vendor at any
time issues an Equipment Upgrade which is combined with any Equipment
Enhancement (collectively, the "Equipment Combined Release") to such Equipment,
the Equipment Combined Release will be provided at no charge to the Owner unless
and until the Owner uses any of the Equipment Enhancements included within the
Equipment Combined Release, provided such use by Owner of such Equipment is
optional without losing the benefit of the Equipment Upgrade.
(b) (i) After a Product has been shipped to the Owner, if the Vendor
issues an Equipment Upgrade or Equipment Enhancement, or where a modification to
correct an error in field documentation is to be introduced, the Vendor will
promptly notify the Owner of such change through the Vendor's design change
management system or another Vendor notification procedure. Each change
notification, whether or not it bears a restrictive legend, will be subject to
the confidentiality obligations provided in subsection 26.18, except that such
information may be reproduced by the Owner for the Owner's use as required
within the System. If the Vendor has engineered, furnished, and installed a
Product which is subject to an Equipment Upgrade, the Vendor will implement such
change, at its sole cost and expense, if it is announced within [*] for the AXE
switch and [*] for all other Products from the date of shipment of that Product,
and subject to the reasonable review and acceptance of the Owner at such times
as the Owner reasonably determines that it needs to review such Vendor decision,
by either (A) modifying the Product at the Owner's site; (B) modifying the
Product which the Owner has returned to the Vendor in accordance with the
Vendor's reasonable instructions pursuant to and in
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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accordance with the terms of this Contract; or (C) replacing the Product
requiring the change with a replacement Product for which such change has
already been implemented. If the Vendor has not engineered the original Product
application and accordingly office records are not available to the Vendor, the
Vendor will provide the generic change information and associated parts for the
Owner's use in implementing such change.
(ii) In any of the instances described in clause (i) above, if the
Vendor and the Owner agree that a Product or part thereof subject to such change
is readily returnable, without incurring any significant time or expense, the
Owner, at its expense, will remove and return such Product or part to the
Vendor's designated facility within the United States and the Vendor, at its
sole expense, will implement such change (or replace it with a Product or part
for which such change has already been implemented) at its facility and return
such changed (or replacement) Product or part at its sole cost and expense to
the Owner's designated location within the United States. Any such
reinstallation of Products which were readily returnable will be performed by
the Owner at its sole expense, provided such reinstallation can be done by Owner
without incurring any significant time or expense. In all other circumstances,
Vendor shall provide such removal, repair and reinstallation Services at its
sole cost and expense.
(iii) If the Owner does not make or permit the Vendor to make an
Equipment Upgrade as stated above within the appropriate [*] or [*] period from
the date of change notification or such other period as the Vendor may agree,
subsequent changes, repairs or replacements affected by the failure to make such
change may, at the Vendor's option, be invoiced to the Owner whether or not such
subsequent change, repair or replacement is covered under the warranty provided
in this Contract for such Product. If requested by the Owner, Equipment Upgrades
announced more than the appropriate [*] or [*] period from the date of shipment
will be implemented at the Owner's expense.
(iv) If the Vendor issues an Equipment Enhancement after a Product
has been shipped to the Owner, the Vendor will promptly notify the Owner of such
change if it is being offered to any of the Vendor's customers. Except as
otherwise set forth above in subsection 14.2(b), when an Equipment Enhancement
is requested by the Owner, the pricing set for such Equipment Enhancements will
be at the Vendor's standard charges subject to the applicable discounts set
forth in the B Exhibits.
(v) All change notifications for Equipment Upgrades and Equipment
Enhancements provided by the Vendor to the Owner pursuant to the terms of this
Contract must contain the following information: (A) a detailed description of
the change; (B) the reason for the change; (C) the effective date of the change;
and (D) the implementation schedule for such change, if appropriate.
14.2.2 Notice. The Vendor shall give, or shall cause to be given to,
the Owner not less than ninety (90) days prior written notice of the
introduction of any Equipment Enhancement or any Equipment Combined Release. In
addition, in each February and August of each year during the Term of this
Contract, the Vendor shall
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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provide the Owner with a forecast of future Equipment Enhancements to the
Equipment or Equipment Combined Releases then currently being developed by or on
behalf of the Vendor.
14.2.3 Installation, Testing and Acceptance The Installation and
testing of the Equipment by the Vendor and the acceptance thereof by the Owner
shall be performed in accordance with the Exhibits and pursuant to the
Milestones contained in the Exhibits.
14.2.4 Equipment Fixes. In the event that any Equipment Upgrade or
Equipment Enhancement, directly or indirectly, supplied by the Vendor during the
appropriate [*] or [*] period following the Effective Date or during [*] period
following the date of shipment of such Equipment Upgrade or Equipment
Enhancement, has the effect of preventing any System or any part thereof from
satisfying, or performing in accordance with, the Specifications or otherwise
adversely affects the functionality, interoperability or features of any System,
or any part thereof then the Vendor shall without any charge to the Owner
promptly retrofit or take such other corrective action as may be necessary to
assure that any System or any such affected part, as modified to include each
such Equipment Upgrade and Equipment Enhancement, shall satisfy, and perform in
accordance with, the Specifications and restore all pre-existing functionality
and features as well as provide any features and functionality provided by any
of the foregoing modifications.
14.2.5 Equipment Backwards Compatibility Warranty. The Vendor
represents and warrants (the "Equipment Backwards Compatibility Warranty") that
each New Equipment Release will be Backwards Compatible, provided that it is
implemented within the specified time provided with each New Equipment Release.
[***] Notwithstanding the foregoing, the Equipment Backwards Compatibility
Warranty does not apply to Products developed beyond AXE standards not yet
finalized as of the date hereof.
14.3 Notice of Developments.
14.3.1 Vendor Developments. The Vendor shall provide the Owner, or
cause to be provided to the Owner, through the Owner's chief executive officer,
with reasonable written notice of any Product developments, innovations and/or
technological advances (collectively "Vendor Developments") relevant to the
System simultaneous to giving such notice to any other customer or otherwise
making any such Vendor Development public; provided that the Vendor shall not be
obligated to provide the Owner such notice before any other customer if doing so
would breach any contractual obligation to any other customer, provided further
that any such notice need not include any information originated by another
customer of Vendor which is proprietary to such other
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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customer of Vendor. For the purposes of this subsection the term "Vendor"
includes the Vendor and its affiliates and subsidiaries.
14.3.2 Participation in Testing. The Owner has the right, but not
the obligation, to witness and/or participate in any initial testing; provided
that any such initial testing of Vendor Developments shall be subject to: (i)
scheduling as reasonably determined by the Vendor; (ii) the qualification that
the Owner's System meets the technical requirements for the testing of such
Vendor Development as reasonably determined by the Vendor (or otherwise that the
Owner is willing to update such System to meet such requirements); (iii) the
Owner's acknowledgment that it shall be able to provide the resources necessary
to implement the initial testing for such Vendor Development; and (iv) the Owner
and the Vendor executing a verification office testing agreement that identifies
the scope, terms, pricing, responsibilities and schedule related to the initial
testing of such Vendor Development. The Vendor shall provide the Owner at least
thirty (30) days prior written notice of its intent to test any such Vendor
Development and upon the Owner's written request the Vendor shall allow the
Owner to participate in such testing upon terms and in a testing environment
reasonably acceptable to the parties at such time. Such rights shall not apply
to a Vendor Development originated by another customer of Vendor which includes
information which is proprietary to such other customer.
14.3.3 Quarterly Notices. Vendor shall make reasonable efforts to
collect and distribute on a quarterly basis a list of new Software bugs,
problems, fixes, etc., provided that Vendor shall not be required to distribute
confidential information of any other customer.
SECTION 15. INTELLECTUAL PROPERTY
15.1 Intellectual Property. Neither Owner nor Vendor shall publish
or use any advertising, sales promotion, press releases or publicity matters
relating to this Contract without the prior written approval of the other, in
accordance with subsection 26.13.
15.2 Infringement. (a) The Vendor agrees that it shall defend,
indemnify and hold harmless, at its own expense, all suits and claims against
the Owner for infringement or violation of any patent, trademark, copyright,
trade secret or other intellectual property rights of any third party
enforceable in the United States or in any other territory where Vendor has
approved the deployment or use of Products under this Contract (collectively,
"Intellectual Property Rights"), covering, or alleged to cover, the Products or
any component thereof. The Vendor agrees that it shall pay all sums, including
without limitation, reasonable attorneys' fees and other costs incurred at
Vendor's written request or authorization, which, in defense of, by final
judgment or decree, or in settlement of any suit or claim to which the Vendor
agrees, may be assessed against, or incurred by, the Owner on account of such
infringement or violation, provided that the Owner shall cooperate in all
reasonable respects with the Vendor and its attorneys in the investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom;
provided, however, that the Owner may, at its own cost, participate in the
investigation, trial and defense of
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such lawsuit or action and any appeal arising therefrom. The parties shall
cooperate with each other in any notifications to insurers. If a claim for
Losses (a "Claim") is to be made by a party entitled to indemnification
hereunder against the Vendor, the party claiming such indemnification shall give
written notice (a "Claim Notice") to the Vendor as soon as practicable after the
party entitled to indemnification becomes aware of any fact, condition or event
which may give rise to Losses for which indemnification may be sought under this
Agreement, provided, however, no delay on the part of the Owner in notifying the
Vendor shall relieve the Vendor from any obligation hereunder unless (and then
solely to the extent) the Vendor is thereby materially prejudiced. If any
lawsuit or enforcement action is filed against any party entitled to the benefit
of indemnity hereunder, written notice thereof shall be given to the Vendor as
promptly as practicable (and in any event within twenty (20) calendar days after
the service of the citation or summons). The Vendor shall be entitled, if it so
elects to: (i) defend such lawsuit or action; (ii) employ and engage attorneys
of its own choice to handle and defend the same, at the Vendor's cost, risk and
expense; and (iii) compromise or settle such Claim, which compromise or
settlement shall be made only with the written consent of the Owner (which may
not be unreasonably withheld), unless such compromise or settlement includes an
unconditional release of any claims against the Owner in which event such
written consent of the Owner shall not be required. If the Vendor fails to
assume the defense of such Claim within twenty (20) calendar days after receipt
of the Claim Notice, the Owner against which such Claim has been asserted will
(upon delivering notice to such effect to the Vendor) have the right to
undertake, at the Vendor's cost and expense, the defense, compromise or
settlement of such Claim on behalf of and for the account and risk of the
Vendor. In the event the Owner assumes the defense of the Claim, the Owner will
keep the Vendor reasonably informed of the progress of any such defense,
compromise or settlement. The Vendor shall be liable for any settlement of any
action effected pursuant to and in accordance with this Agreement and for any
final judgment (subject to any right of appeal), and the Vendor agrees to
indemnify and hold harmless the Owner from and against any Losses by reason of
such settlement or judgment.
(b) The Vendor's obligation under this subsection shall not extend
to alleged infringements or violations that arise because the Products provided
by the Vendor are used in combination with other products furnished by third
parties and where any such combination was not installed, recommended or
approved by the Vendor.
15.3 Vendor's Obligation to Cure. If in any such suit so defended,
all or any part of the Products or any component thereof is held to constitute
an infringement or violation of Intellectual Property Rights of others and its
use is enjoined, or if in respect of any claim of infringement or violation the
Vendor deems it advisable to do so, the Vendor shall at its sole cost, expense
and option take one or more of the following actions: (i) procure the right to
continue the use of the same without interruption for the Owner; (ii) replace
the same with non-infringing Products that meets the Specifications in
accordance with the terms of this Contract; or (iii) modify said Products, any
System or any component thereof so as to be non-infringing, provided that the
Products, any System or any component thereof as modified meets all of the
Specifications. In the event that the Vendor is not able to cure the
infringement pursuant to clause (i), (ii) or (iii) in the immediately preceding
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sentence, in addition to the other rights and remedies provided in this Section
15, the Vendor shall refund to the Owner the full purchase price paid by the
Owner for such infringing Product or feature, and the Owner shall be under no
obligation to return to the Vendor such infringing Product or feature regardless
of whether, or by what means, the Owner, on its own or otherwise, subsequently
cures such infringement, unless Owner is directed to do so by court order.
