<PAGE>
As filed with the Securities and Exchange Commission on May 26, 2000
Registration No. 333-34514
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Airspan Networks Inc.
(Exact name of registrant as specified in its charter)
Washington 4812 75-2743995
(Primary Standard (IRS Employer
(State or other Industrial Identification No.)
jurisdiction of Classification Code
incorporation or Number)
organization) --------------
Cambridge House, Oxford Road
Uxbridge, Middlesex UB8 1UN England
011 44 1895 467 100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive office)
PTSGE Corp.
701 Fifth Avenue, Suite 5000,
Seattle, Washington 98104
(206) 623-7580
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies of all communications to:
Christopher H. Cunningham William M. Kelly
Davis Polk & Wardwell
Ben O. Orndorff
Preston Gates & Ellis LLP 1600 El Camino Real
701 Fifth Avenue, Suite 5000 Menlo Park, California 94025
Seattle, Washington 98104-7078 (650) 752-2000
(206) 623-7580
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement as the
underwriters shall determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the Securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
maximum Maximum Amount of
Amount to be offering price aggregate registration
Title of securities to be registered registered(1) per share offering price fee
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<S> <C> <C> <C> <C>
Common stock, $0.0003 per share........... 5,750,000 $11.00 $63,250,000 $16,698(2)
</TABLE>
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(1) Includes shares issuable upon the underwriters' exercise of their over-
allotment option.
(2) Previously paid.
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 26, 2000.
5,000,000 Shares
[AIRSPAN LOGO APPEARS HERE]
Airspan Networks Inc.
Common Stock
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Prior to this offering, there has been no public market for our common stock.
We currently estimate that the initial public offering price per share will be
between $9.00 and $11.00 per share. We have applied to list the common stock on
The Nasdaq Stock Market's National Market under the symbol "AIRN."
The underwriters have an option to purchase a maximum of 750,000 additional
shares to cover over-allotments of shares.
Investing in our common stock involves risks. See "Risk Factors" on page 7.
<TABLE>
<CAPTION>
Price to Underwriting Discounts Proceeds to
Public and Commissions Airspan
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<S> <C> <C> <C>
Per Share.................................. $ $ $
Total...................................... $ $ $
</TABLE>
Delivery of the shares of common stock will be made on or about , 2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
Credit Suisse First Boston
Deutsche Banc Alex. Brown
Lehman Brothers
U.S. Bancorp Piper Jaffray
The date of this prospectus is , 2000.
<PAGE>
Inside front cover artwork
Graphics depicting Airspan products including base stations, antennas, and
urban and rural settings where they are deployed with text: "Airspan provides
advanced fixed wireless solutions that enable communications service providers
to deliver high-speed data, voice and Internet access services to business and
residential customers around the globe."
Logo, Airspan The Wireless Future for Telecommunications
<PAGE>
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TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Prospectus Summary.................. 3
Risk Factors........................ 7
Special Note Regarding Forward-
Looking Statements................. 16
Use Of Proceeds..................... 17
Dividend Policy..................... 17
Capitalization...................... 18
Dilution............................ 19
Selected Financial Data............. 20
Management's Discussion And Analysis
Of Financial Condition And Results
Of Operations...................... 21
Business............................ 31
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Management....................... 41
Principal Shareholders........... 51
Description Of Capital Stock..... 53
Shares Eligible For Future Sale.. 55
Underwriting..................... 57
Notice To Canadian Residents..... 59
Legal Matters.................... 60
Experts.......................... 60
Where You Can Find More
Information..................... 60
Index To Consolidated Financial
Statements...................... F-1
</TABLE>
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You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
Dealer Prospectus Delivery Obligation
Until , 2000 (25 days after the commencement of this offering), all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealer's obligation to deliver a prospectus when acting
as an underwriter and with respect to its unsold allotments or subscriptions.
2
<PAGE>
PROSPECTUS SUMMARY
Airspan Networks Inc.
We are a global supplier of wireless communications systems that enable
communications service providers to cost effectively deliver integrated high
speed data and voice services to customers at fixed geographic locations. Our
systems, which are referred to as fixed wireless, use proven, robust technology
that provides wide area coverage, security and resistance to fading. Our
systems can be deployed rapidly and cost effectively, providing an attractive
alternative to copper wire and fiber communications networks. Our products
include software tools that optimize geographic coverage of our systems using
the available spectrum frequencies and provide ongoing network management. To
facilitate the deployment and operation of our systems, we also offer network
installation, training and support services.
Our systems feature an architecture where a central radio transmitter and
receiver, or base station, provides services to multiple customer sites, known
as a point-to-multipoint system. During 1996, we began shipping our products
which were among the first fixed wireless, point-to-multipoint systems to be
commercially deployed. Our systems have been installed by over 40
communications service providers in approximately 30 countries and are being
tested by numerous other service providers.
We were originally organized in 1994 as a unit within DSC Communications
Corporation. In January 1998 we created a new corporation that purchased the
Airspan unit from DSC. We have generated significant net losses and negative
cash flow since our formation and expect to continue to do so. We have an
accumulated deficit of $72.1 million as of April 2, 2000.
The Airspan Solution
The explosive growth in Internet use is driving the global demand for
reliable high speed access and increased capacity to transmit and receive data,
or bandwidth. This demand, together with global deregulation and competition,
is driving incumbent and alternative communications service providers to offer
integrated high speed data and voice services. In order to address the demand
for integrated high speed reliable data and voice services, our fixed wireless
systems are designed to deliver the following benefits to communications
service providers:
Integrated Data and Voice Services Platform. Our solutions enable
communications service providers to offer integrated high speed data and voice
services, unlike many other access technologies that are optimized for either
data or voice traffic, but not both.
Quality of Service and Reliability. Our technology provides wide area
coverage, security and resistance to fading, allowing communications service
providers to offer high quality services with the same levels of reliability as
traditional telephone networks.
Rapid, Cost Effective Deployment. Our systems' wide area coverage requires
fewer base stations, allowing faster deployment with lower initial capital
outlays. Communications service providers can quickly begin generating new
subscriber revenues due to the reduced up-front planning and infrastructure
costs and the relative ease of installation of our base stations.
Flexibility and Expandability. Our systems are highly configurable to
customer requirements for specific spectrum frequencies. The modular design of
our systems allows for expansion as customer capacity requirements increase.
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<PAGE>
Comprehensive Implementation and Support Solutions. We offer our customers a
range of software tools that provide system-wide analysis for optimizing
geographic coverage and identifying and solving potential sources of
interference. Our software tools also initiate service for new customers and
provide alarm, maintenance and testing functions.
The Airspan Strategy
Our goal is to be the leading provider of fixed wireless systems to
communications service providers. Key elements of our strategy include the
following:
. capitalize on existing deployments of our systems to attract new
customers
. extend our strong technology position through continued substantial
investment in research and development
. target key growth market opportunities globally
. develop and expand our strategic relationships
. expand global sales, marketing and customer support presence
We are a Washington, USA corporation and our principal executive offices are
located at Cambridge House, Oxford Road, Uxbridge, Middlesex UB8 1UN England.
Our telephone number is + 44 1895 467 100. We have a website located as
www.airspan.com. The information on our website does not form a part of this
prospectus.
4
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The Offering
Common stock offered................
5,000,000 shares
Common stock outstanding after this
offering........................... 33,281,572 shares (1)
Use of proceeds..................... Working capital, general corporate
purposes including increased research and
development and sales and marketing
expenditures and possible acquisitions
Proposed Nasdaq National Market AIRN
symbol.............................
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(1) The number of shares of common stock to be outstanding after this offering
is based on the number of shares outstanding as of April 2, 2000, and does
not include the following:
. 1,776,851 shares issuable upon exercise of outstanding options at a
weighted average exercise price of $1.94 per share
. an aggregate of 281,090 shares available for future issuance under our
stock option plan
. an aggregate of 249,998 shares of preferred stock issuable upon the
exercise of 249,998 warrants to purchase preferred stock at an exercise
price of $1.75 per share; upon the closing of this offering these
warrants will convert into warrants to purchase 83,333 shares of common
stock at an exercise price of $5.25 per share
Except where we state otherwise, the information we present in this prospectus:
. reflects the three for one reverse split of our common stock effected
May 25, 2000
. reflects the amendment of our charter to increase the authorized number
of shares of common stock to 50,000,000 shares
. assumes that the underwriters do not exercise their over-allotment
option to purchase additional shares
. reflects the conversion of our outstanding convertible preferred stock
into common stock upon the closing of this offering
5
<PAGE>
Summary Financial Data
The following tables summarize our financial data. You should read our
financial statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The pro forma balance sheet data reflects
the conversion of our outstanding convertible preferred stock into common stock
upon the closing of this offering. The pro forma as adjusted balance sheet data
reflect our sale of 5,000,000 shares of common stock in this offering at an
assumed initial public offering price of $10.00 per share, after deducting
estimated underwriting discounts and commissions and estimated offering
expenses payable by us.
<TABLE>
<CAPTION>
Predecessor(1) Company
------------------------ -----------------------------------------------
Eleven Months Quarter Quarter
Year Ended Month Ended Ended Year Ended Ended Ended
December 31, January 25, December 31, December 31, April 4, April 2,
1997 1998 1998 1999 1999 2000
------------ ----------- ------------- ------------ -------- ----------
(in thousands,
except per share
data) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenue................. $ 4,818 $ 135 $ 11,485 $ 12,480 $ 1,301 $ 5,661
Gross profit............ 870 35 1,954 4,394 415 2,131
Operating expenses (2).. 17,613 1,850 37,519 33,890 7,564 9,817
-------- ------- -------- ---------- ------- ----------
Loss from operations.... $(16,743) $(1,815) (35,565) (29,496) (7,149) (7,686)
======== =======
Net loss................ -- -- $(35,596) $ (29,449) $(7,057) $ (7,064)
======== ========== ======= ==========
Net loss per share-basic
and diluted............ -- -- $ (65.72) $ (33.84) $(10.33) $ (6.50)
Weighted average shares
outstanding-basic and
diluted................ -- -- 541,667 870,328 682,870 1,087,047
Pro forma net loss per
share-basic and
diluted................ -- -- -- $ (1.37) -- $ (0.26)
Pro forma weighted
average shares
outstanding- basic and
diluted................ -- -- -- 21,446,122 -- 27,633,079
</TABLE>
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(1) The statement of operations data relating to our predecessor are further
described in Note 1 to our financial statements.
(2) The eleven months ended December 31, 1998 includes a charge of $14 million
for acquired in-process research and development in connection with the
acquisition of the net assets of our predecessor.
(3) Pro forma basic and diluted per share calculations reflect the pro forma
conversion at the date of issuance of all outstanding shares of preferred
stock.
<TABLE>
<CAPTION>
As of April 2, 2000
---------------------------
Pro Pro Forma
Actual Forma As Adjusted
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(in thousands)
(unaudited)
<S> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents (1)....................... $55,906 $55,906 $102,352
Working capital..................................... 66,147 66,147 112,593
Total assets........................................ 85,428 85,428 131,874
Long term debt...................................... 20,440 20,440 20,440
Stockholders' equity................................ 54,179 54,179 100,625
</TABLE>
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(1) Excludes $3.3 million of restricted cash.
6
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making a
decision to invest in Airspan.
Risks Related To Our Business
We have incurred substantial losses and may not be profitable in the future.
We have incurred net losses since we became an independent company, and as
of April 2, 2000 we had an accumulated deficit of $72.1 million. Our operating
losses have been due in part to the commitment of significant resources to our
research and development and sales and marketing organizations. We expect to
devote additional resources to these areas and, as a result, will need to
continue increasing our quarterly revenues to achieve and maintain
profitability. We cannot be certain that our revenues will grow at past rates
or that we will achieve sufficient revenues for profitability. If we do achieve
profitability, we cannot be certain that we can sustain or increase
profitability on a quarterly or annual basis in the future.
We have a limited operating history, which makes our future operating results
uncertain.
We are an early-stage company in the emerging fixed wireless communications
access market. We operated as a unit of DSC Communications Corporation
beginning in 1994 and did not become an independent company until January 1998.
As a result of our limited operating history, we have limited financial data
that you can use to evaluate our business. Accordingly, our prospects must be
considered in light of the risks and difficulties frequently encountered by
companies in the early stage of development, particularly companies in new,
rapidly evolving and highly competitive markets.
In addition, the historical financial information for the year ended
December 31, 1997 and the one month ended January 25, 1998 that we have
included in this prospectus may not reflect what our results of operations
would have been had we operated as a separate, stand-alone company during those
periods. The information for these periods has been prepared as a statement of
revenues and direct costs and does not include DSC corporate allocations of
certain overhead, general and administrative expenses, interest expense and
income taxes, as it is impracticable to allocate such expenses arbitrarily on a
retroactive basis. Therefore, those periods are not good indications of our
future performance.
Since we have a limited operating history and a significant percentage of our
expenses are fixed and do not vary with revenues, our quarterly operating
results are volatile and difficult to predict, and our stock price could
decline.
We may not be able to accurately forecast our quarterly revenues since our
customers are not required to purchase a specific number of our products in any
given quarter, which will be further affected if major deployments of our
products do not occur in the quarter we anticipated. As a result, our quarterly
operating results have fluctuated in the past and will likely vary in the
future, which could cause the market price of our common stock to decline.
Other factors that may affect our quarterly operating results include our
ability to react quickly to new competing technologies, products and services
which may cause us to otherwise lose our customers, or if our suppliers and
manufacturers are not able to fulfill our orders and a shortage of key
components leads to a delay in shipping our products. We incur expenses in
significant part based on our expectations of future revenue, and we expect our
operating expense, in particular salaries and lease payments, to be relatively
fixed in the short run. Accordingly, an unanticipated decline in revenue for a
particular quarter could have an immediate negative effect on results for that
quarter. We believe that period-to-period comparisons of our operating results
are not necessarily meaningful. You should not rely on any one quarter as an
indication of future performance.
7
<PAGE>
A loss of one or more of our key customers could cause a significant decrease
in our net revenue.
We currently derive, and expect to continue to derive, a substantial
percentage of our net sales from fewer than ten customers. For the year ended
December 31, 1999, three customers, Suntel Private Ltd, Aliatel a.s. and
eircom, plc, accounted for 59% of our revenue. In the quarter ended April 2,
2000, three customers, AZ Communications Network, Inc., Suntel Private Ltd.,
and eircom, plc accounted for 82% of our revenue. A number of our customers are
affiliated in that they may have cross investments in each other, which means
we may lose more than one customer at once if one party decided to discontinue
deploying our equipment. The amount of revenue we derive from a specific
customer is likely to vary from period to period, and a major customer in one
period may not produce significant additional revenue in a subsequent period.
We anticipate that our operating results will continue to depend on sales to a
small number of key customers in the foreseeable future. In general our
contracts with our customers involve major deployments which require several
months to fulfill, so our results may depend on the same major customers for
consecutive quarters. Once the contract is fulfilled, that customer may
continue to purchase upgrades or services from us, and possibly new products
but we cannot assure you of such future purchases. It is necessary therefore
for us to continually seek new customers in order to increase our revenue. To
the extent that any major customer terminates its relationship with us, our
revenues could decline significantly.
Our customer contracts vary widely in terms and duration, allow our customers
to terminate and are subject to regulatory approvals.
Our contracts and purchase orders are separately negotiated with each of our
customers and the terms may vary widely. A majority of our customers may only
execute short-term purchase orders for a single or a few systems at one time
instead of long-term contracts for large scale deployment of our systems. These
purchase orders do not ensure that they will purchase any additional products
beyond that specifically listed in the order.
Moreover, since we believe that these purchase orders may represent the
early portion of longer term customer programs, we expend significant financial
and personnel resources and expand our operations to be able to fulfill these
programs. If our customers fail to purchase additional products to fulfill
their program as we expect, we may be unable to recover the costs we incurred
and our business could suffer.
In addition, our contracts are generally non-exclusive and contain
provisions allowing our customers to terminate the agreement without
significant penalties, and some contracts are conditional upon our customer's
ability to receive foreign regulatory approvals. Our contracts also may specify
the achievement of shipment, delivery and installation commitments. We are
generally able to meet these commitments or negotiate extensions with our
customers. However, if we fail to meet these commitments in a timely manner,
our customers may choose to terminate their contract with us or impose monetary
penalties. If our customers fail to obtain the required regulatory approvals in
a timely manner, or elect to terminate their contracts with us, our revenues
would be reduced.
Our sales cycle is typically long and unpredictable.
Our sales cycle can range from approximately six months to approximately two
years and varies depending on the customer. The length of the sales cycle with
a particular customer is influenced by a number of factors, including:
. the particular communications market that the customer serves
. the testing requirements imposed by the customer on our systems
. the customer's experience with sophisticated communications equipment
including fixed wireless technology
8
<PAGE>
. the cost of purchasing our systems, including the cost of converting to
our products from previously installed equipment, which may be
significant
Before we receive orders, our customers typically test and evaluate our
products for a period of months or, in some cases, more than a year. In
addition, the emerging and evolving nature of the communication access market
may cause prospective customers to delay their purchase decisions as they
evaluate new technologies or competing technologies or wait for new products or
technologies. As the average order size for our products increases, our
customers' processes for approving purchases could become more complex, leading
to a longer sales cycle. We expect that our sales cycle will continue to be
long and unpredictable. Accordingly it is difficult for us to anticipate the
quarter in which particular sales may occur, to determine product shipment
schedules and provide our manufacturers and suppliers with enough lead time to
ensure that they have sufficient inventory on hand. In addition, our sales
cycle impairs our ability to forecast revenues and control expenses.
Our international operations may be difficult and costly.
Sales to customers based outside the U.S. have historically accounted for a
substantial majority of our revenues. In 1999, our international sales
accounted for 96% of our total revenue with sales to customers in Asia Pacific,
particularly Sri Lanka and the Philippines, accounting for 39.5% and Europe,
particularly Ireland and the Czech Republic, accounting for 41.3%. Our
international sales for the quarter ended April 2, 2000 accounted for 98% of
our total revenue with sales to customers in Asia Pacific, particularly Sri
Lanka and the Philippines, accounting for 72.3% and Europe, particularly
Ireland and the Czech Republic, accounting for 23.7%. We are a U.K. based
operation with primarily international sales, which exposes us to risks
associated with international operations including:
. longer payment cycles, including difficulty in collecting accounts
receivable and timing delays associated with collection
. tariffs, duties, price controls or other restrictions on foreign
currencies or trade barriers imposed by foreign countries and
fluctuations in currency exchange rates
. import or export licensing and product certification requirements
. seasonal reductions in business activity in some parts of the world
. unexpected changes in regulatory requirements
. difficulties and costs of staffing and managing foreign operations
. political and economic instability, including the impact of economic
recessions, specifically recently in Asia
. limited ability to enforce agreements, intellectual property and other
rights in some foreign countries
. higher levels of regulation relating to the telecommunications industry
In addition, changes in foreign currency exchange rates also affect our
revenue. See "Fluctuations in the values of foreign currencies could have a
negative impact on our profitability."
We may not be able to expand our sales and distribution capabilities, which
would harm our ability to generate revenue.
We believe that our future success depends upon our ability to expand our
direct and indirect sales operations, including establishing relationships with
international distributors. We cannot be certain that we will be successful in
these efforts. In addition, our distributors may not devote adequate resources
to marketing, selling and supporting our products. If we fail to expand these
sales channels, our business will be seriously harmed.
Our results of operations could be negatively affected if we are unable to
manage our rapid growth effectively.
We have experienced a period of rapid growth and expansion that has strained
our resources. Since we became an independent company, the number of our
employees, including contract personnel, increased from
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74 to 217 as of March 31, 2000. We intend to continue to expand rapidly. In
order to manage growth effectively, we must continue to develop and expand our
operational systems, procedures and controls. A failure to do so would impair
our ability to accurately forecast sales demand, manage our product inventory
and record and report financial and management information on a timely and
accurate basis. Our inability to manage growth effectively could seriously harm
our business.
Competition from larger, better capitalized or emerging competitors for our
products could result in price reductions, reduced gross margins and loss of
market share.
We compete in a new, rapidly evolving and highly competitive and fragmented
market. We compete with companies that are producing fixed wireless
communications access systems, satellite access systems, cable access systems
and other new entrants to this industry, as well as traditional communications
companies.
We expect competition to persist and intensify in the future. In the
particular frequencies where we operate, we compete directly with ECI and
Lucent, as well as smaller start-up companies. We compete indirectly with a
number of large telecommunication equipment suppliers such as Alcatel,
Ericsson, Hughes, and Nortel. In addition, our technology competes with other
high speed solutions, such as digital subscriber lines, optical fiber cable,
cable modems and high speed leased lines and satellite technologies.
Many of our competitors are substantially larger than we are and have
significantly greater financial, sales and marketing, technical, manufacturing
and other resources and more established distribution channels. These
competitors may be able to respond more rapidly to new or emerging technologies
and changes in customer requirements or to devote greater resources to the
development, promotion, sale and financing of their products than we can.
Furthermore, some of our competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with third parties to
increase their ability to gain customer market share rapidly. These competitors
may enter our existing or future markets with systems that may be less
expensive, provide higher performance or contain additional features.
We expect our competitors to continue to improve the performance of their
current products and to introduce new products or new technologies that may
supplant or provide lower cost alternatives to our systems. To remain
competitive, we must continue to invest significant resources in research and
development, sales and marketing and customer support. We cannot be certain
that we will have sufficient resources to make these investments or that we
will be able to make the technological advances necessary to remain
competitive.
Our dependence on key suppliers and one manufacturer may result in product
delivery delays.
Some of the key components of our products are purchased from single
vendors, including printed circuit boards from Flextronics International Sweden
AB, cabinets from Ripley Engineering Limited, electronic connector panels from
Sanmina (Ireland) Limited and electric power amplifiers from Amplidyne Inc.,
for which alternative sources are generally not readily available. If our
vendors fail to supply us with components because they do not have them in
stock when we need them, they reduce or eliminate their manufacturing capacity
for these components or they enter into exclusive relationships with other
parties which prevents them from selling to us, we could experience significant
delays in shipping our products while we seek other sources, which may result
in our customers claiming damages. At times we have been forced to purchase
these components from distributors instead of from the manufacturers, which
significantly increases our costs. We do not have long-term contracts with most
of these suppliers. Instead, we execute purchase orders approximately three to
six months in advance of when we believe we may need the components. These
purchase orders are non-exclusive, and we are generally not required to
purchase any minimum volume of components from any of these suppliers. Since we
do not have long-term contracts with these suppliers, they may terminate our
relationship with up to four months' notice.
In addition, we outsource most of our manufacturing processes to
Flextronics. Flextronics relies on our forecasts of future orders to make
purchasing and manufacturing decisions. We provide them with forecasts on a
biweekly basis. If our forecast turns out to be inaccurate, it may lead either
to excess inventory that would increase our costs or a shortage of components
that would delay shipments of our systems. Our contract with
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Flextronics is non-exclusive and may be terminated with four months' notice by
either party without significant penalty. Other than agreeing to purchase the
materials we request in the forecasts, we do not have any agreements with them
to purchase any minimum volume. It is possible that our major competitors may
enter into contracts with Flextronics.
Our products incorporate software developed and maintained by third parties.
We depend on these third parties to deliver, support and enhance their
software. The failure of these third parties to do so could seriously harm our
business.
Our ability to attract, train and retain qualified employees is crucial to
increase our revenue and future growth.
The design and development of fixed wireless communications access systems
is complex and requires highly trained professional software, hardware and
radio frequency engineers and customer support personnel. Our business strategy
of developing and delivering sophisticated products and providing our customers
with the appropriate levels of technical support will suffer if we do not have
the skilled personnel working for us. In addition, our future growth also
depends upon our ability to expand our sales and marketing operations in order
to seek new customers, maintain key customer relationships and increase market
awareness of our products. Even if we are able to hire these personnel, we will
need to train them, and they will need time to become fully productive.
Competition for skilled personnel is intense, especially in the London, England
area where we maintain our primary operations. The inability to attract or
retain qualified personnel in the future or delays in hiring required
personnel, particularly engineers and sales and marketing professionals, may
hinder our ability to keep up with new technologies or continue to increase our
customer base.
The loss of Eric Stonestrom or any of our other executive officers could impair
our ability to implement our business plan successfully.
We believe that our ability to implement our business strategy and our
future success depends on the continued employment of our senior management
team, in particular our president and chief executive officer, Eric Stonestrom.
Our senior management team, who have extensive experience in our industry and
are vital to maintaining some of our major customer relationships, would be
very difficult to replace. The loss of the technical knowledge and management
and industry expertise of these key employees could make it difficult for us to
execute our business plan effectively, could result in delays in new products
being developed, lost customers and diversion of resources while we seek
replacements.
If we are not able to implement a program to reduce costs over time, introduce
new products or increase sales volume, our gross margin may decline.
We expect the average selling prices of our products to decline due to a
number of factors, including competitive pricing pressures, rapid technological
change and volume sales discounts. Accordingly, to maintain or increase our
gross margin, we must develop and introduce new products or product
enhancements with higher gross margins and implement cost reductions.
If our average selling prices continue to decline and we are not able to
maintain or increase our gross margin, our results of operations could be
harmed.
We may not have adequate protection for our intellectual property, which may
make it easier for others to sell competing products at lower prices.
Our success depends in part on proprietary technology. We rely on a
combination of patent, copyright, trademark and trade secret laws and
contractual restrictions on disclosure to protect our intellectual property
rights. Despite our efforts to protect our proprietary rights, we cannot be
certain that the steps we have taken
11
<PAGE>
will prevent misappropriation of our technology, and we may not be able to
detect unauthorized use or take appropriate steps to enforce our intellectual
property rights. The laws of some foreign countries do not protect our
proprietary rights to the same extent as the laws of the U.S. and the U.K., and
we may encounter substantial infringement problems in those countries. In
addition, we do not file for patent protection in every country where we
conduct business. If we fail to adequately protect our intellectual property
rights, or fail to do so under applicable law, it would be easier for our
competitors to copy our products and sell competing products at lower prices,
which would harm our business.
Our products may infringe on the intellectual property rights of third parties,
which may result in lawsuits and prohibit us from selling our products.
Third parties could assert exclusive patent, copyright, trademark and other
intellectual property infringement claims against the technologies that are
important to us. In addition, third parties may assert claims, or initiate
litigation against us, or our manufacturers, suppliers or customers with
respect to existing or future products, trademarks or other proprietary rights.
There is a substantial risk of litigation regarding intellectual property
rights in our industry. Any claims against us or customers that we indemnify
against intellectual property claims, with or without merit, may:
. be time-consuming, costly to defend and harm our reputation
. divert management's attention and resources
. cause delays in the delivery of our products
. require the payment of money damages
. result in an injunction, which would prohibit us from using these
technologies and require us to stop shipping our systems until they
could be, if possible, redesigned
. require us to enter into license or royalty agreements, which may not be
available on acceptable terms or require payment of substantial sums
Fluctuations in the values of foreign currencies could have a negative impact
on our profitability.
Although 87% of our sales in 1999 were denominated in U.S. dollars, we incur
most of our expenses in British pounds and a majority of our cost of goods sold
in Swedish krona. We expect these percentages to fluctuate over time. While we
recently commenced currency hedging activities to limit the risks of exchange
rate fluctuations, fluctuations in the value of foreign currencies could still
have a negative impact on the profitability of our global operations and our
business. The value of foreign currencies may also make our products more
expensive than local products.
A material defect in our products could seriously harm our credibility and harm
our business.
We have detected and are likely to continue to detect errors and product
defects in connection with new product releases and product upgrades. In the
past, some of our products have contained defects that have to date delayed the
commencement of service but have not materially affected the operation, planned
scale or planned functionality of the networks. We may experience future
defects that materially affect customer networks which may adversely affect our
ability to sell our systems, cause us to incur significant warranty and repair
costs and harm our credibility with our customers. Fixed wireless devices are
highly complex and frequently contain undetected software or hardware errors
when first introduced or as new versions are released. If our hardware or
software contains undetected errors, we could experience:
. delayed or lost revenues and market share due to adverse customer
reactions
. higher costs and expenses due to the need to provide additional products
and services to a customer at a reduced charge or at no charge
. claims for substantial damages against us, regardless of our
responsibility for any failure, which may lead to increased insurance
costs
12
<PAGE>
. negative publicity regarding us and our products, which could adversely
affect our ability to attract new customers
. diversion of management and development time and resources
Our general liability insurance coverage may not continue to be available on
reasonable terms or in sufficient amounts to cover one or more large claims, or
our insurer may disclaim coverage as to any future claim. The successful
assertion of any large claim against us could adversely affect our business.
If there is a problem in one of our networks, we may have difficulty
identifying the source of the problem.
Our products must successfully integrate with products from other companies.
When problems occur in a network, it may be difficult to identify the source of
the problem. Although a third-party's product may be the source of hardware or
software errors in our network, our customers may hold us responsible. We may
not be able to respond quickly to correct these problems, which may result in
the loss of future sales and harm to our reputation. In addition, we may be
forced to incur significant expenses.
Because our executive office and our executive officers are in the United
Kingdom, you may not be able to enforce judgments against us that are obtained
in U.S. courts.
Since our executive office is located in Middlesex, England, our executive
officers reside outside the U.S. and a portion of our assets are located
outside the U.S. As a result, it may be difficult or impossible for investors
to effect service of process upon such persons within the U.S. or to enforce
against such persons judgments obtained in the U.S. courts, including judgments
predicated upon the civil liability provisions of the federal securities laws
of the U.S.
Risks Related To Our Industry
Fixed wireless systems may not achieve widespread acceptance, which could cause
our business to fail.
The fixed wireless market is relatively new. Our ability to sell and deploy
our systems in the future depends on commercial acceptance of fixed wireless
technology as a communications system. In particular, if alternative
technologies, including wireline, cable and satellite approaches, achieve a
significantly different cost, performance or deployment profile which makes
them less expensive, more accessible or technologically sophisticated, fixed
wireless systems could be significantly less competitive.
In order to achieve commercial acceptance, we will need to educate
prospective customers, including large, established communications companies,
governments and government contractors in developing countries, about the
benefits and uses of fixed wireless systems in general and our systems in
particular. If our efforts fail or if fixed wireless systems do not achieve
commercial acceptance, our business could be seriously harmed.
Changes in telecommunications regulation could adversely affect our customers
and may lead to lower sales and may also restrict our business.
Our customers are subject to extensive regulation as communications service
providers. Changes in legislation or regulation that adversely affect our
existing and potential customers could lead them to spend less on
communications access systems, which would harm our business.
At present there are few laws or regulations that specifically address our
business of providing communications access equipment. However, future
regulation may include access or settlement charges or tariffs which could
impose economic burdens on us and our customers. We are unable to predict the
impact, if any, that future legislation, judicial decisions or regulations will
have on our business.
13
<PAGE>
The communications systems market is changing rapidly, and failure to
anticipate and react to the rapid change could result in loss of customers or
unnecessary capital expenditure.
The market for communications systems has been characterized by:
. rapid technological developments
. evolving industry standards
. dramatic changes in the regulatory environment
. frequent new product and service introductions
Our future success depends largely on our ability to enhance our existing
products and services and to introduce new products and services that are based
on leading technologies and that are capable of adapting to changing
technologies, industry standards and customer preferences, in a timely and cost
effective manner.
New technologies, services or standards could require us to significantly
change our business model, develop new products or provide additional services.
New products and services may be expensive to develop and may result in the
introduction of additional competitors into the marketplace. Furthermore, if
the overall market for communications systems grows slower than anticipated, or
if our products and services fail in any respect to achieve market acceptance,
our revenues would be lower than we anticipate and our business could be
adversely affected.
Risks Related to the Offering
Our existing shareholders have voting control over Airspan.
On completion of this offering, our executive officers and directors and
their affiliates will beneficially own in the aggregate approximately 33.2% of
our outstanding common stock. This percentage will be 32.4% if the underwriters
exercise their over-allotment option in full. As a result, these shareholders
will be able to exercise significant control over all matters requiring
shareholder approval, including the election of directors and approval of
significant corporate transactions, which may have the effect of delaying or
preventing a third party from acquiring control over us.
Our stock price may be volatile after this offering because our shares have not
been publicly traded before this offering.
Prior to this offering, you could not buy or sell our common stock publicly.
An active trading market for our stock may not develop or be sustained after
this offering. The initial public offering price will be determined by us and
the underwriters based on negotiations concerning the valuation of our common
stock. The public market may not agree with or accept this valuation. The
market price for our common stock is likely to be volatile, which may be caused
by a number of factors, some of which are beyond our control:
. variations in our quarterly operating results which are difficult to
predict
. changes in financial estimates or investment recommendations by
securities analysts relating to our stock based on their perceptions of
our business
. changes in market valuations of similar companies or the
telecommunications business in general
. announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments which the market may view as unfavorable to us
. loss of one of our major customers whom we depend upon to generate
revenue
. the potential for future sales of our common stock
. fluctuations in the stock market price and volume of traded shares
generally, especially fluctuations in the technology sector which tends
to be volatile
14
<PAGE>
We may need to raise additional capital after this offering and if we are not
able to raise capital on acceptable terms or on a timely basis, we may not be
able to continue our business operations.
We anticipate that we will continue to experience negative cash flow for at
least the next 36 months following the offering, and may need to raise
additional funds. If we cannot secure needed funds on acceptable terms, we may
not be able to develop or enhance our technologies or products, take advantage
of future opportunities or respond to competitive pressures or unanticipated
cash requirements, or hire and recruit additional personnel, which could
seriously harm our business. If we issue additional equity securities to raise
funds, the ownership percentage of existing shareholders would be reduced. New
investors may demand rights, preferences or privileges senior to those of
existing holders of our common stock.
When we become a public company, we may be the target of securities class
action litigation, which could be costly and time consuming to defend.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. Although we are not currently a party to any such class action
litigation as a private company, we may in the future be the target of
litigation since the volatility of the market price of our securities may cause
our investors to lose money. Securities litigation may result in substantial
costs to defend and divert management's attention and resources.
Our articles of incorporation and bylaws and Washington law contain provisions
that could delay or prevent a change of control of Airspan.
Certain provisions of our articles of incorporation and bylaws and
Washington law may discourage, delay or prevent a merger or acquisition that a
shareholder may consider favorable. These provisions include:
. authorizing the board of directors to issue additional common and
preferred stock
. not permitting cumulative voting in the election of directors
. limiting the persons who may call special meetings of shareholders
. not permitting shareholder action by written consent
. establishing advance notice requirements for nominations for election of
the board of directors or for proposing matters that can be acted on by
shareholders at shareholder meetings
We are also subject to certain provisions of Washington law that could
delay, deter or prevent us from entering into an acquisition. Chapter 19 of the
Washington Business Corporation Act prohibits a Washington corporation such as
Airspan from engaging in a business combination with an interested shareholder
unless specific conditions are met.
Substantial future sales of our shares in the public market may cause our stock
price to fall.
If our shareholders (especially our existing shareholders) sell substantial
amounts of our common stock in the public market after this offering, our stock
price may decline significantly. These sales also might make it more difficult
for us to sell equity securities in the future. All of the shares sold in this
offering will be freely tradable. Substantially all of the remaining shares are
subject to lock-up arrangements between the shareholders and us or the
underwriters. Of the remaining shares of common stock outstanding after this
offering, 27,555,381 will be eligible for sale in the public market 180 days
following the date of the final prospectus. Of these shares, 18,388,849 shares
will be subject to volume limitations under federal securities laws.
In addition, on the date 180 days following the date of the final
prospectus, approximately 723,481 shares will be subject to vested options.
15
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under the captions "Prospectus Summary", "Risk
Factors", "Use of Proceeds", "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" and elsewhere in this
prospectus are "forward-looking statements". These statements involve known and
unknown risks and uncertainties, such as our plans, objectives, expectations
and intentions, and other factors that may cause our, or our industry's, actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by the forward-looking statements. These
factors are listed under "Risk Factors" and elsewhere in this prospectus.
In some cases, you can identify forward-looking statements by terminology
such as "expects", "anticipates", "intends", "may", "should", "plans",
"believes", "seeks", "estimates" or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we do not guarantee future results, levels of
activity, performance or achievements. Our actual results and the timing of
certain events could differ materially from those anticipated in these forward-
looking statements. We are under no obligation to update any of the forward-
looking statements after the date of this prospectus to conform these
statements to actual results.
16
<PAGE>
USE OF PROCEEDS
We expect to receive proceeds of approximately $45.0 million from the sale
of 5,000,000 shares of common stock, and an additional $7.0 million from the
sale of 750,000 shares if the underwriters' over-allotment option is exercised
in full, at an assumed initial public offering price of $10.00 per share and
after deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us.
We intend to use the net proceeds of this offering primarily for additional
working capital and other general corporate purposes, including in management's
estimation continued investment in research and development between $15 million
and $25 million and sales and marketing expenditures between $10 million and
$20 million. The amounts and timing of these expenditures will vary depending
on a number of factors, including the amount of cash generated by our
operations, competitive and technological developments and the rate of growth,
if any, of our business. While we have no specific plans for any remaining
proceeds, we may also use a portion of the net proceeds to acquire businesses,
products and technologies, or to establish joint ventures that we believe will
complement our current or future business. However, we have no specific plans,
agreements or commitments to do so and are not currently engaged in any
negotiations for any acquisition or joint venture.
Pending the uses described above, we intend to invest the net proceeds in
short-term, interest bearing, investment-grade securities. We cannot predict
whether the proceeds will be invested to yield a favorable return.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain any future earnings to fund the development and
growth of our business. In addition, pursuant to a loan agreement with a
capital equipment lessor, we cannot pay dividends without such lender's
consent. Accordingly, we do not currently anticipate paying any cash dividends
in the foreseeable future.
17
<PAGE>
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
capitalization as of April 2, 2000:
. on an actual basis
. on a pro forma basis to reflect the conversion of our outstanding
convertible preferred stock into common stock upon the closing of this
offering and the sale of 578,573 shares of Series C preferred stock at
$2.50 per share on April 11, 2000
. on a pro forma as adjusted basis to reflect our sale of 5,000,000 shares
of common stock in this offering at an assumed initial public offering
price of $10.00 per share, after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us
The information set forth in the table below is qualified by, and you should
read it in conjunction with, our more detailed consolidated financial
statements and notes to financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing elsewhere
in this prospectus.
<TABLE>
<CAPTION>
As of April 2, 2000
---------------------------------
Pro Pro Forma
Actual Forma as Adjusted
-------- ----------- -----------
(unaudited)
(in thousands)
<S> <C> <C> <C>
Cash and cash equivalents.................... $ 55,906 $ 57,352 $102,352
======== ======== ========
Long-term debt, net of current portion....... $ 20,440 $ 20,440 $ 20,440
Stockholders' equity:
Convertible preferred stock $0.0001 par
value; in series A, B and C, 81,000,000
shares authorized, 80,171,429 shares issued
and outstanding, actual; 5,000,000
authorized, none issued and outstanding, pro
forma and pro forma as adjusted............. 801 -- --
Common stock, $0.0001 par value; 50,000,000
shares authorized, 1,358,725 shares issued
and outstanding, actual; 50,000,000 shares
authorized, 28,275,392 shares issued and
outstanding, pro forma; 50,000,000 shares
authorized, 33,275,392 shares issued and
outstanding, pro forma as adjusted.......... 41 65 67
Notes receivable--stockholder................ (130) (130) (130)
Additional paid-in capital................... 125,576 127,799 172,797
Accumulated deficit.......................... (72,109) (72,109) (72,109)
-------- -------- --------
Total stockholders' equity ................ 54,179 55,625 100,625
-------- -------- --------
Total capitalization....................... $ 74,619 $ 76,065 $121,065
======== ======== ========
</TABLE>
- --------
This table excludes the following shares as of April 2, 2000:
. 1,776,851 shares issuable upon exercise of outstanding options at a weighted
average exercise price of $1.94 per share
. an aggregate of 281,090 shares available for future issuance under our stock
option plan
. an aggregate of 249,998 shares of preferred stock issuable upon the exercise
of 249,998 warrants to purchase preferred stock at an exercise price of
$1.75 per share; upon the closing of this offering these warrants will
convert into warrants to purchase 83,333 shares of common stock at an
exercise price of $5.25 per share
The pro forma and pro forma as adjusted columns of this table reflect the three
for one reverse split of the common stock effected May 25, 2000.
18
<PAGE>
DILUTION
Our pro forma net tangible book value as of April 2, 2000 was approximately
$54.1 million, or $1.91 per share after giving effect to the conversion of all
of our outstanding preferred stock as of April 2, 2000, and subsequent sales of
578,573 shares of Series C preferred stock at $2.50 per share into common stock
upon the closing of this offering. Pro forma net tangible book value per share
represents the amount of our total tangible assets less total liabilities,
divided by the number of shares of common stock outstanding, after giving
effect to the conversion of all of our outstanding preferred stock as of April
2, 2000, and subsequent sales of 578,573 shares of Series C preferred stock at
$2.50 per share into common stock.
Dilution per share to new investors represents the difference between the
amount per share paid by purchasers of shares of common stock in this offering
and the pro forma net tangible book value per share of common stock immediately
after the completion of this offering. After giving effect to the sale of the
5,000,000 shares of common stock in this offering at an assumed initial public
offering price of $10.00 per share and after deducting the estimated
underwriting discounts and commissions and estimated offering expenses payable
by us, our pro forma net tangible book value at April 2, 2000 would have been
approximately $99.5 million, or $2.98 per share. This represents an immediate
increase in net tangible book value of $1.07 per share to existing shareholders
and an immediate dilution in net tangible book value of $7.02 per share to new
investors of common stock in this offering. The following table illustrates
this dilution on a per share basis:
<TABLE>
<S> <C>
Assumed initial public offering price per share......................... $10.00
Pro forma net tangible book value per share as of April 2, 2000....... 1.91
Increase per share attributable to new investors...................... 1.07
------
Pro forma net tangible book value per share after this offering......... 2.98
Dilution per share to new investors................................... $ 7.02
------
</TABLE>
The following table sets forth, on a pro forma basis as of April 2, 2000,
after giving effect to the conversion of all of our outstanding convertible
preferred stock into common stock upon the closing of this offering, the
difference between the number of shares of common stock purchased from us, the
total consideration paid and the average price per share paid by existing
holders of common stock and by the new investors, before deducting underwriting
discounts and commissions and estimated offering expenses payable by us, at an
assumed initial public offering price of $10.00 per share.
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ -------------------- Price Per
Number Percent Amount Percent Share
---------- ------- ------------ ------- ---------
% $ % $
<S> <C> <C> <C> <C> <C>
Existing shareholders......... 28,275,392 85.0 127,864,433 71.9 4.52
New investors................. 5,000,000 15.0 50,000,000 28.1 10.00
---------- ---- ------------ ---- -----
Total......................... 33,275,392 100% $177,864,433 100%
========== ==== ============ ====
</TABLE>
- --------
This table excludes:
. 1,776,851 shares issuable upon exercise of outstanding options at a weighted
average exercise price of $1.94 per share
. an aggregate of 281,090 shares available for future issuance under our stock
option plan
. an aggregate of 249,998 shares of preferred stock issuable upon the exercise
of 249,998 warrants to purchase preferred stock at an exercise price of
$1.75 per share; upon the closing of this offering these warrants will
convert into warrants to purchase 83,333 shares of common stock at an
exercise price of $5.25 per share
19
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data should be read together
with our consolidated financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus. The financial information for the year
ended December 31, 1997 and month ended January 25, 1998 relates to the periods
while we were a unit of DSC, which we refer to as the predecessor business. The
information relating to the predecessor business has been prepared as a
statement of revenues and direct costs and expenses and is not intended to be a
complete presentation of the financial results of operations of the predecessor
business. The statement of revenues and direct costs and expenses for the year
ended December 31, 1997 and month ended January 25, 1998 and the consolidated
statement of operations data and balance sheet data for the eleven months ended
or as of December 31, 1998 and the year ended or as of December 31, 1999 are
derived from our audited consolidated financial statements included elsewhere
in this prospectus which have been audited by Ernst & Young, independent
auditors, whose report thereon is also included elsewhere in this prospectus.
The consolidated statement of operations data for the quarters ended April 4,
1999 and April 2, 2000 and the balance sheet data as of April 2, 2000 are
derived from our unaudited condensed consolidated financial statements included
elsewhere in this prospectus and include, in the opinion of management, all
adjustments necessary for the fair presentation of our financial position and
results of operations.
<TABLE>
<CAPTION>
Predecessor(1) Company
------------------------ ---------------------------------------------------------------
Year Ended Month Ended Eleven
December 31, January 25, Months Ended Year Ended Quarter Ended Quarter Ended
1997 1998 December 31, 1998 December 31, 1999 April 4, 1999 April 2, 2000
------------ ----------- ----------------- ----------------- ------------- -------------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenue................. $ 4,818 $ 135 $ 11,485 $ 12,480 $ 1,301 $ 5,661
Cost of revenue......... 3,948 100 9,531 8,086 886 3,530
-------- ------- -------- ----------- ------- ----------
Gross profit............ 870 35 1,954 4,394 415 2,131
-------- ------- -------- ----------- ------- ----------
Research and
development............ 9,747 1,074 10,524 13,845 3,215 4,199
Sales and marketing..... 3,832 398 6,765 9,883 1,931 3,099
General and
administrative......... 4,034 378 3,960 7,686 1,799 2,243
Acquired in-process
research and
development and
amortization of
intangibles (2)........ -- -- 16,270 2,476 619 276
-------- ------- -------- ----------- ------- ----------
Total operating
expenses............... 17,613 1,850 37,519 33,890 7,564 9,817
-------- ------- -------- ----------- ------- ----------
Loss from operations.... $(16,743) $(1,815) (35,565) (29,496) (7,149) (7,686)
======== =======
Interest and other
income, net............ -- -- 119 147 110 638
Income taxes............ -- -- (150) (100) (18) (16)
-------- ----------- ------- ----------
Net loss................ -- -- $(35,596) $ (29,449) $(7,057) $ (7,064)
======== =========== ======= ==========
Net loss per share--
basic and diluted...... -- -- $ (65.72) $ (33.84) $(10.33) $ (6.50)
Shares used to compute
net loss per share--
basic and diluted...... -- -- 541,667 870,328 682,870 1,087,047
Pro forma net loss per
share--basic and
diluted(3)............. -- -- -- $ (1.37) -- $ (0.26)
Shares used to compute
pro forma net loss per
share--basic and
diluted................ -- -- -- 21,446,122 -- 27,633,079
</TABLE>
<TABLE>
<CAPTION>
As of
-------------------------------------------------
December 31, 1998 December 31, 1999 April 2, 2000
----------------- ----------------- -------------
(in thousands)
<S> <C> <C> <C>
Consolidated Balance Sheet
Data:
Cash and cash equivalents... $36,178 $58,828 $55,906
Working capital............. 39,758 68,795 66,147
Total asset................. 57,840 88,220 85,428
Long term debt.............. 16,095 20,138 20,440
Stockholders' equity........ 32,624 57,212 54,179
</TABLE>
- --------
(1) The statement of operations data relating to our predecessor are further
described in Note 1 to our financial statements.
(2) The eleven months ended December 31, 1998 includes a charge of $14 million
for acquired in-process research and development in connection with the
acquisition of the net assets of our predecessor.
(3) Pro forma basic and diluted per share calculations reflect the pro forma
conversion at the date of issuance of all outstanding preferred stock into
common stock.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with our
consolidated financial statements and the related notes included else where in
the prospectus. The financial information for the year ended December 31, 1997
and January 1998 relate to the periods while we were a unit of DSC, which we
refer to as the predecessor business. The information relating to the
predecessor business has been prepared as a statement of revenues and direct
costs and expenses and is not intended to be a complete presentation of the
financial results of operations of the predecessor business. Since our
financial information for the eleven months ended December 31, 1998 is not a
full year, we refer to that period as "fiscal 1998" in the following discussion
and analysis.
Overview
We are a global supplier of wireless communications systems that enable
communications service providers to cost effectively deliver to customers at
fixed geographic locations integrated high speed data and voice services. We
were originally organized in 1994 as a unit within DSC Communications
Corporation, a telecommunications equipment manufacturer acquired by Alcatel in
1998. DSC began developing fixed wireless access systems in 1992. In January
1998 we created a new corporation that purchased the Airspan unit from DSC for
$25 million, consisting of $15 million of debt payable over three years
beginning February 1, 2001 and 10 million shares of preferred stock. Following
the acquisition of DSC by Alcatel, we redeemed the preferred stock held by DSC
for a cash payment of $10 million. During February 1999 we moved to our own
premises in Uxbridge, U.K.
We generated revenue of $4.8 million in 1997, $11.5 million in fiscal 1998,
$12.5 million in 1999, and $5.7 million in the quarter ended April 2, 2000. We
have incurred net losses of $16.7 million, $35.6 million, and $29.4 million for
1997, fiscal 1998 and 1999, respectively and we incurred net losses of $7.1
million in the first quarter of 2000. Since becoming an independent company we
have generated significant net losses and negative cash flow since our
formation and expect to continue to do so. We have an accumulated deficit of
$72.1 million as of April 2, 2000.
We generate revenue from sales of our integrated systems including hardware
and software and from services related to implementation and support
activities. Sales of our systems, primarily our AS4000 systems, constituted 93%
in fiscal 1998 and 89% in 1999. Our sales have been from a relatively small
number of our systems. Following our purchase of the Airspan unit from DSC, we
continued to sell products developed while we were a division of DSC, which we
refer to as our older generation products. In 1998, we introduced products that
assign frequencies to users only when needed, which significantly expanded the
potential number of users per system. We refer to these products, which have
higher margins than our older generation products, as our newer generation
products. Although service revenue does not currently constitute a material
portion of our revenue, we believe services will increase as a percentage of
our revenue. Revenue is recognized when all significant contractual obligations
have been satisfied and the collection of resulting revenues is reasonably
assured. For most product sales, revenue recognition occurs on shipment. For
contracts with nonstandard terms revenue is recognized when these terms have
been satisfied. Revenue from customer service contracts is recognized once the
services have been rendered. Any billings in excess of revenue recognized for
products or services are classified as deferred income or customer advances.
We sell our products primarily through our direct sales force and, to a
lesser extent, through distribution channels. We have a direct sales presence
in the U.S., U.K., Sweden, Denmark, Poland, Czech Republic, Brazil, the
Philippines, South Korea, Sri Lanka and Canada. We also sell through
independent agents and resellers in markets where we do not have a direct sales
presence and to original equipment manufacturers who may sell our products
under their name. Our sales cycle is typically long and unpredictable and
varies between six months to two years, and often involves extensive testing
and evaluation by prospective customers, which makes it difficult for us to
anticipate the quarter in which particular sales may occur.
21
<PAGE>
In 1999, our international sales accounted for 96% of our total revenue,
while U.S. sales accounted for 4%. Most of the U.S. sales consisted of systems
sold to U.S. customers but were shipped to destinations outside the U.S. In the
future, we expect U.S. sales to increase as a percentage of our total sales. In
1999, our top ten customers accounted for 89% of our revenue. We currently
derive, and expect to continue to derive, a substantial percentage of our
revenue from fewer than ten customers. In the quarter ended April 2, 2000, AZ
Communications Network, Inc., Suntel Private Ltd. and eircom, plc represented
36%, 28% and 17%, respectively, of our revenue. For the year ended December 31,
1999, Suntel Private Ltd., Aliatel a.s. and eircom, plc represented 28%, 18%
and 13%, respectively, of our revenue. For the eleven months ended December 31,
1998, Smart Communications, Aliatel a.s. and Telbank represented 18%, 14% and
14%, respectively, of our revenue. We anticipate that our operating results
will continue to depend on sales to a small number of key customers in the
foreseeable future. The following table identifies the percentage of our sales
by geographic region in the periods identified.
<TABLE>
<CAPTION>
Percent of
Revenues
-------------------------------------------------
Eleven Months
Ended Year Ended Quarter Ended
Geographic Area December 31, 1998 December 31, 1999 April 2, 2000
--------------- ----------------- ----------------- -------------
<S> <C> <C> <C>
United States........... 26.5% 3.9% 2.1%
Asia Pacific............ 11.5 39.5 72.3
Europe.................. 47.9 41.3 23.7
Africa and Middle East.. 12.7 13.8 1.5
Other location.......... 1.4 1.5 0.4
</TABLE>
Cost of revenue consists of component and material costs, direct labor
costs, warranty costs, royalties, overhead related to manufacturing our
products and customer support costs. Our gross margin is affected by changes in
our product mix because our gross margin on base stations and related equipment
is substantially higher than the gross margin on subscriber terminals. In
addition, our gross margin is affected by changes in the average selling price
of our systems, volume discounts granted to significant customers and the
proportion of total revenue of sales of software which typically carries a
higher gross margin than hardware. We expect the average selling prices of our
products to decline and we intend to continue to implement product cost
reductions and develop and introduce new products or product enhancements to
maintain or increase our gross margins. Further, we expect to derive an
increasing proportion of our revenue from the sale of our integrated systems
through distribution channels. Revenue derived from these sales channels
typically carry a lower gross margin than direct sales.
Research and development expenses consist primarily of salaries and related
costs for personnel and expenses for design, development and testing facilities
and equipment. These expenses also include costs associated with product
development efforts, including consulting fees and prototyping costs from
initial product concept to manufacture and production. We expect to continue to
make substantial investments in research and development.
Sales and marketing expenses consist of salaries and related costs for
personnel, sales commissions, consulting fees and expenses for advertising,
travel, technical assistance, trade shows, and promotional and demonstration
materials. We expect to continue to incur substantial expenditures related to
sales and marketing activities including cost associated with the recruitment
of additional sales and marketing personnel and for the expansion of our
distribution channels.
General and administrative expenses consist of salaries and related expenses
for personnel, professional and consulting fees and other related expenses
including facilities costs. We expect general and administrative expenses to
continue to increase as we add personnel and incur additional costs related to
the anticipated growth of our business and operation as a public company.
We expect research and development, sales and marketing and general and
administrative expense categories to increase in absolute dollars. However, the
percentage of revenue that each of these categories
22
<PAGE>
represents will vary depending on the rate of our revenue growth and
investments that may be required to support the development of new products and
our penetration of new markets.
We have recently announced new contracts for the sale of our AS 4000 and
related products and services to Motorola and N-abler. On February 28, 2000, we
announced that we have executed an agreement with Motorola whereby Motorola
will offer our systems as part of its wireless solutions portfolio, opening up
a new sales channel for our products. On April 18, 2000, we announced that N-
abler Communications Inc., an equipment operator for AZ Communications, will
purchase our AS 4000 systems and deploy those systems to large corporate
customers in the Philippines.
We outsource most of our manufacturing processes to Flextronics
International and expect to continue to use contract manufacturers. We also
purchase some of the key components of our products from single vendors for
which alternative sources are generally not readily available.
Results of Operations
The results of operations have been prepared for the periods:
. the year ended December 31, 1997 from the predecessor business
. the month ended January 25, 1998 from the predecessor business
. the eleven months ended December 31, 1998 as an independent company
. the year ended December 31, 1999 as an independent company
. the quarter ended April 4, 1999 as an independent company
. the quarter ended April 2, 2000 as an independent company
The following table provides operating data as a percentage of revenue for
the periods presented.
<TABLE>
<CAPTION>
Predecessor Company
------------------------ --------------------------------------------
Quarter Quarter
Eleven Months Ended Ended
Year Ended Month Ended Ended Year Ended April April
December 31, January 25, December 31, December 31, 4, 2,
1997 1998 1998 1999 1999 2000
------------ ----------- ------------- ------------ ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenue................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue......... 81.9 74.1 83.0 64.8 68.1 62.4
------ -------- ------ ------ ------ ------
Gross Profit.......... 18.1 25.9 17.0 35.2 31.9 37.6
------ -------- ------ ------ ------ ------
Operating expenses:
Research and
development.......... 202.3 795.6 91.6 110.9 247.1 74.2
Sales and marketing... 79.5 294.8 58.9 79.2 148.4 54.7
General and
administrative....... 83.7 280.0 34.5 61.6 138.3 39.6
Acquired in-process
research and
development and
amortization of
intangibles.......... -- -- 141.7 19.8 47.6 4.9
------ -------- ------ ------ ------ ------
Total operating
expenses............... 365.6 1,370.4 326.7 271.6 581.4 173.4
------ -------- ------ ------ ------ ------
Loss from operations.... (347.5) (1,344.4) (309.7) (236.3) (549.5) (135.8)
Interest and other
income, net............ -- -- 1.0 1.2 8.5 11.3
Income taxes............ -- -- 1.3 0.8 1.4 0.3
------ -------- ------ ------ ------ ------
Net loss................ (347.5)% (1,344.4)% (309.9)% (236.0)% (542.4)% (124.8)%
====== ======== ====== ====== ====== ======
</TABLE>
23
<PAGE>
Comparison of the Quarter Ended April 2, 2000 to the Quarter Ended April 4,
1999
Revenue
Revenue increased 335% from $1.3 million for the quarter ended April 4, 1999
to $5.7 million for the quarter ended April 2, 2000. The growth in revenue has
been due to the increased demand of our newer generation, higher priced
products predominantly from customers located in Asia Pacific and Europe, which
increased 960% and 185%, respectively. Our increase in revenue is due to
volume, rather than price increases.
Cost of Revenue
Cost of revenue increased 298% from $0.9 million in the quarter ended April
4, 1999 to $3.5 million in the quarter ended April 2, 2000, resulting from the
substantial increase in revenue. Gross profit as a percentage of revenue
increased from 31.9% for the quarter ended April 4, 1999 to 37.6% for the
quarter ended April 2, 2000. The gross profit improvement reflected primarily
the results of fewer product design changes and, to a lesser extent, increased
volume and introduction of lower priced products, partly offset by lower
average selling prices.
Research and Development Expenses
Research and development expenses increased 30.6% from $3.2 million in the
quarter ended April 4, 1999 to $4.2 million in the quarter ended April 2, 2000,
due to increased headcount.
Sales and Marketing Expenses
Sales and marketing expenses increased 60.5% from $1.9 million in the
quarter ended April 4, 1999 to $3.1 million in the quarter ended April 2, 2000,
reflecting a higher headcount and the expansion of our sales and marketing
activities. In addition, sales and marketing expenses for the first quarter of
1999 and 2000 included provisions totaling $0.0 million and $0.1 million,
respectively, for potential bad debt expense.
General and Administrative Expenses
General and administrative expenses increased 24.6% from $1.8 million in
quarter ended April 4, 1999 to $2.2 million in the quarter ended April 2, 2000,
reflecting a higher headcount.
Acquired In-process Research and Development and Amortization of Intangibles
Acquired in-process research and development and amortization of intangibles
expense decreased 55.3% from $0.6 million in the quarter ended April 4, 1999 to
$0.3 million in the quarter ended April 2, 2000, reflecting the full write off
of core/developed technology, purchase contracts and patents.
Interest and other Income
Interest and other income increased 183.4% from $0.4 million for the quarter
ended April 4,1999 to $1.1 million in the quarter ended April 2, 2000 and
consisted of interest earned on cash deposits with financial institutions. The
increased interest was from higher cash balances from additional equity
capital. Amounts from interest income were partially offset by interest expense
of $0.3 million and $0.5 million respectively, on predominately outstanding
indebtedness owed to DSC related to the purchase of the company's assets in
January 1998.
Income Taxes
We did not record an income tax benefit for the tax losses generated in the
U.K. because we have experienced operating losses since inception. The first
quarter 1999 and 2000 tax provisions relates to U.S. federal income taxes
currently payable primarily attributable to intercompany interest income.
24
<PAGE>
Net Loss
Net loss remained essentially unchanged at $7.1 million from first quarter
1999 to first quarter 2000. Increases in revenue and gross profits were offset
by increases in research and development, sales and marketing and general and
administrative expenses.
Comparison of Fiscal Period Ended December 31, 1998 and Year Ended December 31,
1999
Revenue
Revenue increased 9% from $11.5 million in fiscal 1998 to $12.5 million in
1999. During 1999, revenue from older generation products decreased
approximately $8.8 million but was more than offset by revenue from sales of
newer generation products to customers located in Asia Pacific and Europe.
Sales to customers in Asia Pacific increased 243% while sales to customers in
the U.S. declined 84%.
Cost of Revenue
Cost of revenue decreased 15% from $9.5 million in fiscal 1998 to $8.1
million in 1999, resulting from shipment of lower cost products and a $2.1
million provision for excess inventory for older generation products in fiscal
1998. Gross profit as a percentage of revenue increased from 17.0% during
fiscal 1998 to 35.2% during 1999. Excluding the inventory provision for older
generation products of $2.1 million, gross profits remained constant from
fiscal 1998 to 1999.
Research and Development Expenses
Research and development expenses increased 32% from $10.5 million in fiscal
1998 to $13.8 million in 1999, reflecting increased headcount and increased
product manufacturing development costs as newer generation products moved from
development to manufacturing.
Sales and Marketing Expenses
Sales and marketing expenses increased 46% from $6.8 million in fiscal 1998
to $9.9 million in 1999, reflecting higher headcount and the expansion of our
sales and marketing activities. In addition, sales and marketing expenses for
fiscal 1998 and 1999 included provisions totaling $0.6 million and $0.7
million, respectively, for potential bad debt expense.
General and Administrative Expenses
General and administrative expenses increased 94% from $4.0 million in
fiscal 1998 to $7.7 million in 1999, reflecting higher headcount, additional
costs of implementing systems and procedures for an independent company and
increased costs of our new facilities.
Acquired in-process research and development and amortization of intangibles
Acquired in-process research and development and amortization of intangibles
expense decreased 85% from $16.3 million in fiscal 1998 to $2.5 million in
1999, primarily reflecting the one-time write-off in fiscal 1998 of in-process
technology. The products under development, our newer generation products, was
80% complete at the time we purchased the Airspan unit from DSC, with an
estimated $4.1 million required to complete the project, including costs for
final development, system verification and test, documentation and release to
manufacturing processes. The new product uses a fundamentally different product
architecture and software and required an entirely new design and engineering
effort. The project was materially completed by March 31, 1998, with the first
shipment in June 1998. We expect substantially all of our hardware product
revenue will be derived from this product in 2000. See also Note 2 to the
financial statements.
25
<PAGE>
Following a detailed review of the fair value and remaining economic lives
for all material intangible assets, we used the following asset valuation and
economic life estimations for the assets we acquired from DSC.
<TABLE>
<CAPTION>
Estimated Fair Value Estimated Economic
Asset ($ in millions) Life
- ------------------------- -------------------- ------------------
<S> <C> <C>
In-process technology $14.0 0 Years
Core/developed technology 1.9 2 Years
Purchase contracts 2.1 2 Years
Patents 0.1 2 Years
Assembled workforce 1.2 4 Years
</TABLE>
Interest and Other Income, Net
Interest and other income increased 42% from $1.1 million in fiscal 1998 to
$1.6 million in 1999 and consisted of interest earned on cash deposits with
financial institutions. The increase from fiscal 1998 to 1999 was caused by
higher cash balances from the additional equity capital we raised. Amounts from
interest income were partially offset by fiscal 1998 and 1999 interest expense
of $1.0 million and $1.4 million, respectively, on predominately outstanding
indebtedness owed to DSC related to the purchase of the Airspan unit in January
1998.
Income taxes
We did not record an income tax benefit for the tax losses generated in the
U.K. The fiscal 1998 and 1999 tax provision of $0.2 million and $0.1 million,
respectively, relates to U.S. federal income taxes currently payable primarily
attributable to intercompany interest income.
Net Loss
Net loss decreased 17% from $35.6 million in fiscal 1998 to $29.5 million in
1999, primarily due to a decrease in acquired in-process research and
development and amortization of intangibles of $13.8 million and a $2.4 million
increase in gross margin. This decrease was offset in part by increases in
research and development, sales and marketing and general and administrative
expenses.
Comparison of Year Ended December 31, 1997 and Fiscal Period Ended December 31,
1998
Revenue
Revenue increased 138% from $4.8 million in 1997 to $11.5 million in fiscal
1998. Substantially all of our revenue was attributable to the older generation
products. The $6.7 million increase during fiscal 1998 was primarily a result
of system sales to new customers located in Asia Pacific and Europe. Sales to
customers in Asia Pacific increased from 0 in the year ended December 31, 1997
to 11.5% of our revenue in the fiscal period ended December 31, 1998. Sales to
customers in Europe increased from 35% in the year ended December 31, 1997 to
47.9% in the fiscal period ended December 31, 1998.
Cost of Revenue
Cost of revenue increased 141% from $3.9 million in 1997 to $9.5 million in
fiscal 1998. The $5.6 million increase during fiscal 1998 was largely
attributable to higher revenues as well as a $2.1 million excess inventory
provision related to older generation products. Gross profit as a percentage of
revenue decreased from 18.1% in 1997 to 17.0% in fiscal 1998 due primarily to
the inventory reserve. Gross profit in fiscal 1998 excluding the $2.1 million
inventory provision for older generation products would have been 36.7%.
Research and Development Expenses
Research and development expenses increased 8% from $9.7 million in 1997 to
$10.5 million in fiscal 1998. This increase was predominately due to an
increase in head count and new product development programs.
26
<PAGE>
Sales and Marketing Expenses
Sales and marketing expenses increased 77% from $3.8 million in 1997 to $6.8
million in fiscal 1998. The increase was largely attributable to recruiting,
hiring and relocating a direct sales, marketing and technical assistance staff
during fiscal 1998. During 1997, sales of our products were made through DSC's
sales organization, which sold a variety of DSC's products, including ours. The
costs of the sales organization were not allocated by DSC and are not reflected
in our 1997 expenses.
General and Administrative Expenses
General and administrative expenses were unchanged at $4.0 million in 1997
and in fiscal 1998. This reflects an increase in costs related to
administrative personnel and being an independent company being offset by lower
facilities related expenses.
Acquired in-process research and development and amortization of intangibles
Acquired in-process research and development and amortization of intangibles
expense increased from $0.0 in 1997 to $16.3 million in fiscal 1998 primarily
reflecting the one time write-off in fiscal 1998 of in-process technology.
Interest and Other Income, Net
We did not have any interest income or expense in 1997 while we were a unit
of DSC. Interest and other income increased to $1.1 million for fiscal 1998 and
consisted of interest earned on cash deposits with financial institutions. This
amount was partially offset by interest expense of $1.0 million on outstanding
indebtedness of $16.0 million owed to DSC related to the purchase of the
company's assets in January 1998.
Income Taxes
We did not have any direct income taxes in 1997 while we were a unit of DSC.
The fiscal 1998 tax provision of $0.2 million relates to U.S. federal income
taxes primarily attributable to intercompany interest income.
Net Loss
We did not record net loss while we were a unit of DSC. Net loss in fiscal
1998 was $35.6 million for the reasons listed above.
Month Ended January 25, 1998
Revenue during this period was in-line with prior period revenue. Other
expenses, including research and development, sales and marketing and general
and administrative were also in-line with prior period expenses.
27
<PAGE>
Quarterly Results of Operations
The following table represents our consolidated operating results for each
of the eight quarters ending April 2, 2000. The information for each of these
quarters is unaudited and has been prepared on the same basis as our audited
consolidated financial statements appearing elsewhere in this prospectus. In
the opinion of management, all necessary material adjustments have been
included to present fairly the unaudited quarterly results when read in
conjunction with our audited financial statements and related notes.
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------------------------------------------------------
July 3, Oct. 2, Dec. 31, April 4, July 3, Oct. 3, Dec. 31, April 2,
1998 1998 1998 1999 1999 1999 1999 2000
------- ------- -------- -------- ------- ------- -------- --------
($ in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenue................. $ 3,030 $ 2,696 $ 4,783 $ 1,301 $ 2,094 $ 3,509 $ 5,576 $ 5,661
Cost of revenue......... 2,110 1,794 4,934 886 1,112 2,209 3,879 3,530
------- ------- ------- ------- ------- ------- ------- -------
Gross profit (loss)..... 920 902 (151) 415 982 1,300 1,697 2,131
------- ------- ------- ------- ------- ------- ------- -------
Operating expenses:
Research and
development........... 2,341 2,920 3,413 3,215 3,330 3,460 3,840 4,199
Sales and marketing.... 1,414 1,779 2,933 1,931 1,707 2,388 3,857 3,099
General and
administrative........ 884 1,164 1,319 1,799 1,783 1,900 2,204 2,243
Acquired in-process
research and
development and
amortization of
intangibles........... 619 619 619 619 619 619 619 276
------- ------- ------- ------- ------- ------- ------- -------
Total operating
expenses.............. 5,258 6,482 8,284 7,564 7,439 8,367 10,520 9,817
------- ------- ------- ------- ------- ------- ------- -------
Loss from operations.... (4,338) (5,580) (8,435) (7,149) (6,457) (7,067) (8,823) (7,686)
Other income (expense):
Interest expense....... (265) (273) (280) (282) (403) (377) (372) (473)
Interest and other
income................ 224 302 345 392 471 334 384 1,111
------- ------- ------- ------- ------- ------- ------- -------
Total other income
(expense)............. (41) 29 65 110 68 (43) 12 638
------- ------- ------- ------- ------- ------- ------- -------
Loss before income
taxes.................. $(4,379) $(5,551) $(8,370) $(7,039) $(6,389) $(7,110) $(8,811) $(7,048)
======= ======= ======= ======= ======= ======= ======= =======
As a Percentage of
Revenue:
Revenue................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue......... 69.6 66.5 103.2 68.1 53.1 63.0 69.6 62.4
------- ------- ------- ------- ------- ------- ------- -------
Gross profit (loss)..... 30.4 33.5 (3.2) 31.9 46.9 37.0 30.4 37.6
------- ------- ------- ------- ------- ------- ------- -------
Operating expenses:
Research and
development........... 77.3 108.3 71.4 247.1 159.0 98.6 68.9 74.2
Sales and marketing.... 46.7 66.0 61.3 148.4 81.5 68.1 69.2 54.7
General and
administrative........ 29.2 43.2 27.6 138.3 85.1 54.1 39.5 39.6
Acquired in-process
research and
development and
amortization of
intangibles........... 20.4 23.0 12.9 47.6 29.6 17.6 11.1 4.9
------- ------- ------- ------- ------- ------- ------- -------
Total operating
expenses.............. 173.5 240.5 173.2 581.4 355.3 238.4 188.7 173.4
------- ------- ------- ------- ------- ------- ------- -------
Operating loss.......... (143.2) (207.0) (176.4) (549.5) (308.4) (201.4) (158.2) (135.8)
Other income (expense):
Interest expense....... (8.7) (10.1) (5.9) (21.7) (19.2) (10.7) (6.7) (8.4)
Interest income........ 7.4 11.2 7.2 30.1 22.5 9.5 6.9 19.6
------- ------- ------- ------- ------- ------- ------- -------
Total other income
(expense)............. (1.4) 1.1 1.4 8.5 3.2 (1.2) 0.2 11.3
------- ------- ------- ------- ------- ------- ------- -------
Loss before income
taxes.................. (144.5)% (205.9)% (175.0)% (541.0)% (305.1)% (202.6)% (158.0)% (124.5)%
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
Our revenue and results of operations have fluctuated significantly from
quarter to quarter in the past, and we expect these fluctuations to continue in
the future. We have also incurred net losses in each quarter since inception,
and we expect to continue to incur losses for the foreseeable future. The
following discussion highlights significant events that have impacted our
revenues and financial results for the eight quarters ended April 2, 2000.