15.4 Vendor's Obligations. The Vendor's obligations under this
Section 15 shall not apply to any infringement or violation of Intellectual
Property Rights caused by unauthorized modification of the Products, any System
or any component thereof by the Owner, or arises from adherence to instructions
to apply Owner's trademark, trade name or other company identification to a
Product, or any infringement caused solely by the Owner's use and maintenance of
the Products other than in accordance with the Specifications, except as
authorized or permitted by the Vendor. The Owner shall indemnify the Vendor
against all liabilities and costs, including reasonable attorneys' fees, for
defense and settlement of any and all claims against the Vendor for
infringements or violations based upon this subsection.
15.5 Liability of Vendor. The Liability of Vendor with respect to
any and all claims, actions, proceedings or suits by third parties alleging
infringement of patents, trademarks, or copyrights or violation of trade secrets
or proprietary rights because of, or in connection with, any items furnished
pursuant to this Contract shall be limited to the specific undertakings
contained in this Section 15.
SECTION 16. DELAY
16.1 Liquidated Damages. The parties agree that damages for delay
are difficult to calculate accurately and not reasonably determinable at the
time of execution of this Contract, and, therefore, agree that liquidated
damages (the "Liquidated Damages") shall be paid for non-performance or late
performance of the Vendor's obligations to achieve a Guaranteed Substantial
Completion Date for reasons not otherwise excused by Force Majeure or Owner's
failure to satisfy its obligations set out in this Contact. The parties agree
that Liquidated Damages are intended to compensate Owner for the delayed or late
performance by the Vendor and are not a penalty.
16.2 Delay and Default. In the event the Vendor fails to achieve
(other than as permitted by this Contract) the Substantial Completion of a
System on or before the Guaranteed Substantial Completion Date for such System
or during a ten day cure period following such date, the Vendor shall pay,
weekly in arrears, for the next [*] commencing on the eleventh day after the
Guaranteed Substantial Completion Date, Liquidated Damages to the Owner in an
amount equal to [*] (pro-rated on a daily basis for periods of time less than
one week) of the total amount of all Purchase Orders relating to the System with
respect to which the Vendor has so failed, based on the number of days elapsed
after a ten day cure period following the Guaranteed Substantial Completion Date
and before the achievement of Substantial Completion;
[*] Certain material (included by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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provided that in the event that Substantial Completion is not achieved prior to
the expiration of such [*] period, thereafter Vendor shall pay, weekly in
arrears, additional Liquidated Damages to the Owner in an amount equal to [*]
(pro-rated on a daily basis for periods of time less than one week) of the total
amount of all Purchase Orders relating to the System with respect to which the
Vendor has so failed, based on the number of days elapsed after the [*]
plus ten day cure period following the Guaranteed Substantial Completion Date
and before the achievement of Substantial Completion; provided that in no event
shall the amount of Liquidated Damages so paid in respect of a System exceed [*]
of the total amount of all Purchase Orders relating to the System with respect
to which the Vendor has so failed.
16.3 System Capacity Guarantee. [***]
16.4 Limitation. The foregoing provisions concerning Liquidated
Damages shall not be deemed to limit the amount payable by the Vendor to the
Owner for breach of contract, except for amounts payable on account of delay as
aforesaid, provided, however
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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that the payment of Liquidated Damages shall be Owner's sole remedy for the
delay giving rise to the Vendor's obligation to pay the Liquidated Damages.
16.5 Early Completion Bonus. With respect to a System, Vendor shall
be entitled to an early completion bonus from the Owner in the event that
Substantial Completion with respect to such System occurs on or prior to the
date that is [*] prior to the Guaranteed Substantial Completion Date for such
System. Such early completion bonus shall be equal to [*] (pro-rated on a daily
basis for periods of time less than one week) of the total amount of all
Purchase Orders relating to such System, based on the number of days that
Substantial Completion occurs prior the date that is [*] prior to the Guaranteed
Substantial Completion Date for such System.
SECTION 17. FORCE MAJEURE
17.1 Excusable Delay. (a) If the performance of this Contract, or of
any obligation hereunder except for the obligations set forth in Section 5 is
prevented, restricted or interfered with by reason of fires, breakdown of plant,
labor disputes, embargoes, government ordinances or requirements, civil or
military authorities, acts of God or of the public enemy, acts or omissions of
carriers, inability to obtain necessary materials or services from suppliers, or
other causes beyond the reasonable control of the party whose performance is
affected ("Force Majeure"), then the party affected, upon giving prompt notice
to the other party, shall be excused from such performance on a day-for-day
basis to the extent of such prevention, restriction, or interference (and the
other party shall likewise be excused from performance of its obligations on a
day-for-day basis to the extent such party's obligations relate to the
performance so prevented, restricted or interfered with); provided that the
party so affected shall use reasonable efforts to avoid or remove such cause of
non-performance and both parties shall proceed to perform their obligations with
dispatch whenever such causes are removed or cease.
(b) The party claiming the benefit of excusable delay hereunder
shall: (i) promptly notify the other party of the circumstances creating the
failure or delay and provide a statement of the impact of such party failure or
delay; and (ii) use reasonable efforts to avoid or remove such causes of
nonperformance, excusable failure or delay. If an event of Force Majeure
prevents the Vendor from performing its obligations under this affected Purchase
Orders for a period exceeding sixty (60) days, the Owner may, upon prior written
notice to the other party, terminate any affected Purchase Orders; however, this
Contract remains in full force and effect. [To be negotiated.]
(c) In the event of a Force Majeure which the party claiming relief
for such event has used all best efforts to resolve in accordance with the terms
of this Contract, upon the written request of either party, the other party
shall in good faith negotiate modifications, to the extent reasonable and
necessary, in scheduling and performance criteria in order to reasonably address
the impact of such Force Majeure.
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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SECTION 18. WARRANTIES
18.1 Equipment and Services Warranty. Vendor warrants that, with
respect to each System, for a period of two (2) years from the date of
Substantial Completion, provided, however that if prior to Final Acceptance a
Major Outage occurs, the two (2) year period shall be extended by the number of
days elapsed between Substantial Completion and the date the Owner signs the
Certificate of Final Acceptance (as so determined, the "Warranty Period"), all
Equipment and Services furnished under this Contract with respect to such System
will be free of Defects and Deficiencies and shall conform to the applicable
portions of the Specifications (the "Equipment and Services Warranty"),
provided, however, that with respect to those Services for which a warranty is
set forth in an Exhibit, the warranty contained in the Exhibit shall supersede
the general Services warranty contained in this Section 18.1. With respect to
third-party manufactured Products which are not a part of a Core System, Vendor
shall furnish such Products only on a pass-through warranty basis; provided,
however, that Vendor shall identify such Products to Owner before acceptance of
any Purchase Order which includes any such Products. The terms of the warranty
applicable to such Products shall be provided in an addendum to the Purchase
Order. Except as noted in the B Exhibits, all Products referenced in the B
Exhibits qualify as Vendor-warranted Products. The Vendor's obligations with
respect to the Equipment and Services Warranty shall be to attempt first to
repair or replace at no additional cost, any defective Equipment or correct any
deficient Services. If, after using its best efforts to repair or replace such
Product and after consultation with and with the consent of Owner, which consent
shall not be unreasonably withheld, Vendor determines that it is unable to
repair, replace or otherwise correct such defect, Vendor shall provide a credit
or refund based on the original purchase price, and installation charges if
installed by Vendor. If, as a result of the Defect and Deficiency, the Product
fails to operate in accordance with the Specifications which causes the System
to fail to materially operate in accordance with its Specifications, a refund
shall be paid to the Owner on account of the purchase price for the total
System, less a pro-rata discount calculated with regard to the period of time
during the Warranty Period that Owner operated the System in In Revenue Service.
For purposes of calculating such pro rata discount, the period of time the Owner
would have been able to operate the System within In Revenue Service shall be:
(i) ten (10) years from Substantial Completion for the AXE switch; and (ii)
seven (7) years from Substantial Completion for all other Products. In the event
that Vendor pays a refund hereunder, Owner shall return such Products to Vendor
at Vendor's sole cost and expense. The Warranty Period for all Equipment or
Services repaired, replaced or corrected under the Equipment and Services
Warranty shall be the longer of: (i) one (1) year from the date of delivery of
the repaired or replacement Equipment or from the completion of the corrected
Services, as applicable; or (ii) or the unexpired term of the Warranty Period.
The Warranty Period for Equipment purchased as spares shall be two (2) years
from installation of such Equipment.
For those Products not readily returnable by Owner, or where Owner cannot
remove and reinstall the Products without incurring significant time and
expense, and where Vendor elects to repair or replace the Product, Vendor shall
repair or replace the Product at Owner's Site. In the event Vendor does the
repair work at Owner's site, Vendor shall be responsible
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for replacement of cable and wire Products, and for reasonable Site restoration.
If Vendor has elected to repair or replace a defective Product, and the Product
is readily returnable by Owner without incurring significant work or expense,
Owner is responsible for removing and reinstalling the Products. Products
returned for repair or replacement will be accepted by Vendor only in accordance
with its instructions and procedures for such returns. The transportation
expense associated with returning such Product to Vendor shall be borne by
Owner. Vendor shall pay the cost of transportation of the repaired or replacing
Product to the return destination designated by Owner. Defective or
nonconforming Products or parts which are replaced hereunder shall become
Vendor's property. Vendor may use either the same or functionally equivalent
new, remanufactured, reconditioned or refurbished Products or parts in the
furnishing of repairs or replacements under this Contract, provided that such
Products satisfy the Specifications.
18.2 Expansions Warranty. Vendor warrants that, with respect to
Products and Services constituting Expansions (including Expansions to a System,
or Expansions or growth not part of a System, and all other purchased Products)
furnished under this Contract will be free of Defects and Deficiencies and shall
conform the applicable portions of the Specifications (the "Expansions
Warranty"). The warranty period with respect to such Products and Services shall
be two (2) years from the date of installation completion or completion of
Services, as the case may be (the "Expansions Warranty Period"). With respect to
third-party manufactured Products which are not a part of a Core System, Vendor
shall furnish such Products only on a pass-through warranty basis; provided,
however, that Vendor shall identify such Products to Owner before acceptance of
any Purchase Order which includes any such Products. The terms of the warranty
applicable to such Products shall be provided in an addendum to the Purchase
Order. Except as noted in the B Exhibits, all Products referenced in the B
Exhibits qualify as Vendor-warranted Products. The Vendor's obligations with
respect to the Expansions Warranty shall be to attempt first to repair or
replace at no additional cost, any defective Equipment or correct any deficient
Services. If, after using its best efforts to repair or replace such Product and
after consultation with and with the consent of Owner, which consent shall not
be unreasonably withheld, Vendor determines that it is unable to repair, replace
or otherwise correct such defect, Vendor shall provide a credit or refund based
on the original purchase price, and installation charges if installed by Vendor.
The warranty period for all Equipment or Services repaired, replaced or
corrected under the Expansions Warranty shall be the longer of: (i) one (1) year
from the date of delivery of the repaired or replacement Equipment or from the
completion of the corrected Services, as applicable; or (ii) or the unexpired
term of the Expansions Warranty Period. The Warranty Period for Equipment
purchased as spares shall be two (2) years from installation of such Equipment.