During fiscal 1998, our revenue was predominantly from sales of our older
generation products. Revenue substantially decreased in the first quarter of
1999 from the fourth quarter of fiscal 1998 due to a combination of (1)
customers spending budgeted funds prior to year-end and (2) a transition during
the first quarter of 1999 from older generation products to newer generation
products, including a lower-priced subscriber terminal. Following the
commercial introduction of our new products, revenues increased in each
subsequent quarter of 1999.
28
<PAGE>
Cost of revenue, in absolute dollars, fluctuated throughout 1998, 1999 and
2000, due to a combination of manufacturing start up costs and low volume
production. Gross profits fluctuated during each year in part due to changes in
product mix and were also adversely affected by volume price discounts. We made
provisions of $2.3 million and $0.2 million for excess inventory in the fourth
quarter of fiscal 1998 and the third quarter of 1999, respectively.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through private
sales of convertible preferred stock, which totaled $115.9 million (net of
transaction expenses) through April 2, 2000. We have also financed our
operations through equipment leases and loans aggregating an additional $5.0
million.
At April 2, 2000, our cash and cash equivalents totaled $59.2 million,
including $3.3 million of restricted cash that is held as collateral for
performance guarantees on customer and supplier contracts and with landlords.
We do not have a line of credit or similar borrowing facility, nor do we have
any material capital commitments.
Our long term debt consists primarily of the amount owed to DSC as part of
the purchase price paid for the company in January 1998. The debt, under a
promissory note of $17.5 million, consists of the original principal amount of
$15.0 million, plus accrued but unpaid interest. Interest accrues on the debt
at an annual rate of 7% and is compounded on a quarterly basis until February
2001, at which time principal and interest are to be repaid in equal
installments over the subsequent 36 months. The promissory note to DSC is
secured by a lien over equipment, debts, stock and all other assets of our
wholly-owned subsidiary based in the U.K. We have other term loans or
subordinated debt aggregating $4.7 million at rates ranging from 6% to 9%
annually, payable in installments over periods ranging from 21 to 54 months.
There are no financial or operating covenants attached to our DSC Note or other
term loans or subordinated debt. The amount payable under the promissory note
is still under negotiation whereby we are seeking to reduce the principal to be
paid as a result of certain claims against DSC in connection with the
acquisition.
We used cash in operating activities of $16.2 million in fiscal 1998, $29.8
million in 1999 and $6.8 million in the quarter ended April 2, 2000. The cash
used in fiscal 1998 was primarily attributable to an operating loss of $35.6
million and an increase in accounts receivables and other current assets of
$5.8 million. This use of cash was partly offset by an in-process research and
development charge of $14.0 million, in addition to reductions in inventory,
accounts payable, other accrued expenses and depreciation and amortization of
$10.4 million. The cash we used in 1999 was mainly attributable to an operating
loss of $29.5 million, an increase in accounts receivables, inventory and other
current assets of $6.4 million and a reduction of accounts payable of
$0.3 million. These amounts were partly offset by accruals, accretion of
interest on notes payable, and depreciation and amortization of $6.3 million.
The cash used during the first quarter of 2000 was primarily attributable to an
operating loss of $7.1 million and an increase in accounts receivable,
inventory and other current assets of $1.0 million and a reduction in accounts
payable of $0.5 million. These amounts were partly offset by accruals,
accretion of interest on notes payable and depreciation and amortization of
$1.7 million.
We used $3.3 million in cash in fiscal 1998, $4.3 million in 1999 and $0.9
million in the quarter ended April 2, 2000, for investing activities. In each
period these amounts related primarily to capital equipment purchases.
Our financing activities from the sale of convertible preferred stock
provided us with cash of $58.2 million in fiscal 1998, $53.7 million in 1999
and $4.0 million in the quarter ended April 2, 2000. In addition, we obtained
term loan and subordinated debt aggregating $5.0 million in 1999, which was
offset in part by payments on long-term debt, including capital lease
obligations and depositing cash into a restricted account as collateral.
We believe that the net proceeds from this offering, together with our
current cash, cash equivalents and borrowing capacity, will be sufficient to
meet our anticipated cash needs for working capital and capital expenditures
for at least the next 18 months.
29
<PAGE>
Year 2000 Issues
As a result of the change over from 1999 to 2000, none of our systems or
products were affected nor are we aware of any issues that have affected our
third party suppliers or customers.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued FASB Statement
No. 133, "Accounting for Derivative and Hedging Activities." Statement 133
establishes standards for accounting for derivative financial instruments and
hedging activities and is effective for fiscal year ending December 31, 2001.
We currently hold no derivative instruments nor do we engage in hedging
activities. Accordingly, we anticipate that the adoption of Statement 133 will
not have a material impact on our financial positions, results of operations or
cash flows.
In March 1998, the American Institute of Certified Public Accountants, or
AICPA, issued Statement of Position, or SOP, 98-1, "Accounting for the Cost of
Computer Software Developed or Obtained for Internal Use." SOP 98-1 will be
effective for fiscal year ending September 30, 2000. SOP 98-1 provides guidance
on accounting for computer software developed or obtained for internal use
including the requirement to capitalize specified costs and amortization of
such costs. We have begun capitalizing costs in calendar year 2000.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-
Up Activities." SOP 98-5 is effective for our year ending December 31, 2000.
This SOP provides guidance on the financial reporting of start-up costs and
organization costs. It requires the costs of start-up activities and
organization costs to be expensed as incurred. We do not expect that the
adoption of SOP 98-5 will have any material impact on our financial positions,
results of operations or cash flows.
During December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements". SAB
101 provides guidance on the recognition, presentation and disclosure of
revenue in the financial statements. Implementation of guidance prescribed in
the bulletin which applies to all registrants will not result in a change to
our revenue recognition policy.
Disclosures About Market Risk
The following discusses our exposure to market risk related to changes in
interest rates, equity prices and foreign currency exchange rates. This
discussion contains forward-looking statements that are exposed to risks and
uncertainties. Actual results could vary materially as a result of a number of
factors, including those discussed in "Risk Factors" and elsewhere in this
prospectus.
As of April 2, 2000, we had cash and cash equivalents of $59.2 million
(including restricted cash). Substantially all of these amounts consisted of
highly liquid investments with remaining maturities at the date of purchase of
less than 90 days. These investments are exposed to interest rate risk and will
decrease in value if market interest rates increase. A hypothetical increase or
decrease in market interest rates by 10 percent from the April 2, 2000 rates
would cause the fair market value of these short-term investments to change by
an insignificant amount. Due to the short duration of these investments, an
immediate increase in interest rates would not have a material effect on our
financial condition or results of operations. Declines in interest rates over
time will, however, reduce our interest income.
We do not own any equity investments, other than in our subsidiaries. As a
result, we do not currently have any direct equity price risk.
In 1999, 87% of our sales were denominated in U.S. dollars. Since a majority
of our manufacturing occurs in Sweden, a majority of our cost of goods are
denominated in Swedish krona. A large proportion of our expenses are
denominated in British pounds. We expect these proportions to fluctuate over
time. Recently, we initiated hedging activities and we will continue to monitor
our foreign currency exposures and may modify hedging strategies as we deem
prudent.
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<PAGE>
BUSINESS
Business Overview
We are a global supplier of fixed wireless systems that enable
communications service providers to cost effectively deliver integrated high
speed data and voice services. Our systems are based on proven, robust Code
Division Multiple Access, or CDMA, a digital wireless standard that provides
wide area coverage, security and resistance to fading. Our systems can be
deployed rapidly and cost effectively, providing an attractive alternative to
copper wire and fiber communications networks. Our products include software
tools that optimize geographic coverage of our systems and provide ongoing
network management. To facilitate the deployment and operation of our systems,
we also offer network installation, training and support services. During 1996,
we began shipping our products which were among the first fixed point-to-
multipoint systems to be commercially deployed. Our systems have been installed
by over 40 communications service providers in approximately 30 countries and
are being tested by numerous other service providers.
Industry Overview
The Global Need for Integrated Data and Voice Communications Services
The explosive growth in Internet use is driving the global demand for
reliable high speed access and increased bandwidth. End-users worldwide are
demanding integrated communication access solutions that include reliable high
speed data and Internet access and high quality voice telephony services. Even
in countries where communications systems are unreliable or not yet widely
deployed, businesses and consumers increasingly require Internet access and fax
and modem capabilities, in addition to basic telephone service.
Global Deregulation and Increased Competition
Worldwide deregulation of the telecommunications industry has created the
opportunity for new competitors to provide local access connections that
historically were offered by a single incumbent provider. Most countries in
Europe, Latin America, and Asia have joined the U.S. and the U.K. in promoting
competition for communications services. Incumbent and alternative
communications service providers are seeking to differentiate their service
offerings on the basis of their range of services, quality and reliability,
customer service, provisioning and pricing.
Need for Cost Effective and Rapid Network Deployments
Alternative communications service providers have expanded their focus
beyond large business customers to small and medium-sized businesses and high-
end residential, small-office/home-office customers as well as providing
services outside of the major urban areas. These markets require more cost-
effective network deployment solutions to compensate for lower average customer
spending on communications services and larger coverage area requirements.
Many countries have networks that are unable to provide reliable data, voice
and fax services while many other countries lack the network infrastructure to
make basic telephony services broadly available. Communications service
providers in these markets, both incumbent and new entrants, need cost
effective, rapidly deployable alternatives to traditional copper based
networks. Time-to-market and the ability to offer integrated data and voice
services with attractive pricing are key success factors.
Access Network Bottleneck
While the communications transport network and Internet backbone are capable
of delivering data at extremely high speeds, data can only be delivered to the
end user as fast as the end-user's connection will permit. Traditional access
methods are inadequate to address the rapidly expanding bandwidth requirements.
To address this access network bottleneck, a number of alternative solutions
have emerged.
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. Digital Subscriber Line. Digital subscriber line, or DSL, technology
improves the data transmission rate of existing copper networks. DSL
transmission rates and service availability, however, are limited by
both the quality of the available copper and the distance from the
subscriber to the service provider's network equipment. These
limitations restrict the use of DSL in many countries outside the U.S.,
Canada and portions of western Europe.
. Cable Modems. Two-way cable modems using coaxial cable enable data
services to be delivered over a network originally designed to provide
television service to residential subscribers. Coaxial cable has greater
transmission capacity than copper wires, but is often costly to upgrade
for two-way data services. Additionally, because office buildings are
generally not wired for cable service, it is not a viable alternative
for many business users worldwide.
. Fiber Optics. Fiber optics provide the highest data transmission rate of
any access solution, but are the most costly to deploy. As a result,
fiber is typically used only to solve the bandwidth needs of the largest
businesses who can justify the higher costs.
. Satellite. Broadband satellite solutions enable two-way access services.
These solutions use broadcast satellite technology for high speed
transmissions from the network service provider to the subscriber, but
use slower wire-based connections to transmit data from the subscriber
to the network service provider. The data rate available to each
subscriber in a service area decreases as usage increases. As a result,
because they are not cost effective, satellite solutions are not widely
deployed worldwide.
Need for Fixed Wireless Access Solutions
The technology and cost limitations of other existing technologies have led
many communications companies to deploy fixed wireless networks because
wireless technology can deliver high performance integrated services more cost
effectively, quickly and flexibly than other solutions. The market for our
systems is a subset of the fixed wireless systems market. Currently there is no
reliable data about the size of growth rate of our target markets. Growth rates
experienced by the industry as a whole may not reflect growth rates that we or
our target markets will experience
Wireless communications equipment operates within assigned, often licensed
frequency bands that vary as to the bandwidth of data that can be carried, the
effective range of a single cell hub and the cost of deployment. Currently
available wireless technologies include millimeter wave, wireless local area
network, fixed wireless, cordless, cellular and advanced mobile systems
technologies.
Each of these technologies is best suited to specific applications. Systems
based on millimeter wave technologies which utilize frequencies above 10
gigahertz, or GHz, for example, provide high bandwidth services, but are costly
to deploy, have significant range limitations, require line-of-sight to provide
services and are adversely affected by weather conditions. These systems are
generally targeted at large business customers in major cities.
Lower frequency cordless and cellular technologies have been widely deployed
to deliver wireless voice service. Cellular has a wider geographic range than
our system, while cordless and wireless local area networks have a more limited
geographic range than our system. The low bandwidth of cordless and cellular
technologies, however, make them unsuitable for delivering advanced high speed
Internet access. Wireless local area networks have greater bandwidth than our
system, but are, like cordless technologies, generally more expensive to deploy
because of their limited geographic range.
Our systems are designed to provide communications services in the 1.5 to
4.0 GHz frequency bands, which are increasingly being licensed worldwide,
particularly in the 3.5 GHz range. These bands are
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<PAGE>
less sensitive to line-of-sight obstructions and weather conditions than the
millimeter wave technologies described above although they offer lower capacity
for data transmission.
The combination of technology costs and performance makes this spectrum
ideal for broader market applications. Communications service providers
addressing these markets require high performance, cost effective systems
enabling integrated high speed data and voice services.
The Airspan Solution
We are a global supplier of fixed wireless systems that enable
communications service providers to cost effectively deliver integrated high
speed reliable data and voice services. We have developed a fixed wireless
solution, which provides the following benefits:
Integrated Data and Voice Services Platform. Our solutions enable delivery
of integrated high speed data and voice services, unlike many other access
technologies that are optimized for either data or voice traffic, but not both.
Our systems solve this problem by flexibly allocating the available bandwidth
to the services required, thereby permitting data and voice to be transmitted
efficiently. Our technology platform is designed as a modular solution to
enable our systems to evolve as our technologies and customers' needs evolve.
Quality of Service and Reliability. Our systems are based on robust, proven
CDMA technology, which allows communications service providers to offer high
quality data and voice services with the same level of reliability that
traditional telephone networks provide. This technology provides wide area
coverage, security and resistance to fading. In addition, our systems allow
alternative service providers to bypass the incumbent's network enabling the
service provider to monitor on a real time basis the end user's network access
connection. Our products are successfully deployed and operated in a wide range
of demanding environments throughout the world.
Rapid, Cost Effective Deployment. Our fixed wireless solutions are generally
less expensive to deploy than fiber or copper networks or other high speed
fixed wireless networks. Our systems' wide area coverage requires fewer base
stations, allowing faster deployment with lower initial capital outlays. A
single base station in urban settings covers up to 70 square miles and in rural
settings covers as much as a 700 square miles. Communications service providers
can quickly begin generating new subscriber revenues due to the reduced up-
front planning and infrastructure costs and the relative ease of installation
of our base stations. Our systems allow our customers to rapidly add new
subscribers that can be brought online in hours once the basic infrastructure
is in place. For communications service providers, the "pay as you go" approach
reduces up-front capital costs and can increase return on investment.
Flexibility and Expandability. Our systems are highly configurable to
customer requirements for specific frequencies allocations. The modular design
of our systems allows for expansion as customer capacity requirements increase.
Our point-to-multipoint architecture also facilitates expansion by permitting
multiple subscribers to be connected to a single base station and multiple base
stations to be supported by a single access concentrator. In addition, multiple
service types, including data and voice, can be delivered over a single radio
channel enabling communications service providers to differentiate and
customize their service offerings.
Comprehensive Implementation and Support Solutions. We offer our customers a
range of software tools that provide system-wide analysis for optimizing
geographic coverage and identifying and solving potential sources of
interference. Our software tools also initiate service for new customers and
provide alarm, maintenance and testing functions. In addition, to facilitate
deployment and operation of our systems, we offer network installation,
training and support services. The communications service provider is generally
responsible for site preparation as well as having the responsibility and
installation for subscriber terminal installation. We have also developed a
network of subcontractors that allows us to support customers wherever our
products are deployed.
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Our Strategy
Our goal is to be the leading provider of integrated fixed wireless
communications access systems to communications service providers. Key elements
of our strategy include the following:
Capitalize on existing deployments of our systems to attract new
customers. Our numerous installations with communications service providers
worldwide serve both as proof of concept and as a basis for reference selling
to other communications service providers. We intend to build upon this early
acceptance of our products to become the primary provider of fixed wireless
systems to these service providers. We are particularly focused on expanding
our existing customer relationships to supply systems to their subsidiaries and
affiliates worldwide.
Extend our strong technology position. We believe that we have established a
strong technology position in the market for fixed wireless solutions, and we
intend to extend this position by continuing to invest substantially in
research and development. Our expertise in wireless telecommunications and
radio frequency engineering is based on eight years of development experience
and four years of deployment experience. Our research and development efforts
are particularly focused on increasing data transmission capability and
coverage area while reducing the cost of our systems. To support our strong
technological position, we are actively involved in the development of
standards through our membership in or participation with leading standards
organizations such as the European Telecommunications Standards Institute. We
also expect to evaluate the acquisition of additional businesses, products and
technologies in order to accelerate the development of and time-to-market with
new technologically advanced products.
Target key growth market opportunities globally. Our fixed wireless
solutions find their strongest competitive advantage in areas where there is a
growing demand for integrated high speed data and voice services and where cost
considerations make traditional solutions impracticable. As a result, in a
developed market like the United States, we focus on small and medium sized
businesses, small office/home office users and high-end consumers as well as
end users in suburban and rural areas. In the developing world, our
opportunities are much broader due to the general inadequacy of the existing
communications infrastructure. In these markets, wireless solutions can be the
basis for a new national infrastructure.
Develop and expand our strategic relationships. We intend to develop and
expand our strategic relationships with large communications equipment
manufacturers to help us market our products to communications service
providers deploying large-scale networks. These relationships facilitate
broader deployments of our systems worldwide, through stronger sales presence
and additional integration services and support capabilities. We also intend to
form strategic relationships with communications companies situated within
certain countries where there are competitive advantages to having a local
presence. For example, in Brazil, where high import tariffs make it very
difficult for us to compete and where local relationships are important, we
have a manufacturing and marketing alliance with Tropico S.A.
Expand global sales, marketing and customer support presence. We intend to
significantly expand our sales, marketing and customer support presence to
drive additional deployments and increase awareness of Airspan among
communications service providers. We plan to aggressively hire sales and
marketing personnel in our existing offices as well as to open new sales and
customer support offices in key strategic markets globally.
Products
General
We supply fixed wireless access systems that provide integrated fixed
wireless data and voice services that connect residential and business
customers to a communications service provider's network. The end user
experiences a transparent connection with performance and features equivalent
to a high quality wireline access service. Our products consist primarily of
the following:
. AS4000, a product solution consisting of an access concentrator that
connects multiple base stations which in turn connect multiple
subscriber terminals
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. AS8100, a network management system simplifying tasks such as
configuration and provisioning of subscribers, performance monitoring
and alarm management
. AS9000, a comprehensive radio frequency and deployment planning tool
Overview of Airspan Fixed Wireless Access System
[PICTURE AND DIAGRAM OF AIRSPAN SYSTEM ARCHITECTURE INCLUDING CENTRAL OFFICE
SITE, BASE-STATION SITE, SUBSCRIBER SITES AND MANAGEMENT SITE.]
AS4000 Fixed Wireless Access Systems
Our AS4000 fixed wireless access systems, introduced in 1996, provide a
robust high speed CDMA technology to deliver high speed data, voice and ISDN to
a communications service provider's local access networks.
[CLOSE UP PICTURE OF SUBSCRIBER TERMINAL VARIANTS]
[PICTURE OF SUBSCRIBER TERMINAL ANTENNA IN MOUNTED SETTING]
. the AS4000 System allows the signal to travel to and from the
subscriber's equipment (router, computer, fax or telephone) through the
building's existing internal wiring to a subscriber interface unit
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. the subscriber interface unit is connected by a coaxial cable to an
external antenna which together form the subscriber terminal
. the antenna relays the information to the base station
. the signals from the various subscriber terminals (up to 2000 subscriber
lines per base station) are routed through the base station to the
access concentrator, normally located at the communications service
provider's central switching center
. the signals are routed through the network to the final destination
Our newer generation AS4000 System, introduced in 1998, typically allocates
a line to a subscriber terminal only when needed; for example, when a customer
picks up a telephone handset. This technology allocates spectrum efficiently
and increases total system capacity. The access concentrator assigns capacity
and provides a node for network management. Priority channels can be configured
to provide access to key users such as emergency services.
AS8100 Network Management System
The newer generation AS8100 Network Management System, introduced in 1998,
is a configuration, alarm, test and performance manager for the AS4000 range of
products. The management system helps ensure that the services provided over
the AS4000 network are uninterrupted and of high quality. The AS8100 is
flexible and scalable to suit a range of different networks and is available in
different versions for the network center, desktop and the field.
The AS8100 Network Management System operates on a Microsoft Windows NT
platform and the user interface is entirely graphical and windows-based, uses
drag-down menus, icon-based representations, maps and equipment views. The
system permits communications service providers to remotely manage a
geographically dispersed set of network elements.
AS9000 Airplan Planning and Configuration Tools
The AS9000 Planning and Configuration Tool, introduced in 1998, is a
sophisticated planning solution that enables operators to plan and deploy our
systems. This product is based on third party software customized for use with
our systems. The main task of the planning tool is to find the optimal location
and configuration for the access concentrator and base stations of the AS4000.
The system provides a powerful prediction engine that can generate coverage
predictions for multiple scenarios until the best case scenario is found.
Once the location of the access concentrator and base stations have been
determined, the AS9000 can be used to compare radio signal propagation and
extent of coverage. The four key aspects of the predictive tool are the terrain
(altitude) databases, clutter (natural terrain features and man-made
obstructions) information, antenna information and system configuration, which
are used to predict transmission coverage.
Technology
As of April 2, 2000 we had 75 people engaged in research and development.
Our technology has been under continuous development since the inception of the
system design in 1993, and from the outset our goal has been to develop high
performance systems that are resilient in a wide range of deployment
conditions.
Frequency Choice
We recognized early that no single fixed wireless spectrum would apply
around the world. Consequently, our designs have accommodated the ability to
easily change radio frequency subsystems to match the customer's specific
spectrum allocation. We believe we have the widest choice of radio subsystems
in the industry within the 1.5 to 4.0 GHz bands.
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CDMA Technology
CDMA is a well-established technology that allows multiple users to share
simultaneously a single radio channel while providing a high degree of security
between channels and other users. Other technologies, such as Frequency
Division Multiple Access, or FDMA, and Time Division Multiple Access, or TDMA,
and variants of these technologies, are also used to expand the number of users
within a given radio band.
Each of these technologies, CDMA, FDMA and TDMA, function differently. CDMA
uses virtually random encoding of data, rather than dividing the frequencies
into narrow bands like FDMA or based on time intervals of the transmission like
TDMA. We selected CDMA, technology for our products because we believe CDMA can
generally allow a greater number of users per radio channel than either FDMA or
TDMA, and with greater security.
CDMA technology is, however, more difficult to develop than FDMA or TDMA,
because of its challenging network synchronization and power control
requirements. Further, the complexity of CDMA algorithms can require multiple
computer chips and complex, customized software programs.
Intellectual Property
We have successfully developed a reliable and robust CDMA-based system
employing our own enabling technology which has resulted in, as of March 31,
2000, 18 separate patents granted in the U.S. and 20 pending applications in
the U.S. In order to improve system performance and reduce costs, we have
developed a custom integrated circuit, Trinity I, which is the key element of
the AS4000 System. We are currently developing next generation components that
are expected to produce further cost reductions, increased bandwidth and
enhanced functionality. We expect to deliver such components in 2000.
Extensive testing and integration facilities
We have taken extensive steps to ensure that our products are thoroughly
stress-tested prior to release. We have secured radio licenses for and
implemented a live multi-cell test network which provides service to a number
of volunteer customers situated in and around the town of Stratford-upon-Avon,
U.K. In addition to providing valuable long-term system reliability,
availability and other performance data, this unique facility permits us to
empirically investigate radio propagation and interference behavior for
existing and emerging products.
Research and development expenditures
During the fiscal year ended December 31, 1999 and the fiscal period ended
December 31, 1998, we spent $16.3 million and $26.8 million, respectively on
research and development of our products. Of such amounts, $2.5 million and
$16.3 million were, in the fiscal year 1999 and fiscal period 1998,
respectively, attributed to acquired in-process research and development and
amortization of intangibles in connection with the acquisition of the business
from DSC.
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Customers
We began shipping our products in 1996 and through March 2000 we had shipped
our products to over 40 communications service providers in approximately 30
countries. Our customers include integrated data and voice carriers, data
centric carriers and mobile carriers. As of April 2, 2000, the following table
indicates our top customers, their locations and their percentage of our
revenue over the last five quarters:
<TABLE>
<CAPTION>
Percentage of
Customer Locations Revenue
-------- --------- --------------
<S> <C> <C>
Suntel Private Ltd. Sri Lanka 28%
eircom, plc Ireland 14
Aliatel, a.s. Czech Republic 14
AZ Communications Incorporated The Philippines 11
Mobitel Limited Nigeria 4
MTT Networks Private Limited Sri Lanka 3
Bell Telecommunications Phils., Inc. The Philippines 3
Petersburg Telephone Network Russia 3
Joint Stock Company Central Telegraph Russia 2
Motorola, Inc. various countries 2
</TABLE>
Our contracts with our customers typically provide for delivery, training,
spare parts and maintenance and upgrade. In addition, we generally also agree
to warranty the equipment and software for a limited period of time.
Our contracts are generally non-exclusive and contain provisions allowing
our customers to terminate the agreement without significant penalties, and
some contracts are conditional upon our customer's ability to receive foreign
regulatory approvals. Our contracts also may specify the achievement of
shipment, delivery and installation commitments. We are generally able to meet
these commitments or negotiate extensions with our customers.
Sales, Marketing and Customer Service
We sell our systems and solutions through our direct sales force,
independent agents, resellers and OEM partners. Our direct sales force targets
communications service providers in both developed and developing markets.
Currently we have a direct sales presence in the U.S., U.K., Sweden, Denmark,
Poland, Czech Republic, Brazil, the Philippines, South Korea, Sri Lanka and
Canada. In markets where we do not have a direct sales presence, we also sell
through independent agents and resellers who target communications service
providers. In certain countries we also sell to OEMs who may sell our products
under their names.
Our marketing efforts are focused on communications service providers that
provide integrated communications services to their customers. Through our
marketing activities, we provide technical and strategic sales support
including in-depth product presentations, technical manuals, sales tools,
pricing, marketing communications, marketing research, trademark administration
and other support functions.
A high level of ongoing service and support is critical to our objective of
developing long-term customer relationships. In order to facilitate the
deployment of our systems, we offer our customers a wide range of
implementation and support services including spectrum optimization and network
management, installation, training and support services.
Most major installations are performed by our subcontractors who have the
expertise and ability to professionally install our products. This enables us
to efficiently manage fluctuations in volume of installation work.
As of April 2, 2000, we had 57 employees dedicated to sales, marketing and
customer service.
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Manufacturing
We outsource our manufacturing to global contract manufacturers in order to
realize the advantages in cost, quality and volume and geographic flexibility.
We currently outsource most of our manufacturing to Flextronics International,
located in Karlskrona, Sweden. Flextronics and one other contract manufacturer
provided 66% and 93% of our manufactured products in 1999 and 1998,
respectively. We have an agreement with Flextronics dated August 27, 1999 for a
period of two years, which may be extended an additional year by either party.
Either party may terminate this agreement. The agreement also requires us to
provide a bank guarantee in respect of subcontractor debt and inventory
exposure in favor of Flextronics, which was $1.85 million at May 23, 2000. Our
manufacturing support activities consist primarily of prototype development,
materials planning and procurement, final product assembly testing and quality
control.
Our contract with Flextronics is non-exclusive and may be terminated with
four months' notice by either party without significant penalty. Other than
agreeing to purchase the materials we request in the forecasts, we do not have
any agreements with them to purchase any minimum volume.
Our operation and manufacturing strategies enable us to configure our
products to meet a wide variety of customer requirements and facilitate
technology transfer between our research and development group and our contract
manufacturers. We are ISO 9001 certified.
Competition
Competition in our markets is intense and involves rapidly-changing
technologies and customer requirements. We compete with established vendors of
communications systems, including traditional wired communications systems.
We believe several factors make Airspan a strong competitor including:
. range of product offerings (data, voice and ISDN)
. quality and performance of our products
. high quality customer service
. ability to implement and integrate solutions
The primary competitive challenges our business faces include:
. competing with established and installed traditional wired networks
. convincing alternative service providers that our service is superior to
other potential wireless solutions
We face, or believe that we will face, competition from various other
providers of wireless communications products and services, including ECI,
Lucent and AT&T. While we believe our industry to be competitive, we do not
believe there to be a single dominant competitor.
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Competitors vary in size and scope, in terms of products and services
offered. In the particular frequencies where we operate, we compete directly
with ECI and Lucent, as well as smaller start-up companies. We compete
indirectly with a number of large telecommunication equipment suppliers such as
Alcatel, Ericsson, Hughes, and Nortel. In addition, our technology competes
with other high speed solutions, such as digital subscriber lines, optical
fiber cable, cable modems and high speed leased lines and satellite
technologies. Finally, our business may compete in the future with products and
services based on other wireless technologies including TDMA, FDMA and other
technologies that have yet to be developed.
Intellectual Property Rights
We rely on a combination of copyright, patent, trademark, trade secret and
other intellectual property laws together with confidentiality and/or license
agreements with our employees, customers and others to protect our proprietary
rights. Our patent portfolio consists of, as of April 2, 2000, 18 patents that
have been granted in the U.S., together with their foreign counterparts. We
also have 20 U.S. patent applications that are currently pending, together with
their foreign counterparts. Our other intellectual property rights relate to
the trademark and trade name Airspan(R), our website, our software and hardware
design and technology.
Employees
As of April 2, 2000, we had a total of 217 full-time employees, including
contract personnel. Our employees are not presently represented by a labor
union. We have not experienced any work stoppages and consider our relations
with our employees to be good.
Properties
We are headquartered in Uxbridge, U.K. where we lease three facilities with
approximately 25,000, 17,000 and 12,000 square feet, respectively. These leases
expire in 2006, 2010 and 2003, respectively.
Legal Proceedings
We are not currently subject to any material legal proceedings. We may from
time to time become a party to various legal proceedings arising in the
ordinary course of our business.
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MANAGEMENT
Executive Officers and Directors
The names, ages and positions of our executive officers and directors as of
April 2, 2000 are listed below along with their business experience during the
past five years. Messrs. Cooper, Paget and Terry are officers of Airspan
Communications Ltd., our wholly owned U.K. operating subsidiary.
<TABLE>
<CAPTION>
Name Age Title
- ---- --- -----
<S> <C> <C>
Thomas S. Huseby.......... 52 Chairman of the Board of Directors
Eric D. Stonestrom........ 38 President and Chief Executive Officer, Director
Joseph J. Caffarelli...... 55 Senior Vice President and Chief Financial Officer
Ian Cooper................ 41 Vice President, Engineering
Jonathan Paget............ 53 Vice President, Product Operations
Nigel J. Terry............ 42 Vice President, Sales and Marketing
Jon W. Bayless............ 59 Director
Bandel L. Carano.......... 38 Director
H. Berry Cash............. 61 Director
Ovid Santoro.............. 40 Director
David A. Twyver........... 53 Director
</TABLE>
Thomas S. Huseby has served as the chairman of the board of directors of
Airspan since January 1998. Since August 1997, Mr. Huseby has served as
managing partner of SeaPoint Ventures, a venture capital fund focused on
communications and Internet infrastructure. Prior to SeaPoint Ventures, from
1994 to 1997, Mr. Huseby was the chairman and chief executive officer of
Metawave Communications, a manufacturer of cellular infrastructure equipment.
Previously he was president and chief executive officer of Innova Corporation,
a manufacturer of millimeter wave point-to-point radios. Mr. Huseby holds a
B.A. in Economics from Columbia College, a B.S.I.E. from the Columbia School of
Engineering and a M.B.A. from Stanford University.
Eric D. Stonestrom joined Airspan at its inception in January 1998 as
executive vice president and chief operating officer. In May 1998, he was named
president and chief executive officer as well as a member of the board of
directors. From 1995 to 1998, Mr. Stonestrom joined DSC Communications
Corporation as the vice president of Network Management. From 1984 to 1995, Mr.
Stonestrom worked at Bell Laboratories and AT&T in a variety of positions. He
received B.S., M.S. and M. Eng. degrees in 1982, 1983 and 1984, respectively,
from the College of Engineering at the University of California at Berkeley.
Joseph J. Caffarelli joined Airspan in April 1999 as senior vice president
and chief financial officer. Prior to joining Airspan, from 1994 to February
1999, he was executive vice president and chief financial officer of Physio-
Control International Corporation, a worldwide leader in external
defibrillation, monitoring and noninvasive pacing devices. Prior to joining
Physio-Control, he was the executive vice president and chief financial officer
of OECO Corporation, a diversified electronics manufacturer. Prior to joining
OECO, he worked in various financial management positions, including positions
in the manufacturing operations of General Electric Company. He received a B.A
from the State University of New York at Albany.
Ian Cooper joined Airspan in February 1998 as vice president, engineering.
Prior to joining Airspan, he joined DSC Communications Corporation in 1994 to
develop products for the Airspan unit. In 1997, he attained responsibility for
all research and development activities, including the development of the
AS4000 platform. Before joining DSC, he worked at various companies as an ASIC
and hardware/systems designer and, previously he worked as a scientist for the
NZ Department of Scientific and Industrial Research developing satellite
communication and signal processing solutions for precision scientific
instrumentation. He graduated from the University of Auckland with a Science
degree in 1981.
Jonathan Paget joined Airspan in April 1999 as vice president, product
operations. Prior to joining Airspan, from 1997 to October 1998, he served
Telspec Plc, a company specializing in the development,
41
<PAGE>
manufacture and sale of advanced telecommunications equipment, as group chief
executive. From 1992 to 1996, he served as vice president and general manager
of the European Radio Networks Solutions Group of Motorola, a provider of
integrated communications solutions and embedded electronic solutions. He holds
a Masters Degree in Engineering Science from Cambridge University.
Nigel J. Terry joined Airspan in November 1998 as vice president, sales and
marketing. Prior to joining Airspan, from 1993 to November 1998, Mr. Terry
served in a number of positions for Madge Networks, a vendor of advanced
multimedia equipment. Most recently, Mr. Terry served as the vice president and
general manager of Madge Networks' WAVE business unit. Mr. Terry holds a M.A.
in Physics from the University of Oxford.
Jon W. Bayless has served as a director of Airspan since January 1998. Since
1981, Dr. Bayless has been associated with Sevin Rosen Funds, a series of
venture capital partnerships, and he currently is a general partner of such
partnerships. He also serves as a director of several privately-held companies.
Dr. Bayless holds a B.S. in Electrical Engineering from the University of
Oklahoma, a M.S. in Electrical Engineering from the University of Alabama and a
Ph.D. in Electrical Engineering from Arizona State University.
Bandel L. Carano has served as a director of Airspan since January 1998. Mr.
Carano has been a general partner of Oak Investment Partners, a venture capital
firm, since 1987. Mr. Carano currently serves as a member of the Investment
Advisory Board of the Stanford University Engineering Venture Fund. Mr. Carano
also serves as a member of the board of directors of Netopia, Inc., Polycom,
Inc., Wireless Facilities Inc., Virata, Advanced Radio Telecom and PulsePoint
Communications, as well as several private companies. Mr. Carano graduated from
Stanford University with a B.S. in Electrical Engineering and also received a
M.S. in Electrical Engineering from Stanford University.