For those Products not readily returnable by Owner, or where Owner cannot
remove and reinstall the Products without incurring significant time and
expense, and where Vendor elects to repair or replace the Product, Vendor shall
repair or replace the Product at Owner's Site. In the event Vendor does the
repair work at Owner's site, Vendor shall be responsible for replacement of
cable and wire Products, and for reasonable Site restoration. If Vendor has
elected to repair or replace a defective Product, and the Product is readily
returnable by Owner without incurring significant work or expense, Owner is
responsible for removing
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and reinstalling the Products. Products returned for repair or replacement will
be accepted by Vendor only in accordance with its instructions and procedures
for such returns. The transportation expense associated with returning such
Product to Vendor shall be borne by Owner. Vendor shall pay the cost of
transportation of the repaired or replacing Product to the return destination
designated by Owner. Defective or nonconforming Products or parts which are
replaced hereunder shall become Vendor's property. Vendor may use either the
same or functionally equivalent new, remanufactured, reconditioned or
refurbished Products or parts in the furnishing of repairs or replacements under
this Contract, provided that such Products satisfy the Specifications.
18.3 Software Warranty. Vendor warrants that, with respect to each
System for the Warranty Period, all Software will be free of Defects and
Deficiencies and shall conform to the applicable portions of the Specifications
(the "Software Warranty"). The Vendor's obligations with respect to the Software
Warranty shall be to attempt first to repair or replace at no additional cost,
any defective Software. If, after using its best efforts to repair or replace
such Software and after consultation with and with the consent of Owner, which
consent shall not be unreasonably withheld, Vendor determines that it is unable
to repair, replace or otherwise correct such defect, Vendor shall provide a
credit or refund based on the original purchase price, and installation charges
if installed by Vendor. If, as a result of the Defect and Deficiency, the
Software fails to operate in accordance with the Specifications which causes the
System to fail to materially operate in accordance with its Specifications, a
refund shall be paid to Owner on account of the purchase price for the total
System, less a pro rata discount calculated with regard to the period of time
during the Warranty Period that Owner operated the System in In Revenue Service.
For purposes of calculating such pro rata discount, the period of time the Owner
would have been able to operate the System in In Revenue Service shall be: (i)
ten (10) years from Substantial Completion for the AXE switch; and (ii) seven
(7) years from Substantial Completion for all other Products. In the event that
Vendor pays a refund hereunder, Owner shall return such Products to Vendor. The
warranty period for all Software so corrected or replaced under the Software
Warranty shall be the longer of: (i) one (1) year from the date of delivery of
the repaired or replacement Software; or (ii) or the unexpired term of the
Warranty Period. Vendor shall be solely responsible for all costs and expenses
incurred by Owner or Vendor in connection with the de-installation, removal and
transportation of defective Software under the Software Warranty and for the
transportation and installation of repaired, corrected or replacement Software,
including without limitation any additional or upgraded Equipment or processing
capability necessary to run or operate such repaired, corrected or replacement
Software. The Warranty Period with respect to Software Maintenance Releases,
Software Upgrades, Software Enhancements and Software Combined Releases shall be
two (2) years from the successful installation [To be negotiated.] of such
Software Maintenance Releases, Software Upgrades, Software Combined Releases and
Software Enhancements.
18.4 [intentionally deleted]
18.5 Year 2000 Warranty. [YEAR 2000 WARRANTY LANGUAGE MAY NOT BE
RELEVANT AT TIME OF DELIVERY AND DEPLOYMENT UNDER THIS CONTRACT.]
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18.6 Warranty Claim Procedures. (a) If the Owner claims a breach of
any warranty, it shall notify the Vendor of the claimed breach within a
reasonable time after its determination that a breach has occurred. The Owner
shall allow the Vendor to inspect the Equipment, Software, Services, or the
System, as the case may be, on-site in order to effect the necessary repairs.
(b) The Vendor shall respond to such warranty claims for warranty
Services in accordance with the procedures outlined in Exhibit N.
18.7 Technical Assistance. The Vendor shall maintain a technical
assistance center and shall have technical support available to the Owner in
accordance with the requirements set forth in Exhibit N.
18.8 Scope of Warranties. Unless otherwise stated herein, the
Warranties shall not apply to:
18.8.1 defective conditions or nonconformities to the extent
resulting from the following, if not consistent with applicable
Specifications: unauthorized Owner modifications, misuse, neglect,
accident, abuse, improper wiring, repairing, splicing, alteration,
installation, storage or maintenance failure of Owner to apply previously
applicable Vendor modifications or corrections;
18.8.2 any Equipment, Services or Software damaged by accident or
disaster, including without limitation, fire, flood, wind, water,
lightning or power failure other than to the extent that any such
Equipment, Services or Software should in accordance with the
Specifications be able to withstand any such events; or
18.8.3 non-integral items normally consumed in operation or which
has a normal life inherently shorter than the Warranty Periods (e.g.,
fuses, lamps, magnetic tape); or
18.8.4 damages or defects resulting directly from third party
equipment, provided that this shall in no event limit the Vendor's
obligations as to interoperability pursuant to the terms of this Contract;
18.8.5 Equipment which have had their serial numbers or months and
year of manufacture removed or obliterated by the Owner; or
18.8.6 failures or deficiencies in BTS performance or System
optimization resulting solely from changed environmental conditions or
unauthorized changes to the System by Owner, or changes not consented to
by Owner including but not limited to the growth of trees and other
foliage, the erection of buildings, and interference from third party
radio transmissions not otherwise engineered for by the Vendor;
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except when any such damage or defects are made, done or caused by the Vendor or
any of its Subcontractors, their respective agents and employees.
18.9 Third Party Warranties. If the Vendor purchases or subcontracts
for the manufacture of any part of a System or the performance of any of the
Services to be provided hereunder from a third party, the warranties given to
the Vendor by such third party shall inure, to the extent assigned to the Owner
pursuant to this Section 18 or permitted by law, to the benefit of the Owner,
and the Owner shall have the right, at its sole discretion, to enforce such
warranties directly and/or through the Vendor. The warranties of such third
parties shall be in addition to and shall not, unless otherwise expressly stated
herein, be in lieu of any warranties given by the Vendor under this Contract.
18.10 Additional Sites. In the event that under the remedy
provisions of this Section 18 the Vendor is required to provide additional MSC
and/or BTSs requiring additional Sites, the Owner shall be responsible for all
Site Acquisition.
18.11 EXCLUSIVE REMEDIES. THE FOREGOING EQUIPMENT, SERVICES,
SOFTWARE AND EXPANSIONS WARRANTIES AND REMEDIES ARE EXCLUSIVE FOR THE PURPOSES
OF ANY BREACH BY THE VENDOR OF ANY SUCH WARRANTY AND ARE IN LIEU OF ALL OTHER
EXPRESS AND IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
SECTION 19. INSURANCE
19.1 Insurance. The Vendor shall maintain insurance in accordance
with the provisions set forth in Exhibit Q. [To be negotiated.]
SECTION 20. INDEMNIFICATION AND LIMITATION OF LIABILITY
20.1 Indemnity. Vendor agrees to indemnify, defend and hold harmless Owner
and its affiliates and their respective directors, officers, employees, agents,
successors and assigns, from Losses and threatened Losses arising from, in
connection with, or based on allegations of, any of the following:
(a) Vendor's failure to observe or perform any duties or
obligations to Subcontractors or any third parties within the
reasonable contemplation of this Contract;
(b) the death or bodily injury of any agent, employee, customer,
business invitee or any other person caused by the tortious
conduct (including without limitation negligence, willful
misconduct or breach of warranty) or strict liability of
Vendor, any Subcontractor
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or its or their respective employees, contractors, agents or
representatives;
(c) the damage, loss or destruction of any real or tangible
personal property caused by the tortious conduct (including
without limitation negligence, willful misconduct or breach of
warranty) or strict liability of Vendor, any Subcontractor or
its or their respective employees, contractors, agents or
representatives; or
(d) any claim, demand, charge, action, cause of action or other
proceeding asserted against Owner but arising out of or
resulting from an act or omission of Vendor, any Subcontractor
or its or their respective employees, contractors, agents or
representatives in its or their respective capacities as an
employer.
20.2 Claim for Losses. If a Claim is to be made by a party entitled
to indemnification hereunder against the Vendor, the party claiming such
indemnification shall give a Claim Notice to the Vendor as soon as practicable
after the party entitled to indemnification becomes aware of any fact, condition
or event which may give rise to Losses for which indemnification may be sought
under this Agreement, provided, however, no delay on the part of the Owner in
notifying the Vendor shall relieve the Vendor from any obligation hereunder
unless (and then solely to the extent) the Vendor is thereby materially
prejudiced. If any lawsuit or enforcement action is filed against any party
entitled to the benefit of indemnity hereunder, written notice thereof shall be
given to the Vendor as promptly as practicable (and in any event within twenty
(20) calendar days after the service of the citation or summons). The Vendor
shall be entitled, if it so elects to: (i) defend such lawsuit or action; (ii)
employ and engage attorneys of its own choice to handle and defend the same, at
the Vendor's cost, risk and expense; and (iii) compromise or settle such Claim,
which compromise or settlement shall be made only with the written consent of
the Owner (which may not be unreasonably withheld), unless such compromise or
settlement includes an unconditional release of any claims against the Owner in
which event such written consent of the Owner shall not be required. If the
Vendor fails to assume the defense of such Claim within twenty (20) calendar
days after receipt of the Claim Notice, the Owner against which such Claim has
been asserted will (upon delivering notice to such effect to the Vendor) have
the right to undertake, at the Vendor's cost and expense, the defense,
compromise or settlement of such Claim on behalf of and for the account and risk
of the Vendor. In the event the Owner assumes the defense of the Claim, the
Owner will keep the Vendor reasonably informed of the progress of any such
defense, compromise or settlement. The Vendor shall be liable for any settlement
of any action effected pursuant to and in accordance with this Agreement and for
any final judgment (subject to any right of appeal), and the Vendor agrees to
indemnify and hold harmless the Owner from and against any Losses by reason of
such settlement or judgment.
20.3 Limitation Of Liability. THE ENTIRE LIABILITY OF VENDOR FOR ANY
CLAIM, LOSS, DAMAGE OR EXPENSE OF OWNER OR ANY OTHER
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ENTITY ARISING OUT OF THIS CONTRACT, OR THE USE OR PERFORMANCE OF ANY PRODUCT OR
SERVICE, WHETHER IN AN ACTION FOR OR ARISING OUT OF BREACH OF CONTRACT OR TORT,
INCLUDING NEGLIGENCE, INDEMNITY OR STRICT LIABILITY, SHALL BE EXPRESSLY SET
FORTH HEREIN AND AS FOLLOWS:
1. FOR INFRINGEMENT, THE REMEDIES SET FORTH IN SECTION 15;
2. FOR THE NON-PERFORMANCE OF PRODUCTS OR SERVICES DURING THE WARRANTY
PERIOD, THE REMEDIES SET FORTH IN THE APPLICABLE CLAUSE OF SECTION
18;
3. FOR DELAYS ATTRIBUTABLE TO FAILURE TO ACHIEVE A GUARANTEED
SUBSTANTIAL COMPLETION DATE OR FAILURE TO SATISFY THE CAPACITY
GUARANTEE, THE AGGREGATE OF THE DAMAGES WITH RESPECT TO THE
FOREGOING SHALL NOT EXCEED AN AMOUNT EQUAL TO [*] OF THE AGGREGATE
AMOUNTS OF ALL PURCHASE ORDERS WITH RESPECT TO ALL SYSTEMS, PROVIDED
THAT FOR PURPOSES OF QUANTIFYING THE DAMAGES FOR A FAILURE TO
SATISFY THE CAPACITY GUARANTEE, THE ADDITIONAL EQUIPMENT FURNISHED
BY THE VENDOR AT NO CHARGE TO THE OWNER SHALL BE VALUED AT THE
PURCHASE PRICES FOR SUCH EQUIPMENT SET FORTH IN THIS CONTRACT AND,
AS SO VALUED, SHALL BE DEEMED TO BE DAMAGES FOR PURPOSES OF THIS
SUBSECTION AND;
4. EXCEPT AS PROVIDED IN PARAGRAPH 5 BELOW, FOR EVERYTHING OTHER THAN
AS SET FORTH ABOVE, VENDOR'S TOTAL LIABILITY TO THE OWNER, WHETHER
IN CONTRACT OR IN TORT (INCLUDING BREACH OF WARRANTY, NEGLIGENCE AND
STRICT LIABILITY) SHALL BE LIMITED TO AN AMOUNT EQUAL TO [*] OF THE
AGGREGATE AMOUNT OF ALL PURCHASE ORDERS ISSUED UNDER THIS CONTRACT.