H. Berry Cash has served as a director of Airspan since January 1998. He
been a general partner with InterWest Partners, a venture capital fund focusing
on technology and healthcare, since 1985. Mr. Cash currently serves as a member
of the board of directors of the following public companies: Panja Corporation,
CIENA Corporation, i2 Technologies, Inc. and Liberte', Inc. He is also an
advisor to Austin Ventures. Mr. Cash received a B.S. in Electrical Engineering
from Texas A&M University and a M.B.A. from Western Michigan University.
Ovid Santoro joined the board of directors of Airspan in November 1998. He
currently serves as the chief executive officer of SurfCast, Inc., a software
development company. He is a board member of CyberSafe Corporation, a provider
of network security software products and services to the business community.
From March 1998 until December 1999, Mr. Santoro was the founder, managing
director and global head of venture capital at Deutsche Bank AG as well as the
deputy chairman of Deutsche Bank AG's private equity commitment committee.
Prior to joining Deutsche Bank AG, from May 1993 to March 1998, Mr. Santoro was
a strategic consultant to various technology companies. Mr. Santoro holds a
B.A. from Columbia University.
David A. Twyver joined the board of directors of Airspan in May 1999. Mr.
Twyver is currently president and chief executive officer of Ensemble
Communications Inc., a supplier of LMDS wireless equipment. From 1996 to 1997,
he served as chief executive officer of Teledesic Corporation, a broadband
satellite telecommunications company. From 1974 to 1996, he served in several
management positions at Nortel, a leading global supplier of data and telephony
network solutions and services, most recently as president of Nortel Wireless
Networks from 1993 to 1996. Mr. Twyver is a director of several private
wireless equipment companies. He received his B.S. in Mathematics and Physics
from Royal Roads Military College and University of Saskatchewan.
Board Composition
Our bylaws provide for a board of directors consisting of seven members. Of
the current board members, five became directors pursuant to an agreement dated
November 1, 1999 among us and all of our preferred
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<PAGE>
shareholders. This agreement terminates upon the consummation of this offering.
All directors hold office until the next annual meeting of our shareholders and
until their successors have been elected and qualified. Our officers are
appointed annually and serve at the discretion of the board of directors.
Board of Directors Committees
We have an audit committee and a compensation committee. Our audit committee
consists of Messrs. Carano, Twyver, and Santoro and reviews the results and
scope of the audits and other services provided by our independent accountants.
Our compensation committee consists of Messrs. Huseby, Bayless and Cash and
reviews and approves the compensation and benefits for our executive officers,
administers our stock purchase and stock option plans and make recommendations
to the board of directors regarding such matters.
Board and Compensation Committee Interlocks
No interlocking relationship exists between our board of directors or
compensation committee and the board of directors or compensation committee of
any other company, nor has any such interlocking relationship existed in the
past. Certain of our board members have other relationships with us. See
"Certain Relationships and Related Party Transactions."
Board Compensation
SeaPoint Ventures receives $12,500 per month for providing a chairman of our
board. Thomas S. Huseby is a general partner of SeaPoint Ventures and the
chairman of our board. David Twyver receives $2,000 per month for serving as a
member of our board of directors. Otherwise, except for reimbursement for
reasonable travel expenses relating to attendance at board meetings and the
grant of stock options, directors are not compensated for their services as
directors. In 1999 we granted options to board members Eric Stonestrom and
David Twyver in the amounts of 66,667 and 30,000, respectively. Directors who
are also our employees are eligible to participate in our 1998 Stock Option and
Restricted Stock Plan and our 2000 Employee Stock Purchase Plan. See "--Stock
Plans."
Executive Compensation
Summary Compensation Table
The following table sets forth the compensation of our chief executive
officer and our four other most highly compensated executive officers who were
serving at December 31, 1999 (collectively, the "named executive officers") for
fiscal 1998 and the year ended December 31, 1999. See "--Employment
Agreements."
<TABLE>
<CAPTION>
Annual Compensation(1) Long-Term Compensation Awards
-------------------------- -------------------------------------
Restricted Securities
Name and Stock Underlying All Other
Principal Position Year Salary($) Bonus($) Awards($) Options(2) Compensation($)
- ------------------ ---- --------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Eric D. Stonestrom,..... 1999 $218,000 $50,000 $ 0 66,667 $50,000(3)
president and chief
executive officer 1998 200,000 0 0 500,000 25,000(3)
Joseph J. Caffarelli,... 1999(4) 149,999 0 0 122,667 86,009(5)
senior vice president
and chief financial
officer
Ian Cooper,............. 1999 164,448 1,391 0 25,000 0
vice president,
engineering 1998 134,722 0 0 66,667 0
Jonathan Paget,......... 1999(4) 145,566 0 0 122,667 0
vice president, product
operations
Nigel J. Terry,......... 1999 195,705 38,931 0 6,667 4,025(6)
vice president, sales
and marketing 1998 25,029 0 0 60,000 20,491
</TABLE>
- --------
(1) Salary amounts for Messrs. Cooper, Paget and Terry reflect a conversion
rate from U.K. pounds to U.S. dollars of (Pounds)1:$1.6549 in 1998 and
(Pounds)1:$1.6174 in 1999, as applicable.
43
<PAGE>
(2) Reflects the three for one reverse split of our common stock effected May
25, 2000
(3) Mr. Stonestrom's other compensation consisted of tax equalization payments
made to Mr. Stonestrom.
(4) Both Messrs. Caffarelli and Paget joined Airspan on April 1, 1999. Mr.
Caffarelli's annualized compensation for 1999 was $200,000 and Mr. Paget's
annualized compensation for 1999 was $194,088.
(5) Mr. Caffarelli's other compensation consisted of payments to Mr. Caffarelli
for reimbursement of certain relocation expenses, tax equalization payments
and sign on bonus.
(6) Mr. Terry's other compensation consisted of payments to Mr. Terry for
reimbursement of certain relocation expenses.
Option Grants During 1999 Fiscal Year and through May 25, 2000
The following table provides information regarding stock options granted
during fiscal 1999 and through May 25, 2000 to the named executive officers. We
have not granted any stock appreciation rights. The table below reflects the
three for one reverse split of our common stock effected May 25, 2000.
<TABLE>
<CAPTION>
% of Total Potential Realizable Value
Options at Assumed Annual Rates
Number of Granted to of Stock Appreciation
Securities Employees in Exercise or for Option Term(1)
Underlying Fiscal Base Price Expiration ---------------------------
Name Options(#) Year(%) ($/share)(1) Date 5%($) 10%($)
- ---- ---------- ------------ ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eric D. Stonestrom...... 66,667(2) 10.43% $3.60 10/4/09 $ 845,930 $ 1,489,162
Joseph J. Caffarelli.... 114,333(2) 17.89 0.54 3/31/09 1,800,630 2,903,772
8,333(2) 1.30 3.60 10/4/09 105,741 186,145
16,667(2) -- 7.50 3/31/10 146,482 307,290
Ian Cooper.............. 25,000(2) 3.91 3.60 10/4/09 317,224 558,436
10,000(2) -- 7.50 3/31/10 87,889 184,374
Jonathan Paget.......... 40,000(3) 6.26 0.54 3/31/09 629,958 1,015,897
20,000(2) 3.13 0.54 4/14/09 314,979 507,948
62,667(2) 9.80 3.60 10/4/09 795,174 1,399,812
Nigel J. Terry.......... 6,667(2) 1.04 3.60 10/4/09 84,593 148,916
</TABLE>
- --------
(1) The potential realizable value illustrates value that might be realized
upon exercise of the options immediately prior to the expiration of their
term, assuming the specified compounded rates of appreciation of the market
price of the common stock over the term of the options. These numbers do
not take into account provisions of certain options providing for
termination of the option following termination of employment,
nontransferability or vesting over periods of up to ten years.
(2) The vesting period for these options is over 4 years with 25% vesting after
one year and then 1/48th per month thereafter.
(3) The vesting period for these options is over 4 years with 1/48th per month
from the month of grant.
Aggregated Option Exercises During 1999 Fiscal Year and Fiscal Year-End Option
Values
The following table provides information as to the number and value of all
outstanding options exercised during fiscal year 1999 to the named executive
officers. We have not granted any stock appreciation rights. The table below
reflects the three for one reverse split of our common stock effected May 25,
2000.
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year-End(#) at Fiscal Year-End($)(1)
Acquired on Value ------------------------- -------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eric D. Stonestrom...... 500,000 -- (2) -- 66,667 -- $ 426,667
Joseph J. Caffarelli.... -- -- -- 122,667 -- 1,134,927
Ian Cooper.............. 16,667 $14,500(2) 11,111 63,889 $107,777 537,223
Jonathan Paget.......... -- -- 6,667 116,000 63,067 907,494
Nigel J. Terry.......... -- -- 16,250 50,417 157,625 467,042
</TABLE>
- --------
(1) The amount set forth represents the difference between the fair market
value of the underlying common stock using an assumed initial public
offering price of $10.00 per share and the exercise price of the option,
multiplied by the number of shares underlying the option.
44
<PAGE>
(2) The realized value represents the difference between the fair market value
of the underlying common stock, as determined by the board, at date of
exercise and the exercise price of the option, multiplied by the number of
shares. The fair market value used for Eric Stonestrom's exercised options
was the same as the option price, $0.30, as the options were exercised as
soon as they were granted. The fair market value of Ian Cooper's exercised
options was determined at $1.17 on exercise while the option price was
$0.30.
Stock Plans
1998 Stock Option and Restricted Stock Plan
Our 1998 Stock Option and Restricted Stock Plan was adopted by our board of
directors and approved by our shareholders on February 1, 1998. As of April 2,
2000, options to purchase a total of 733,725 shares of common stock had been
exercised, options to purchase a total of 1,776,851 shares at a weighted
average exercise price of $1.94 per share were outstanding, and 281,090 shares
remained available for future option grants.
The plan provides for the grant to our employees (including officers and
employee directors) of "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986 and for the grant of nonstatutory
stock options to our employees, officers, directors and consultants. Non-
employee directors are not eligible for option grants under the plan. To the
extent an optionee would have the right in any calendar year to exercise for
the first time one or more incentive stock options for shares having an
aggregate fair market value (under the plan and determined for each share as of
the date the option to purchase the share was granted) in excess of $100,000,
any such excess options are treated as nonstatutory stock options.
The plan is administered by the board of directors or a committee of the
board of directors. The administrator determines the terms of options granted
under the plan, including the number of shares subject to the option, exercise
price, term and exercisability. The exercise price of all incentive stock
options granted under the plan must be at least equal to the fair market value
of our common stock on the date of grant. The exercise price of all
nonstatutory stock options granted to persons who are not 10% shareholders
cannot be less than 100% of the fair market value of our common stock on the
date of grant. The administrator determines the term of options. The term of an
incentive stock option granted under the plan may not exceed ten years. Options
granted to each employee under the plan generally become exercisable at the
rate of 25% of the total number of shares subject to the options after the
first anniversary following the date of grant, with 2.778% vesting monthly
thereafter.
In the event of certain changes in control, our stock options generally
require that each outstanding option be assumed or an equivalent option
substituted by the successor corporation. In the event that a successor
corporation refuses to assume each option or substitute an equivalent option,
the administrator shall provide for the optionee to have the right to exercise
the option as to 50% of the remaining unvested options, including shares as to
which the option would not otherwise be exercisable. The administrator has the
authority to amend or terminate the plan as long as such action does not
adversely affect any outstanding option and provided that shareholder approval
shall be required for an amendment to increase the number of shares subject to
the plan, or any change in the designation of the class of persons eligible to
be granted options, or a material increase in benefits accruing to participants
under the plan if a class of our shares is registered under Section 12 of the
Securities Exchange Act of 1934. If not terminated earlier, the plan will
terminate February 1, 2008.
2000 Employee Stock Purchase Plan
Our 2000 Employee Stock Purchase Plan was adopted by our board of directors
on May 17, 2000 and shareholders on May 24, 2000. A total of 500,000 shares of
common stock has been reserved for issuance under the purchase plan. The
purchase plan, which is intended to qualify under Section 423 of the Internal
Revenue Code, generally will be implemented in a series of offering periods of
one year duration with new offering periods (other than the first offering
period) commencing on August 1 and ending on the following July 31, with the
last day of each period being designated as a purchase date. The first offering
period will commence on the effective date of this offering and continue
through July 31, 2001. The purchase plan will be
45
<PAGE>
administered by our board of directors or a committee appointed by our board of
directors. Our employees (including officers and employee directors) or
employees of any subsidiary are eligible to participate if they are employed by
us or any subsidiary for at least 20 hours per week and more than five months
per year. The purchase plan permits eligible employees to purchase common stock
through payroll deductions, which may not exceed 10% of an employee's
compensation, at a price equal to the lower of 85% of the fair market value of
our common stock at the beginning of the offering period or the purchase date.
Employees may end their participation in the offering at any time prior to the
last business day of the offering period, and participation ends automatically
on termination of employment with us. In addition, participants may decrease
their level of payroll deductions once during an offering period.
Our board of directors may amend or terminate the purchase plan as long as
any outstanding rights to purchase stock thereunder are not adversely affected.
If not terminated earlier, the purchase plan will terminate on July 31, 2006.
46
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The following is a description of transactions during our last three fiscal
years to which we have been a party, in which the amount involved in the
transaction exceeds $60,000 and in which any director, executive officer or
holder of more than 5% of our capital stock had or will have a direct interest
or indirect material interest, other than compensation arrangements that are
otherwise required to be described under "Management."
Sales of Our Common and Preferred Stock
During the past three years, in addition to issuances of common stock upon
option exercises, we have issued or sold common stock and convertible preferred
stock:
. in November 1999, February and April 2000, we sold an aggregate of
22,178,573 shares of Series C convertible preferred stock at $2.50 per
share
. in November 1998, we sold an aggregate of 18,571,429 shares of Series B
convertible preferred stock at $1.75 per share, the proceeds of which
were used, in part, to redeem all shares owned by DSC
. in January 1998, we sold an aggregate of 40,000,000 shares of Series A
convertible preferred stock at $1.00 per share
. in January 1998, we sold an aggregate of 541,667 shares of common stock
at $0.03 per share, adjusted to reflect the three for one reverse split
of the common stock effected May 25, 2000
Our officers, directors and 5% shareholders participated in these
transactions as follows:
<TABLE>
<CAPTION>
Number of Shares Number of Shares Number of Shares
of Series A of Series B of Series C Number of Shares
Name of Purchaser Preferred Stock Preferred Stock Preferred Stock of Common Stock
- ----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Sevin Rosen Funds(1).... 7,330,000 1,047,143 572,098 --
Oak Investment
Partners(2)............ 7,330,000 2,047,143 2,000,000 --
InterWest Partners(3)... 7,330,000 1,047,143 572,098 --
Venrock Associates...... 5,330,000 761,429 416,000 --
Charles River
Partnership............ 4,000,000 857,143 532,000 --
DB Overseas Holdings
Limited(4)............. -- 5,714,286 1,100,000 --
Meritech Capital........ -- -- 5,680,064 --
Weston Presidio
Capital................ -- -- 4,532,000 --
SeaPoint Ventures(5).... -- -- 760,000 416,667
Eric Stonestrom(6)...... -- -- -- 500,000
</TABLE>
- --------
(1) Jon W. Bayless is a director of Airspan and a partner of Sevin Rosen
Funds.
(2) Bandel L. Carano is a director of Airspan and a general partner of Oak
Investment Partners.
(3) H. Berry Cash is a director of Airspan and a general partner of InterWest
Partners.
(4) Ovid Santoro is a director of Airspan and a former managing director of
Deutsche Bank AG, the parent company of DB Overseas Holdings Limited.
(5) Thomas S. Huseby is a director of Airspan and managing partner of SeaPoint
Ventures.
(6) Mr. Stonestrom is the president and chief executive officer of Airspan.
In connection with our acquisition of the Airspan assets from DSC in January
1998, Sevin Rosen Funds, Oak Investment Partners and InterWest Partners agreed
to purchase our Series A convertible preferred stock. All of these entities may
be deemed to be promoters of Airspan. Other than purchasing Series A preferred
stock at the same price per share as other investors in our Series A
convertible preferred stock financing, Sevin Rosen Funds, Oak Investment
Partners and InterWest Partners did not receive any item of value, nor did
these entities sell any property or assets to Airspan.
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<PAGE>
The original purchasers of our common stock include SeaPoint Ventures, of
which Mr. Huseby, a director, is the managing partner. SeaPoint Ventures paid
$0.03 per share, with an aggregate capital contribution of $16,250, for
approximately 0.004% of Airspan's capitalization (based on our capitalization
immediately following the Series A financing) and 4.0% of the issued shares
(based on our issued shares immediately following the Series A financing).
As compensation for performing services in the original formation of
Airspan, SeaPoint Ventures was issued 333,333 shares of common stock at $0.03
per share. In addition, SeaPoint later purchased 83,333 shares of common stock
for $0.54 per share in connection with our Series B convertible preferred
stock.
In 1998 and 1999, we paid $220,000 and $263,000, respectively, to SeaPoint
Ventures for executive management and accounting services.
On February 16, 1998 we sold to Eric Stonestrom, our president and chief
executive officer, 333,333 shares of common stock at $0.10 per share. We have
an option to repurchase these shares at the same price if Mr. Stonestrom's
employment with us is terminated for any reason. On May 12, 1998 we sold an
additional 166,667 shares to Mr. Stonestrom at the same price, with the same
repurchase option. On April 27, 1999 we entered into two promissory notes
reflecting the remaining $130,000 Mr. Stonestrom owes for the purchase of the
common stock, which is required to be paid upon a change of control of the
company. The notes are secured by the common stock.
We believe that the transactions described in this section were made on
terms no less favorable than could have been obtained from third parties. Prior
to the closing of this offering, we will adopt a policy that requires, unless
otherwise approved by a disinterested majority of directors as required by
Washington law, all future transactions between Airspan and its officers,
directors and affiliates to be on terms no less favorable than could be
obtained from unaffiliated third parties.
Employment Agreements
All share amounts discussed below reflect the three for one reverse split of
the common stock effected May 25, 2000.
In January 1998, we entered into an employment agreement with Eric D.
Stonestrom, our president and chief executive officer. Mr. Stonestrom's annual
compensation was set at an annual base salary of $180,000, with a bonus based
on achieving gross profit objectives. Mr. Stonestrom was also granted stock
options to purchase 333,333 shares of common stock which were exercised in
February 1998. In May 1998, we entered into another employment agreement with
Mr. Stonestrom. Pursuant to this agreement, Mr. Stonestrom's annual base salary
was increased to $210,000 and he received additional options to purchase
166,667 shares of common stock which were exercised in May 1998. The agreement
with Mr. Stonestrom further provides certain tax equalization payments of
$50,000 annually. Mr. Stonestrom is also entitled to receive six months of
severance payments if his employment is terminated involuntarily. In May 1999,
Mr. Stonestrom's annual base salary was increased to $222,000 and in October
1999 he received additional options to purchase 66,667 shares of common stock.
In April 1999, we entered into an employment agreement with Joseph J.
Caffarelli, our senior vice president and chief financial officer. This
agreement provides for annual compensation of $200,000, with an additional
signing bonus of $30,000. In addition to the signing bonus, Mr. Caffarelli may
receive additional bonuses if certain gross profit objectives are met. Mr.
Caffarelli was also granted options to purchase 114,333 shares of common stock.
In October 1999, Mr. Caffarelli received additional options to purchase 8,333
shares of common stock. The agreement with Mr. Caffarelli further provides
certain tax equalization payments of $50,000 annually. We also reimbursed Mr.
Caffarelli for his moving expenses and cost of certain living expenses incurred
in moving from the U.S. to the U.K. Mr. Caffarelli is entitled to receive six
months of severance payments if his employment is terminated involuntarily. In
March 2000, Mr. Caffarelli received additional options to purchase 16,667
shares of common stock.
In November 1998, we entered into an employment agreement with Nigel J.
Terry, our vice president, sales and marketing. Mr. Terry's annual compensation
was set at an annual base salary of $195,705, with a
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<PAGE>
guaranteed bonus of $40,435 for the first twelve months of employment only. In
addition to the guaranteed bonus, Mr. Terry may receive additional bonuses if
certain revenue objectives are met. Mr. Terry was also granted options to
purchase 60,000 shares of common stock. In October 1999, Mr. Terry received
additional options to purchase 6,667 shares of common stock. We also reimbursed
Mr. Terry for a portion of his moving expenses to the U.K.
In April 1999, we entered into an employment agreement with Jonathan Paget,
our vice president, product operations. Mr. Paget's annual compensation was set
at an annual base salary of $194,088, with options to purchase 60,000 shares of
common stock. In October 1999, Mr. Paget received additional options to
purchase 62,667 shares of common stock.
In January 1998, we entered into an employment agreement with Ian Cooper,
our vice president, engineering. Mr. Cooper's annual compensation was set at an
annual base salary of $134,722. In addition to the base salary Mr. Cooper was
granted options to purchase 50,000 shares of common stock. In October 1998, we
entered into another employment agreement with Mr. Cooper where he was named
vice president, engineering. Pursuant to this agreement, Mr. Cooper"s annual
base salary was increased to $164,448 and he received options to purchase
16,667 shares of common stock. In October 1999, Mr. Cooper received options to
purchase 25,000 shares of common stock, and in March 2000, Mr. Cooper received
options to purchase 10,000 shares of common stock.
Executive Compensation Employment Agreements/Stock Option Grants
The following table relates to options granted to the named executive
officers, including the option exercise price and the specific vesting terms.
<TABLE>
<CAPTION>
No. of
Effective Date Vesting Shares Exercise
Name of Grant Period Vesting Terms Granted Price
- ---- -------------- --------- --------------------------------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Eric D. Stonestrom..... Employment Agreement 01-Feb-98 Immediate Immediate upon grant 333,333 $0.30
Common Stock Agreement 12-May-98 Immediate Immediate upon grant 166,667 $0.30
Stock Option Agreement 05-Oct-99 4 years 25% after 1 year 1/48 per mo. 66,667 $3.60
Joseph J. Caffarelli... Employment Agreement 01-Apr-99 4 years 25% after 1 year 1/48 per mo. 114,333 $0.54
Stock Option Agreement 05-Oct-99 4 years 25% after 1 year 1/48 per mo. 8,333 $3.60
Stock Option Agreement 10-Mar-00 4 years 25% after 1 year 1/48 per mo. 16,667 $7.50
Ian Cooper............. Employment Agreement 01-Feb-98 4 years 25% after 1 year 1/48 per mo. 50,000 $0.30
Stock Option Agreement 06-Oct-98 4 years 25% after 1 year 1/48 per mo. 16,667 $0.30
Stock Option Agreement 05-Oct-99 4 years 25% after 1 year 1/48 per mo. 25,000 $3.60
Stock Option Agreement 10-Mar-00 4 years 25% after 1 year 1/48 per mo. 10,000 $7.50
Jonathan Paget......... Employment Agreement 01-Apr-99 4 years Immediate start 1/48 per mo. 40,000 $0.54
Stock Option Agreement 01-Apr-99 4 years 25% after 1 year 1/48 per mo. 20,000 $0.54
Stock Option Agreement 05-Oct-99 4 years 25% after 1 year 1/48 per mo. 62,667 $3.60
Nigel J. Terry......... Employment Agreement 16-Nov-98 4 years 25% after 1 year 1/48 per mo. 60,000 $0.30
Stock Option Agreement 05-Oct-99 4 years 25% after 1 year 1/48 per mo. 6,667 $3.60
</TABLE>
Voting Agreement
The shareholders identified in the table above are parties to a voting
agreement pursuant to which directors are elected. The directors are as
follows: (i) our Chairman; (ii) our Chief Executive Officer; (iii) the nominee
director of InterWest VI, L.P.; (iv) the nominee director of Sevin Rosen Fund
VI, L.P.; (v) the director of DB Overseas Holdings Limited and its affiliates;
(vi) the nominee director of Oak Investment Partners, VII Limited Partnership
and (vii) one non-employee director. This agreement terminates on the closing
of this offering.
49
<PAGE>
Terms of Preferred Stock
The following table summarizes the key terms of our outstanding preferred
stock.
<TABLE>
<CAPTION>
Series A Series B Series C
-------------- -------------- --------------
<S> <C> <C> <C>
Number of Shares Outstanding..... 40,000,000 18,821,427 22,178,573
Dividends........................ None specified None specified None specified
Liquidation Preference........... $1.00 $1.75 $2.50
Additional Priority Distribution
Amount.......................... $2.00 $3.00 $5.00
Redemption Rights................ None None None
Conversion Ratio................. Each series is converted on a 3:1 ratio
(three preferred shares convert into one
common share).
Conversion....................... Each series is automatically converted into
common stock upon our initial public
offering. The offering size and price per
share amount requirements have been waived
by the shareholders.
Voting Rights.................... Each series has the right to one vote per
common stock on an as converted basis. The
approval of a majority of the preferred
stock is required for certain acts,
including mergers, dividends, guarantees,
security interests, amendments affecting the
rights and preferences of the preferred
stock.
</TABLE>
Registration Rights
The holders of our preferred stock that will convert into common stock on
the closing of this offering have certain rights relating to registration by us
of their common stock. See "Description of Capital Stock--Registration Rights
of Certain Holders."
50
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of April 2, 2000, and as adjusted to reflect
the sale of our common stock offered by this prospectus for:
. each shareholder who is known by us to own beneficially more than 5% of
our common stock
. each of our named executive officers
. each of our directors
. all of our directors and executive officers as a group
Unless otherwise indicated, to our knowledge, all persons listed below have
sole voting and investment power with respect to their shares of our common
stock, except to the extent authority is shared by spouses under applicable
law. The number of shares beneficially owned reflects the three for one reverse
split of the common stock and reflects the automatic conversion of our
preferred stock into common stock at the closing of this offering on a three-
for-one basis.
<TABLE>
<CAPTION>
Percentage of Shares
Outstanding(1)
---------------------
Number of Shares Before the After the
Beneficial Owner Beneficially Owned Offering Offering
- ---------------- ------------------ ---------- ----------
<S> <C> <C> <C>
Oak Investment Partners(2)........... 3,792,381 13.5% 11.4%
Sevin Rosen Funds(3)................. 2,983,080 10.6 9.0
InterWest Partners(4)................ 2,983,080 10.6 9.0
DB Overseas Holdings Limited(5)...... 2,271,429 8.1 6.8
Venrock Associates(6)................ 2,169,143 7.7 6.5
Meritech Capital(7).................. 1,893,355 6.7 5.7
Charles River Partnership(8)......... 1,796,381 6.4 5.4
Weston Presidio Capital(9)........... 1,510,667 5.4 4.6
Thomas S. Huseby(10)................. 670,000 2.4 2.0
Eric D. Stonestrom(11)............... 500,000 1.8 1.5
Joseph J. Caffarelli(11)(12)......... 30,965 * *
Ian Cooper(11)(13)................... 34,722 * *
Jonathan Paget(11)(14)............... 16,253 * *
Nigel J. Terry(11)(15)............... 22,500 * *
Jon W. Bayless(16)................... 2,983,080 10.6 9.0
Bandel L. Carano(17)................. 3,792,381 13.5 11.4
H. Berry Cash(18).................... 2,983,080 10.6 9.0
Ovid Santoro(19)..................... -- -- --
David A. Twyver(20).................. -- -- --
All directors and executive officers
as a group (11 persons)............. 11,032,981 39.0% 33.2%
</TABLE>
- --------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Applicable percentage ownership is
based on 28,915,868 shares of common stock outstanding as of April 2,
2000, including 83,333 shares issuable upon exercise of warrants,
together with options for that shareholder that are currently exercisable
or exercisable within 60 days of April 2, 2000. In computing the number
and percentage of shares beneficially owned by a person, shares of common
stock subject to options currently exercisable, or exercisable within 60
days of April 2, 2000 are counted as outstanding, while these shares are
not counted as outstanding for computing the percentage ownership of any
other person. The percentage of shares outstanding after the offering is
calculated after giving effect to the issuance of 5,000,000 shares of
common stock offered by this prospectus, assuming no exercise of the
underwriters' over-allotment option.
(2) The address of Oak Investment Partners is 525 University Avenue, Suite
1300, Palo Alto, CA 94301. Includes purchases made by Oak Investment
Partners VII, L.P. and Oak VII Affiliates Fund, L.P., each of which is an
affiliate of Oak IW Partners.
51
<PAGE>
(3) The address of Sevin Rosen Funds is 13455 Noel Road, Suite 1670, Dallas,
Texas 75240. Includes purchases made by Sevin Rosen Bayless Management
Company, Sevin Rosen Fund VL.P., Sevin Rosen Fund VIL.P., Sevin Rosen V
Affiliates Fund L.P., and Sevin Rosen VI Affiliates Fund L.P. each of
which is an affiliate of Sevin Rosen Funds.
(4) The address of InterWest Partners is 3000 Sand Hill Road #3-255, Menlo
Park, CA 94025. Includes purchases made by InterWest Investors VI, L.P.
and InterWest Partners VI, L.P., each of which is an affiliate of
InterWest Partners.
(5) The address of DB Overseas Holdings Limited (formerly DB U.K. Finance
Limited and DB U.K. Finance plc) is 6 Bishopsgate, London, England EC2N
4DA. DB Overseas Holdings Limited is owned by Deutsche Bank AG through
its subsidiaries, as is Deutsche Bank Securities Inc.
(6) The address of Venrock Associates is 30 Rockefeller Plaza, Room 5508, New
York, New York 10112.
(7) The address of Meritech Capital is 428 University Avenue, Palo Alto, CA
94301.
(8) The address of Charles River Partnership is 1000 Winter Street, Suite
3300, Waltham, MA 02154.
(9) The address of Weston Presidio Capital is 343 Sansome Street, San
Francisco, California 94104.
(10) The address of Mr. Huseby is 777 108th Avenue N.E., Suite 1895, Bellevue,
WA 98004. Mr. Huseby is a general partner of SeaPoint Ventures. The
shares listed represent 670,000 shares held by investment entities within
SeaPoint Ventures. Mr. Huseby disclaims beneficial ownership of the
shares held by SeaPoint Ventures, except to the extent of his pecuniary
interest therein.
(11) The addresses of Messrs. Stonestrom, Terry, Cooper, Caffarelli and Paget
is Cambridge House, Oxford Road, Uxbridge, Middlesex UB8 1UN, England.
(12) Includes 30,965 shares of common stock issuable on exercise of presently
exercisable stock options.
(13) Includes 18,056 shares of common stock issuable on exercise of presently
exercisable stock options.
(14) Includes 16,250 shares of common stock issuable on exercise of presently
exercisable stock options.
(15) Includes 22,500 shares of common stock issuable on exercise of presently
exercisable stock options.
(16) The address of Mr. Bayless is 13455 Noel Road, Suite 1670, Dallas, Texas
75240. Mr. Bayless is a general partner of Sevin Rosen Funds. The shares
listed represents 2,983,080 shares held by investment entities within the
Sevin Rosen Funds. Mr. Bayless disclaims beneficial ownership of the
shares held by Sevin Rosen Funds, except to the extent of his pecuniary
interest therein.
(17) The address of Mr. Carano is 525 University Avenue, Suite 1300, Palo
Alto, CA 94301. Mr. Carano is a general partner of Oak Investment
Partners VII, LP and Oak VII Affiliates Fund, LP. The shares listed
represents 3,699,468 shares held by Oak Investment Partners VII, LP and
92,913 shares held by Oak VII Affiliates Fund, LP. Mr. Carano disclaims
beneficial ownership of the shares held by the Oak entities, except to
the extent of his pecuniary interest therein.
(18) The address of Mr. Cash is 3000 Sand Hill Road #3-255, Menlo Park, CA
94025. Mr. Cash is a general partner of InterWest Partners. The shares
listed represents 2,983,080 shares held by investment entities of
InterWest Partners. Mr. Cash disclaims beneficial ownership of the shares
held by InterWest partners except for his pecuniary interest therein.
(19) The address of Mr. Santoro is 6 Bishopsgate, London, England EC2N 4DA.
(20) The address of Mr. Twyver is P.O. Box 2447, Friday Harbor, WA 98250.
52
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Our amended and restated articles of incorporation authorize the issuance of
50,000,000 shares of common stock, $0.0003 par value per share and 86,000,000
shares of preferred stock, $0.0001 par value per share. Excluding the shares
offered hereby, we will have 28,281,572 shares of common stock issued and
outstanding, including 26,916,667 shares of common stock issued on the
conversion of our preferred stock immediately prior to the closing of the
offering. Upon this conversion, our articles of incorporation will authorize
the issuance of 5,000,000 shares of preferred stock, of which none will be
outstanding.
Certain provisions of our articles of incorporation and bylaws and
Washington law may discourage, delay or prevent a merger or acquisition that a
shareholder may consider favorable. These provisions include:
. authorizing the board of directors to issue additional common and
preferred stock
. not permitting cumulative voting in the election of directors
. limiting the persons who may call special meetings of shareholders
. not permitting shareholder action by written consent
. establishing advance notice requirements for nominations for election of
the board of directors or for proposing matters that can be acted on by
shareholders at shareholder meetings
We are also subject to certain provisions of Washington law that could
delay, deter or prevent us from entering into an acquisition. Chapter 19 of the
Washington Business Corporation Act prohibits a Washington corporation such as
Airspan from engaging in a business combination with an interested shareholder
unless specific conditions are met.
Common Stock
Holders of common stock are entitled to one vote per share on all matters to
be voted upon by the shareholders generally, including the election of
directors. Holders of common stock have no cumulative voting rights and no
preemptive or conversion rights. There are no redemption or sinking fund
provisions available to the holders of common stock. Subject to preferences
that may be applicable to any then-outstanding preferred stock, holders of
common stock will be entitled to receive ratably such dividends as may be
declared by our board of directors out of funds legally available for such
dividends. In the event of a liquidation, dissolution or winding up of Airspan,
holders of common stock will be entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference to any
then-outstanding holders of preferred stock.
Preferred Stock
As of the closing of this offering, our articles of incorporation authorize
us to issue 5,000,000 shares of preferred stock, which may be issued from time
to time in one or more classes or series or both upon authorization by our
board of directors. Our board of directors, without further approval of the
shareholders, is authorized to fix the dividend rights and terms, conversion
rights, voting rights, redemption rights and terms, liquidation preferences and
any other rights, preferences, privileges and restrictions applicable to each
class or series of preferred stock. The issuance of preferred stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could adversely affect the voting power of the holders of
our common stock and, under certain circumstances, make it more difficult for a
third party to gain control of Airspan, discourage bids for our common stock at
a premium, or otherwise adversely affect the market price of our common stock.
We have no current plan to issue preferred stock.
Warrants and other Rights
As of May 23, 2000, there were outstanding warrants to purchase 249,998
shares of preferred stock convertible into 83,333 shares of common stock with
an exercise price of $1.75 that will expire three years from the date of this
prospectus.
53
<PAGE>
Registration Rights of Certain Holders
The holders of 80,750,002 shares of preferred stock that will convert into
26,916,667 shares of common stock, or their transferees, are entitled to some
rights with respect to the registration of these shares under the Securities
Act. These rights are provided under the terms of an agreement between us and
the holders of registrable securities. Subject to some limitations in this
agreement, the holders of the registrable securities may require, on three
occasions at any time after one year from the effective date of this offering,
that we use our best efforts to register the registrable securities, for public
resale, provided that the proposed aggregate offering price exceeds
$10,000,000. If we register any of our common stock either for our own account
or for the account of other security holders, the holders of registrable
securities are entitled to include their shares of common stock in the
registration. A holder's right to include shares in an underwritten
registration is subject to the ability of the underwriters to limit the number
of shares included in the offering. All fees, costs and expenses of such
registrations must be borne by us and all selling expenses, including
underwriting discounts, selling commissions and stock transfer taxes, relating
to registrable securities must be borne by the holders of the securities being
registered.