5. THE LIMITATION SET FORTH IN PARAGRAPH 4 ABOVE SHALL NOT APPLY WITH
RESPECT TO: (i) CLAIMS OF BREACH OF CONFIDENTIALITY; (ii) CLAIMS
SUBJECT TO INDEMNIFICATION PURSUANT TO SUBSECTION 20.1 ABOVE OR
PATENT INFRINGEMENT PROVISIONS OF THIS CONTRACT; OR (iii) FAILURE TO
COMPLY WITH APPLICABLE LAWS.
6. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CONTRACT, NEITHER PARTY,
NOR THEIR AFFILIATES NOR THEIR EMPLOYEES, DIRECTORS, OFFICERS AND
SUPPLIERS SHALL BE LIABLE FOR THE OTHER PARTY'S INDIRECT,
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS, REVENUES OR
SAVINGS ARISING OUT OF THIS CONTRACT OR THE USE OR PERFORMANCE OF
ANY PRODUCTS OR SERVICES OR, EXCEPT AS SET FORTH ABOVE, FOR DAMAGES
IN EXCESS OF THE AGGREGATE AMOUNT OF ALL PAYMENTS MADE TO THE VENDOR
HEREUNDER. THIS CLAUSE SHALL SURVIVE FAILURE OF AN EXCLUSIVE OR
LIMITED REMEDY.
SECTION 21. REPRESENTATIONS AND WARRANTIES
21.1 Representations and Warranties of the Parties. The parties
hereby represent and warrant as follows:
21.1.1 Due Organization. Each party represents and warrants to the
other party that the representing party is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to
own and operate its business and properties and to carry on its business
as such business is now being conducted and is duly qualified to do
business in all jurisdictions in which the transaction of its business in
connection with the performance of its obligations under this Contract
makes such qualification necessary or required.
21.1.2 Due Authorization; Binding Obligation. Each party represents
and warrants to the other party that the representing party has full
corporate power and authority to execute and deliver this Contract and to
perform its obligations hereunder, and the execution, delivery and
performance of this Contract by the representing party have been duly
authorized by all necessary corporate action on the part of the party;
this Contract has been duly executed and delivered by such party and is
the valid and binding obligation of the party enforceable in accordance
with its terms, except as enforcement thereof may be limited by or with
respect to the following: (i) applicable insolvency, moratorium,
bankruptcy, fraudulent conveyance and other similar laws of general
application relating to or affecting the rights and remedies of creditors;
(ii) application of equitable principles (whether enforcement is sought in
proceedings in equity or at law); and (iii) provided the remedy of
specific enforcement or of injunctive relief is subject to the discretion
of the court before which any proceeding therefore may be brought.
21.1.3 Non-Contravention. Each party represents and warrants to the
other party that the execution, delivery and performance of this Contract
by the representing party and the consummation of the transactions
contemplated hereby will not contravene its certificate of incorporation
or by-laws and will not conflict with or result in (i) a breach of or
default under any material indenture, mortgage, lease, agreement,
instrument, judgment, decree, order or ruling applicable to it or by which
it or any of its properties is bound or affected; or (ii) a breach by the
representing party of any Applicable Law.
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21.1.4 Regulatory Approvals. Vendor represents and warrants to Owner
that all authorizations by, approvals or orders by, consents of, notices
to, filings with or other acts by or in respect of any Governmental Entity
or any other Person required in connection with the execution, delivery
and performance of this Contract by the Vendor have been obtained or shall
be obtained in due course.
21.1.5 Non-Infringement. Vendor represents and warrants to Owner
that to the best of Vendor's knowledge after reasonable investigation, as
of the Effective Date there are no actual claims or threatened or actual
suits in connection with patents or other Intellectual Property Rights
that could materially adversely affect it's the Vendor's ability to
perform its obligations under this Contract.
21.1.7 Requisite Knowledge. Vendor represents and warrants to Owner
that that Vendor has all requisite knowledge, know-how, skill, expertise
and experience to satisfy its obligations in accordance with the terms of
this Contract.
21.1.8 Financial Capacity. Vendor represents and warrants to Owner
that Vendor has the financial, management and manufacturing capacity and
capabilities to satisfy its obligations in a timely manner in accordance
with the terms of this Contract.
SECTION 22. TITLE AND RISK OF LOSS
22.1 Title. Title to Equipment shall pass to the Owner upon delivery
of such Equipment to the location specified in the Exhibits.
22.2 Risk of Loss. Risk of loss or damage of any Products furnished
to the Owner in connection with this Contract shall pass from the Vendor to the
Owner upon the later of: (i) delivery of such Products to the Sites; or (ii) if
Vendor is responsible for Site Preparation, the date of the Site Preparation
Substantial Completion Certificate; provided that during the period a party has
the risk of loss or damage to an item, nothing in this section shall relieve the
other party of responsibility for loss or damage to the item resulting from the
acts or omissions of the other party, its employees, or agents.
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SECTION 23. DISPUTE RESOLUTION
23.1 Dispute Resolution. In the event any controversy, claim,
dispute, difference or misunderstanding between the Owner and the Vendor arises
out of or relates to this Contract, any term or condition hereof, any of the
Work to be performed hereunder or in connection herewith, each party shall
designate managers to meet and negotiate in good faith in an attempt to amicably
resolve such controversy, claim, dispute, difference or misunderstanding in
writing. Such managers shall meet for this purpose within ten (10) Business
Days, or such other time period mutually agreed to by the parties, after written
notice from either party. If the parties are unable to resolve the controversy,
claim, dispute, difference or misunderstanding through good faith negotiations
within ten (10) Business Days after such meeting or meetings, each party shall,
within five (5) Business Days after the expiration of such ten (10) Business Day
period, prepare a written position statement which summarizes the unresolved
issues and such party's proposed resolution. Such position statement shall be
delivered by the Vendor to the Owner's Chief Executive Officer and by the Owner
to the Vendor's corresponding officer or representative for resolution within
(5) Business Days, or such other time period mutually agreed to by the parties.
23.2 Tolling. All applicable statutes of limitation shall be tolled
to the extent permitted by Applicable Law while the dispute resolution
procedures specified in this Section are pending, and nothing herein shall be
deemed to bar any party from taking such action as the party may reasonably deem
to be required to effectuate such tolling.
SECTION 24. TERMINATION AND EVENTS OF DEFAULT
24.1 Termination Without Cause. The Owner may, at its sole option,
terminate any Purchase Orders, in their entirety, [To be negotiated.]for
convenience upon ninety (90) days' prior written notice at any time. Any
Purchase Orders issued prior to any such termination above shall remain in
effect and shall be fulfilled to the extent that such orders are outstanding as
of the date of such termination. In the event that at the time of such
termination the aggregate amount of all Purchase Orders delivered to Vendor
under this Contract (the "Aggregate Purchase Orders") is less than One Hundred
Million Dollars ($100,000,000), Owner shall pay to the Vendor the lesser of: (i)
the difference between One Hundred Million Dollars ($100,000,000) and the
Aggregate Purchase Orders; or (ii) the aggregate amounts of the Products and
Services furnished by Vendor pursuant to Exhibits B-2 and B-3 prior to the date
of such termination.
24.2 Termination for Cause. The Owner shall have the right to
terminate this Contract in its entirety (except as otherwise set forth in clause
(g) below) without any penalty or payment obligation, except as provided in
subsection 24.5 below, upon the occurrence of any of the events of default (each
a "Vendor Event of Default") as set forth below:
(a) the Vendor (i) files a voluntary petition in bankruptcy or has
an involuntary petition in bankruptcy filed against it that is not
dismissed within sixty
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(60) days of such involuntary filing; (ii) admits the material allegations
of any petition in bankruptcy filed against it; (iii) is adjudged
bankrupt; (iv) is unable generally to pay its debts as they mature; (v)
makes a general assignment for the benefit of its creditors, or if a
receiver is appointed for all or a substantial portion of its assets and
is not discharged within sixty (60) days after his appointment; or (vi)
the Vendor commences any proceeding for relief from its creditors in any
court under any state insolvency statutes; or
(b) the Vendor disregards or violates any Applicable Laws or
Applicable Permits which has a material adverse effect on the business,
financial condition or operations of Owner or on any of its Systems
("Material Adverse Effect"); or
(c) the Vendor allows material Defects and Deficiencies to exist; or
(d) the Vendor fails to fulfill its obligations with respect to the
satisfaction, discharge or bonding of liens as set forth herein; or
(e) the Vendor abandons or ceases for a period in excess of thirty
(30) days its performance of the Work (except as a result of Force Majeure
or a casualty which is fully covered by insurance or as to which other
provisions reasonably acceptable to the Owner are being diligently
pursued); or
(f) the Vendor assigns or subcontracts Work other than as provided
for in this Contract which has a Material Adverse Effect; or
(g) the Vendor misses the Guaranteed Substantial Completion Date for
any given System by a period in excess of one hundred-fifty (150) days;
provided that in such case the Owner shall have the right, but not the
obligation, to terminate this Contract with respect to only that System in
which such delay occurred; and provided further that such failure to
achieve such date was not caused by: (i) a Force Majeure event; and/or
(ii) any act or omission of the Owner; or
(h) if an event of Force Majeure prevents the Vendor from performing
its obligations under this Contract for a period exceeding sixty (60)
days, the Owner may, upon prior written notice to the Vendor, terminate
this Contract in accordance with the Force Majeure provisions above; or
(i) the Vendor otherwise materially breaches any provision of this
Contract.
24.3 Remedies. (a) If any of the Vendor Events of Default exists,
the Owner may, in addition to and without prejudice to any other rights or
remedies of the Owner in this Contract or at law or in equity, terminate this
Contract upon written notice to the Vendor; provided, however, that the Owner
shall have first provided to the Vendor the following periods of notice and
opportunity to cure:
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(i) in the case of a Vendor Event of Default specified in the
foregoing clauses (a) or (b), no notice or opportunity to cure shall be
required from the Owner; and
(ii) in the case of any other Vendor Event of Default, the
Owner shall have provided thirty (30) days' prior written notice, and the
Vendor shall have failed to: (i) commence to cure the default within five
(5) Business Days of delivery of such notice; and (ii) diligently pursue
such cure and remedy the breach entirely.
(b) If the Owner elects to terminate this Contract, the Owner may,
in addition to and without prejudice to any other rights or remedies of the
Owner in this Contract or of law or in equity, do one or more of the following:
(i) require Vendor, at no additional charge to Owner, to
complete or assist others with the completion of all ordered but
unfinished Work, including the sharing with Owner and others all relevant
engineering and design data, procurement data, manufacturing data,
construction and erection data, start-up and testing data, materials, and
Products that shall become part of such unfinished System and/or the
specified Systems, which Vendor would otherwise have been required to
deliver to Owner pursuant to the terms of this Contract but for the
breach, under reasonably appropriate non-disclosure agreements; or
(ii) direct that the Vendor assign its Subcontractor
agreements to the Owner without any change of price or conditions therein
or penalty or payment therefor.
(c) In the event of any termination of this Contract by Owner in
connection with a Vendor Event of Default, Owner shall have no liability for any
failure to satisfy the Minimum Purchase Commitment prior to such termination.
24.4 Discontinuance of Work. Upon such notification of termination,
the Vendor shall immediately discontinue all of the Work (unless such notice of
termination directs otherwise), and, as more fully set forth in subsection
24.3(b), deliver to the Owner copies of all data, drawings, specifications,
reports, estimates, summaries, and such other information, and materials as may
have been accumulated by the Vendor in performing the Work, whether completed or
in process, which Vendor would otherwise have been required to deliver to Owner
pursuant to this Contract but for the breach. Furthermore, the Vendor shall
assign, assemble and deliver to the Owner all purchase orders and Subcontractor
agreements requested by the Owner.
24.5 Payments. If the Owner terminates this Contract pursuant to
subsection 24.2, the Vendor shall not be entitled to receive further payment
other than payments due and payable under this Contract and not subject to
dispute prior to such termination (provided that any such disputed amounts shall
be paid by the Owner when and if such dispute is in fact resolved).
Notwithstanding anything herein to the contrary, the Owner may withhold
payments, if any, to the Vendor for the purposes of offset of amounts
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owed to the Owner pursuant to the terms of this Contract until such time as the
exact amount of damages due the Owner from the Vendor is fully determined by a
court of competent jurisdiction.
24.6 Continuing Obligations. Termination of this Contract for any
reason (i) shall not relieve either party of its obligations with respect to the
confidentiality of the Proprietary Information as set forth in subsection 26.18;
(ii) shall not relieve either party of any obligation which applies to it and
which expressly or by implication survives termination; and (iii) except as
otherwise provided in any provision of this Contract expressly limiting the
liability of either party, shall not relieve either party of any obligations or
liabilities for loss or damage to the other party arising out of or caused by
acts or omissions of such party prior to the effectiveness of such termination
or arising out of its obligations as to portions of the Work already performed
or of obligations assumed by the Vendor prior to the date of such termination.
24.7 Vendor's Right to Terminate. The Vendor shall have the option
to terminate this Contract without any penalty or payment obligations, other
than undisputed payment obligations outstanding as of the date of any such
termination pursuant to the terms of this Contract if:
(a) the Owner (i) files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is not dismissed
within sixty (60) days of such involuntary filing: (ii) admits the
material allegations of any petition in bankruptcy filed against it; (iii)
is adjudged bankrupt; (iv) makes a general assignment for the benefit of
its creditors, or if a receiver is appointed for all or a substantial
portion of its assets and is not discharged within sixty (60) days after
his appointment; or (v) commences any proceeding for relief from its
creditors in any court under any state insolvency statutes, and any such
filing, proceeding, adjudication or assignment as described herein above
shall otherwise materially impair the Owner's ability to perform its
obligations under this Contract; or
(b) the Owner fails to make payments of undisputed amounts due to
the Vendor pursuant to the terms of this Contract which are more than
sixty (60) days overdue, provided that such failure has continued for at
least thirty (30) days after the Vendor has notified the Owner of its
right and intent to so terminate on account of such overdue amount; and
provided, further, that such failure to make undisputed payments to Vendor
shall not arise out of or relate to a termination of or credit
restrictions under the Vendor Financing, or
(c) the Owner materially breaches any provision of this Contract
other than a breach to which subsection 24.7(b) is applicable, and after
the Vendor having provided thirty (30) days' prior written notice, the
Owner shall have failed to: (i) commence to cure the default within five
(5) Business Days of delivery of such notice; and (ii) diligently pursue
such cure and remedy the breach entirely.
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24.8 Special Termination Events. (a) Neither the Vendor nor the
Owner shall be obligated to perform under this Contract, except as specifically
provided, in the event that financing for the purpose of acquiring any System
sufficient to cover Owner's current payment obligations hereunder has not been
finalized with the Vendor on terms and conditions reasonably satisfactory to the
Owner. Unless acceptable financing is available, either party may terminate this
Contract without recourse, except as noted below, by notifying the other party
in writing. Further, the parties agree that the delivery and performance
schedules shall be extended by the period of time required to secure acceptable
financing. In the event of a termination of this Contract pursuant to this
subsection the Owner shall remain liable for amounts due to the Vendor for all
Work performed or Products delivered by the Vendor or any of its Subcontractors
pursuant to the specific terms of this Contract which had been directly
delivered to or performed for the Owner and/or any of its facilities or Sites in
accordance with the terms of this Contract. Any amounts owed by the Owner for
Work done or Products delivered by the Vendor during such interim period not
otherwise invoiced to the Owner by the Vendor prior to the termination of such
interim period, shall be invoiced to the Owner by the Vendor within thirty (30)
days. In no event shall the Owner be liable to the Vendor due to a termination
of this Contract pursuant to this subsection for satisfaction of the Minimum
Purchase Commitment or for any of the Vendor's direct or indirect costs or
expenses incurred in connection with any supplies or equipment ordered by the
Vendor or agreements entered into by the Vendor in order to enable it to fulfill
its obligations hereunder or in connection with the establishment of and/or
upgrade to its manufacturing, personnel, engineering, administrative or other
capacities and/or resources in contemplation of or pursuant to its performance
in accordance with the terms of this Contract. Any amounts due to the Vendor
pursuant to this subsection shall be limited in all cases to Work actually done
or Products or Services actually delivered to the Owner, its Sites or its
facilities.
(b) If at any time after the Effective Date any material change
shall have occurred in any Applicable Law or in the interpretation thereof by
any Governmental Entity, or there shall be rendered any decision in any judicial
or administrative case or proceeding, in either case which, in the reasonable
opinion of the Owner would make the Owner's use of any part of any System
illegal or would subject the Owner or any of its Affiliates to any material
penalty, other material liability or onerous condition or to any burdensome
regulation by any Governmental Entity or otherwise render the use of such System
economically nonviable, then, with respect to such System, or affected part
thereof, or with respect to all Systems if so affected, the Owner may terminate
this Contract without charge or penalty of any kind; provided that (i) the Owner
gives the Vendor prior written notice of any such change or decision and (ii)
that the Owner uses its reasonable efforts for a reasonable time to reverse or
ameliorate such change or decision to the extent possible or practical prior to
declaring such termination. In the event of a termination pursuant to this
subsection, payment obligations incurred by the Owner for Work actually done or
Products or Services actually delivered by the Vendor prior to such termination
pursuant to this Contract shall be payable by the Owner to the Vendor on the
same terms and subject to the limitations set forth in subsection 24.8(a) above.
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SECTION 25. SUSPENSION
25.1 Owner's Right to Suspend Work. The Owner may at any time issue
a Change Order to the Vendor to suspend all or any part of the Work for such
period of time as the Owner may reasonably determine to be appropriate. Any such
Change Order shall be handled in accordance with the provisions of Section 11
hereof.
SECTION 26. MISCELLANEOUS
26.1 Amendments. The terms and conditions of this Contract may only
be amended by mutually agreed contract amendments. Each amendment shall be in
writing and shall identify the provisions to be changed and the changes to be
made. Contract amendments shall be signed by duly authorized representatives of
each of the Vendor and the Owner.
26.2 Owner Liabilities. Vendor understands and agrees that no third
party shall guarantee or otherwise be in any way liable with respect to any
obligations or liabilities of the Owner or any of its affiliates pursuant to
this Contract.
26.3 Offset. The Vendor hereby waives any right of offset of amounts
owed by the Owner to the Vendor pursuant to the terms of this Contract.
26.4 Assignment. The Owner may assign this Contract, or any part
hereof, to any affiliate of Owner without the Vendor's approval or consent.
Subject to the foregoing and except as otherwise permitted herein, neither this
Contract nor any portion hereof may be assigned by either party without the
express prior written consent of the other party. The Owner may, without the
consent of the Vendor, collaterally assign its rights hereunder (including but
not limited to all licenses with respect to the Software) to any or all parties
providing financing for any part of a System for the benefit of the Vendor and
one or more other entities providing financing for any part of a System or
similar arrangement for the benefit of the Vendor and one or more other entities
providing for the financing for any part of a System, in either case, which
arrangement, as the case may be, is reasonably acceptable to the Vendor in
accordance with the terms of the financing documents. If requested by the Owner,
the Vendor shall within seven (7) calendar days of such request provide a
written consent to any such assignment; provided that such consent shall permit
reassignment if the financing parties exercise their remedies under the
documents for such financing subject to reasonable standards as to: (i) the
creditworthiness of the assignee; and (ii) the fact that the assignee is not at
such time a direct competitor of the Vendor involved in the manufacture of
communications equipment, software or related services. The foregoing rights and
obligations are in addition to those set forth elsewhere in this Contract. Any
attempted assignment in violation of the terms of this Contract shall be null
and void. Subject to the foregoing, this Contract shall bind and inure to the
benefit of the parties to this Contract, their successors and permitted assigns.
Notwithstanding the foregoing, Vendor shall have the right to assign this
Contract to its affiliate, Ericsson Inc.; provided however, such
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assignment shall not relieve Vendor of its obligations hereunder or cause Owner
to incur any additional costs or expenses.
26.5 Notices. Except as otherwise expressly stated herein, all
notices, requests, demands and other communications which are required or may be
given under this Contract shall be in writing and shall be deemed to have been
duly given when received if personally delivered; when transmitted if
transmitted by telecopy, electronic or digital transmission method; the day
after it is sent, if sent for next day delivery to a domestic address by
recognized overnight delivery service; and three (3 ) days after sending, if
sent by certified or registered mail, postage prepaid, return receipt requested.
All notices shall be addressed as follows:
If to the Owner:
CRICKET WIRELESS COMMUNICATIONS, INC.
10307 Pacific Center Court
San Diego, California 92121
Attention: Chief Executive Officer
With a copy to:
Sr. Vice President, General Counsel
10307 Pacific Center Court
San Diego, California 92121
Telephone: (858) 882-6000
Facsimile: (858) 882-6080
If to the Vendor:
Ericsson Wireless Communications Inc.
6455 Lusk Boulevard
San Diego, California 92121
Attention: President
Telephone: (858) 332-5000
Facsimile: (858) 332-7188
With a copy to:
Vice President, General Counsel
Telephone: (858) 332-5000
Facsimile: (858) 332-7189
By written notice provided pursuant to this subsection, either party may change
its designated addressee for purposes of giving notices under this Contract.
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26.6 Governing Law. This Contract is governed by the laws of the
State of California, without regard to principles of conflict of laws. This
Contract shall be deemed to be made and executed in the State of California.
26.7 Remedies. Subject only to the limitations on liability
contained in subsection 20.3, each party shall be entitled to pursue any and all
rights and remedies that are available at law or in equity.
26.8 Consent to Jurisdiction. Each party to this Contract, by its
execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction
of the United States District Court located in the Southern District of
California or the state courts of the State of California located in San Diego,
California for the purpose of any action, claim, cause of action or suit (in
contract, tort or otherwise), inquiry, proceeding or investigation arising out
of or based upon this Contract or relating to the subject matter hereof; (ii)
hereby waives, to the extent not prohibited by applicable law, and agrees not to
assert, by way of motion, as a defense or otherwise, in any such action, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution,
that-any such proceeding brought in one of the above-named courts is improper,
or that this Contract or the subject matter hereof may not be enforced in or by
such court; and (iii) hereby agrees not to commence any action, claim, cause of
action or suit (in contract, tort or otherwise), inquiry, proceeding or
investigation arising out of or based upon this Contract or relating to the
subject matter hereof other than before one of the above-named courts nor to
make any motion or take any other action seeking or intending to cause the
transfer or removal of any such action, claim, cause of action or suit (in
contract, tort or otherwise), inquiry, proceeding or investigation to any court
other than one of the above-named courts whether on the grounds of inconvenient
forum or otherwise. Each party hereby consents to service of process in any such
proceeding in any manner permitted by California law, and agrees that service of
process by registered or certified mail, return receipt requested, at its
address specified herein.