Business Combination Statute
The Washington Business Act, Section 23B.19 of the Revised Code of
Washington, prohibits a "target corporation," with certain exceptions, from
engaging in certain "significant business transactions," such as a merger or
sale of assets, with an "acquiring person" who acquires more than 10% of the
voting securities of the target corporation for a period of five years after
such acquisition, unless the transaction is approved by the majority of the
members of the target corporation's board of directors prior to the date of the
transaction or unless the aggregate amount of the cash and the market value of
non-cash consideration received by holders of outstanding shares of any class
or series of stock of the target corporation is equal to certain minimum
amounts. Our Articles of Incorporation provide that we will be subject to such
prohibitions and shall remain subject to such prohibitions even if the law is
repealed.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services, L.L.C.
Listing
We have applied to list the common stock on The Nasdaq Stock Market's
National Market under the symbol "AIRN."
54
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have outstanding 33,281,572 shares
of common stock, assuming no exercise of the underwriters' over-allotment
option and no exercise of outstanding options or warrants after April 2, 2000.
Of these shares, the 5,000,000 shares of common stock sold in this offering
will be freely tradable without restriction under the Securities Act except for
any shares purchased by our "affiliates" as defined in Rule 144 under the
Securities Act. The remaining 28,281,572 shares are "restricted securities"
within the meaning of Rule 144. The restricted securities may not be sold
unless they are registered under the Securities Act or are sold under an
exemption from registration, such as the exemption provided by Rule 144.
Our executive officers, directors and our other securityholders have entered
into lock-up agreements in which they have agreed that, for a period of 180
days after the date of this prospectus, they will not offer, sell, contract to
sell, pledge or otherwise dispose of any shares of our common stock, or any
securities convertible into or exchangeable or exercisable for any shares of
our common stock, or publicly disclose their intention to make any offer, sale,
contract, pledge or disposal, without the prior written consent of Credit
Suisse First Boston Corporation, other than shares of common stock acquired
pursuant to this offering or in the open market or transferred (i) as a bona
fide gift or gifts, or (ii) as a distribution to the partners, members, or
shareholders of the holder, provided the transferee(s) has agreed to be bound
in writing by the terms of this the lock-up agreement. In addition, we have
agreed in the underwriting agreement that, for a period of 180 days after the
date of this prospectus, we will not offer, sell, contract to sell, pledge or
otherwise dispose of any shares of our common stock, or any securities
convertible into or exchangeable or exercisable for any shares of our common
stock, or publicly disclose our intention to make any offer, sale, contract,
pledge or disposal, without the prior written consent of Credit Suisse First
Boston Corporation. We have similarly agreed that, with limited exceptions, we
will not file a registration statement with the SEC or publicly disclose our
intention to do so. Credit Suisse First Boston Corporation may, at any time and
without notice, waive any of the terms of these lock-up agreements.
Under these lock-up agreements, our outstanding shares of common stock will
be available for sale in the public market as follows:
<TABLE>
<CAPTION>
Percent of
Number of Total Shares
Shares Outstanding Date of Availability for Sale
--------- ------------ ------------------------------------------------------
<C> <C> <S>
0 0% , 2000 (date of this prospectus) to , 2000
(90 days after the date of this prospectus)
27,555,381 82.8 , 2000 (180 days after the date of this
prospectus), in some cases under Rule 144
726,191 16.2 At various times after , 2000
</TABLE>
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person (or persons whose shares are aggregated)
who has beneficially owned restricted shares for at least one year, including
persons who may be deemed our "affiliates," would be entitled to sell within
any three-month period a number of shares that does not exceed the greater of
(a) 1% of the number of shares of common stock then outstanding or (b) the
average weekly trading volume of the common stock as reported through the
Nasdaq National Market during the four calendar weeks preceding the filing of a
Form 144 with respect to such sale. Sales under Rule 144 are also subject to
certain manner of sale provisions and notice requirements and the availability
of current public information about us. In addition, a person who is not deemed
to have been our affiliate at any time during the 90 days preceding a sale and
who has beneficially owned for at least two years the shares proposed to be
sold would be entitled to sell such shares under Rule 144(k) without regard to
the requirements described above. Persons deemed to be "affiliates" must always
sell pursuant to Rule 144, even after the applicable holding periods have been
satisfied.
55
<PAGE>
In general, Rule 701 permits resales of shares issued pursuant to certain
compensatory benefit plans and contracts commencing 90 days after the issuer
becomes subject to the reporting requirements of the Securities Exchange Act of
1934 in reliance upon Rule 144 but without compliance with certain
restrictions, including the holding period requirements, contained in Rule 144.
We will file registration statements on Form S-8 under the Securities Act of
1933 to register common stock issuable under our stock option plans and stock
purchase plan. Such registration will permit the resale of shares in the public
market without restriction under the Securities Act.
We intend to file, after the effective date of this offering, a registration
statement on Form S-8 to register up to approximately 2.1 million shares of
common stock reserved for issuance under our stock plans. The registration
statement will become effective automatically upon filing. After the
registration statement has been filed, shares issued under the stock plans may
be sold in the open market, unless the sale is limited by the provisions of
Rule 144 applicable to our affiliates or the lock-up agreements.
No prediction can be made as to the effect, if any, that market sales of
shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of substantial amounts of our
common stock in the public market after the lapse of the restrictions described
above could adversely affect the prevailing market price and our ability to
raise equity capital in the future.
See also "Description of Capital Stock--Registration Rights of Certain
Holders."
56
<PAGE>
UNDERWRITING
Under the terms and conditions contained in an underwriting agreement dated
, 2000, we have agreed to sell to the underwriters named below, for whom
Credit Suisse First Boston Corporation, Deutsche Bank Securities Inc., Lehman
Brothers, Inc. and U.S. Bancorp Piper Jaffray Inc. are acting as
representatives, the following respective numbers of shares of common stock:
<TABLE>
<CAPTION>
Number
Underwriter of Shares
----------- ---------
<S> <C>
Credit Suisse First Boston Corporation...........................
Deutsche Bank Securities Inc.....................................
Lehman Brothers, Inc.............................................
U.S. Bancorp Piper Jaffray Inc. .................................
----
Total..........................................................
====
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all of the shares of common stock in the offering if any are
purchased, other than those shares covered by the over-allotment option
described below. The underwriting agreement also provides that if an
underwriter defaults, the purchase commitments of non-defaulting underwriters
may be increased or the offering of common stock may be terminated.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to additional shares at the initial public offering price
less the underwriting discounts and commissions. The option may be exercised
only to cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and selling group members may allow a discount of $ per share
on the sales to other broker/dealers. After the initial public offering, the
public offering price, concession and discount to broker/dealers may be changed
by the representatives.
The following table summarizes the compensation and estimated expenses we
will pay.
<TABLE>
<CAPTION>
Per Share Total
------------------- -------------------
Without With Without With
Over- Over- Over- Over-
allotment allotment allotment allotment
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Underwriting discounts and commissions
paid by us........................... $ $ $ $
Expenses payable by us................ $ $ $ $
</TABLE>
The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.
We, our officers and directors and other shareholders holding an aggregate
of shares have agreed that we and they will not offer, sell, contract to
sell, announce our intention to sell, pledge or otherwise dispose of, directly
or indirectly, or, in our case, file with the Securities and Exchange
Commission a registration statement under the Securities Act of 1933 relating
to, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any of our common stock without the prior
written consent of Credit Suisse First Boston Corporation for a period of 180
days after the date of this prospectus, except in certain limited exceptions.
The underwriters have reserved for sale, at the initial public offering
price, up to shares of the common stock for some of our vendors,
customers, employees, directors and other people and entities with whom we
maintain business relationships who have expressed an interest in purchasing
common stock in the offering. The number of shares available for sale to the
general public in the offering will be reduced by the
57
<PAGE>
number of the reserved shares purchased. Any reserved shares not purchased will
be offered by the underwriters to the general public on the same terms as the
other shares.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act of 1933, or contribute to payments which the underwriters may be
required to make.
We intend to apply to list the common stock on The Nasdaq Stock Market's
National Market under the symbol "AIRN."
Deutsche Bank Securities Inc., an underwriter in this offering, is an
affiliate of DB Overseas Holdings Limited, one of our shareholders. Deutsche
Bank Securities Inc. and DB Overseas Holdings Limited are both owned by
Deutsche Bank AG through its subsidiaries.
Prior to this offering, there has been no public market for our common
stock. The initial public offering price has been determined by negotiations
between us and the representatives. The principal factors considered in
determining the public offering price included:
. the information set forth in this prospectus and otherwise available to
the representatives
. the history and the prospects for the industry in which we compete
. the ability of our management
. the prospects for our future earnings
. the present state of our development and our current financial condition
. the general condition of the securities markets at the time of this
offering
. the recent market prices of, and the demand for, publicly-traded common
stock of generally comparable companies
The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation
M under the Securities Exchange Act of 1934. A description of each of these
terms is below:
. over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position
. stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum
. syndicate covering transactions involve purchase of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions
. penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by such
syndicate member is purchased in a syndicate covering transaction to
cover syndicate short positions
These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the common stock to be higher than it would
otherwise be in the absence of these transactions. These transactions may be
effected on The Nasdaq Stock Market's National Market or otherwise and, if
commenced, may be discontinued at any time.
A prospectus in electronic format may be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters
for sale to their online brokerage account holders. Internet distributions will
be allocated by the underwriters that will make internet distributions on the
same basis as other allocations.
58
<PAGE>
NOTICE TO CANADIAN RESIDENTS
The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common
stock in Canada must be made under securities laws which will vary depending on
the relevant jurisdiction, and which may require resales to be made under
available statutory exemptions or under a discretionary exemption granted by
the Canadian securities regulatory authority that has jurisdiction. Purchasers
are advised to seek legal advice prior to any resale of the common stock.
Representations of Purchasers
Each purchaser of common stock in Canada who receives a purchase
confirmation will represent to us and the dealer from whom the purchase
confirmation is received that:
. the purchaser is entitled under the provincial securities laws that
apply to the purchaser to purchase the common stock without the benefit
of a prospectus qualified under these securities laws;
. the purchaser is purchasing as principal and not as agent if the
purchaser is not allowed to purchase as agent under the provincial
securities laws that apply to the purchaser;
. the purchaser has reviewed the text above under "Resale Restrictions."
Rights of Action of Ontario Purchasers
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
Enforcement of Legal Rights
All of the issuer's directors and officers as well as the experts named in
this prospectus may be located outside Canada and, as a result, it may not be
possible for Canadian purchasers to serve process within Canada upon the issuer
or these persons. All or a substantial portion of the assets of the issuer and
these persons may be located outside Canada and, as a result, it may not be
possible to satisfy a judgment against the issuer or these persons in Canada or
to enforce a judgment obtained in Canadian courts against the issuer or these
persons outside Canada.
Notice to British Columbia Residents
A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that the purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by the purchaser under this offering. This report must be
in the form attached to British Columbia Securities Commission Blanket Order
BOR #95/17, a copy of which may be obtained from us. Only one report must be
filed for common stock acquired on the same date and under the same prospectus
exemption.
Taxation and Eligibility for Investment
Canadian purchasers of common stock should consult with their own legal and
tax advisors about the tax consequences of an investment in the common stock in
their particular circumstances and about the eligibility of the common stock
for investment by the purchaser under Canadian legislation.
59
<PAGE>
LEGAL MATTERS
The validity of the common stock offered by this prospectus will be passed
upon for us by our counsel, Preston Gates & Ellis LLP, Seattle, Washington.
Certain legal matters in connection with the offering will be passed upon for
the underwriters by Davis Polk & Wardwell.
EXPERTS
The statements of revenues and direct costs and expenses of the predecessor
business for the year ended December 31, 1997 and the month ended January 25,
1998 and the consolidated financial statements of Airspan at December 31, 1998
and 1999, and for the eleven months ended December 31, 1998 and the year ended
December 31, 1999, appearing in this prospectus and registration statement have
been audited by Ernst & Young, independent auditors, as set forth in their
reports thereon appearing elsewhere herein and in the registration statement,
and are included in reliance upon such reports given on the authority of such
firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1. This
prospectus, which forms a part of the registration statement, does not contain
all of the information included in the registration statement and its exhibits
and schedules. References in this prospectus to any contract or other document
that has been filed as an exhibit to the registration statement should be read
together with the exhibit itself. You may inspect a copy of the registration
statement and its exhibits without charge at the public reference facilities
maintained by the SEC at 450 Fifth Street, NW, Judiciary Plaza, Washington,
D.C. 20549, and you may obtain copies of all or any part thereof from the SEC
upon payment of certain fees prescribed by the SEC. The SEC maintains a World
Wide Web site that contains reports, proxy and information statements and other
information filed electronically with the Securities and Exchange Commission.
The address of the site is http://www.sec.gov.
60
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors............................................. F-2
Consolidated Balance Sheets of the Company at December 31, 1998, December
31, 1999 and April 2, 2000 (unaudited).................................... F-3
Statements of Revenues and Direct Costs and Expenses of the Predecessor
Business for the year ended December 31, 1997 and the month ended January
25, 1998 and Consolidated Statements of Operations of the Company for the
eleven months ended December 31, 1998, the year ended December 31, 1999
and the quarters ending April 4, 1999 (unaudited) and April 2, 2000
(unaudited)............................................................... F-4
Consolidated Statements of Stockholders' Equity of the Company for the
eleven months ended December 31, 1998, the year ended December 31, 1999
and the quarter ended April 2, 2000 (unaudited)........................... F-5
Consolidated Statements of Cash Flows of the Company for the eleven months
ended December 31, 1998, the year ended December 31, 1999 and the quarters
ending April 4, 1999 (unaudited) and April 2, 2000 (unaudited)............ F-6
Notes to the Financial Statements.......................................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To: The Board of Directors and Shareholders
Airspan Networks Inc.
We have audited the accompanying statement of revenues and direct costs and
expenses of the Predecessor Business for the year ended December 31, 1997 and
the month ended January 25, 1998 and consolidated balance sheets of Airspan
Networks Inc. as of December 31, 1998 and December 31, 1999, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the eleven month period ended December 31, 1998 and the year ended December 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurances about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by the management, as well as evaluating the overall financial
presentation. We believe our audits provide a reasonable basis for our opinion.
As discussed in Note 1, the accompanying financial statements of the
Predecessor Business have been prepared solely to present the revenue and
direct costs and expenses of the Predecessor Business for the year ended
December 31, 1997 and month ended January 25, 1998 for the purpose of complying
with the requirements of the Securities and Exchange Commission and is not
intended to be a complete presentation of the financial results of operations
of the Predecessor Business.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the revenues and direct costs and expenses of the
Predecessor Business for the year ended December 31, 1997 and the month ended
January 25, 1998 and consolidated financial position of Airspan Networks Inc.
at December 31, 1998 and December 31, 1999 and the consolidated results of its
operations and its consolidated cash flows for the eleven month period ended
December 31, 1998 and the year ended December 31, 1999 in conformity with
United States generally accepted accounting principles.
/s/ Ernst & Young
Ernst & Young
London, England
February 9, 2000, except for
Note 16 - Subsequent Events,
as to which the date is May
26, 2000
F-2
<PAGE>
AIRSPAN NETWORKS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
<TABLE>
<CAPTION>
December 31, December 31, April 2,
1998 1999 2000
------------ ------------ -----------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............... $ 36,178 $ 58,828 $ 55,906
Restricted cash......................... 2,421 4,068 3,254
Accounts receivable, less allowance for
doubtful accounts of $578 in 1998,
$1,130 in 1999--and $1,371 at April 2,
2000................................... 5,343 6,091 6,409
Unbilled accounts receivable............ 559 1,581 1,197
Inventory............................... 3,022 7,127 7,639
Prepaid expenses and other current
assets................................. 1,356 1,970 2,551
-------- -------- --------
Total Current Assets.................. 48,879 79,665 76,956
Property, plant and equipment, net...... 4,681 6,751 6,944
Intangible assets, net.................. 4,280 1,804 1,528
-------- -------- --------
Total Assets.......................... $ 57,840 $ 88,220 $ 85,428
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable........................ $ 5,682 $ 5,334 $ 4,863
Accrued taxes........................... 520 874 709
Other accrued expenses.................. 2,873 2,866 3,490
Current portion of capital lease
obligations............................ 46 53 55
Current portion of long-term debt....... -- 1,743 1,692
-------- -------- --------
Total Current Liabilities............. 9,121 10,870 10,809
-------- -------- --------
Non current liabilities
Note payable to DSC Telcom L.P. ........ 15,771 16,904 17,203
Other long-term debt.................... -- 2,947 2,963
Accrued interest on long-term debt...... 236 253 254
Capital lease obligations............... 88 34 20
-------- -------- --------
16,095 20,138 20,440
-------- -------- --------
Stockholders' equity
Preferred stock, $.01 par value,
70,000,000, 81,000,000 and 81,000,000
shares authorized in 1998, 1999 and
2000, respectively
Series A convertible preferred stock,
$0.01 par value, 40,000,000 shares
authorized and issued in 1998, 1999 and
2000................................... 400 400 400
Series B convertible preferred stock,
$0.01 par value, 18,571,429 shares
authorized in 1998, 1999 and 2000;
16,442,858, 18,571,429 and 18,571,429
shares issued in 1998, 1999 and 2000,
respectively........................... 164 185 185
Series C convertible preferred stock,
$0.01 par value, 20,000,000 shares
authorized and issued in 1999 and
21,600,000 shares authorized and
21,600,000 issued at April 2, 2000..... -- 200 216
Common stock, $.03 par value; 33,333,333
shares authorized in 1998, 1999 and at
April 2, 2000; 1,041,667, 1,321,720 and
1,358,725 shares issued in 1998, 1999,
and at April 2000 respectively......... 31 40 41
Note receivable--stockholder............ (150) (130) (130)
Additional paid in capital.............. 67,775 121,562 125,576
Accumulated deficit..................... (35,596) (65,045) (72,109)
-------- -------- --------
Total Stockholders' Equity............ 32,624 57,212 54,179
-------- -------- --------
Total Liabilities and Stockholders'
Equity............................... $ 57,840 $ 88,220 $ 85,428
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
AIRSPAN NETWORKS INC.
STATEMENT OF REVENUES AND DIRECT COSTS AND EXPENSES OF THE PREDECESSOR BUSINESS
AND CONSOLIDATED STATEMENTS OF OPERATIONS OF THE COMPANY
(in thousands, except for share and per share data)
<TABLE>
<CAPTION>
Predecessor Company
------------------------ ------------------------------------------------
Eleven
Year Month months Year Quarter Quarter
ended ended ended ended ended ended
December 31, January 25, December 31, December 31, April 4, April 2,
1997 1998 1998 1999 1999 2000
------------ ----------- ------------ ------------ -------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenue................. $ 4,818 $ 135 $ 11,485 $ 12,480 $ 1,301 $ 5,661
Cost of revenue......... (3,948) (100) (9,531) (8,086) (886) (3,530)
-------- ------- ---------- ----------- ------- -----------
Gross profit............ 870 35 1,954 4,394 415 2,131
-------- ------- ---------- ----------- ------- -----------
Operating expenses:
Research and
development............ 9,747 1,074 10,524 13,845 3,215 4,199
Sales and marketing..... 3,832 398 6,765 9,883 1,931 3,099
General and
administrative......... 4,034 378 3,960 7,686 1,799 2,243
Acquired in-process
research and
development and
amortization of
intangibles............ -- -- 16,270 2,476 619 276
-------- ------- ---------- ----------- ------- -----------
Total operating
expenses............. 17,613 1,850 37,519 33,890 7,564 9,817
-------- ------- ---------- ----------- ------- -----------
Loss from operations.... $(16,743) $(1,815) (35,565) (29,496) (7,149) (7,686)
======== =======
Interest expense........ -- -- (994) (1,434) (282) (473)
Interest and other
income................. -- -- 1,113 1,581 392 1,111
---------- ----------- ------- -----------
Loss before income
taxes.................. -- -- (35,446) (29,349) (7,039) (7,048)
Income taxes............ -- -- (150) (100) (18) (16)
---------- ----------- ------- -----------
Net loss................ -- -- $ (35,596) $ (29,449) $(7,057) $ (7,064)
========== =========== ======= ===========
Net loss per share-basic
and diluted............ -- -- $ (65.72) $ (33.84) $(10.33) $ (6.50)
Weighted average shares
outstanding-basic and
diluted................ -- -- 541,667 870,328 682,870 1,087,047
Pro forma net loss per
share-basic and
diluted................ -- -- -- $ (1.37) -- $ (0.26)
Pro forma weighted
average shares
outstanding- basic and
diluted................ -- -- -- 21,446,122 -- 27,633,079
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
AIRSPAN NETWORKS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except for share data)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
---------------- --------------- Additional Note
Par Par paid in receivable Accumulated
Shares value Shares value capital stockholder deficit Total
---------- ----- --------- ----- ---------- ----------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock
upon incorporation..... 541,667 $16 $ 16
Issuance of Series A
preferred stock........ 40,000,000 $400 $ 39,025 39,425
Issuance of Series B
preferred stock........ 16,442,858 164 28,611 28,775
Exercise of stock
options................ 500,000 15 135 $(150)
Stock compensation...... 4 4
Net loss for the
period................. $(35,596) (35,596)
---------- ---- --------- --- -------- ----- -------- -------
At December 31, 1998.... 56,442,858 564 1,041,667 31 67,775 (150) (35,596) 32,624
Issuance of Series B
preferred stock........ 2,128,571 21 3,704 3,725
Issuance of Series C
preferred stock........ 20,000,000 200 49,800 50,000
Issuance of Series B
stock warrants......... 95 95
Issuance of common
stock.................. 83,333 3 42 45
Exercise of stock
options................ 196,720 6 53 59
Stock compensation...... 93 93
Repayment of note
receivable............. 20 20
Net loss for the year... (29,449) (29,449)
---------- ---- --------- --- -------- ----- -------- -------
At December 31, 1999.... 78,571,429 785 1,321,720 40 121,562 (130) (65,045) 57,212
Issuance of Series C
preferred stock
(unaudited)............ 1,600,000 16 3,984 4,000
Exercise of stock
options (unaudited).... 37,005 1 5 6
Stock compensation
(unaudited)............ 25 25
Net loss for the quarter
(unaudited)............ (7,064) (7,064)
---------- ---- --------- --- -------- ----- -------- -------
At April 2, 2000
(unaudited)............ 80,171,429 $801 1,358,725 $41 $125,576 $(130) $(72,109) $54,179
========== ==== ========= === ======== ===== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
AIRSPAN NETWORKS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Eleven months Year Quarter Quarter
ended ended ended ended
December 31, December 31, April April
1998 1999 4, 1999 2, 2000
------------- ------------ ------- -------
(unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss......................... $(35,596) $(29,449) $(7,057) $(7,064)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization.. 3,707 4,821 3,557 976
Stock compensation............. 4 93 -- 25
Purchased in-process research
and development............... 14,000 -- -- --
Accretion of interest on notes
payable....................... 755 1,134 279 299
Amortization of deferred fi-
nancing costs................. -- 20 -- --
Changes in operating assets and
liabilities:
Decrease/(increase) in receiv-
ables......................... (4,300) (748) 3,323 (318)
Decrease/(increase) in invento-
ries.......................... 1,774 (4,105) (1,730) (512)
Decrease/(increase) in other
current assets................ (1,497) (1,561) 64 (197)
Increase/(decrease) in accounts
payable....................... 2,968 (348) (1,615) (471)
Increase in other accrued ex-
penses........................ 1,946 346 205 460
Decrease in notes receivable... -- 20 20 --
-------- -------- ------- -------
Net cash used in operating activ-
ities........................... (16,239) (29,777) (2,954) (6,802)
-------- -------- ------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property and equip-
ment............................ (3,256) (4,276) (4,297) (893)
Acquisition costs................ (100) -- -- --
-------- -------- ------- -------
Net cash used in investing activ-
ities........................... (3,356) (4,276) (4,297) (893)
-------- -------- ------- -------
CASH FLOWS FINANCING ACTIVITIES
Net proceeds from issuance of
common stock.................... 16 45 -- --
Net proceeds from issuance of
preferred stock................. 58,200 53,725 3,725 4,000
Net proceeds from issuance of
long-term debt.................. -- 5,000 5,000 --
Payment on long-term debt, in-
cluding capital lease obliga-
tions........................... (22) (479) (47) (47)
Exercise of stock options........ -- 59 -- 6
Restricted cash.................. (2,421) (1,647) (1,147) 814
-------- -------- ------- -------
Net cash provided by financing
activities...................... 55,773 56,703 7,531 4,773
-------- -------- ------- -------
Increase in cash and cash equiva-
lents........................... 36,178 22,650 280 (2,992)
Cash and cash equivalents, begin-
ning of period.................. -- 36,178 36,178 58,828
-------- -------- ------- -------
Cash and cash equivalents, end of
period.......................... $ 36,178 $ 58,828 $36,458 $55,906
======== ======== ======= =======
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Issuance of preferred stock
warrants in connection with debt
facilities...................... -- $ 95 $ 95 --
Interest paid.................... $ 3 296 3 $ 173
Assets acquired under capital
lease........................... 156 -- -- --
Preferred stock issued in pur-
chase of business............... 10,000 -- -- --
Note payable issued in purchase
of business..................... 15,016 -- -- --
======== ======== ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS
(in thousands, except for share and per share data)
1. THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
The Company is a global supplier of fixed wireless communications access
systems that enable communications service providers to deliver integrated high
speed data and voice services. The Company's systems are based on Code Division
Multiple Access, CDMA, technology that can be deployed rapidly and cost
effectively, providing an alternative to traditional wireline communications
networks. The Company's integrated solutions include software tools that
provide coverage and spectrum optimization and ongoing network management. To
facilitate the deployment and operation of its systems, the Company also offers
network installation, integration, training and support services. The Company's
main operations are based in Uxbridge, United Kingdom.
Basis of presentation for the Predecessor
Airspan Networks Inc. (the "Company" or "Airspan") was formed as a U.S.
company in January 1998 and is now incorporated in the State of Washington. The
Company was formed simultaneously with the acquisition of a business unit of
DSC Communications Corporation ("DSC") that began development of fixed wireless
access systems in 1994. In accordance with the terms of the acquisition, the
assets and liabilities of the business unit were transferred from DSC to the
Company on January 26, 1998. The assets and liabilities acquired were the fixed
wireless communications access systems operations of DSC (the "Predecessor
Business"). These operations consisted of a research and development function,
product management, direct sales and marketing and direct general and
administration costs.
The Predecessor Business was not a separate legal entity and its operations
formed part of the activities of several legal entities within DSC world wide.
Except for compilations of product line revenue, direct costs, direct expenses
and corporate allocations, no separate financial statements of the Predecessor
Business were prepared in the past. The assets and liabilities associated with
the Predecessor Business were components of larger business units. Accordingly,
other than certain inventory and equipment, the assets and liabilities of the
Predecessor Business were not identified or maintained in separate accounts. In
addition, the Predecessor Business did not maintain its own cash accounts.
Given these constraints, the balance sheets of the Predecessor Business and
related statement of operations and cash flows have not been presented.
Certain costs and expenses incurred by DSC were allocated to individual
product lines, including the Predecessor Business, on various bases, applying
internal management allocations. These corporate allocations are not
necessarily indicative of the level of expenses which might have been incurred
had the Predecessor Business been operated as an independent business. The
accompanying statement of revenues and direct costs and expenses of the
Predecessor Business do not include DSC corporate allocations of certain
overhead, general and administrative expenses, interest expense and income
taxes as it is impracticable to allocate such expenses arbitrarily on a
retroactive basis.
The accompanying statement of revenues and direct costs and expenses of the
Predecessor Business was prepared solely to comply with the requirements of the
Securities and Exchange Commission. These financial statements are not intended
to be a complete presentation of the results of operations of the Predecessor
Business.
Effect of the three for one reverse split
On May 25, 2000 the common stock of the Company underwent a three for one
reverse split. For comparative purposes we have in these financial statements
shown outstanding common stock numbers as if the split was retroactive. The
reverse split reduced our outstanding common stock by 66.7% and correspondingly
increased our loss per share by 200% across all periods since the acquisition
of the Predecessor business.
F-7
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
Principles of consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiary which is wholly-owned. All significant inter-company
transactions and balances have been eliminated on consolidation.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Interim Financial Information
The unaudited condensed financial statements as of and for the quarter ended
April 4, 1999 and April 2, 2000 have been prepared in accordance with generally
accepted accounting principles for interim financial information and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles. The unaudited
financial statements include, in the opinion of management, all adjustments,
consisting of only normal recurring adjustments, that are considered necessary
for the fair presentation of the information in the financial statements. All
footnote disclosures included in these financial statements related to the
quarter ended April 4, 1999 and April 2, 2000 are unaudited.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Fair value of financial instruments
The financial instruments of the Company consist mainly of cash and cash
equivalents, restricted cash, accounts receivable, accounts payable and
promissory notes. In view of their nature, the fair value of the financial
instruments included in the accounts of the company does not significantly vary
from their carrying amount.
Inventories
Inventories are stated at the lower of cost or market value. Cost includes
all costs incurred in bringing each product to its present location and
condition, as follows:
Raw materials, consumables and goods for resale--average cost
Work in progress and finished goods--cost of direct materials, labor and
allocated manufacturing overhead
Property and equipment
Property and equipment are stated at cost. Depreciation is provided on all
tangible fixed assets at rates calculated to write off the cost, less estimated
residual value based on prices prevailing at the date of acquisition, of each
asset evenly over its expected useful life, as follows:
Leasehold improvements--over the minimum lease term
Plant, machinery and equipment--over 2 to 5 years
Furniture and fixtures--over 4 to 5 years
F-8
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
Identifiable intangible assets
Identifiable intangible assets arose in connection with the acquisition of
the Predecessor Business. They are stated at allocated cost and include
developed technology, purchase contracts, patents and assembled workforce.
Identifiable intangible assets are amortized using the straight line method
over their estimated useful lives ranging from two to four years.
Goodwill arising on business combinations
The excess of the purchase price (including associated expenses) paid over
net assets of the business acquired is being amortized over its estimated
useful life of ten years on the straight-line method. The Company reviews the
recoverability of goodwill whenever events or changes in circumstances indicate
that its carrying value may not be recoverable from the anticipated future cash
flows of the related businesses on an undiscounted basis. A loss is recognized
for the difference between the carrying value and the estimated fair value of
the asset.
Restricted cash
Restricted cash consists of bank accounts set aside for the guarantees
described in note 8.
Impairment of long lived assets
In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed", the Company reviews its long-lived assets for impairment when
events or changes in circumstances indicate that the carrying value of such
assets may not be recoverable. This review consists of a comparison of the
carrying value of the asset with the asset's expected future undiscounted cash
flows. Estimates of expected future cash flows represent management's best
estimate based on reasonable and supportable assumptions and projections. If
the expected future cash flows exceed the carrying value of the asset, no
impairment is recognized. If the carrying value of the asset exceeds the
expected future cash flows, an impairment exists and is measured by the excess
of the carrying value over the fair value of the asset. Any impairment
provisions recognized are permanent and may not be restored in the future. No
impairment expense was recognized in 1997, 1998 or 1999.
Product development
All product development expenditures are charged to product development
expense in the period incurred. Generally accepted accounting principles
require the capitalization of certain software development costs after
technological feasibility of the software is established. In the development of
the Company's new products and enhancements to existing products, the
technological feasibility of the software is not established until
substantially all product development is complete, including the development of
a working model. Internal software development costs that were eligible for
capitalization were insignificant and were charged to research and development
expense in the accompanying statements of operations.
Revenue recognition
Revenue is recognized when all significant contractual obligations have been
satisfied and the collection of resulting revenues is reasonably assured. For
most product sales, revenue recognition occurs on shipment. For contracts with
non standard terms, revenue is recognized when these terms have been satisfied.
Revenue from customer service contracts is recognized once the services have
been rendered. Any billings in excess of revenue recognized for products or
services are classified as deferred income or customer advances.
F-9
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
Warranty
The Company provides a limited warranty for periods usually ranging from
twelve to twenty-four months, to all purchasers of its new equipment. Warranty
expense is accrued at the date revenue is recognized on the sale of equipment.
Management believes that the amounts provided for are sufficient for all future
warranty cost on equipment sold through April 2, 2000.
Foreign currency transactions
Transactions in currencies other than dollars are converted at the exchange
rate on the date of the transaction. The Company's functional currency is the
U.S. dollar for its only subsidiary in the U.K.
Monetary assets and liabilities denominated in currencies other than U.S.
dollars are translated into U.S. dollars at the rate of exchange on the balance
sheet date. All differences resulting from realized and unrealized gains and
losses are recognized in the statement of operations as other income or
expense.
Concentration of credit risk
Financial instruments which potentially subject Airspan to concentration of
credit risk consist primarily of cash and cash equivalents and accounts
receivable. Airspan places its cash equivalents and short-term investments only
in highly rated financial instruments. Airspan's accounts receivable are
derived from sales of wireless local loop products and approximately 73% and
96% of product sales were non U.S. sales for the 11 month period ended December
31, 1998 and the year ended December 31, 1999, respectively. Approximately 93%
and 98% of product sales were non U.S. sales for the first quarters of 1999 and
2000 respectively (see Note 9). Airspan generally requires a U.S. dollar
irrevocable letter of credit for the full amount of significant sales to be in
place at the time of shipment, except in cases where credit risk is considered
to be acceptable. The Predecessor Business derived 76% of revenue from four
customers in 1997 and 78% of revenue from one customer in January 1998. Airspan
derived 46% of revenue from three customers in the 11 months ended December
1998, 59% of revenue from three customers in 1999 and 77% of revenue from three
customers in the first quarter of 1999 and 82% of revenue from three customers
in the first quarter of 2000. The Predecessor Business received 100% in 1997
and January 1998 of goods for resale from one supplier, DSC Telcom LP. Airspan
received 93% in 1998, 66% in 1999 and 96% in the quarter ended April 4, 1999 of
goods for resale from two suppliers, DSC Communications Ireland and Flextronics
International AB in the quarter ended April 2, 2000 53% of goods for resale
were received from one supplier, Flextronics International AB. These suppliers
act as sub-contractors to manufacture a substantial part of Airspan's product
for resale.
Stock based compensation
Stock options are granted under various stock compensation programs to
employees and independent directors. The Company accounts for stock option
grants in accordance with Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees" ("APB 25"). In rare instances, stock
is issued to non-employees in return for services. The Company recognizes
compensation expense for options granted to non-employees in accordance with
the provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-based Compensation" ("SFAS 123"), and Emerging Issues
Task Force Consensus 96-18, "Accounting for Equity Instruments that are Issued
to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services".
Segment reporting
During the periods, the Company operated as a single segment, being the
development and supply of wireless local loop systems and solutions.
F-10
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
2. THE ACQUISITION OF THE PREDECESSOR BUSINESS
The Company was formed simultaneously with the acquisition of the
Predecessor Business which began development of fixed wireless access systems
in 1994. In accordance with the terms of the acquisition, the assets and
liabilities of the Predecessor Business unit were transferred from DSC to the
Company on January 26, 1998.
<TABLE>
<S> <C>
Venture capital raised:
Issue of Series A stock for cash.................................. $30,000
Stock issue costs................................................. (575)
-------
29,425
-------
Consideration issued to DSC in exchange for the Predecessor and
costs incurred:
Promissory note issued............................................ 15,016
Fair value of Preferred Series A stock issued..................... 10,000
Direct and incremental acquisition costs.......................... 100
-------
25,116
-------
Total initial assets of the Company............................. $54,541
=======
</TABLE>
As consideration for the sale Airspan issued 10,000,000 shares of Preferred
Series A stock to DSC. Total direct costs relating to the acquisition and the
issuance of venture capital were $675. Of this, $575 has been accounted for as
a reduction in the proceeds of Series A stock as this represents the cost of
issuing the shares. The remaining $100 represents other direct and incremental
acquisition costs and has been included in the cost of the acquisition.