26.9 Compliance with Law. The Owner and the Vendor shall comply with
all Applicable Laws in the performance of this Contract, including, without
limitation, the laws and regulations of the United States Department of
Commerce, State Department and the Federal Communications Commission and any
other applicable agency or department.
26.10 Headings. The headings given to the Sections and subsections
herein are inserted only for convenience and are in no way to be construed as
part of this Contract or as a limitation of the scope of the particular Section
or subsection to which the title refers.
26.11 Severability. Whenever possible, each provision of this
Contract shall be interpreted in such a manner as to be effective and valid
under such applicable law, but, if any provision of this Contract shall be held
to be prohibited or invalid in any jurisdiction, the remaining provisions of
this Contract shall remain in full force and effect and such prohibited or
invalid provision shall remain in effect in any jurisdiction in which it is not
prohibited or invalid.
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26.12 Waiver. Unless otherwise specifically provided by the terms of
this Contract, no delay or failure to exercise a right resulting from any breach
of this Contract shall impair such right or shall be construed to be a waiver
thereof, but such right may be exercised from time to time as may be deemed
expedient. If any representation, warranty or covenant contained in this
Contract is breached by either party and thereafter waived by the other party,
such waiver shall be limited to the particular breach so waived and not be
deemed to waive any other breach under this Contract.
26.13 Public Statements and Advertising. (a) Neither party shall
issue any public statement (or any private statement unless required in the
performance of the Work) relating to or in any way disclosing any aspect of the
Work or any System including the scope, the specific terms of this Contract,
extent or value of the Work or any System. Express written consent of the other
party is required prior to the invitation of or permission to any reporter or
journalist to enter upon the System or any part thereof. The Vendor agrees not
to use for publicity purposes any photographs, drawings and/or materials
describing any System without obtaining the prior written consent of the Owner,
which consent shall not be unreasonably withheld. The Owner agrees not to use
for publicity purposes any photographs, drawings and/or materials describing the
Vendor's products and services without obtaining the prior written consent of
the Vendor, which consent shall not be unreasonably withheld. This subsection
shall not prohibit the provision of necessary information to prospective
Subcontractors and the Vendor's or the Owner's personnel, agents or consultants
or other disclosures which are required by Applicable Law, including without
limitation federal and state securities laws and regulations. All other such
public disclosures by a party require the written consent of the other party.
(b) Each party shall submit to the other proposed copies of all
advertising (other than public statements or press releases) wherein the name,
trademark or service mark of the other party or its affiliates is mentioned; and
neither party shall publish or use such advertising without the other party's
prior written approval. Such approval shall be granted as promptly as possible
and shall not be unreasonably withheld. The parties acknowledge that the
obtaining of prior written approval for each such use pursuant to this
subsection may be an administrative burden. At the request of either party, the
Owner and the Vendor shall establish mutually acceptable guidelines for the uses
specified therein. Such guidelines shall be subject to change from time to time
at the reasonable request of either party.
26.14 Records and Communications. Procedures for keeping and
distributing orderly and complete records of the Work and its progress are
stated in the Exhibits. The procedures so established shall be followed
throughout the course of the Work unless the Owner and the Vendor mutually agree
in advance in writing to revise the procedures. Procedures for communications
among the Owner and the Vendor are stated in the Exhibits. The procedures so
established shall be followed throughout the course of the Work unless the Owner
and the Vendor mutually agree in advance and in writing to revise such
procedure.
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26.15 Ownership of Specifications. The Specifications shall
constitute the Proprietary Information of each party to the extent of each
party's contribution to the Specifications. Neither party shall use those parts
of the Specifications contributed by the other party or any part of the
Proprietary Information of the other party for any purpose other than fulfilling
or exercising their respective rights or obligations under this Agreement.
26.16 Financing Requirements. The Vendor acknowledges that the
attainment of financing for construction of the System may be subject to
conditions that are customary and appropriate for the providers of such
financing. Therefore, the Vendor agrees to promptly consider any reasonable
amendment to or modification or assignment of this Contract required by such
providers (including, without limitation, any pertinent industrial development
authority or other similar governmental agency issuing bonds for financing of
the System) which do not materially modify the scope of the Vendor's Work in
order to obtain such financing. In the event that any such amendment or
modification materially increases the Vendor's risk or costs hereunder, the
Owner and the Vendor shall negotiate in good faith to adjust pricing matters,
and to equitably adjust such other provisions of this Contract, if any, which
may be affected thereby, to the extent necessary to reflect such increased risk
or costs. In no event shall the Vendor be required to accept any modification or
amendment pursuant to this subsection provide it has a commercially reasonable
basis for such refusal.
26.17 Owner Review, Comment and Approval. To the extent that various
provisions of this Contract provide for the Owner's review, comment, inspection,
evaluation, recommendation or approval, the Owner may at its option do so in
conjunction and/or consultation with the Vendor. To the extent that this
Contract requires the Owner to submit, furnish, provide or deliver to the Vendor
any report, notice, Change Order, request or other items, the Owner may at its
option and upon written notice to the Vendor designate a representative to
submit, furnish, provide or deliver such items as the Owner's agent therefor. To
the extent that various provisions of this Contract provide that the Owner may
order, direct or make requests with respect to performance of the Work or is
provided access to the System sites or any other site, the Owner may at its
option and upon written notice to the Vendor authorize a representative to act
as the Owner's agent therefor. Upon receipt of such notice, the Vendor shall be
entitled to rely upon such authorization until a superseding written notice from
the Owner is received by the Vendor.
26.18 Confidentiality. (a) All information which is identified as
proprietary or confidential by the disclosing party, including without
limitation all oral and written information (including but not limited to
determinations or reports by arbitrators pursuant to the terms of this
Contract), disclosed to the other party is deemed to be confidential, restricted
and proprietary to the disclosing party (hereinafter referred to as "Proprietary
Information"). Each party agrees to use the Proprietary Information received
from the other party only for the purpose of this Contract. Except as specified
in this Contract, no other rights, and particularly licenses, to trademarks,
inventions, copyrights, patents, or any other intellectual property rights are
implied or granted under this Contract or by the conveying of Proprietary
Information between the parties. Proprietary Information supplied is not to be
reproduced in any form except as required to accomplish the intent of, and in
accordance
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with the terms of, this Contract. The receiving party shall provide the same
care to avoid disclosure or unauthorized use of Proprietary Information as it
provides to protect its own similar proprietary information but in no event
shall the receiving party fail to use reasonable care under the circumstances to
avoid disclosure or unauthorized use of Proprietary Information. All Proprietary
Information shall be retained by the receiving party in a secure place with
access limited to only such of the receiving party's employees, subcontractors
or agents who need to know such information for purposes of this Contract and to
such third parties as the disclosing party has consented to by prior written
approval. All Proprietary Information, unless otherwise specified in writing (i)
remains the property of the disclosing party, (ii) shall be used by the
receiving party only for the purpose for which it was intended, and (iii) such
Proprietary Information, including all copies of such information, shall be
returned to the disclosing party or destroyed after the receiving party's need
for it has expired or upon request of the disclosing party, and, in any event,
upon termination of this Contract. At the request of the disclosing party, the
receiving party shall furnish a certificate of an officer of the receiving party
certifying that Proprietary Information not returned to disclosing party has
been destroyed. For the purposes hereof, Proprietary Information does not
include information which:
(i) is published or is otherwise in the public domain through no
fault of the receiving party at the time of any claimed
disclosure or unauthorized use by the receiving party;
(ii) prior to disclosure pursuant to this Contract is properly
within the legitimate possession of the receiving party as
evidenced by reasonable documentation to the extent
applicable;
(iii) subsequent to disclosure pursuant to this Contract is lawfully
received from a third party having rights in the information
without restriction of the third party's right to disseminate
the information and without notice of any restriction against
its further disclosure;
(iv) is independently developed by the receiving party or is
otherwise received through parties who have not had, either
directly or indirectly, access to or knowledge of such
Proprietary Information;
(v) is transmitted to the receiving party after the disclosing
party has received written notice from the receiving party
after termination or expiration of this Contract that it does
not desire to receive further Proprietary Information;
(vi) is obligated to be produced under order of a court of
competent jurisdiction or other similar requirement of a
Governmental Entity, so long as the party required to disclose
the information provides the other party with prior notice of
such order or requirement and its cooperation to the extent
reasonable in preserving its confidentiality; or
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(vii) the disclosing party agrees in writing is free of such
restrictions.
(b) Because damages may be difficult to ascertain, the parties
agree, without limiting any other rights and remedies specified herein, an
injunction may be sought against the party who has breached or threatened to
breach this subsection. Each party represents and warrants that it has the right
to disclose all Proprietary Information which it has disclosed to the other
party pursuant to this Contract, and each party agrees to indemnify and hold
harmless the other from all claims by a third party related to the wrongful
disclosure of such third party's proprietary information.
26.19 Entirety of Contract; No Oral Change. This Contract and the
Exhibits and Schedules referenced herein constitute the entire contract between
the parties with respect to the subject matter hereof, and supersede all
proposals, oral or written, all previous negotiations, and all other
communications between the parties with respect to the subject matter hereof. No
modifications, alterations or waivers of any provisions herein contained shall
be binding on the parties hereto unless evidenced in writing signed by duly
authorized representatives of both parties as set forth in this Contract.
26.20 Relationship of the Parties. Nothing in this Contract shall be
deemed to constitute either party a partner, agent or legal representative of
the other party, or to create any fiduciary relationship between the parties.
The Vendor is and shall remain an independent contractor in the performance of
this Contract, maintaining complete control of its personnel, workers,
Subcontractors and operations required for performance of the Work. This
Contract shall not be construed to create any relationship, contractual or
otherwise, between the Owner and any Subcontractor, except to establish Owner as
a third party beneficiary of the Vendor's contacts with Subcontractors as
provided herein.
26.21 Discretion. Notwithstanding anything contained herein to the
contrary, to the extent that various provisions of this Contract call for an
exercise of discretion in making decisions or granting approvals or consents,
the parties shall be required to exercise such discretion, decision or approvals
and in good faith.
26.22 Non-Recourse. No past, present or future limited or general
partner in or of the Owner, no parent or other affiliate of any company
comprising the Owner, and no officer, employee, servant, executive, director,
agent or authorized representative of any of them (each, an "Operative") shall
be liable by virtue of the direct or indirect ownership interest of such
Operative in the Owner for payments due under this Contract or for the
performance of any obligation, or breach of any representation or warranty made
by the Owner hereunder. The sole recourse of the Vendor for satisfaction of the
obligations of the Owner under this Contract shall be against the Owner and the
Owner's assets and not against any Operative or any assets or property of any
such Operative. In the event that a default occurs in connection with such
obligations, no action shall be brought against any such Operative by virtue of
its direct or indirect ownership interest in the Owner.
26.23 Improvements, Inventions and Innovations. All rights in any
improvements, inventions, and innovations made solely by the Owner shall vest in
the
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Owner, and the Owner and its affiliates shall have the right to exploit such
improvements, inventions, and innovations. All rights in any improvements,
inventions and innovations made solely by the Vendor shall vest in the Vendor,
and the Vendor and its affiliates shall have the right to exploit such
improvements, inventions and innovations. All rights in any improvements,
inventions and innovations made by the substantial contribution of both parties
("Joint Information") shall vest jointly in both parties. Joint Information does
not include any underlying information owned by one of the parties prior to
commencement of such joint activities or developed beyond the scope of such
joint activities, including Products and Product information, technical
information or inventions developed prior to the commencement of any joint
activities, developed outside of the scope of such joint activities or developed
solely by either party. The rights of joint ownership to such Joint Information
shall be rights of full non-exclusive worldwide ownership, including rights to
license and transfer. Each party may exploit its rights to the Joint Information
independent of the other and may retain all economic benefits thereof, neither
party shall have any obligation to account to the other for profits derived from
the Joint Information and each party shall have full rights to enforce the Joint
Information intellectual property rights against non-authorized users.