The purchase price allocation was as follows:
<TABLE>
<S> <C>
Inventory........................................................... $ 4,796
Accounts receivable................................................. 1,225
Tangible fixed assets............................................... 2,706
Accounts payable.................................................... (4,161)
-------
4,566
Goodwill and identifiable intangible assets......................... 20,550
-------
$25,116
=======
</TABLE>
The allocation of the excess of the purchase price over the net tangible
assets acquired to goodwill and identifiable intangibles was as follows:
<TABLE>
<CAPTION>
Amortization
Value allocated in years
------- ------------------
<S> <C> <C>
Assembled workforce $ 1,200 4
Purchase contracts................................ 2,083 2
Patent technology................................. 119 2
Developed technology.............................. 1,900 2
In process research and development............... 14,000 --
Goodwill.......................................... 1,248 10
-------
$20,550
=======
</TABLE>
F-11
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
A detailed review was undertaken by management, who have primary
responsibility, to estimate the fair values and remaining economic lives for
all material intangible assets, including any in-process technology, purchased
from DSC Communications Corporation in accordance with "Fair Value" as referred
to in APB Opinion No. 16.
The amount allocated to in-process research and development was recorded as
a one-time charge to operations in 1998 because the technology was not fully
developed and had no future alternative use. Management's expectations of the
future revenue streams to be generated from this technology meant that a
material amount of the purchase price was allocated to in-process research and
development. The product under development was 80% complete at acquisition,
with an estimated $4.1 million of cost required to complete the project
associated with final development, system verification and test, documentation
and release to manufacturing processes.
The acquired in-process research and development represents the development
of technologies associated with a new generation of the AS4000 System, which
allows a significantly larger number of subscribers to be supported on a single
radio channel. This project was materially completed by March 31, 1998, with
the first shipment in June 1998 and revenue first recognized in December 1998.
The appraisal method used to value the in-process technology was the Income
Approach where the valuation is focused on the income-producing capability of
the Demand Assigned product. The premise being that the value of an asset can
be measured by the present worth of the net economic benefit to be received
over the life of the asset. Expected cash flows attributable to the demand
assigned product over its product life cycle were converted to present value
through discounting. The discounting process used a rate of return that
accounted for the time value of money and risk factors.
The significant assumptions made in the valuation were as follows:
. The valuation was performed as at 31 January 1998, the date of
acquisition, with the knowledge and assumptions held at that date
. Revenue streams were expected to commence in the second half of 1998 and
carry on through to 2003
. Average sales prices would be significantly lower than that of the older
generation product
. Forecasted average sales prices and costs of goods relating to the new
product offering would decrease over the life of the product. The
product costs decreasing at a greater rate, leading to an improvement in
margins for future years
. Risk adjusted discount factor used was 28%, assessed to be 100 basis
points greater than the Company's weighted average cost of capital to
allow for the required return on in-process technology
The developed technology relates to the older generation product, designed
to provide a fixed network service.
3. TAXATION
The Company did not record an income tax benefit for the tax losses
generated in the U.K. because it has experienced operating losses since
inception. At December 31, 1999 the Company has U.K. income tax net operating
loss carryforwards of $47,918 which do not expire.
F-12
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
The 1998, 1999 and 2000 tax provision relates to US federal income taxes
currently payable, primarily attributable to intercompany interest income.
Significant components of the Company's deferred tax assets are as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1998 1999
------------ ------------
<S> <C> <C>
Net operating loss carryforwards................... $ 6,944 $ 14,375
Accruals and reserves.............................. 241 216
Fixed assets....................................... (281) (9)
------- --------
6,904 14,582
Valuation allowance................................ (6,904) (14,582)
------- --------
$ 0 $ 0
======= ========
</TABLE>
Since the Company's utilization of these deferred tax assets is dependent on
future profits, a valuation allowance equal to the net deferred tax assets has
been provided following the criteria under SFAS 109 as it is considered more
likely than not that such assets will not be realised.
4. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
December 31, December 31, April 2,
1998 1999 2000
------------ ------------ -----------
(unaudited)
<S> <C> <C> <C>
Plant, machinery and equipment........ $ 4,983 $ 7,992 $8,789
Furniture and fixtures................ 234 602 695
Construction in progress.............. 901 -- --
Leasehold improvements................ -- 1,932 1,937
------- ------- ------
6,118 10,526 11,421
Accumulated depreciation.............. (1,437) (3,775) (4,477)
------- ------- ------
$ 4,681 $ 6,751 $6,944
======= ======= ======
</TABLE>
Depreciation expense totalled $1,308 for the year ended December 31, 1997,
$112 for the month ended January 25, 1998, $1,437 for the eleven months ended
December 31, 1998, and $2,345 for the year ended December 31, 1999, and $700
for the quarter ended April 2, 2000.
5. INTANGIBLE ASSETS
<TABLE>
<CAPTION>
December 31, December 31, April 2,
1998 1999 2000
------------ ------------ -----------
(unaudited)
<S> <C> <C> <C>
Assembled workforce.................... $ 1,200 $ 1,200 $1,200
Customer contracts..................... 2,083 2,083 2,083
Patent technology...................... 119 119 119
Developed technology................... 1,900 1,900 1,900
Goodwill............................... 1,248 1,248 1,248
------- ------- ------
6,550 6,550 6,550
Less accumulated amortization.......... (2,270) (4,746) (5,022)
------- ------- ------
Net intangible assets.................. $ 4,280 $ 1,804 $1,528
======= ======= ======
</TABLE>
F-13
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
Amortization of intangible assets amounted to $2,270 for the eleven months
ended December 31, 1998, $2,476 for the year ended December 31, 1999, and $276
for the quarter ended April 2, 2000.
6. INVENTORY
Inventory consists of the following:
<TABLE>
<CAPTION>
December 31, December 31, April 2,
1998 1999 2000
------------ ------------ -----------
(unaudited)
<S> <C> <C> <C>
Purchased parts and materials.......... $1,874 $4,226 $5,975
Work in progress....................... 421 -- -
Finished goods and consumables......... 727 2,901 1,664
------ ------ ------
$3,022 $7,127 $7,639
====== ====== ======
</TABLE>
7. LONG-TERM DEBT
Long-term debt consists of:
<TABLE>
<CAPTION>
December 31, December 31, April 2,
1998 1999 2000
------------ ------------ -----------
(unaudited)
<S> <C> <C> <C>
Promissory note payable to DSC,
bearing interest at 7%............. $15,771 $16,904 $17,203
Promissory note, bearing interest at
9%................................. -- 940 905
Subordinated promissory notes,
bearing interest at 6%............. -- 3,750 3,750
------- ------- -------
$15,771 $21,594 $21,858
======= ======= =======
</TABLE>
On January 30, 1998 the Company issued a promissory note with a principal
amount of $17,000 and an interest rate of 7% per annum to DSC Telcom L.P. The
principal amount of the promissory note was subsequently adjusted down by
$1,984 with an effective adjustment date of January 30, 1998, due to a purchase
price adjustment applicable to certain customer contracts. Accrued but unpaid
interest is considered additional principal and is added to the principal
indebtedness every quarter commencing April 15, 1998.
The promissory note bearing interest at 7% is repayable in 36 equal monthly
installments commencing February 1, 2001. In the event that the principal
amount payable under the promissory note is adjusted further, the amount of the
equal installments shall be recalculated from the date of the adjustment so
that the principal is paid in equal installments over the remainder of the
thirty-six month period. The amount payable under the promissory note is still
under negotiation whereby the company is seeking to reduce the principal to be
paid as a result of certain claims against DSC in connection with the
acquisition.
On March 19, 1999 the Company entered into two Loan Agreements to borrow
$2,500 in installments of $1,250 each. The Company executed the borrowing of
$1,250 against this Loan Agreement on March 29, 1999 as evidenced by the issue
of a promissory note. The promissory note is repayable in 30 equal monthly
installments of $46 commencing May 1, 1999 and two additional final
installments of $94 to be paid on October 1, 2001 and May 1, 2002. The
promissory note has an interest rate of 9% per annum.
On March 19, 1999 the Company also entered into a subordinated loan and
security agreement to borrow $3,750 in increments of $1,250 each. The loan was
executed by the Company on March 29, 1999 by the issue of three subordinated
promissory notes of $1,250. Two of the subordinated promissory notes have the
same
F-14
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
repayment conditions of 54 monthly installments consisting of one monthly
installment of interest only of $0.4 (paid April 1999), 52 monthly installments
of interest only of $6 (starting May 1, 1999) and one final balloon payment of
$1,256 on September 1, 2003. Both subordinated promissory notes have an
interest rate of 6% per annum. The third subordinated promissory note is
payable in 21 monthly installments consisting of one monthly installment of
interest only of $0.4 (paid April 1999), 19 monthly installments of interest
only of $6 (starting May 1, 1999) and one final balloon payment of $1,256 on
December 1, 2000. The promissory note has an interest rate of 6% per annum.
Long term debt maturities at December 31, 1999 are as follows:
<TABLE>
<S> <C>
2000................................................................. $ 1,743
2001................................................................. 5,612
2002................................................................. 5,635
2003................................................................. 8,135
2004................................................................. 469
-------
$21,594
=======
</TABLE>
8. COMMITMENTS
Future minimum lease payments for assets under capital leases at December
31, 1999 are as follows:
<TABLE>
<S> <C>
2000.................................................................... $60
2001.................................................................... 35
---
95
Less amount representing interest....................................... (8)
---
Present value of future minimum lease payments.......................... 87
Less current portion.................................................... 53
---
$34
===
</TABLE>
The net book value of machinery and equipment under capital lease
obligations December 31, 1998 was $117 and at December 31, 1999 was $78.
Airspan has $266 in commitments for the acquisition of property, plant and
equipment at December 31, 1999.
Future minimum lease payments for assets under noncancelable operating
leases with original terms of more than one year as of December 31, 1999 are as
follows:
<TABLE>
<S> <C>
2000.................................................................. $1,184
2001.................................................................. 1,114
2002.................................................................. 1,093
2003.................................................................. 849
2004.................................................................. 583
Thereafter............................................................ 1,620
------
$6,443
======
</TABLE>
Airspan Networks Inc. has entered into various operating lease agreements,
primarily for office space, warehouse space and vehicles. Rent expense for the
eleven months ended December 31, 1998 was $1,204 and for the year ended
December 31, 1999 was $1,554.
F-15
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
The Company had guarantees with its landlords, a supplier and customers
totalling $4,068 at December 31, 1999 and $3,254 at April 2, 2000. The
guarantees relate to non payment or non performance under contracts. Bank
security guarantees of similar amounts have been established and are classified
as restricted cash.
9. SEGMENTS
As a developer and supplier of fixed wireless communications access systems
and solutions, the Company has one reportable segment. The revenue of this
single segment is comprised primarily of revenue from products and, to a lesser
extent, services. All of the Company's revenue is generated from the United
Kingdom operations. Substantially all of the Company's revenue is attributable
to customers in Asia Pacific, Europe and the United States. Additionally,
substantially all of the Company's assets other than most of the cash and
certain intangibles are located within the United Kingdom and Ireland.
An analysis of revenue by geographical market is given below:
<TABLE>
<CAPTION>
Predecessor Company
------------------------ --------------------------------------------------
Month Quarter Quarter
Year ended ended Eleven months ended Year ended ended ended
December 31, January 25, December 31, December 31, April 4, April 2,
1997 1998 1998 1999 1999 2000
------------ ----------- ------------------- ------------ -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
United States........... $1,316 -- $ 3,048 $ 487 $ 86 $ 117
Asia Pacific............ -- $ 10 1,317 4,928 386 4,092
Europe.................. 1,684 16 5,503 5,151 471 1,344
Africa and MiddleEast... 1,711 109 1,453 1,725 358 83
Other location.......... 107 -- 164 189 -- 25
------ ---- ------- ------- ------ ------
$4,818 $135 $11,485 $12,480 $1,301 $5,661
====== ==== ======= ======= ====== ======
</TABLE>
For the year ended December 31, 1997, the Predecessor Business had revenues
from transactions with four customers which amounted to 26%, 20%, 15% and 14%
of total revenues. For the one month ended January 25, 1998, the Predecessor
Business had revenues from transactions with one customer which amounted to 78%
of total revenues. For the 11 month period ended December 31, 1998, the Company
had revenues from transactions with three customers which amounted to 18%, 14%
and 14% of total revenues. For the year ending December 31, 1999 the Company
had revenues from transactions with three customers which amounted to 27%, 18%
and 13% of total revenues. For the quarter ended April 4, 1999 the Company had
revenues from transactions with three customers which amounted to 30%, 26% and
22% of total revenues. For the quarter ended April 2, 2000 the Company had
revenues from transactions with three customers which amounted to 36%, 28% and
17% of total revenues.
F-16
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
An analysis of the Company's assets is given below:
<TABLE>
<CAPTION>
December 31, December 31, April 2,
1998 1999 2000
------------ ------------ --------
<S> <C> <C> <C>
Long-lived assets:
Property, plant and equipment, net:
United States.............................. -- $ 11 $ 17
United Kingdom and Ireland................. $ 4,681 6,740 6,927
------- ------- -------
4,681 6,751 6,944
------- ------- -------
Intangible assets, net:
United States.............................. 2,227 1,092 978
United Kingdom and Ireland................. 2,053 712 550
------- ------- -------
4,280 1,804 1,528
------- ------- -------
Total long-lived assets.................. $ 8,961 $ 8,555 $ 8,472
======= ======= =======
Total assets:
United States.............................. $32,932 $55,464 $50,148
United Kingdom and Ireland................. 24,908 32,756 35,280
------- ------- -------
$57,840 $88,220 $85,428
======= ======= =======
</TABLE>
10. STOCK OPTIONS
On February 1, 1998, and as subsequently amended, the Board of Directors
authorized the establishment of a non-qualified employee stock option plan
whereby the Company may grant employees stock options to purchase up to
2,791,667 shares of common stock. The exercise price of each option is equal to
the market price of the Company's common stock on the date of grant, as
determined by the Board of Directors of the Company. Employee stock options
generally vest over a four-year period and expire on the tenth anniversary of
their issuance. The total number of options granted were 1,237,167 and
1,779,500 and 2,007,334 as of December 31, 1998, December 31, 1999 and April 2,
2000, respectively, to employees under the plan.
Also, within the plan described above, the Company granted nonqualified
common stock options to directors under various discrete option agreements. The
number of non-qualified options granted to directors were 500,000 and 596,666
and 596,666 as of December 31, 1998, December 31, 1999 and April 2, 2000,
respectively.
The Company has a full recourse note receivable from a director relating to
the exercise of such options in the amount of $150 outstanding at December 31,
1998 and $130 outstanding at December 31, 1999 and April 2, 2000. Such options
may be exercised for the issuance of restricted stock to the extent such
options are not vested. Restrictions lapse over the same four year vesting
schedule as the underlying option. In the event of termination, the Company has
a repurchase right determined on the original exercise price.
The Company granted options to purchase 14,000 shares of common stock to
consultants at an exercise price of $0.30 per share in February 1998. In
December 1999 the Company granted options to purchase 5,000 shares of common
stock to a consultant at an exercise price of $6.00 per share. These options
were granted in exchange for consulting services. The Company valued these
options using the Black-Scholes option-pricing model. As such, $4 was charged
to operations in 1998, $93 was charged to operations in 1999 and $25 was
charged to operations in the quarter ended April 2, 2000 to reflect the
estimated fair value of the underlying options. All such options remain
unexercised as of December 31, 1998, December 31, 1999 and April 2, 2000.
F-17
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
The Company has reserved 505,048 shares as at December 31, 1999 and 281,090
as at April 2, 2000 of its Common Stock for purchase upon exercise of options
to be granted in the future.
The following table sets forth the activity for all common stock options:
<TABLE>
<CAPTION>
Weighted
Number of average
shares exercise price
--------- --------------
<S> <C> <C>
Outstanding, February 1, 1998...................... -- --
Granted.......................................... 1,737,167 $0.30
Forfeited........................................ (20,000) 0.34
Exercised........................................ (500,000) 0.30
---------
Outstanding, December 31, 1998..................... 1,217,167 0.30
Granted.......................................... 639,000 2.32
Forfeited........................................ (69,548) 0.50
Exercised........................................ (196,720) 0.30
---------
Outstanding, December 31, 1999..................... 1,589,898 $1.11
========= =====
</TABLE>
The following table sets forth stock options outstanding at December 31,
1999:
<TABLE>
<CAPTION>
Outstanding options Exercisable options
Weighted Weighted
average average
remaining remaining
contractual contractual
-------------------- --------------------
Exercise Price Number life Number life
-------------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C>
$0.30.............................. 941,905 8.25 304,247 8.23
0.54.............................. 285,167 9.15 3,177 8.92
1.80.............................. 34,833 9.57 -- --
3.60.............................. 295,833 9.75 -- --
6.00.............................. 32,333 9.92 -- --
</TABLE>
The Company applies APB 25 in accounting for its stock options and warrants.
On a pro forma basis, had compensation cost been determined on the basis of
fair value determined under the minimum value method pursuant to SFAS 123, net
loss would have been as follows for the periods ended December 31, 1998 and
December 31, 1999:
<TABLE>
<CAPTION>
Eleven months
ended Year ended
December 31, December 31,
1998 1999
------------- ------------
<S> <C> <C>
Net loss, as reported............................. $(35,596) $(29,449)
Pro forma net loss................................ (35,628) (29,480)
Net loss per share................................ (65.72) (33.84)
Pro forma net loss per share...................... (65.77) (33.87)
</TABLE>
The pro forma effect of applying SFAS 123 is not likely to be representative
of the effects on reported net income or loss for future years.
F-18
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
The weighted average fair value of the options at their grant date was $0.06
during 1998 and $0.60 during 1999. The estimated fair value of each option
granted is calculated using the Black-Scholes option-pricing model. The
following summarizes the weighted average of the assumptions used in the model:
<TABLE>
<CAPTION>
Eleven months
ended Year ended
December 31, December 31,
1998 1999
------------- ------------
<S> <C> <C>
Risk-free interest rate........................... 5.45% 5.60%
Expected years until exercised.................... 5 5
Expected dividend yield........................... 0 0
Expected volatility............................... 0 0
</TABLE>
11. CONVERTIBLE PREFERRED STOCK
The holders of the $1.00 Series A Convertible Preferred Stock (Series A
Stock) and $1.75 Series B Convertible Preferred Stock (Series B Stock) and
$2.50 Series C Convertible Preferred Stock (Series C Stock) are entitled to
receive dividends, on an as-converted basis, if and when any such dividend is
paid on the Common Stock, by declaration of the Board of Directors. No
dividends have been declared.
Upon any liquidation, dissolution or winding up of Airspan, the holders of
the Series A Stock, Series B Stock and Series C Stock will be entitled to
receive, from Airspan's assets available for distributions to stockholders,
$1.00 for each outstanding share of the Series A Stock, $1.75 for each
outstanding share of the Series B Stock, and $2.50 for each outstanding share
of Series C Stock plus all dividends accrued, on a pari passu basis, before any
distribution is made to the Common stockholders. After such payment and
distribution to any other class or series of preferred stock, the holders of
the Convertible Preferred Stock would be entitled to further distributions of
remaining assets on a pari passu basis.
The Series A Stock, Series B Stock and Series C Stock is convertible into
Common Stock at any time after issuance. Except under the conditions described
below the Convertible Preferred Stock are converted to Common Stock on a three
for one basis. This conversion factor would be adjusted ratably if any
subsequent issues of Common Stock or Convertible Preferred Stock are at a lower
per share consideration than the Series A, B and C convertible preferred stock
already in issue. The Series A Stock, Series B Stock and Series C Stock would
be automatically converted to common stock upon the closing of a qualified
initial public offering. The Series A Stock, Series B Stock and Series C Stock
are not redeemable.
The holders of each share of the Series A Stock, Series B Stock and Series C
Stock have the right to one vote for each share of Common Stock into which each
such share of Series A Stock, Series B Stock and Series C Stock could then be
converted. The voting rights of Convertible Preferred Stock are the same as the
rights of the holders of the Common Stock.
12. STOCK WARRANTS
As of December 31, 1999, in addition to the option plans discussed above,
Airspan has various warrants outstanding to purchase 249,998 shares of the
Company's Series B Convertible Preferred Stock at exercise prices of $1.75 per
share which were issued in connection with debt facilities and lease
agreements. As of December 31, 1999 all of these warrants are currently
exercisable. These warrants expire on the earlier of seven years from the
effective date of the warrant agreement or three years from the effective date
of the Company's initial public offering. Upon the completion of a qualified
initial public offering these warrants would convert to common stock warrants.
The number of shares of Common Stock to be obtained upon exercise of certain of
these warrants are
F-19
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
subject to adjustment under certain conditions. The estimated fair value of the
warrants, determined based on the Black-Scholes valuation model was $95. The
value of these warrants was recorded as deferred loan costs and are amortized
over the life of the loan.
13. NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of shares
of common stock outstanding less the number of shares subject to repurchase.
Shares associated with stock options, warrants and the convertible preferred
stock are not included in the calculation of diluted net loss per share because
they are antidilutive. As described above, each share of convertible preferred
stock will automatically convert to common stock upon the completion of the
company's initial public offering. Pro forma net loss per share data has been
determined as if each share of convertible preferred stock had converted to
common stock at the time of issuance.
The following table sets forth the computation of basic and diluted net loss
per share and pro forma basic and diluted net loss per share for the periods
indicated:
<TABLE>
<CAPTION>
11 months Year Quarter Quarter
ended ended ended ended
December 31, December 31, April 4, April 2,
1998 1999 1999 2000
------------ ------------ ----------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Numerator:
Net loss................ $ (35,596) $ (29,449) $ (7,057) $ (7,064)
=========== =========== =========== ===========
Denominator:
Weighted average common
shares outstanding..... 965,908 1,231,728 1,125,000 1,350,902
Less weighted average
shares of restricted
stock.................. (424,242) (361,400) (442,130) (263,889)
----------- ----------- ----------- -----------
Denominator for basic
and diluted
calculations........... 541,667 870,328 682,870 1,087,047
Weighted average pro
forma conversion of
convertible preferred
stock.................. 14,329,870 20,575,794 19,287,302 26,546,032
----------- ----------- ----------- -----------
Denominator for pro
forma basic and diluted
calculation............ 14,871,537 21,446,122 19,970,172 27,633,079
=========== =========== =========== ===========
Net loss per share:
Basic and diluted....... $ (65.72) $ (33.84) $ (10.33) $ (6.50)
=========== =========== =========== ===========
Pro forma basic and
diluted................ $ (2.39) $ (1.37) $ (0.35) $ (0.26)
=========== =========== =========== ===========
</TABLE>
There were 1,217,167 stock options and 56,442,858 shares of convertible
preferred stock outstanding at December 31, 1998, and 1,589,898 stock options,
249,998 Series B Convertible stock warrants and 78,571,429 shares of
convertible preferred stock outstanding at December 31, 1999, 1,428,042 stock
options, 249,998 Series B Convertible stock warrants and 58,571,429 shares of
convertible preferred stock outstanding at April 4, 1999 and 1,776,851 stock
options, 249,998 Series B Convertible stock warrants and 80,171,429 shares of
convertible preferred stock outstanding at April 2, 2000 that were excluded
from the computation of diluted net loss per share as their effect was
antidilutive. If the Company had reported net income, the calculation of these
per share amounts would have included the dilutive effect of these common stock
equivalents using the treasury stock method for stock options and warrants
using the if converted method for convertible preferred stock.
F-20
<PAGE>
AIRSPAN NETWORKS INC.
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
(in thousands, except for share and per share data)
14. PAR VALUE
The Company's common stock originally had a par value of $0.01. On August 6,
1999, the Company reincorporated from Delaware to Washington. In connection
with this reincorporation, the par value of the common stock was changed to
$0.0001. As a result of the reverse split described in note 16, the par value
of common stock is now $0.0003.
15. RELATED PARTY TRANSACTIONS
Airspan paid $220 in 1998 and $263 in 1999 to SeaPoint Ventures for
executive management and accounting services. Thomas Huseby, chairman of the
Company's board of directors, is a general partner of SeaPoint Ventures.
16. SUBSEQUENT EVENTS
In March 2000, the Board of Directors authorized the Company to proceed with
the filing of a registration statement with the Securities and Exchange
Commission for an initial public offering of the Company's common stock.
In April 2000 the Company issued 578,573 Series C convertible preferred
shares at $2.50 per share, raising $1,446.
In May 2000 the common stock of the Company underwent a three for one
reverse split. The authorized common stock after the reverse split was
increased from 33,333,333 to 50,000,000 shares.
In May 2000 the Board of Directors and the shareholders approved the
adoption of the 2000 Employee Stock purchase plan (the "Purchase Plan"). A
total of 500,000 shares of common stock have been reserved for issuance under
the Purchase Plan. The Purchase Plan permits eligible employees to purchase
shares of common stock through the payroll deductions at 85% of fair market
value of the common stock, as defined in the Purchase Plan.
In May 2000 the Board of Directors approved an increase in the number of
shares of common stock reserved under the 1998 Stock option plan from 2,791,667
to 4,591,666.
F-21
<PAGE>
Inside back cover
Textual description of Artwork
Complete Wireless Fixed Access Solutions
. Picture of AS 4000 Subscriber Terminals with text:
"Fixed Wireless Access Systems: Robust high-speed solutions for the
local access network."
. Picture of AS 8100 on computer screen with text:
"Access Management System: Configuration, alarm, test and performance
manager."
. Picture of implementation of AS 9000 with text:
"Radio Planning: Planning tool to predict radio coverage and plan
AS 4000 deployments."
"Customer Services & Training
Customer Support Services
Installation, commissioning, test and handover to on-going support and
maintenance
Training Programs
Instructor-led highly personalized sessions with hands-on practical
training."
Logo, Airspan the Wireless Future for Telecommunications
<PAGE>
[AIRSPAN LOGO APPEARS HERE]
<PAGE>
PART II
Information Not Required in the Prospectus
Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of common stock being registered. All amounts are estimates
except the SEC registration fee and the NASD filing fee.
<TABLE>
<CAPTION>
Amount
To be paid
-------------
<S> <C>
SEC Registration Fee............................................. $ 16,698.00
NASD Filing Fee.................................................. 7,000.00
Nasdaq National Market Listing Fee............................... 95,000.00
Printing Fees and Expenses....................................... 250,000.00
Legal Fees and Expenses.......................................... 350,000.00
Accounting Fees and Expenses..................................... 200,000.00
Blue Sky Fees and Expenses....................................... 30,000.00
Transfer Agent and Registrar Fees................................ 10,000.00
Other............................................................ 541,302.00
-------------
Total.......................................................... $1,500,000.00
=============
</TABLE>
- --------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 5.4 of our Articles of Incorporation authorizes us to indemnify any
present or former director or officer to the fullest extent not prohibited by
the Washington Business Corporation Act ("WBCA") or other applicable law now or
hereafter in force. Chapter 23B.08.510 and .570 of the WBCA authorizes a
corporation to indemnify its directors, officers, employees, or agents in terms
sufficiently broad to permit such indemnification under certain circumstances
for liabilities (including provisions permitting advances for expenses
incurred) arising under the Securities Act.
In addition, we maintain directors' and officers' liability insurance under
which our directors and officers are insured against loss (as defined in the
policy) as a result of claims brought against them for their wrongful acts in
such capacities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) The Company has issued or sold the following securities within the past
three years:
. an aggregate of 22,178,573 shares of Series C convertible preferred
stock at $2.50 per share in November 1999, February and April 2000 to 26
accredited investors
. a warrant to purchase 249,998 shares of Series B convertible preferred
stock at $1.75 per share in March 1999 to a commercial equipment leasing
company
. an aggregate of 18,571,429 shares of Series B convertible preferred
stock at $1.75 per share and 83,333 shares of common stock at $0.03 per
share in November 1998 to 19 accredited investors
. an aggregate of 40,000,000 shares of Series A convertible preferred
stock at $1.00 per share in January and August 1998 to 9 accredited
investors
. an aggregate of 541,667 shares of common stock at $0.03 per share in
January 1998 to 3 accredited investors
(b) As of April 2, 2000, an aggregate of 733,725 shares of Common Stock had
been issued upon exercise of options under the Registrant's Stock Option Plan.
II-1
<PAGE>
(c) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).
The issuances described in Item 15(a) were deemed to be exempt from
registration under the Securities Act in reliance upon Section 4(2) thereof as
transactions by an issuer not involving any public offering. The issuances
described in Item 15(c) were deemed to be exempt from registration under the
Securities Act in reliance upon Rule 701 promulgated thereunder in that they
were offered and sold either pursuant to written compensatory benefit plans or
pursuant to a written contract relating to compensation, as provided by Rule
701. In addition, such issuances were deemed to be exempt from registration
under Section 4(2) of the Securities Act as transactions by an issuer not
involving any public offering. The recipients of securities in each such
transaction represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends where affixed to the securities
issued in such transactions. All recipients had adequate access, through their
relationships with the Company, to information about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Amended and Restated Articles of Incorporation of the Registrant
3.2 Bylaws of the Registrant***
4.1 Form of the Registrant's common stock certificate***
5.1 Opinion of Preston Gates & Ellis LLP*
10.1 Manufacturing Contract, dated August 27, 1998, between Airspan
Communications Limited and Flextronics International Sweden AB***
10.2 Contract for the Sale and Purchase of Equipment and Ancillary Facilities
for the Establishment of a Wireless Access System, dated October 25,
1999, between AZ Communications Network, Inc. and Airspan Communications
Limited**/***
10.3 Contract for the Engineering, Project Management, Factory Inspection,
Training and Technical Assistance Services for the Establishment of a
Wireless Access System, dated October 25, 1999, between AZ
Communications Network, Inc. and Airspan Communications Limited**
10.4 Contract for purchase order No. LP/0442/99 between Airspan
Communications Ltd and Suntel Private Ltd. dated April 29, 1999**
10.5 Distributor Agreement between Airspan Networks Inc. and GLS LLC.**/***
10.6 Supply Agreement between Airspan Networks Inc. and GLS LLC.**
10.7 Original Equipment Manufacturer Agreement between Motorola, Inc. and
Airspan Networks Inc.**
10.8 Lease for Registrant's facilities located at Oxford House and Cambridge
House, Uxbridge, U.K.***
Lease for Registrants facilities located at Riverside Way, Uxbridge,
10.9 U.K.***
10.10 Agreement to tender with eircom, plc**
10.11 1998 Stock Option and Restricted Stock Plan
10.12 2000 Employee Stock Purchase Plan
21.1 Subsidiaries of registrant***
23.1 Consent of Ernst & Young, Independent Auditors
23.2 Consent of Preston Gates & Ellis LLP (included in Exhibit 5.1)*
27.1 Financial Data Schedule
</TABLE>
- --------
* To be filed by amendment
** Confidential treatment requested for portions of this agreement.
*** Previously filed
II-2
<PAGE>
(b) Financial Statement Schedules
Schedule II
<TABLE>
<CAPTION>
AIRSPAN NETWORKS INC VALUATION AND QUALIFYING ACCOUNTS
--------------------------------------------------------------
(in thousands of U.S. dollars)
Additions Deductions
---------- ---------------------------
Balance at Balance at
Beginning of Charged to Credited to Charged Against End of
Period Expenses Expenses Provision Period
------------ ---------- ----------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
debts
Year ended December 31,
1999................... 578 856 (20) (283) 1,130
Eleven months ended
December 31, 1998...... 0 578 0 0 578
</TABLE>
II-3
<PAGE>
REPORT OF INDEPENDENT AUDITORS ON SCHEDULE II
We have audited the consolidated financial statements of Airspan Networks
Inc. as of December 31, 1998 and 1999 and for the eleven month period ended
December 31, 1998 and the year ended December 31, 1999, and have issued our
report thereon dated February 9, 2000, except for Note 16--Subsequent Events,
as to which the date is May 26, 2000 (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedule listed in
Item 16(b) of this Registration Statement. This schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young
Ernst & Young
London, England
May 26, 2000
II-4
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Uxbridge, United Kingdom, on the 26th day of May 2000.
Airspan Networks Inc.
/s/ Eric D. Stonestrom
By: _________________________________
Eric D. Stonestrom, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement on Form S-1 has been signed by the following persons in
the capacities indicated.
<TABLE>
<CAPTION>
Dated
-----
<S> <C> <C>
/s/ Eric D. Stonestrom President and Chief May 26, 2000
______________________________________ Executive Officer,
Eric D. Stonestrom Director (Principal
Executive Officer)
/s/ Joseph J. Caffarelli Senior Vice President, May 26, 2000
______________________________________ Finance; Chief Financial
Joseph J. Caffarelli Officer (Principal
Financial and Accounting
Officer)
</TABLE>
<TABLE>
<S> <C> <C>
* Director
______________________________________
Jon Bayless
* Director
______________________________________
Berry Cash
* Director
______________________________________
Thomas S. Huseby
<CAPTION>
<S> <C> <C>
*
______________________________________
Bandel L. Carano
*
______________________________________
David A. Twyver
*
______________________________________
Ovid Santoro
</TABLE>
- --------
* Pursuant to a Power of Attorney dated April 11, 2000
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Amended and Restated Articles of Incorporation of the Registrant
3.2 Bylaws of the Registrant***
4.1 Form of the Registrant's common stock certificate***
5.1 Opinion of Preston Gates & Ellis LLP*
10.1 Manufacturing Contract, dated August 27, 1998, between Airspan
Communications Limited and Flextronics International Sweden AB***
10.2 Contract for the Sale and Purchase of Equipment and Ancillary Facilities
for the Establishment of a Wireless Access System, dated October 25,
1999, between AZ Communications Network, Inc. and Airspan Communications
Limited**/***
10.3 Contract for the Engineering, Project Management, Factory Inspection,
Training and Technical Assistance Services for the Establishment of a
Wireless Access System, dated October 25, 1999, between AZ
Communications Network, Inc. and Airspan Communications Limited**
10.4 Contract for purchase order No. LP/0442/99 between Airspan
Communications Ltd and Suntel Private Ltd. dated April 29, 1999**
10.5 Distributor Agreement between Airspan Networks Inc. and GLS LLC.**/***
10.6 Supply Agreement between Airspan Networks Inc. and GLS LLC.**
10.7 Original Equipment Manufacturer Agreement between Motorola, Inc. and
Airspan Networks Inc.**
10.8 Lease for Registrant's facilities located at Oxford House and Cambridge
House, Uxbridge, U.K.***
Lease for Registrants facilities located at Riverside Way, Uxbridge,
10.9 U.K.***
10.10 Agreement to tender with eircom, plc**
10.11 1998 Stock Option and Restricted Stock Plan
10.12 2000 Employee Stock Purchase Plan
21.1 Subsidiaries of registrant***
23.1 Consent of Ernst & Young, Independent Auditors
23.2 Consent of Preston Gates & Ellis LLP (included in Exhibit 5.1)*
27.1 Financial Data Schedule
</TABLE>
- --------
* To be filed by amendment
** Confidential treatment requested for portions of this agreement.
*** Previously filed
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
AIRSPAN NETWORKS INC.
ARTICLE 1
NAME
The name of this corporation is Airspan Networks Inc.
ARTICLE 2
DURATION
This corporation is organized under the Washington Business Corporation Act
(the "Act") and shall have perpetual existence.