26.24 Attachments and Incorporations. All Schedules and Exhibits
attached hereto, are hereby incorporated by reference herein and made a part of
this Contract with the same force and effect as though set forth in their
entirety herein.
26.25 Conflicts. In the event of any conflict or inconsistency among
the provisions of this Contract and the documents attached hereto and
incorporated herein, such conflict or inconsistency shall be resolved by giving
precedence to this Contract and thereafter to the Exhibits, Schedules and
Specifications.
26.26 References to Certain Sources. Reference to standard
specifications, manuals or codes of any technical society, organization or
association or to the laws or regulations of any Governmental Entity, whether
such reference is specific or by implication, by this Contract, means the latest
standard specification, manual, code, laws or regulations in effect at the time
of such reference, except as may be otherwise specifically agreed to by the
Owner. However, no provision of any reference, standard, specification, manual
or code (whether or not specifically incorporated by reference in this Contract)
shall be effective to change the duties and responsibilities of the Owner or the
Vendor from those set forth in this Contract; provided that nothing contained in
this Contract shall require the Owner or the Vendor to violate then existing and
enforceable Applicable Laws.
26.27 Counterparts. This Contract may be executed by one or more of
the parties to this Contract on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
26.28 Cooperation. Vendor acknowledges that Owner may have one or
more third party vendors, contractors and other personnel engaged to provide
work, equipment or services to Owner in connection with or related to this
Contract. Vendor agrees to reasonably communicate and cooperate with such third
parties at all times and, at
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the request of Owner, coordinate Vendor's and Vendor's Subcontractors'
activities hereunder with the activities of such third parties.
26.29 Survival. Notwithstanding any expiration or termination of
this Contract, the provisions of Sections 2.8, 12, 13, 14, 15, 18, 20 and 26.18
shall continue in full force and effect. Any termination hereunder shall not
relieve Owner of any payment obligation accrued prior to such termination.
THE OWNER AND THE VENDOR HAVE READ THIS CONTRACT INCLUDING ALL
SCHEDULES AND EXHIBITS HERETO AND AGREE TO BE BOUND BY ALL THE TERMS AND
CONDITIONS HEREOF AND THEREOF.
IN WITNESS WHEREOF, the parties have executed this Contract as of
the date first above written.
VENDOR:
ERICSSON WIRELESS COMMUNICATIONS INC.,
a Delaware corporation
By:
--------------------------------------
Name:
Title:
OWNER:
CRICKET WIRELESS COMMUNICATIONS, INC.,
a Delaware corporation
By:
--------------------------------------
Name:
Title:
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EXHIBIT D
CREDIT FACILITY
<TABLE>
<S> <C>
Borrower: Cricket Wireless Communications Inc.
("Borrower").
Lender: Ericsson Inc. or any of its parent
companies ("Lender") (with a right to
assign to one (1) or more eligible
assignees).
Purpose: To finance [*] of the price for equipment
purchased from Ericsson. In the event that
Ericsson does not manufacture such an item
equivalent in form, fit and function to be
made available for purchase at a competitive
market price, Cricket shall be permitted to
purchase such items from third parties
(excluding competitors of Ericsson) utilizing
the borrowings from Lender. Borrower shall
also be able to use the financing for services
provided by Ericsson. Subject to the
foregoing, borrowings in excess of the
purchase price can be used for most working
capital needs of Cricket, including interest
payable to Lender, other loan related fees and
spectrum acquisition.
Amount/Facility: The maximum principal amount of the
Facility may not exceed $495 million.
Effective Date: Date of first advance.
Availability Period: Three (3) years after the Effective Date.
Final Maturity: Eight (8) years from the Effective Date.
Leap Guarantee: None.
Amortization Schedule: No principal for the first three (3) years
after the Effective Date. Thereafter principal
reductions are due over five (5) years, with
annual payments of 5%, 15%, 20%, 25% and 35%
of the amount outstanding at the end of the
Availability Period in years 4 through 8,
respectively.
</TABLE>
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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<TABLE>
<S> <C>
Mandatory Prepayments: 50% of Borrower's "excess cash flow" (to be
defined in the definitive loan documents) and
pro rata prepayments if Borrower or any of its
direct or indirect subsidiaries prepays any
indebtedness to any other lender.
Interest Rate & Payment: Libor plus a margin based on the ratio of
total indebtedness to EBITDA (margin ranges
from 3.5% to 4.25%). Comparable Base Rates (to
be defined in definitive loan documents)
interest options are available. Interest will
be calculated on a 360-day basis. Interest
will be payable on quarterly in arrears.
Default Interest Rate: At all times while a payment default exists under
the Facility, interest will be charged at the
otherwise applicable rate plus 200 basis points.
Commitment Fees: Borrower pays: (i) 1.25% per annum on borrowings
up to $175M; (ii) 1% per annum on borrowings
from $175M to $350M; and (iii) .75% on
borrowings above $350M.
Facility Fee: Borrower will pay to the Lender's a Facility Fee
equal to 3% of the Facility. The fee is
payable at the earlier of: (i) when the loan
is sold to an unrelated third party; or (ii)
at the earlier of the date on which: (a)
Borrower has drawn down the entire amount of
the Facility; or (b) availability period for
the Facility has expired. The Facility Fee may
be financed under the Facility.
Administrative Fees: The Lenders will agree on a third party
administrative agent with respect to the
credit facility, and Borrower shall pay the
fees, costs and expenses of such third party
administrative agent.
Collateral: All the stock and assets of all Leap US wireless
business subsidiaries. Lender agrees to share
the collateral on a pari passu basis
</TABLE>
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<PAGE> 81
<TABLE>
<S> <C>
with other comparable vendor financing of up
to a total of $1.2 billion for all vendors. To
obtain collateral, loan terms and covenants
will have to be comparable to those of other
lender. Borrower covenants that no other more
favorable terms will be given to other similar
lenders, and in the event more favorable terms
are given, such terms will be equally extended
to Lender on a retrospective basis back to the
date such terms were given to the other
similar lenders
Financial Covenants: With respect to Borrower, the following:
minimum covered pops, minimum number of
subscribers; total debt to total
capitalization; maximum total debt to
annualized EBITDA; maximum annual capital
expenditures and EBITDA to cash interest
expense. [***]
Maximum total debt to contributed capital is
set at 2 to 1 for the first three (3) years
and declining thereafter.
Permitted Dividends--Maximum of $65 Million
subject to payment not before 6/30/2005
subject to compliance with minimum cash
interest coverage ration and loan having been
amortized as scheduled.
Affirmative and Negative Covenants, Typical and customary for a facility of
Representations, and Warranties: this nature.
Assignments and Participations: Permitted by Lender without prior written
notice to the Borrower. Not permitted by
Borrower
Expenses: Typical expenses of the Lender are reimbursed
by Borrower, including without limitation,
attorneys' fees, costs and expenses.
Governing Law And Jurisdiction: The Borrower and Guarantor (to be defined
in the definitive loan documents) (if
applicable) will: consent to the jurisdiction
of the State and Federal Courts of the City of
New York.
</TABLE>
[*] Certain material (indicated by an asterisk) has been omitted from this
document pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange
Commission.
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<TABLE>
<S> <C>
Appoint an agent for service of process in New
York Waive trial by jury.
Intercreditor Agreement: An intercreditor agreement will be required upon
the closing of a senior secured permitted
indebtedness permitted to share pari passu in
the collateral as will be set forth in the
definitive loan documents.
Events of Default & Remedies: The definitive loan documents will contain
those events of default customary for
financing transactions of this type, subject
to customary cure periods, grace periods and
material provisions.
Due Diligence Review; Internal
Approvals: The terms and conditions of the definitive
loan documents are subject to Lender's
completion of its due diligence review with
respect to Borrower and its affiliates, all to
Lender's satisfaction, and Lender's Board of
Directors' approval.
</TABLE>
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EXHIBIT E
[ERICSSON LOGO]
PRESS RELEASE
SEPTEMBER 20, 1999
FINAL DRAFT - FOR INTERNATIONAL /// DISTRIBUTION
ERICSSON AND LEAP WIRELESS INTERNATIONAL SIGN $330 MILLION MOBILE INFRASTRUCTURE
AGREEMENT
ERICSSON (NASDAQ: ERICY) AND LEAP WIRELESS INTERNATIONAL, INC. (NASDAQ: LWIN), A
GLOBAL PROVIDER OF WIRELESS COMMUNICATIONS, TODAY ANNOUNCED A SIGNED AGREEMENT
TO PROVIDE $330 MILLION IN MOBILE NETWORK EQUIPMENT FOR LEAP'S U.S. SUBSIDIARY,
CRICKET COMMUNICATIONS.
Ericsson will supply and install state-of-the-art digital mobile systems that
will provide next-generation voice and multimedia data services based on the
phase one cdma2000 standard, known as 1XRTT. Ericsson will provide Radio Base
Stations (RBS), CMS 11 Base Station Controllers (BSC), switching equipment, and
a full portfolio of services including network design, deployment and training.
In connection with sales of equipment, Ericsson will provide Leap with vendor
financing that will be used for equipment, services and operations needed to
expand its wireless network in various markets across the United States. The
Ericsson agreement is part of Leap's strategy to work with multiple world-class
infrastructure vendors.
"We're proud to have the opportunity to contribute to the success of Cricket's
innovative service offering," said Ake Persson, president of Ericsson's CDMA
Systems business unit. "As a leading supplier of CDMA solutions, Ericsson is
committed to providing high quality networks to Leap Wireless International and
all of its operations, and we look forward to a strong relationship over the
long term."
"We are pleased to be working closely with Ericsson as it continues to develop
state-of-the-art CDMA infrastructure equipment," said Harvey P. White, chairman
and CEO of Leap. "We believe that our relationship with a world-renowned vendor
like Ericsson will allow us to provide the highest-quality wireless service to
Cricket and Leap customers."
"We believe that Ericsson's expertise in designing and supporting premier
communications solutions will be important to Cricket's success as it rolls out
across the United States," said Susan G. Swenson, president of Leap and CEO of
Cricket.
<PAGE> 84
EXHIBIT E
cdmaOne is one of the fastest growing wireless technologies in the world,
currently serving close to 35 million subscribers. Ericsson's cdmaOne networks
deliver the full advantages of CDMA technology for strong performance in mobile,
fixed and data applications. cdmaOne networks offer a clear migration path to
cdma2000, enabling operators to evolve their networks to provide the full range
of third generation services.
The financing agreement described above is subject to Ericsson obtaining the
approval of its Board of Directors.
This news release contains certain forward-looking statements, which are based
upon certain assumptions and describe future plans, strategies and expectations
of Leap Wireless International, are generally identifiable by use of the words
"believe," "expect," "intend," "anticipate," "estimate," "project" or similar
expressions. The ability of Leap to predict actual results and other future
events is inherently uncertain. Important factors which may cause actual results
to differ materially from the forward-looking statements contained herein or in
other public statements by Leap are described in the section entitled "Risk
Factors" in Leap's Information Statement filed with the Securities and Exchange
Commission on September 14, 1998. Those risk factors include the uncertainties
relating to costs and profitability and the ability to raise sufficient capital
for continued expansion and operation.