ARTICLE 3
PURPOSE AND POWERS
The purpose and powers of this corporation are as follows:
3.1 To engage in any lawful business.
3.2 To engage in any and all activities that, in the judgment of the Board
of Directors, may at any time be incidental or conducive to the attainment of
the foregoing purpose.
3.3 To exercise any and all powers that a corporation formed under the
Act, or any amendment thereto or substitute therefor, is entitled at the time to
exercise.
ARTICLE 4
CAPITAL STOCK
<PAGE>
4.1 Classes and Series of Stock. This corporation is authorized to issue
two classes of stock, to be designated, respectively, "Common Stock" and
"Convertible Preferred Stock." The total number of shares that this corporation
is authorized to issue is one hundred thirty-six million (136,000,000) shares.
Fifty million (50,000,000) shares shall be Common Stock, par value $.0003 per
share, and eighty-six million (86,000,000) shares shall be Convertible Preferred
Stock, par value $.0001 per share. The Convertible Preferred Stock shall include
three series as follows: forty million (40,000,000) shares of Series A
Convertible Preferred Stock (the "Series A Stock"); eighteen million eight
hundred twenty-one thousand four hundred twenty-seven (18,821,427) shares of
Series B Convertible Preferred Stock (the "Series B Stock"); and twenty-two
million one hundred seventy eight thousand five seventy-three (22,178,573)
shares of Series C Convertible Preferred Stock (the "Series C Stock"). Authority
is vested in the Board of Directors, subject to the limitations and procedures
prescribed by law, to divide any part or all of such preferred class into any
number of series, to fix and determine relative rights and preferences of the
shares of any series to be established, and to amend the rights and preferences
of the shares of any series that has been established but is wholly unissued.
Within any limits stated in these Articles or in the resolution of the
Board of Directors establishing a series, the Board of Directors, after the
issuance of shares of a series, may amend the resolution establishing the series
to decrease (but not below the number of shares of such series then outstanding)
the number of shares of that series, and the number of shares constituting the
decrease shall thereafter constitute authorized but undesignated shares.
The authority herein granted to the Board of Directors to determine the
relative rights and preferences of the preferred stock shall be limited to
unissued shares, and no power shall exist to alter or change the rights and
preferences of any shares that have been issued.
4.2 Rights, Preferences and Restrictions of Convertible Preferred Stock.
The rights, preferences, privileges, and restrictions granted to and imposed on
the Series A Stock, Series B Stock and Series C Stock are as set forth below in
this Section 4.2.
4.2.1 Dividend Provision. The holders of shares of Series A Stock,
Series B Stock and Series C Stock shall be entitled to receive dividends, on an
as-converted basis, when and if any such dividend is paid on the Common Stock by
declaration of the Board of Directors.
4.2.2 Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of this corporation, either voluntary or involuntary, subject to the rights of
other classes or series of preferred stock that may from time to time come into
existence, the holders of Series A Stock, Series B Stock and Series C Stock
shall be entitled to receive, prior and in preference to any distribution of any
of the assets of this corporation to the holders of
2
<PAGE>
Common Stock by reason of their ownership thereof, an amount per share equal to
the sum of (i) $1.00 for each outstanding share of Series A Stock (the "Original
Series A Issue Price"), $1.75 for each outstanding share of Series B Stock (the
"Original Series B Issue Price"), and $2.50 for each outstanding share of Series
C Stock (the "Original Series C Issue Price," and together with the Original
Series A Issue Price and the Original Series B Issue Price, the "Original Issue
Price"), and (ii) an amount equal to declared but unpaid dividends on each such
share of Series A Stock, Series B Stock and Series C Stock. If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A Stock, Series B Stock and Series C Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then, subject to the rights of other classes or series of
preferred stock that may from time to time come into existence, the entire
assets and funds of this corporation legally available for distribution shall be
distributed ratably among the holders of the Series A Stock, Series B Stock and
Series C Stock in proportion to the preferential amount each such holder is
otherwise entitled to receive.
(b) For purposes of subsections (c), (d), (e) and (f) of this
Section 4.2.2, the following definitions shall apply:
"Series A Investment Amount" shall mean the Original Series A
Issue Price multiplied by the number of shares of Series A Stock outstanding.
"Series B Investment Amount" shall mean the Original Series B
Issue Price multiplied by the number of shares of Series B Stock outstanding.
"Series C Investment Amount" shall mean the Original Series C
Issue Price multiplied by the number of shares of Series C Stock outstanding.
"Series A Percentage" shall mean the Series A Investment Amount
divided by the Total Preferred Stock Investment Amount.
"Series B Percentage" shall mean the Series B Investment Amount
divided by the Total Preferred Stock Investment Amount.
"Series C Percentage" shall mean the Series C Investment Amount
divided by the Total Preferred Stock Investment Amount.
"Total Preferred Stock Investment Amount" shall mean the sum of
the Series A Investment Amount, the Series B Investment Amount and the Series C
Investment Amount.
(c) Upon the completion of the distributions required by
subsection (a) of this Section 4.2.2 and any other distribution that may be
required with respect to any other class or series of preferred stock that may
from time to time come into existence, the remaining assets of this corporation
legally available for distribution to stockholders shall be distributed as
follows: (i) an aggregate amount (the "Second Distribution Amount") equal to the
product of $2.00 multiplied by the number of shares of Series A Stock, Series B
Stock and Series C Stock then outstanding shall be
3
<PAGE>
distributed, on a pari passu basis, in an amount equal to the Series A
Percentage multiplied by the Second Distribution Amount, ratably among the
holders of Series A Preferred Stock, in an amount equal to the Series B
Percentage multiplied by the Second Distribution Amount, ratably among the
holders of Series B Preferred Stock, and in an amount equal to the Series C
Percentage multiplied by the Second Distribution Amount, ratably among the
holders of Series C Preferred Stock, and (ii) an amount per share equal to $2.00
for each outstanding share of Common Stock shall be distributed ratably among
the holders of Common Stock. If the assets and funds thus distributed among the
holders of the Series A Stock, Series B Stock, Series C Stock and the Common
Stock shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then, subject to the rights of any other class
or series of preferred stock that may from time to time come into existence, the
entire assets and funds of this corporation legally available for distribution
shall be distributed ratably among the holders of the Series A Stock, Series B
Stock, Series C Stock and Common Stock in proportion to the amount each such
holder is otherwise entitled to receive under this subsection (c).
(d) Upon the completion of the distributions required by
subsections (a) and (c) of this Section 4.2.2 and any other distribution that
may be required with respect to any other class or series of preferred stock
that may from time to time come into existence, the remaining assets of this
corporation legally available for distribution to stockholders shall be
distributed as follows: (i) an aggregate amount (the "Third Distribution
Amount") equal to the product of $1.50 multiplied by the number of shares of
Series B Stock and Series C Stock then outstanding shall be distributed, on a
pari passu basis, in an amount equal to the Series A Percentage multiplied by
the Third Distribution Amount, ratably among the holders of Series A Stock, in
an amount equal to the Series B Percentage multiplied by the Third Distribution
Amount, ratably among the holders of Series B Preferred Stock, and in an amount
equal to the Series C Percentage multiplied by the Third Distribution Amount,
ratably among the holders of Series C Preferred Stock, and (ii) an amount per
share equal to $1.50 for each outstanding share of Common Stock, in addition to
the amounts paid pursuant to subsection (c) of this Section 4.2.2, shall be
distributed ratably among the holders of Common Stock. If the assets and funds
thus distributed among the holders of the Series A Stock, Series B Stock, Series
C Stock and Common Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amount, then, subject to the rights
of any other class or series of preferred stock that may from time to time come
into existence, the entire assets and funds of this corporation legally
available for distribution shall be distributed ratably among the holders of the
Series A Stock, Series B Stock, Series C Stock and Common Stock in proportion to
the amount each such holder is otherwise entitled to receive under this
subsection (d).
(e) Upon the completion of the distributions required by
subsections (a), (c) and (d) of this Section 4.2.2 and any other distribution
that may be required with respect to any other class or series of preferred
stock that may from time to time come into existence, the remaining assets of
this corporation legally available for distribution to stockholders shall be
distributed as follows: (i) an aggregate amount (the "Fourth Distribution
Amount") equal to the product of $1.50 multiplied by the number of
4
<PAGE>
shares of Series C Stock then outstanding shall be distributed, on a pari passu
basis, in an amount equal to the Series A Percentage multiplied by the Fourth
Distribution Amount, ratably among the holders of Series A Stock, in an amount
equal to the Series B Percentage multiplied by the Fourth Distribution Amount,
ratably among the holders of Series B Preferred Stock, and in an amount equal to
the Series C Percentage multiplied by the Fourth Distribution Amount, ratably
among the holders of Series C Preferred Stock, and (ii) an amount per share
equal to $1.50 for each outstanding share of Common Stock, in addition to the
amounts paid pursuant to subsections (c) and (d) of this Section 4.2.2, shall be
distributed ratably among the holders of Common Stock. If the assets and funds
thus distributed among the holders of the Series A Stock, Series B Stock, Series
C Stock and Common Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amount, then, subject to the rights
of any other class or series of preferred stock that may from time to time come
into existence, the entire assets and funds of this corporation legally
available for distribution shall be distributed ratably among the holders of the
Series A Stock, Series B Stock, Series C Stock and Common Stock in proportion to
the amount each such holder is otherwise entitled to receive under this
subsection (e).
(f) Upon the completion of the distributions required by
subsections (a), (c), (d) and (e) of this Section 4.2.2 and any other
distribution that may be required with respect to any other class or series of
preferred stock that may from time to time come into existence, if assets remain
in this corporation, the holders of Series A Stock, Series B Stock and Series C
Stock shall receive no further distributions and the holders of the Common Stock
of this corporation shall receive all of the remaining assets of this
corporation pro rata based on the number of shares of Common Stock held by each.
(g) (i) For purposes of this Section 4.2.2, unless otherwise
agreed by holders of at least sixty-seven percent (67%) of the then outstanding
shares of Series A Stock, Series B Stock and Series C Stock, voting together as
a single class and not as a separate series, on an as-converted basis, a
liquidation, dissolution or winding up of this corporation shall be deemed to be
occasioned by, or to include, (A) any consolidation or merger of the corporation
with or into any other corporation or entity or person, or any other corporate
reorganization in which shareholders of the corporation immediately prior to
such consolidation, merger or reorganization, as a result of their ownership of
the corporation's securities, own less than 50% of the surviving corporation's
voting power immediately after such consolidation, merger or reorganization; or
(B) a sale, lease or other disposition of all or substantially all of the assets
of this corporation.
(ii) In any of such events, if the consideration received by
this corporation is other than cash, the value of such consideration will be
deemed its fair market value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or
other similar restrictions on free marketability covered by (B) below:
5
<PAGE>
(1) If traded on a securities exchange or
through the Nasdaq National Market, the value shall be deemed to be the average
of the closing prices of the securities on such quotation system over the thirty
(30) day period ending three (3) days prior to the closing of the impending
transaction;
(2) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty (30) day period ending three (3) days
prior to the closing of the impending transaction; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by this
corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Series A Stock, Series B Stock and Series C Stock,
voting together as a single class.
(B) The method of valuation of securities subject
to investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a stockholder's status as an affiliate
or former affiliate of this corporation) shall be to make an appropriate
discount from the market value determined as above in (A)(1), (2) or (3) to
reflect the approximate fair market value thereof, as mutually determined by
this corporation and the holders of at least a majority of the voting power of
all then outstanding shares of such Series A Stock, Series B Stock and Series C
Stock, voting together as a single class.
(iii) In the event the requirements of this subsection
4.2.2(g) are not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such
time as the requirements of this Section 4.2.2 have been complied with; or
(B) cancel such transaction, in which event the
rights, preferences and privileges of the holders of the Series A Stock, Series
B Stock and Series C Stock shall revert to and be the same as such rights,
preferences and privileges existing immediately prior to the date of the first
notice referred to in subsection 4.2.2(g)(iv) hereof.
(iv) This corporation shall give each holder of record of
Series A Stock, Series B Stock and Series C Stock written notice of such
impending transaction not later than twenty (20) days prior to the stockholders'
meeting called to approve such transaction, if any, or twenty (20) days prior to
the closing of such transaction, whichever is earlier, and shall also notify
such holders in writing of the final approval of such transaction. The first of
such notices shall describe the material terms and conditions of the impending
transaction and the provisions of this Section 4.2.2, and this corporation shall
thereafter give such holders prompt notice of any material changes. The
transaction shall in no event take place sooner than twenty (20) days after this
corporation has given the first notice provided for herein or sooner than ten
(10) days after this corporation has given notice of any material changes
provided for
6
<PAGE>
herein; provided, however, that such periods may be shortened upon the written
consent of the holders of Convertible Preferred Stock that are entitled to such
notice rights or similar notice rights and that represent at least a majority of
the voting power of all then outstanding shares of such Series A Stock, Series B
Stock and Series C Stock, voting together as a single class.
4.2.3 Redemption. The Series A Stock, Series B Stock and Series C
Stock are not redeemable.
4.2.4 Conversion. The holders of the Series A Stock, Series B Stock
and Series C Stock shall have conversion rights as follows (the "Conversion
Rights"):
(a) Right to Convert. Each share of Series A Stock, Series B
----------------
Stock and Series C Stock shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share, at the office of
this corporation or any transfer agent for such stock, into such number of fully
paid and nonassessable shares of Common Stock as is determined by dividing the
Original Issue Price (as defined above) applicable to such series by the
Conversion Price (as defined below) applicable to such series, determined as
hereafter provided, in effect on the date the certificate is surrendered for
conversion. The initial "Conversion Price" per share for shares of Series A
Stock shall be the Original Series A Issue Price; the initial "Conversion Price"
per share for shares of Series B Stock shall be the Original Series B Issue
Price; and the initial "Conversion Price" per share for shares of Series C Stock
shall be the Original Series C Issue Price; provided, however, that the
Conversion Price for the Series A Stock, Series B Stock and Series C Stock shall
be subject to adjustment as set forth in subsection 4.2.4(d) hereof.
(b) Automatic Conversion. Each share of Series A Stock,
--------------------
Series B Stock and Series C Stock shall automatically be converted into shares
of Common Stock at the Conversion Price at the time in effect for such series
immediately upon the earlier of (i) this corporation's sale of its Common Stock
in a firm commitment underwritten public offering pursuant to a registration
statement on Form S-1 or Form SB-2 under the Securities Act of 1933, as amended,
the public offering price of which was not less than $5.25 per share (adjusted
to reflect subsequent stock dividends, stock splits or recapitalizations) and
the aggregate offering proceeds of which were not less than $40,000,000 (net of
underwriting discounts and commissions) or (ii) the date specified by written
consent or agreement of the holders of seventy-five percent (75%) of the then
outstanding shares of Series A Stock, Series B Stock and Series C Stock, voting
together as a single class on an as-converted basis and not as separate series.
(c) Mechanics of Conversion. Before any holder of Series A
-----------------------
Stock, Series B Stock or Series C Stock shall be entitled to convert the same
into shares of Common Stock, he or she shall surrender the certificate or
certificates therefor, duly endorsed, at the office of this corporation or of
any transfer agent for the Series A Stock, Series B Stock or Series C Stock, and
shall give written notice to this corporation at its principal corporate office
of the election to convert the same and shall state therein the name or names in
which the certificate or certificates for shares of
7
<PAGE>
Common Stock are to be issued. This corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A Stock,
Series B Stock or Series C Stock, or to the nominee or nominees of such holder,
a certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the shares of Series A Stock, Series B Stock or Series C Stock to
be converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date. If the
conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, as amended, the conversion
may, at the option of any holder tendering Series A Stock, Series B Stock or
Series C Stock for conversion, be conditioned upon the closing with the
underwriters of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock upon conversion of the Series
A Stock, Series B Stock or Series C Stock shall not be deemed to have converted
such Series A Stock, Series B Stock or Series C Stock until immediately prior to
the closing of such sale of securities.
(d) Conversion Price Adjustments of Convertible Preferred
-----------------------------------------------------
Stock for Certain Dilutive Issuance, Stock Splits and Combinations. The
- ------------------------------------------------------------------
Conversion Price of the Series A Stock, Series B Stock and Series C Stock shall
be subject to adjustment from time to time as follows:
(i) (A) If this corporation shall issue, after the
date upon which any shares of Series C Stock were first issued (the "Purchase
Date"), any Additional Stock (as defined below) without consideration or for a
consideration per share less than the Conversion Price for the Series A Stock,
Series B Stock or Series C Stock (the "Affected Series") in effect immediately
prior to such issuance, then the Conversion Price of each Affected Series in
effect immediately prior to such issuance shall forthwith (except as otherwise
provided in this clause (i)) be adjusted to a price determined by multiplying
such Conversion Price of the Affected Series by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issuance (including shares of Common Stock deemed to be issued
pursuant to subsection 4.2.4(d)(i)(E)(1) or (2)) plus the number of shares of
Common Stock that the aggregate consideration received by this corporation for
such issuance would purchase at such Conversion Price; and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issuance (including shares of Common Stock deemed to be issued
pursuant to subsection 4.2.4(d)(i)(E)(1) or (2)) plus the number of shares of
such Additional Stock.
(B) No adjustment of the Conversion Price for the
Series A Stock, Series B Stock or Series C Stock shall be made in an amount less
than one cent per share, provided that any adjustments that are not required to
be made by reason of this sentence shall be carried forward and shall be either
taken into account in any subsequent adjustment to the Conversion Price of the
Affected Series made prior to three (3) years from the date of the event giving
rise to the adjustment being carried forward, or shall be made at the end of
three (3) years from the date of the event giving
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<PAGE>
rise to the adjustment being carried forward. Except to the limited extent
provided for in subsections (E)(3) and (E)(4), no adjustment of such Conversion
Price of the Series A Stock, Series B Stock or Series C Stock pursuant to this
subsection 4.2.4(d)(i) shall have the effect of increasing the Conversion Price
of the Affected Series above the Conversion Price in effect immediately prior to
such adjustment.
(C) In the case of the issuance of Common Stock
for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by this corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined by the
Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance (whether before,
on or after the Purchase Date) of options to purchase or rights to subscribe for
Common Stock, securities by their terms convertible into or exchangeable for
Common Stock or options to purchase or rights to subscribe for such convertible
or exchangeable securities, the following provisions shall apply for all
purposes of this subsection 4.2.4(d)(i) and subsection 4.2.4(d)(ii).
(1) The aggregate maximum number of shares of
Common Stock deliverable upon exercise (assuming the satisfaction of any
conditions to exercisability, including, without limitation, the passage of
time, but without taking into account potential antidilution adjustments) of
such options to purchase or rights to subscribe for Common Stock shall be deemed
to have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided in
subsections 4.2.4(d)(i)(C) and (d)(i)(D)), if any, received by this corporation
upon the issuance of such options or rights plus the minimum exercise price
provided in such options or rights (without taking into account potential
antidilution adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability, including,
without limitation, the passage of time, but without taking into account
potential antidilution adjustments) for any such convertible or exchangeable
securities or upon the exercise of options to purchase or rights to subscribe
for such convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time such securities
were issued or such options or rights were issued and for a consideration equal
to the consideration, if any, received by this corporation for any such
securities and related options or rights (excluding any cash received on account
of accrued interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by this corporation (without taking into
9
<PAGE>
account potential antidilution adjustments) upon the conversion or exchange of
such securities or the exercise of any related options or rights (the
consideration in each case to be determined in the manner provided in
subsections 4.2.4(d)(i)(C) and (d)(i)(D)).
(3) In the event of any change in the
number of shares of Common Stock deliverable or in the consideration payable to
this corporation upon exercise of such options or rights or upon conversion of
or in exchange for such convertible or exchangeable securities, including, but
not limited to, a change resulting from the antidilution provisions thereof
(unless such options or rights or convertible or exchangeable securities were
merely deemed to be included in the numerator and denominator for purposes of
determining the number of shares of Common Stock outstanding for purposes of
subsection 4.2.4(d)(i)(A)), the Conversion Price of the Series A Stock, Series B
Stock or Series C Stock, to the extent in any way affected by or computed using
such options, rights or securities, shall be recomputed to reflect such change,
but no further adjustment shall be made for the actual issuance of Common Stock
or any payment of such consideration upon the exercise of any such options or
rights or the conversion or exchange of such securities.
(4) Upon the expiration of any such
options or rights, the termination of any such rights to convert or exchange or
the expiration of any options or rights related to such convertible or
exchangeable securities, the Conversion Price of the Series A Stock, Series B
Stock or Series C Stock, to the extent in any way affected by or computed using
such options, rights or securities or options or rights related to such
securities (unless such options or rights were merely deemed to be included in
the numerator and denominator for purposes of determining the number of shares
of Common Stock outstanding for purposes of subsection 4.2.4(d)(i)(A)), shall be
recomputed to reflect the issuance of only the number of shares of Common Stock
(and convertible or exchangeable securities that remain in effect) actually
issued upon the exercise or such options or rights, upon the conversion or
exchange of such securities or upon the exercise of the options or rights
related to such securities.
(5) The number of shares of Common Stock
deemed issued and the consideration deemed paid therefor pursuant to subsections
4.2.4(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any change,
termination or expiration of the type described in either subsection
4.2.4(d)(i)(E)(3) or (4).
(ii) "Additional Stock'' shall mean any shares of
Common Stock issued (or deemed to have been issued pursuant to subsection
4.2.4(d)(i)(E)) by this corporation after the Purchase Date other than:
(A) Common Stock issuable or issued pursuant
to a transaction described in subsection 4.2.4(d)(iii) hereof;
(B) shares of Common Stock issuable or issued
to employees, consultants or directors of this corporation directly or pursuant
to a stock option plan or restricted stock plan approved by the Board of
Directors of this
10
<PAGE>
corporation;
(C) shares of Common Stock issuable or issued
in a firm commitment underwritten public offering before or in connection with
which all outstanding shares of Series A Stock, Series B Stock and Series C
Stock will be converted to Common Stock;
(D) shares of Common Stock issuable or issued
upon conversion of the Series A Stock, Series B Stock or Series C Stock or other
already outstanding convertible securities (including shares issuable or issued
as a result of the antidilution provisions thereof), or as dividends or
distributions on the Series A Stock, Series B Stock or Series C Stock;
(E) shares of Common Stock issuable or issued
upon exercise of warrants issued to banks or equipment lessors, which warrants
were approved by the Board of Directors; or
(F) shares of Common Stock issuable or issued
in connection with business combinations or corporate partnering agreements
approved by the Board of Directors.
(iii) In the event this corporation should at any time
or from time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of the Series A Stock, Series B Stock and Series C Stock
shall be appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be increased in
proportion to such increase of the aggregate of shares of Common Stock
outstanding and those issuable with respect to such Common Stock Equivalents.
(iv) If the number of shares of Common Stock
outstanding at any time after the Purchase Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series A Stock, Series B Stock and
Series C Stock shall be appropriately increased so that the number of shares of
Common Stock issuable on conversion of each share of such series shall be
decreased in proportion to such decrease in outstanding shares.
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<PAGE>
(e) Other Distributions. In the event this corporation shall declare a
-------------------
distribution payable in securities of other persons, evidences of indebtedness
issued by this corporation or other persons, assets (excluding cash dividends)
or options or rights not referred to in subsection 4.2.4(d)(iii), then, in each
such case for the purpose of this subsection 4.2.4(e), the holders of the Series
A Stock, Series B Stock and Series C Stock shall be entitled to a proportionate
share of any such distribution as though they were the holders of the number of
shares of Common Stock of this corporation into which their shares of Series A
Stock, Series B Stock and Series C Stock are convertible as of the record date
fixed for the determination of the holders of Common Stock of this corporation
entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time there shall
-----------------
be a recapitalization of the Common Stock (other than a subdivision, combination
or merger or sale of assets transaction provided for elsewhere in this Section
4.2.4 or in Section 4.2.2) provision shall be made so that the holders of the
Series A Stock, Series B Stock and Series C Stock shall thereafter be entitled
to receive upon conversion of the Series A Stock, Series B Stock and Series C
Stock the number of shares of stock or other securities or property of this
corporation or otherwise to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 4.2.4 with respect to the rights of the holders of the Series A
Stock, Series B Stock and Series C Stock after the recapitalization to the end
that the provisions of this Section 4.2.4 (including adjustment of the
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A Stock, Series B Stock and Series C Stock) shall be
applicable after that event as nearly equivalent as may be practicable.
(g) No Impairment. This corporation will not, by amendment of its
-------------
Amended and Restated Articles of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by this corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4.2.4 and in the taking of
all such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A Stock, Series B Stock and
Series C Stock against impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
------------------------------------------------------
(i) No fractional shares shall be issued upon the conversion of any
share or shares of the Series A Stock, Series B Stock or Series C Stock, and the
number of shares of Common Stock to be issued shall be determined by rounding to
the nearest whole share. Such conversion shall be determined on the basis of the
total number of shares of Series A Stock, Series B Stock and Series C Stock the
holder is at the time converting into Common Stock and such rounding shall apply
to the number of shares of Common Stock issuable upon such aggregate conversion.
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<PAGE>
(ii) Upon the occurrence of each adjustment or readjustment of the
Conversion Price of the Series A Stock, Series B Stock or Series C Stock
pursuant to this Section 4.2.4, this corporation, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of the Affected Series a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. This corporation shall, upon the
written request at any time of any holder of Series A Stock, Series B Stock or
Series C Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price for such series of Convertible Preferred Stock at the time in
effect and (C) the number of shares of Common Stock and the amount, if any, of
other property that at the time would be received upon the conversion of a share
of Series A Stock, Series B Stock or Series C Stock, as the case may be.
(i) Notices of Record Date. In the event of any taking by this
----------------------
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Series A Stock, Series B Stock and
Series C Stock, at least twenty (20) days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. This corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Stock, Series B Stock and Series C Stock, such number
of its shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Series A Stock, Series B Stock
and Series C Stock; and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series A Stock, Series B Stock and Series C
Stock, in addition to such other remedies as shall be available to the holder of
such Series A Stock, Series B Stock and Series C Stock, this corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in best efforts to obtain the requisite stockholder approval of any
necessary amendment to this Certificate of Incorporation.
(k) Notices. Any notice required by the provisions of this Section
-------
4.2.4 to be given to the holders of shares of Series A Stock, Series B Stock or
Series C Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his, her or its
address appearing on the books of this corporation.
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<PAGE>
(l) Special Mandatory Conversion.
----------------------------
(i) If (A) this corporation consummates a financing (a
"Financing") pursuant to which any holders of Series A Stock, Series B Stock and
Series C Stock are entitled to exercise the first right of refusal (the "First
Right of Refusal") set forth in Section 2.4 of the Second Amended and Restated
Investors' Rights Agreement, dated on or about November 1, 1999, by and among
this corporation and certain investors and persons, and as it may be further
amended from time to time (the "Rights Agreement"); (B) the Board of Directors
of this corporation shall have determined that holders of Series A Stock, Series
B Stock and Series C Stock of this corporation must participate in the Financing
(a "Mandatory Offering") and have determined the aggregate dollar amount to be
invested by all holders of Series A Stock, Series B Stock and Series C Stock
(the "Aggregate Preferred Stock Investment Amount"), which amount may be more
than or less than the holders' right to participate in the Financing pursuant to
the First Right of Refusal contained in the Rights Agreement and which amount
shall not exceed twenty-five million dollars ($25,000,000); (C) this corporation
shall have delivered a notice ("Notice") to the holders of Series A Stock,
Series B Stock and Series C Stock: (1) stating this corporation's bona fide
intention to consummate the Financing, (2) indicating the number of securities
to be offered, (3) indicating the price and terms upon which it proposes to
offer such securities, (4) identifying the Pro Rata Share (as defined below) of
each holder of Series A Stock, Series B Stock and Series C Stock of the
Aggregate Preferred Stock Investment Amount and (5) offering each holder of
Series A Stock, Series B Stock and Series C Stock the right to purchase such
holder's Pro Rata Share of the Aggregate Preferred Stock Investment Amount
within the time periods set forth in the Notice; and (D) a holder (a "Non-
Participating Holder") does not acquire or does not cause an affiliate to
acquire at least its Pro Rata Share of the Aggregate Preferred Stock Investment
Amount within the time periods set forth in the Notice, then that percentage of
each Non-Participating Holder's shares of Series A Stock, Series B Stock and
Series C Stock equal to the percentage of such Non-Participating Holder's Pro
Rata share of the Aggregate Preferred Stock Investment Amount not acquired by
such Non-Participating Holder shall automatically and without further action on
the part of such holder be converted effective upon, subject to, and
concurrently with, the consummation of the Mandatory Offering (the "Mandatory
Offering Date") into shares of Common Stock of this corporation at a Conversion
Price equal to the Original Series A Issue Price or the Original Series B Issue
Price or the Original Series C Issue Price, as applicable (as adjusted for any
stock dividends, combinations or splits). For purposes of this subsection
4.2.4(I)(i), each holder's Pro Rata Share of the Aggregate Preferred Stock
Investment Amount shall be an amount determined by multiplying the Aggregate
Preferred Stock Investment Amount by a fraction, the numerator of which shall be
the number of shares of Common Stock issuable upon conversion of shares of
Series A Voting Stock, Series B Voting Stock and Series C Voting Stock (as each
term is defined below) then held by such holder and the denominator of which
shall be the total number of shares of Common Stock issuable upon conversion of
shares of Series A Voting Stock, Series B Voting Stock and Series C Voting Stock
then outstanding. For purposes of calculating a holder's Pro Rata Share, the
applicable number of shares of Common Stock issuable upon conversion of the
shares of Series A Voting Stock,
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<PAGE>
Series B Voting Stock and Series C Voting Stock shall be calculated based on the
number of shares outstanding immediately preceding the closing of the Mandatory
Offering, but assuming a conversion price based on full participation of all of
the holders of Preferred Stock in such Mandatory Offering. The foregoing
notwithstanding, under no circumstances shall any holder of Series A Stock,
Series B Stock or Series C Stock or Common Stock be required to make any
additional investment in a Financing if any of the securities offered in such a
Financing would be rendered non-voting by application of the Legal Limitations
(as defined below) or if any Series A Voting Stock, Series B Voting Stock,
Series C Voting Stock or Voting Common Stock (as each term is defined below)
held by such holder prior to investment in such Financing would be rendered non-
voting by application of the Legal Limitations as a result of such additional
investment in the Financing.
(ii) The holder of any shares of Series A Stock, Series B
Stock or Series C Stock converted pursuant to this subsection 4.2.4(l) shall
deliver to this corporation during regular business hours at the office of any
transfer agent of this corporation for the Series A Stock, Series B Stock or
Series C Stock, or at such other place as may be designated by this corporation,
the certificate or certificates for the shares so converted, duly endorsed or
assigned in blank or to this corporation. As promptly as practicable thereafter,
this corporation shall issue and deliver to such holder, at the place designated
by such holder, a certificate or certificates for the number of full shares of
the Common Stock to be issued and such holder shall be deemed to have become a
stockholder of record of Common Stock on the Mandatory Offering Date, unless the
transfer books of this corporation are closed on that date, in which event he,
she or it shall be determined to have become a stockholder of record of Common
Stock on the next succeeding date on which the transfer books are open.
(iii) In the event that a holder of Series A Stock, Series B
Stock or Series C Stock converts any Series A Stock, Series B Stock or Series C
Stock into Common Stock pursuant to subsection 4.2.4(a) hereof within ninety
(90) days prior to the date of closing of a Mandatory Offering, such holder
shall be deemed to have converted such shares pursuant to this subsection
4.2.4(l).
4.2.5 Voting Rights.
(a) Voting In General. Subject to any restrictions set forth herein
-----------------
or as otherwise required by applicable law, the holder of each share of Series A
Stock, Series B Stock and Series C Stock shall have the right to one vote for
each share of Common Stock into which each such share of Series A Stock, Series
B Stock and Series C Stock could then be converted, and with respect to such
vote, such holder shall have full voting rights and powers equal to the voting
rights and powers of the holders of Common Stock, and shall be entitled,
notwithstanding any provision hereof, to notice of any stockholders' meeting in
accordance with the bylaws of this corporation, and shall be entitled to vote,
together with holders of Common Stock, as a single class on an as-converted
basis and not as separate series, with respect to any question upon which
holders of Common Stock have the right to vote.
15
<PAGE>
(b) Voting Limitations. The foregoing notwithstanding, a holder of
------------------
Common Stock, Series A Stock, Series B Stock or Series C Stock shall not, at any
time, be entitled to vote any shares of this corporation held by it to the
extent that such voting would contravene the provisions of Regulation Y of the
Board of Governors of the Federal Reserve System (12 C.F.R. Part 225), or any
successor to such regulation, or any other law, regulation, rule or other
requirement of any governmental authority as from time to time in effect (the
"Legal Limitations"). The number of shares held by a holder which are rendered
non-voting under the preceding sentence may vary depending upon the
circumstances to which the Legal Limitations are being applied, and the number
of other shares entitled to vote in such circumstance. In the event that only a
portion of a holder's holdings of Common Stock, Series A Stock, Series B Stock
or Series C Stock must be rendered non-voting in order to achieve compliance
with the Legal Limitations, then the holder's holdings of Series C Stock, then
Series B Stock, then Series A Stock, and then Common Stock shall be rendered
non-voting, in that order, until compliance with the Legal Limitations is
achieved. Shares of Series A Stock, Series B Stock, Series C Stock and Common
Stock which are not rendered non-voting under this subsection 4.2.5(b) are
referred to in certain sections and subsections herein as "Series A Voting
Stock," "Series B Voting Stock," "Series C Voting Stock" and "Voting Common
Stock," respectively. This corporation shall be entitled to rely, without
independent verification, upon the representation of any holder that it is
entitled under applicable law to vote the shares held by it, and in no event
shall the corporation be liable to any such holder or any third party arising
from any such vote whether or not permitted by applicable law. A holder of any
shares of Common Stock, Series A Stock, Series B Stock or Series C Stock which
are rendered non-voting in order to comply with the Legal Limitations may not
sell such shares (other than to a purchaser taking such shares subject to the
Legal Limitations) unless:
(i) such sale will take place in a dispersed public distribution
in which no purchaser or group of related purchasers acquires shares
representing more than two percent of a class of voting shares of this
corporation;
(ii) such sale is to this corporation; or
(iii) this corporation is notified of such holder's intent to sell
such shares and such sale is to one or more purchasers acceptable to it.
(c) Fractional Shares. Fractional votes shall not be permitted and any
-----------------
fractional voting rights available on an as-converted basis (after aggregating
all shares into which shares of Convertible Preferred Stock held by each holder
could be converted) shall be rounded to the nearest whole number (with one-half
being rounded upward).