Ericsson is the leading provider in the new telecoms world, with communications
solutions that combine telecom and datacom technologies with freedom of mobility
for the user. With more than 100,000 employees in 140 countries, Ericsson
simplifies communications for its customers - network operators, service
providers, enterprises and consumers - the world over.
Please visit Ericsson's Press Room at: http://www.ericsson.se/pressroom
FOR FURTHER INFORMATION, PLEASE CONTACT
Ericsson Contacts:
Michelle French, Media Relations
Phone: 1-858-332-5241; Fax: 1-858-332-7203
Email: [email protected]
Eric Osterberg, Communications Director
Ericsson Corporate Communications
Phone: +46 70 590 05 99
Email: [email protected]
Leap Wireless International Contacts:
Sarah Thailing, Media Relations
Phone: 1-858-882-6018; Fax:1-858-882-6030
Email: [email protected]
Jim Seines, Investor Relations
Phone: 1-858-882-6084 Fax: 1-858-882-6030 Email: [email protected]
<PAGE> 85
EXHIBIT E
COMPANY INFORMATION
ABOUT CRICKET COMMUNICATIONS, INC.
Cricket Communications, Inc., a subsidiary of Leap Wireless International; plans
to change the way people communicate by bringing wireless communications to the
U.S. mass consumer market. Cricket's service, called "Comfortable Wireless" SM
and the "around town phone," SM has been operating in Chattanooga, Tennessee
since early 1999 using Chase Telecommunications' infrastructure and licenses
under an agreement that provides that ChaseTel controls the business until
Leap's proposed acquisition of ChaseTel is complete. Cricket's service lets
customers make and receive unlimited calls within their local service area for
one low, flat rate. Cricket's service also allows customers to make long
distance calls by paying for these calls in advance. While roaming is not
available, the local service area provides coverage where people live, work, and
play. Leap has rights to acquire licenses to offer the Cricket service to
approximately 24 million potential subscribers (1998 POPs) in more than 50
markets across the country, including Albuquerque, N.M., Greensboro, N.C.,
Little Rock, Ark., Nashville, Tenn., Salt Lake City, Utah, Spokane, Wash.,
Tucson, Ariz., Tulsa, Okla., and Wichita, Kans.
ABOUT LEAP WIRELESS INTERNATIONAL, INC.
Leap Wireless International, Inc., headquartered in San Diego, Calif., is a
wireless communications carrier that deploys, owns and operates wireless
networks in domestic and international markets with strong growth potential.
Through its operating companies, Leap has launched all-digital wireless service
in the United States, Mexico, Chile and Russia. Leap is dedicated to bringing
the benefits of reliable, cost-effective and high-quality voice and data
services to domestic and emerging markets. For more information, please visit
www.leapwireless.com.
###
<PAGE> 86
EXHIBIT E
Leap Contract Announcement Q&A
September 20, 1999
Please direct all media inquiries to an appropriate Ericsson spokesperson
o Michelle French, Senior Public Relations Manager, CDMA Systems
Phone: +1 858 332 5241, e-mail: [email protected]
o Eric Osterberg, Communications Director, Ericsson Corporate Communications
Phone: +46 70 590 05 99, e-mail: [email protected]
BACKGROUND INFORMATION:
In 1998, Qualcomm deployed a CDMA PCS network for ChaseTel in Chattanooga,
Tennessee. The network, which uses Qualcomm/Ericsson BSS equipment and Alcatel
switches, was commercially launched in the fall of 1998. In January of this
year, Leap Wireless International announced that it would acquire ChaseTel. In
March 1999, Leap's "Cricket" brand of service was launched in Chattanooga. No
products or services are currently sold under the ChaseTel name.
Leap is pursuing a "multi-vendor" strategy and has awarded Lucent an
infrastructure contract to supply equipment for their Cricket networks. Ericsson
will also continue to supply equipment to Leap as they expand their Cricket
networks.
1. HOW MUCH OF THE EQUIPMENT IS BEING FINANCED BY ERICSSON?
Ericsson is financing * * * percent of the equipment to cover capital and
operational costs associated with the expansion of Cricket's network.
2. WHEN DOES ERICSSON EXPECT TO OBTAIN BOARD APPROVAL OF THE FINANCING
AGREEMENT?
Board approval timing depends on Cricket's rollout schedule, which will
determine when equipment is purchased and shipped. Once Cricket presents its
specific rollout plans to Ericsson, we have 30 days to obtain board approval.
3. WHEN EXACTLY WILL ERICSSON HAVE CDMAONE 1XRTT EQUIPMENT AVAILABLE? DOES
THAT MEAN THAT ERICSSON WON'T SELL ANY CURRENT GENERATION EQUIPMENT TO
LEAP?
Ericsson expects to support cdma2000 1XRTT in 2001. Ericsson is undertaking the
normal product development process for our 1XRTT solution, and we'll proceed
with executing trials, demos, prototype equipment, etc over the next year. We'll
keep the market updated as to the specifics of our product availability schedule
as internal milestones are reached.
Ericsson will continue to supply current-generation equipment to Leap Wireless
as per our existing contracts with Pegaso PCS, Chilesat PCS and other operators.
4. WHERE WILL THE ERICSSON EQUIPMENT BE DEPLOYED IN THE US? WHERE WILL
LUCENT'S EQUIPMENT BE DEPLOYED?
[* * * Deleted pursuant to Confidential Treatment Request.]
09/20/99 Ericsson Proprietary - For Internal Use Only Page 1 of 4
<PAGE> 87
EXHIBIT E
Leap Contract Announcement Q&A
September 20, 1999
Please direct all media inquiries to an appropriate Ericsson spokesperson
o Michelle French, Senior Public Relations Manager, CDMA Systems
Phone: +1 858 332 5241, e-mail: [email protected]
o Eric Osterberg, Communications Director, Ericsson Corporate Communications
Phone: +46 70 590 05 99, e-mail: [email protected]
Cricket's service is currently offered in Tennessee, and Cricket Communications
plans to deploy the service in additional markets across the United States. Leap
has rights to acquire licenses to offer the Cricket service to approximately 24
million potential subscribers (1998 POPs) in more than 50 markets across the
country, including Albuquerque, N.M., Greensboro, N.C., Little Rock, Ark.,
Nashville, Tenn., Salt Lake City, Utah, Spokane, Wash., Tucson, Ariz., Tulsa,
Okla., and Wichita, Kans.
Specific information on Leap's rollout schedule has not been announced. We
expect that some geographical areas will be supplied with Ericsson equipment,
while others will be supplied with Lucent equipment.
5. IT DOESN'T SOUND LIKE YOU HAVE SPECIFIC EQUIPMENT ORDERS TODAY. WHEN DO YOU
EXPECT CONCRETE ORDERS AGAINST THIS PURCHASE AGREEMENT?
It is customary in this business to issue master purchase agreements followed by
specific equipment orders. We are currently supplying equipment to several of
Leap's projects, including Chile and Mexico. Specific information on the timing
of Leap's Cricket expansions will have to come from Leap.
6. DIDN'T ERICSSON, IN EFFECT, ALREADY HAVE A MASTER SUPPLY AGREEMENT WITH
LEAP BECAUSE OF THE CONTRACTUAL OBLIGATIONS TRANSFERRED FROM QUALCOMM? IS
THIS REALLY NEW BUSINESS?
Ericsson does have a global agreement with Leap wireless that gives us the right
to supply up to 50% of all of their infrastructure equipment. However, this
agreement has no specific dollar amounts or timeframes attached to it. The $330
million agreements represent new network expansions for Leap, and therefore new
business for Ericsson. In addition, this new agreement is much more specific in
terms of the type of equipment to be supplied.
09/20/99 Ericsson Proprietary - For Internal Use Only Page 2 of 4
<PAGE> 88
EXHIBIT E
Leap Contract Announcement Q&A
September 20, 1999
Please direct all media inquiries to an appropriate Ericsson spokesperson
o Michelle French, Senior Public Relations Manager, CDMA Systems
Phone: +1 858 332 5241, e-mail: [email protected]
o Eric Osterberg, Communications Director, Ericsson Corporate Communications
Phone: +46 70 590 05 99, e-mail: [email protected]
QUESTIONS ADAPTED FROM LEAP WIRELESS INTERNATIONAL'S Q&A
1. IS LEAP PURCHASING LUCENT EQUIPMENT BECAUSE OF SPECIFIC PROBLEMS WITH
ERICSSON'S EQUIPMENT?
In the past, Leap has indicated that they plan to build a multi-infrastructure
network. The agreement with Lucent simply adds another vendor to Leap's
portfolio of infrastructure equipment.
2. WHY DID LEAP DECIDE TO CHOOSE A NEW VENDOR NOW?
It is a natural process for a new company such as Leap or Cricket to complete a
vendor selection process when entertaining a major expansion. Recognizing that
Leap has always planned to become a multi-vendor shop, it was essential to
select an additional vendor as they begin to launch in Cricket service in new
markets.
3. WHAT DOES THIS MEAN FOR LEAP'S RELATIONSHIP WITH QUALCOMM?
This agreement should not have any impact on Leap's relationship with QC.
4. WHAT DOES THIS MEAN FOR LEAP'S RELATIONSHIP WITH ERICSSON?
Ericsson expects to continue a strong relationship with Leap as they develop and
expand new networks. Leap believes that having two vendors will ultimately mean
better service and pricing for their customers.
5. WHAT ARE THE TERMS OF ERICSSON'S EXISTING AGREEMENT WITH LEAP? HOW DOES
THIS TRANSACTION AFFECT THOSE OBLIGATIONS?
Ericsson has the right to supply infrastructure equipment for up to 50% of Leap
needs for any future RFPs under the terms of the separation agreements
(separation agreements between Leap / Qualcomm and Qualcomm / Ericsson).
6. WILL LUCENT NOW BE YOUR VENDOR IN MEXICO AND CHILE?
This contract covers the domestic markets only. It does not affect the existing
infrastructure in any other markets.
7. DOES THIS CONTRACT AFFECT THE INFRASTRUCTURE IN OTHER MARKETS?
09/20/99 Ericsson Proprietary - For Internal Use Only Page 3 of 4
<PAGE> 89
EXHIBIT E
Leap Contract Announcement Q&A
September 20, 1999
Please direct all media inquiries to an appropriate Ericsson spokesperson
o Michelle French, Senior Public Relations Manager, CDMA Systems
Phone: +1 858 332 5241, e-mail: [email protected]
o Eric Osterberg, Communications Director, Ericsson Corporate Communications
Phone: +46 70 590 05 99, e-mail: [email protected]
It does not affect the existing infrastructure in any other markets.
8. ARE THERE ANY COMPATIBILITY ISSUES BETWEEN THE TWO VENDORS' EQUIPMENT?
There are no compatibility issues. In fact, Lucent and Ericsson support both
IS-41, which is the interface between switches, and IOS, which is the standard
interface between switches and radio access equipment.
9. DOES THIS CONTRACT INVOLVE THE EXISTING CHATTANOOGA NETWORK INFRASTRUCTURE
EQUIPMENT?
Yes, Leap will be putting Lucent equipment into their existing Chattanooga
property, as well as in new markets.
10. WHY IS LEAP REMOVING ERICSSON'S EQUIPMENT?
The products originally installed in Chattanooga were intended for support of a
traditional mobile wireless network as designed by ChaseTel. Now that Leap has
deployed their Cricket one-rate service plan, the network traffic patterns more
closely resemble landline traffic. Leap plans to redeploy the Ericsson equipment
to be used in more traditional mobile networks.
11. WHAT WILL HAPPEN TO ALL OF ERICSSON'S EXISTING EQUIPMENT?
The equipment that was originally installed by Qualcomm will be redeployed in
other Leap markets.
09/20/99 Ericsson Proprietary - For Internal Use Only Page 4 of 4