4.2.6 Protective Provisions.
(a) So long as an aggregate of at least 30,000,000 shares of Series A
Voting Stock, Series B Voting Stock and Series C Voting Stock remain
outstanding, this corporation shall not take any of the following actions
without first
16
<PAGE>
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least fifty-one percent (51%) of the then outstanding shares of
Series A Voting Stock, Series B Voting Stock and Series C Voting Stock, voting
together as a single class on an as-converted basis and not as separate series:
(i) authorize or issue, or obligate itself to issue, any
other equity security, including any other security convertible into or
exercisable for any equity security, having a preference over or being on a
parity with any of the Series A Stock, Series B Stock or the Series C Stock with
respect to rights of redemption, liquidation preference, voting or dividends;
(ii) sell, convey, or otherwise dispose of all or
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly-owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of this corporation is disposed of; or
(iii) declare or pay any dividends on its Common Stock or
redeem, purchase or otherwise acquire (or pay into or set aside for a sinking
fund for such purpose) any share or shares of Series A Stock, Series B Stock,
Series C Stock or Common Stock; provided, however, that this restriction shall
not apply to the repurchase of shares of Common stock from employees, officers,
directors, consultants or other persons performing services for this corporation
or any subsidiary pursuant to agreements under which this corporation has the
option to repurchase such shares at cost or at cost upon the occurrence of
certai
(b) In addition, so long as an aggregate of at least 30,000,000
shares of Series A Voting Stock, Series B Voting Stock and Series C Voting Stock
remain outstanding and unless unanimously approved by the Board of Directors of
this corporation, this corporation shall not take any of the following actions
without first obtaining the approval (by vote or written consent, as provided by
law) of the holders of at least fifty-one percent (51%) of the then outstanding
shares of Series A Voting Stock, Series B Voting Stock and Series C Voting
Stock, voting together as a single class on an as-converted basis and not as
separate series:
(i) make any loans or advances to its employees or any
members of their immediate families, other than travel advances and other
advances made in the ordinary course of business or loans to employees made
pursuant to promissory notes issued for the purchase of shares under a stock
option plan or restricted stock plan approved by the Board of Directors of this
corporation;
(ii) guarantee any indebtedness or obligation of any other
party other than in the ordinary course of business;
17
<PAGE>
(iii) create or suffer to be imposed any lien,
mortgage, security interest or other charge on or against all or substantially
all of the properties or assets of this corporation or any subsidiary; or
(iv) acquire, or permit any subsidiary to acquire, any
stock or other securities of any corporation, partnership or entity unless
immediately following such acquisition such corporation, partnership or entity
would be wholly owned by this corporation or a subsidiary of this corporation.
(c) In addition, this corporation shall not take any of the
following actions which would have the following effects on any of the Series A
Stock, Series B Stock or the Series C Stock (the series so affected being
referred to as the "Subject Series") without first obtaining the approval (by
vote or written consent, as provided by law) of the holders of at least fifty-
one percent (51%) of the then outstanding shares of the Subject Series voting as
a separate class:
(i) alter or change the rights, preferences or
privileges of the shares of the Subject Series so as to affect such shares
adversely; or
(ii) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of the Subject Series.
4.2.7 Status of Converted Stock. In the event any shares of Series
A Stock Series B Stock or Series C Stock shall be converted pursuant to Section
4.2.4 here of, the shares so converted shall be canceled and shall not be
issuable by this corporation. The Amended and Restated Articles of Incorporation
of this corporation shall be appropriately amended to effect the corresponding
reduction i n this corporation's authorized capital stock.
4.3 Common Stock.
4.3.1 Dividend Rights. Subject to the prior rights of holders of
all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of this corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
4.3.2 Liquidation Rights. Upon the liquidation, dissolution or
winding up of this corporation, the assets of this corporation shall be
distributed as provided in Section 4.2.2 hereof.
4.3.3 Voting Rights. The holder of each share of Voting Common
Stock shall have the right to one vote, and shall be entitled to notice of any
stockholders' meeting in accordance with the bylaws of this corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
4.4 Issuance of Certificates. The Board of Directors shall have the
authority to issue shares of the capital stock of this corporation and the
certificates therefor
18
<PAGE>
subject to such transfer restrictions and other limitations as it may deem
necessary to promote compliance with applicable federal and state securities
laws, and to regulate the transfer thereof in such manner as may be calculated
to promote such compliance or to further any other reasonable purpose.
4.5 Cumulative Voting. Shareholders of this corporation shall not have
the right to cumulate votes for the election of directors.
4.6 No Preemptive Rights; Exception. No shareholder of this corporation
shall have, solely by reason of being a shareholder, any preemptive or
preferential right or subscription right to any stock of this corporation or to
any obligations convertible into stock of this corporation, or to any warrant or
option for the purchase thereof, except to the extent provided by resolution or
resolutions of the Board of Directors establishing a series of preferred stock
or by written agreement with this corporation
4.7 Quorum for Meeting of Shareholders. A quorum shall exist at any
meeting of shareholders if a majority of the votes entitled to be cast is
represented in person or by proxy. In the case of any meeting of shareholders
that is adjourned more than once because of the failure of a quorum to attend,
those who attend the third convening of such meeting, although less than a
quorum, shall nevertheless constitute a quorum for the purpose of electing
directors, provided that the percentage of shares represented at the third
convening of such meeting shall not be less than one-third of the shares
entitled to vote.
4.8 Execution of Consent by Less Than Unanimous Consent of Shareholders.
To the extent permitted by the Act, the taking of action by shareholders without
a meeting by less than unanimous written consent of all shareholders entitled to
vote on the action shall be permitted. Notice of the taking of such action shall
be given to those shareholders entitled to vote on the action who have not
consented in writing (and, if the Act would otherwise require that notice of a
meeting of shareholders to consider the action be given to nonvoting
shareholders, to all nonvoting shareholders), in writing, describing with
reasonable clarity the general nature of the action, and accompanied by the same
material that, under the Act, would have been required to be sent to
nonconsenting (or nonvoting) shareholders in a notice of meeting at which the
action would have been submitted for shareholder action. Such notice shall be
either (i) by deposit in the U.S. mail before the action becomes effective, with
first-class postage thereon prepaid, correctly addressed to each shareholder
entitled thereto at the shareholder's address as it appears on the current
record of shareholders of the Corporation; or (ii) by personal delivery, courier
service, wire or wireless equipment, telegraphic or other facsimile
transmission, or any other electronic means which transmits a facsimile of such
communication correctly addressed to each shareholder entitled thereto at the
shareholder's physical address, electronic mail address, or facsimile number, as
it appears on the current record of shareholders of the Corporation. Notice
under clause (i) shall be given at least seventy-two (72) hours, and notice
under clause (ii) shall be given at least twenty-four (24) hours before the
action becomes effective.
19
<PAGE>
4.9 Contracts with Interested Shareholders. Subject to the limitations
set forth in RCW 23B.19.040, to the extent applicable:
(a) The corporation may enter into contracts and otherwise
transact business as vendor, purchaser, lender, borrower, or otherwise with its
shareholders and with corporations, associations, firms, and entities in which
they are or may be or become interested as directors, officers, shareholders,
members, or otherwise.
(b) Any such contract or transaction shall not be affected or
invalidated or give rise to liability by reason of the shareholder's having an
interest in the contract or transaction.
4.10 Ratification by Shareholder Vote. Subject to the requirements of RCW
23B.08.730 and 23B.19.040, any contract, transaction, or act of the corporation
or of any director or officer of the corporation that shall be authorized,
approved, or ratified by the affirmative vote of a majority of shares
represented at a meeting at which a quorum is present shall, insofar as
permitted by law, be as valid and as binding as though ratified by every
shareholder of the corporation.
4.11 Shareholder Voting on Extraordinary Actions. Pursuant to the
authority granted under Sections 23B.10.030, 23B.11.030, 23B.12.020, and
23B.14.020 of the Act, the vote of shareholders of this corporation required in
order to approve amendments to the Articles of Incorporation, a plan of merger
or share exchange, the sale, lease, exchange, or other disposition of all or
substantially all of the property of the corporation not in the usual and
regular course of business, or dissolution of the corporation shall be a
majority of all of the votes entitled to be cast by each voting group entitled
to vote thereon.
ARTICLE 5
DIRECTORS
5.1 Number of Directors. Except as may be provided in these articles of
incorporation as amended from time to time, the number of directors of the
corporation shall be fixed as provided in the Bylaws and may be changed from
time to time by resolution of the Board of Directors.
5.2 Authority of Board of Directors to Amend Bylaws. Subject to the
limitation(s) of RCW 23B.10.210, and subject to the power of the shareholders of
the corporation to change or repeal the Bylaws, the Board of Directors is
expressly authorized to make, amend, or repeal the Bylaws of the corporation
unless the shareholders in amending or repealing a particular bylaw provide
expressly that the Board of Directors may not amend or repeal that bylaw.
20
<PAGE>
5.3 Contracts with Interested Directors. Subject to the limitations set
forth in RCW 23B.08.700 through 23B.08.730:
(a) The corporation may enter into contracts and otherwise transact
business as vendor, purchaser, lender, borrower, or otherwise with its directors
and with corporations, associations, firms, and entities in which they are or
may be or become interested as directors, officers, shareholders, members, or
otherwise.
(b) Any such contract or transaction shall not be affected or
invalidated or give rise to liability by reason of the director's having an
interest in the contract or transaction.
5.4 Indemnification of Directors, Officers, Employees and Agents. The
capitalized terms in this Section 5.4 shall have the meanings set forth in RCW
(a) The Corporation shall indemnify and hold harmless each
individual who is or was serving as a Director or officer of the Corporation or
who, while serving as a Director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
against any and all Liability incurred with respect to any Proceeding to which
the individual is or is threatened to be made a Party because of such service,
and shall make advances of reasonable Expenses with respect to such Proceeding,
to the fullest extent permitted by law, without regard to the limitations in RCW
23B.08.510 through 23B.08.550; provided that no such indemnity shall indemnify
any Director or officer from or on account of (1) acts or omissions of the
Director or officer finally adjudged to be intentional misconduct or a knowing
violation of law; (2) conduct of the Director or officer finally adjudged to be
in violation of RCW 23B.08.310; or (3) any transaction with respect to which it
was finally adjudged that such Director or officer personally received a benefit
in money, property, or services to which the Director or officer was not legally
entitled.
(b) The Corp oration may purchase and maintain insurance on behalf
of an individual who is or was a director, officer, employee, or agent of the
Corporation or, who, while a director, officer, employee, or agent of the
Corporation, is or was serving at the request of the Corporation as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise against Liability asserted against or incurred by the individual in
that capacity or arising from the individual's status as a director, officer,
employee, or agent, whether or not the Corporation would have power to indemnify
the individual against such Liability under RCW 23B.08.510 or 23B.08.520.
(c) If, after the effective date of this Section 5.4, the Act is
amended to authorize further indemnification of Directors or officers, then
Directors and officers of the Corporation shall be indemnified to the fullest
extent permitted by the Act.
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<PAGE>
(d) To the extent permitted by law, the rights to indemnification
and advance of reasonable Expenses conferred in this Section 5.4 shall not be
exclusive of any other right which any individual may have or hereafter acquire
under any statute, provision of the Bylaws, agreement, vote of shareholders or
disinterested directors, or otherwise. The right to indemnification conferred in
this Section 5.4 shall be a contract right upon which each Director or officer
shall be presumed to have relied in determining to serve or to continue to serve
as such. Any amendment to or repeal of this Section 5.4 shall not adversely
affect any right or protection of a Director or officer of the Corporation for
or with respect to any acts or omissions of such Director or officer occurring
prior to such amendment or repeal.
(e) If any provision of this Section 5.4 or any application thereof
shall be invalid, unenforceable, or contrary to applicable law, the remainder of
this Section 5.4, and the application of such provisions to individuals or
circumstances other than those as to which it is held invalid, unenforceable, or
contrary to applicable law, shall not be affected thereby.
5.5 Limitation of Directors' Liability. To the fullest extent permitted by
the Act, as it exists on the date hereof or may hereafter be amended, a director
of this corporation shall not be personally liable to the corporation or its
shareholders for monetary damages for conduct as a director. Any amendment to or
repeal of this Section 5.5 shall not adversely affect a director of this
corporation with respect to any conduct of such director occurring prior to such
amendment or repeal.
ARTICLE 6
OTHER MATTERS
6.1 Registered Agent and Office. The street address of the registered agent
of the corporation shall be 701 Fifth Avenue, Suite 5000, Seattle, WA 98154-
1065; and the registered agent at that office shall be PTSGE Corp.
6.2 Amendments to Articles of Incorporation. Except as otherwise provided
in these Articles, as amended from time to time, the corporation reserves the
right to amend, alter, change, or repeal any provisions contained in these
Articles in any manner now or hereafter prescribed or permitted by statute. All
rights of shareholders of the corporation are subject to this reservation. A
shareholder of the corporation does not have a vested property right resulting
from any provision of these Articles of Incorporation.
6.3 Correction of Clerical Errors. The corporation shall have authority to
correct clerical errors in any documents filed with the Secretary of State of
Washington, including these Articles or any amendments hereto, without the
necessity of special shareholder approval of such corrections.
22
<PAGE>
Exhibit 10.3
Note: Portions of this exhibit indicated by "[*]" are subject to a confidential
treatment request, and have been omitted from this exhibit. Complete,
unredacted copies of this exhibit have been filed with the Securities and
Exchange Commission as part of this Company's confidential treatment request.
CONTRACT FOR THE ENGINEERING, PROJECT
MANAGEMENT, FACTORY INSPECTION, TRAINING AND
TECHNICAL ASSISTANCE SERVICES FOR THE
ESTABLISHMENT OF A WIRELESS ACCESS SYSTEM
AZ COMMUNICATIONS NETWORK, INC.
- and -
AIRSPAN COMMUNICATIONS LIMITED
October 25, 1999
CONTRACT NO. CN99-002/S
1
<PAGE>
TABLE OF CONTENTS
SECTION 1 DEFINITIONS
SECTION 2 SCOPE OF THE CONTRACT
SECTION 3 SERVICES TO BE RENDERED BY ACL
SECTION 4 SERVICES TO BE RENDERED BY AZCOM
SECTION 5 PRICE
SECTION 6 TERMS OF PAYMENT
SECTION 7 SCHEDULE
SECTION 8 ACCEPTANCE
SECTION 9 CONFIDENTIALITY AND USE
OF INFORMATION
SECTION 10 LIQUIDATED DAMAGES
SECTION 11 LIMITATION OF LIABILITY
SECTION 12 FORCE MAJEURE
SECTION 13 CHANGES
SECTION 14 APPLICABLE DOCUMENTS
2
<PAGE>
SECTION 15 ORDER OF PRECEDENCE
SECTION 16 SEVERABILITY
SECTION 17 SUCCESSION AND ASSIGNMENT
SECTION 18 TERMINATION
SECTION 19 ARBITRATION
SECTION 20 INTERPRETATION
SECTION 21 ADDRESSES
SECTION 22 EXECUTION IN COUNTERPARTS
SECTION 23 EFFECTIVITY OF THE CONTRACT
***
3
<PAGE>
This Contract For The Engineering, Project Management, Factory Inspection,
Training and Technical Assistance Services For The Establishment of a Wireless
Access System is entered into this 25/th/ day of October 1999 between the
following parties:
AZ COMMUNICATIONS NETWORK, INCORPORATED, a corporation organized and
existing under the laws of the Republic of the Philippines and having its
principal office in 8/th/ Floor DPC Place, 2322 Chino Roces Avenue, Makati
------------------------------------------------------
City, Philippines, represented in this act by its Director for Engineering,
------------------
Felizardo P. dela Merced, and hereinafter referred to as "AZCOM";
- a n d -
AIRSPAN COMMUNICATIONS LIMITED, a corporation organized and existing under
the laws of the United Kingdom and having its registered address at
Cambridge House, Oxford Road, Uxbridge Middlesex, UB8, 1UN, United Kingdom,
---------------------------------------------------------------------------
represented in this act by Henrik Smith-Petersen, Regional Sales Vice
President, and hereinafter referred to as "ACL".
(AZCOM and ACL may be individually referred to as a "Party" and
collectively the "Parties")
WHEREAS, ACL has represented itself to be a qualified and reliable provider of
services needed by AZCOM for the engineering, project management, factory
inspection, training and technical assistance services, for the establishment of
Wireless Access System Network and has offered to supply the same to AZCOM.
WHEREAS, AZCOM is the holder of a valid franchise issued by the Congress of the
Republic of the Philippines and is duly authorized to provide telecommunications
services throughout the Philippines.
WHEREAS, pursuant to its authority to provide telecommunications services, AZCOM
has expressed its desire to acquire a wireless access system as contemplated by
this Contract.
WHEREAS, AZCOM is interested in acquiring the said services offered by ACL for
the said Project.
WHEREAS, ACL has agreed to provide, and AZCOM is willing to purchase the said
services under such terms and conditions mutually agreeable to the Parties.
NOW, THEREFORE, for and in consideration of the foregoing, this Contract is
entered into under the following terms and conditions:
4
<PAGE>
1 DEFINITIONS
-----------
For purposes of this Contract, the following terms shall have the meanings
indicated and the plural form of any term defined herein in the singular
shall merely express the grammatical plural of that defined term:
"Contract" refers to this Contract For The Engineering,
Project Management, Factory Inspection,
Training and Technical Assistance Services
For The Establishment of a Wireless Access
System together with its annexes and the
other documents specifically considered its
integral parts.
"Acceptance Test Program" refers to the series of steps to be taken in
conducting the necessary tests and inspection
of a System to verify its compliance with the
Specifications, as determined by AZCOM.
"Cell Site" refers to the area of coverage around a base
station wherein it can provide reliable
service in accordance with the
Specifications.
"Equipment" refers to the equipment i.e., Wireless Access
System (WAS) Equipment, including base
stations, subscriber terminals, RF and indoor
units, antennas and feeders, and other
related installation materials as described
in Annex A, which ACL is required to deliver
under this Contract, and to install, test and
commission under the Services Contract.
"System Acceptance" refers to the issuance of a System Acceptance
certificate by AZCOM after the completion of
the System Acceptance Test to certify that
the System installed by ACL fully complies
with the Specifications.
"System Acceptance Test" refers to test conducted by AZCOM in
accordance to an agreed Acceptance Test
Program to determine if the System installed
fully complies with the Specifications.
"Network" refers to the complete point-to-point or
point-to-multipoint configuration of the
Equipment configured in accordance with the
Specifications to provide the WAS; it shall
be composed of multiple Systems.
"Price" refers to the total price to be paid by AZCOM
to ACL in consideration for the complete and
faithful performance by ACL of its duties and
responsibilities under this Contract.
"Project" refers to the undertaking or activity subject
of this Contract and the Services Contract.
5
<PAGE>
"Schedule" refers to the timetable describing the
activities and the period within which to
complete each and every System, the Network
and the Project, as described in Annex B.
"Supply Contract" refers to Contract No. CN99-002 between AZCOM
and ACL dated October 25, 1999, for the sale
and purchase of equipment and ancillary
facilities for the establishment of a
wireless access system.
"Spares" refers to the items or materials to be used
as replacement or reserve for maintenance
purposes of the Equipment during and after
the Warranty Period, which shall likewise be
subject to acceptance testing.
"Specifications" refers to the technical specifications of the
Equipment as described in the Protocol (Annex
B).
"System" refers to a part or segment of the Network,
which can be put into workable commercial
operation. Each system shall be comprised of
a base station, subscriber terminals, network
management station, antennae, radio frequency
amplifiers and other related equipment to
complete point-to-point or point-to-
multipoint connectivity under a single Cell
Site.
"Warranty Period" refers to the period of time from System
Acceptance up to 18 months thereafter. The
Warranty Period shall be extended when the
requirements of the performance monitoring as
described in Annex B are not met.
"Work" refers to all the services to be performed by
ACL under the Contract.
6
<PAGE>
2 SCOPE OF THE CONTRACT
---------------------
2.1 ACL undertakes to provide the complete engineering, installation and
commissioning, project management, factory inspection, training and
technical assistance services and the other services stipulated in
this Contract, and takes full responsibility of ensuring that the
System shall comply in all respects with the Specifications.
2.2 In consideration for the performance by ACL of its obligations under
this Contract, AZCOM shall pay ACL the Price in accordance with the
terms of payment described in Section 6 hereof.
3 SERVICES TO BE RENDERED BY ACL
------------------------------
ACL shall perform the following services:
3.1 Engineering Design
3.1.1 ACL shall undertake the design and engineering of the complete
network and other associated installation and erection
materials to be established in accordance with the
Specifications and shall assume full and overall responsibility
over the System in regard to:
- engineering and operational consistency
- functional integration of the network
- operational and functional interconnection with AZCOM's
frame relay network
3.1.2 The design or engineering services shall include the following
activities:
- site survey
- preparation of plans, such as, installation drawings,
system description, etc.
- radio frequency planning and management
- detailed engineering
3.1.3 Prior to the installation of the Equipment, the detailed
working plans shall be submitted by ACL to AZCOM, except for
the first five (5) sites, one (1) week prior to the start of
the installation for its comments or concurrence.
Notwithstanding any comments made by AZCOM on the said plans,
the responsibility of accomplishing the objectives of the
Project shall remain with ACL.
7
<PAGE>
3.2 Installation and Commissioning
3.2.4 ACL shall perform the installation work in accordance with the
installation plan as agreed with AZCOM.
3.2.5 ACL shall provide the necessary personnel with knowledge and
skill in the installation of telecommunication equipment.
3.2.6 ACL shall provide the installation and test personnel for the
entire period of the Project in accordance with the agreed
Schedule.
3.2.7 The installation of the Equipment shall be undertaken in
accordance with the installation documents, the appropriate
Philippine government regulations, and the instructions of ACL.
The comments or recommendations of AZCOM on the installation
shall be taken into consideration by ACL as much as possible.
The installation shall include, but not be limited to
the following.- Mechanical installation of the System
- Interconnection of the Equipment and internal
cabling
- Interconnection of the Equipment to power supply
and ground terminals
- Interconnection to AZCOM's network
- Termination to MDF/DDF
3.2.8 The Equipment shall be tested after its installation. The
quantity and type of measurement shall be agreed upon by the
parties prior to the measuring activities and shall be stated
in the Acceptance Test Program.
3.3 Project Management
3.3.1 ACL shall provide, during the entire period of the Project, the
personnel who will coordinate with AZCOM in the performance of
its planning, engineering, installation, testing and
commissioning services.
3.3.2 ACL shall arrange the time schedule of the performance of its
services and inform AZCOM immediately of any changes in the
said schedule. ACL shall coordinate with AZCOM on matters
regarding shipment, availability of installation and testing
personnel, tools, test equipment, vehicles and the on-time
availability of the building and power supply equipment.
3.3.3 ACL shall submit, except for the first five (5) sites, a weekly
report of its accomplishments to AZCOM using a format to be
agreed upon by the parties at least one (1) month before the
start of the installation.
8
<PAGE>
3.4 Installation Planning
3.4.1 ACL shall supply all the documents needed for the installation,
testing and maintenance, and whatever information that may be
essential for the proper installation of the Equipment. All the
said documents shall be written in the English language.
3.4.2 The documents to be provided by ACL for each station/switch
location shall include, but not be limited to, the following:
- Equipment layout plans
- Floor layout plans
- MDF/DDF and terminal block wiring plans
- Network configuration plan
- Power distribution plans
- Cabling plans
- Grounding plans
- Installation instructions
- Interface configuration
3.4.3 ACL shall deliver the plans and drawings to AZCOM before the
commencement of the installation work. A prerequisite for the
installation planning is the punctual delivery of the building
plans by AZCOM.
3.5 Submission of Installation Documents
ACL shall submit the installation documents to AZCOM for its comments
or concurrence, except for the first five (5) sites, one (1) week
prior to the start of the installation as stated in the installation
schedule. Notwithstanding any comments made by AZCOM in the said plan,
the responsibility of accomplishing the objectives of the Project
shall remain with ACL.
3.6 ACL's Personnel
3.6.1 ACL shall provide sufficient and qualified manpower to carry
out the Work within the period stated in Annex B.
3.6.2 ACL shall replace any of its personnel whom AZCOM may consider
undesirable.
3.6.3 No employer-employee relationship shall exist between AZCOM and
ACL's personnel, it being clearly understood that the said
personnel are the employees of ACL.
3.7 Tools and Test Equipment
3.7.1 ACL shall make available the quantity and types of tools and
test equipment
9
<PAGE>
needed for the testing and acceptance work to be done under
this Contract. This excludes specialized tools and equipment
required by AZCOM to perform Performance Monitoring.
3.7.2 All the costs and expenses, including customs duties and re-
export bond, which may be incurred in connection with the re-
export of the tools and test equipment to their place of origin
shall be for the account of ACL.
3.8 Training Courses
ACL shall provide training to AZCOM's personnel in accordance with
Annex B.
3.9 Technical Assistance
ACL shall provide technical assistance service during the Warranty
Period, as described in Annex B.
3.10 Inland Transportation and Warehousing
ACL shall bear the cost of warehousing, unloading, loading and
transportation to the Job Site(s) of the Equipment as provided for
under this Contract.
3.11 Other Services
ACL shall provide all the other services stipulated in this Contract.
4 SERVICES TO BE RENDERED BY AZCOM
--------------------------------
AZCOM shall provide the drawings of the equipment room which may be
necessary for the installation design of the Equipment. AZCOM shall provide
the technically-clarified design drawings of the equipment room of the
buildings upon request by ACL. These drawings shall include the plans of
the equipment rooms with data about positions for the Equipment as well as
outlets for central main current grounding connection.
10
<PAGE>
5 PRICE
-----
5.1 Subject to the compliance by ACL with the terms and conditions of this
Contract, AZCOM shall pay ACL the following:
The sum of [*] as full and complete payment of the Work. The breakdown
of the Price shall be in accordance with Annex A and summarized as
follows:
PRICE
(US$)
5.1.1 Engineering [*]
5.1.2 Installation and Commissioning [*]
5.1.3 Project Management [*]
5.1.4 Inland Transportation and Warehousing [*]
5.1.5 Factory Inspection/Training [*]
5.1.6 Technical Assistance [*]
-----------------
TOTAL [*]
5.2 The Price shall be firm up to the completion of the Project.
5.3 The Price covers all taxes, customs duties, license fees, and other charges
which may be imposed on foreign services by authorities other than the
government of the Republic of the Philippines. All taxes, fees and other
charges which may be levied in the Philippines in connection with or
incidental to this Contract shall be for the account of AZCOM.
5.4 In the event the full amounts provided for the cost of the Work are not
utilized or in case of termination of this Contract under Section 19
hereof, ACL shall return the proportionate amount representing the value of
Work which were not utilized in a manner to be described in a separate
letter by AZCOM.
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
11
<PAGE>
6 TERMS OF PAYMENT
----------------
6.1 Subject to the rules and regulations of the Bangko Sentral ng
Pilipinas, AZCOM shall pay the Price in accordance with the following
schedule:
6.1.1 For Engineering Services
6.1.1.1 The downpayment, which is equivalent to fifteen
percent (15%) of the full value of engineering
services shall be paid by AZCOM within thirty (30)
calendar days from the signing of this Contract and
upon receipt of complete and correct invoice.
6.1.1.2 Subject to the rules and regulations of the Bangko
Sentral ng Pilipinas, AZCOM shall pay ACL the Price
from the proceeds of the financing agreement/s to be
concluded by AZCOM, with the assistance of ACL, with
international credit institutions to defray the cost
of the Project. AZCOM shall pay the Price in
accordance with the following schedule.
The balance, or eighty five percent (85%) of the value
of the said services, shall be paid in eight (8) equal
monthly installments, the first payment of which shall
be due thirty (30) calendar days after the payment of
the downpayment, and upon receipt of complete and
correct invoice.
6.1.2 For Installation and Commissioning Services
6.1.2.1 The downpayment, which is equivalent to fifteen
percent (15%) of the value of the installation,
testing and commissioning services, shall be paid by
AZCOM within thirty (30) calendar days from the
signing of this Contract and upon receipt of complete
and correct invoice.
6.1.2.2 Subject to the rules and regulations of the Bangko
Sentral ng Pilipinas, AZCOM shall pay ACL the Price by
means of a telegraphic transfer in accordance with the
following schedule:
(a) Seventy five percent (75%) of the value of the
said services for each System shall be paid
within thirty (30) calendar days from the time
ACL informs AZCOM in writing that a System is
ready for System Acceptance Test and upon receipt
of complete and correct invoice.
(b) The balance, or ten percent (10%) of the value of
the said services, shall be paid within thirty
(30) calendar days from the issuance of the
System acceptance certificate of the last System
and upon receipt of complete and correct invoice.
12
<PAGE>
For purposes of determining the value of the
installation for each System, the following formula
shall be used :
A = (B/C) * D
where :
A = amount for installation, testing,
commissioning and engineering services
for each System
B = C/20
C = total Equipment amount for all Systems
D = total amount for installation, testing,
commissioning and engineering services
6.1.3 For Project Management and Inland Transportation and
Warehousing
6.1.3.1 The downpayment, which is equivalent to fifteen
percent (15%) of the full value of project management
services, shall be paid by AZCOM within thirty (30)
calendar days from the signing of this Contract and
upon receipt of complete and correct invoice.
6.1.3.2 Subject to the rules and regulations of the Bangko
Sentral ng Pilipinas, AZCOM shall pay ACL the Price
from the proceeds of the financing agreement/s to be
concluded by AZCOM, with the assistance of ACL, with
international credit institutions to defray the cost
of the Project. AZCOM shall pay the Price in
accordance with the following schedule.
Seventy five percent (75%) of the full value of the
said services shall be paid within eighteen (18) equal
monthly installments, the first payment of which shall
be due thirty (30) days from the payment of the
downpayment, and receipt of complete and correct
invoice provided, that if, after the tenth (10th)
installment, the percentage accomplishment in the
installation is not commensurate to the progress
billings for project management services already paid
and provided that such non-accomplishment is ACL's
responsibility. AZCOM shall have the right to suspend
the payment of the project management services until
after the work progress matches the billings.
Thereafter the monthly billings shall take into
account the actual percentage in work accomplishments.
The balance, or ten percent (10%) of the full value of
the said services, shall be paid within thirty (30)
calendar days from the issuance of the
13
<PAGE>
System acceptance certificate of the last System and
upon receipt of complete and correct invoice.
6.1.4 For Training and Factory Inspection
Free of charge.
6.1.5 For Emergency Technical Assistance
6.1.5.1 The downpayment, which is equivalent to fifteen
percent (15%) of the value of the emergency technical
assistance services, shall be paid by AZCOM within
thirty (30) calendar days from the signing of this
Contract and upon receipt of complete and correct
invoice.
6.1.5.2 Subject to the rules and regulations of the Bangko
Sentral ng Pilipinas, AZCOM shall pay ACL the Price
from the proceeds of the financing agreement/s to be
concluded by AZCOM, with the assistance of ACL, with
international credit institutions to defray the cost
of the Project. AZCOM shall pay the Price in
accordance with the following schedule.
The balance, or eighty five percent (85%) of the value
of the said services, shall be paid in twenty four
(24) equal monthly installments, the first payment of
which shall be due thirty (30) calendar days from the
payment of the downpayment and upon receipt of
complete and correct invoice.
6.2 AZCOM shall be responsible for securing all the required
authorizations from the Bangko Sentral ng Pilipinas for the payments
to be made under this Contract.
6.3 ACL shall be responsible for the submission of all the required
billings/invoices under this Contract.
6.4 All bank charges, which may be incurred outside the Philippines on
account of the above-mentioned payments, shall be borne by ACL.
7 SCHEDULE
--------
ACL acknowledges that time is of the essence in this Contract and therefore
it shall undertake to complete the Work within the periods described in
Annex B.
8 ACCEPTANCE
----------
8.1 The Acceptance Test Program shall be prepared by ACL and submitted to
AZCOM for its comments at least two (2) weeks before the conduct of
the acceptance testing. AZCOM
14
<PAGE>
shall give its comments or signify its concurrence to the program
within one (1) week from the date of its submission by ACL. The
Acceptance Test Program shall not be implemented by ACL without the
prior written approval of AZCOM.
8.2 System Acceptance
(a) A System shall be considered complete and ready for System
Acceptance Test when all the items and components of the
Equipment installed by ACL are in ACL's judgment, in working
order.
(b) ACL shall inform AZCOM in writing of the completion and readiness
for System acceptance testing of a System at least two (2) weeks
in advance of the scheduled testing.
(c) The System Acceptance Test shall be conducted by AZCOM under the
supervision of ACL within a period of seven (7) calendar days for
each System. ACL shall immediately correct any defect for which
it may be responsible. Upon successful System Acceptance Test, a
system acceptance certificate shall be issued by AZCOM within two
(2) weeks therefrom. In case the System is put into commercial
operation by AZCOM before the System Acceptance without ACL's
written approval, the System acceptance certificate shall be
deemed to have been issued by AZCOM at the time of commencement
of commercial operation.
(d) The system acceptance certificate shall not be withheld because
of minor defects which do not substantially affect the normal
operation of the System as described in detail in Annex B.
8.3 Performance Monitoring
After the System Acceptance, the System concerned shall undergo
performance monitoring in accordance with the pertinent provisions of
Annex B. The performance monitoring shall continue until the System
Acceptance. If, prior to the System Acceptance, the results of the
performance monitoring show that the performance standards described
in Annex B have not been met, ACL shall promptly undertake the
necessary correction/s at no cost to AZCOM to bring the performance of
the System to the agreed performance level.
Consequently, the Warranty Period shall be extended by a period of
time which corresponds to the length of time it took ACL to bring the
System to the acceptable performance standards, as described in Annex
B.
9 CONFIDENTIALITY AND USE OF INFORMATION
--------------------------------------
9.4 All business and technical information and data including all software
provided by either Party and related documentation, in whatever form
provided, recorded or unrecorded (hereinafter collectively referred to
as "Information"), which the Parties may furnish or
15
<PAGE>
have furnished each other in anticipation of this Contract shall:
(a) be used solely for the purpose for which it was furnished;
(b) be treated in strictest confidence and protected;
(c) not be reproduced, except as necessary for its authorized use;
and
(d) if in tangible form, shall be returned together with all copies
thereof, including the promotional materials, when demanded by
either Party or no longer needed.
9.5 The obligations of confidentiality and restricted use are not
applicable to those portions of the Information that, free from any
obligation to maintain confidential, were previously known to, or that
fall into public knowledge without the fault of either Party, or which
the Parties have agreed in writing need not be kept confidential.
10 LIQUIDATED DAMAGES
------------------
10.1 AZCOM shall have the right to claim liquidated damages from ACL in
case ACL fails to meet the scheduled date of System Acceptance of a
System.
10.2 In case of failure to meet the scheduled date of System Acceptance of
a System, ACL shall pay AZCOM in United States Dollars, liquidated
damages in an amount equivalent to 0.10% of the Price for each day of
delay, Sundays and Holidays included.
10.3 Where the right to claim liquidated damages exists, the liquidated
damages payable shall not exceed eight percent (8%) of the price of
the affected System. In addition, ACL must replace the affected System
with a part of an equal or greater functionality
10.4 In consideration of the aggressive schedule of the Project
Implementation as shown in Annex B, ACL shall be allowed extra time to
meet the schedule date of completion as follows:
. For the sites to be completed in November : 60 days
. For the sites to be completed in December : 60 days
. For the sites to be completed in January : 30 days
. For the sites to be completed in February : 15 days
The above means that liquidated damages can only be claimed by AZCOM
against ACL after the above extension time has likewise been exceeded.
10.5 The claim of AZCOM for liquidated damages against ACL shall not
prejudice the exercise of AZCOM of its other right and privileges
under the contract.
10.6 Any deferment on the part of AZCOM to remit the downpayment within ten
(10) days of Contract signing shall allow ACL an extension equivalent
to the number of days AZCOM has delayed in the remittance of the
downpayment from the said ten (10) day period.
16
<PAGE>
11 LIMITATION OF LIABILITY
-----------------------
The Parties shall be liable only for damages directly caused through their
own fault or negligence.
12 FORCE MAJEURE
-------------
12.1 The Parties shall not be liable for the non-performance of any of its
obligations under this Contract when such inability is due solely to
an event of force majeure which (a) directly affects the performance
of a Party's obligations under this Contract and (b) the occurrence of
which event is not traceable to the fault or negligence of the said
Party.
12.2 The events of force majeure shall include, but not be limited to: (a)
earthquakes, floods, typhoons, or epidemics; (b) war, rebellion,
insurgency, riots, or invasion of the Philippines by another country;
(c) strikes, lockouts, boycotts or other forms of work stoppage; and
(d) government embargo, restriction, or commandeering of the vessel
carrying the Equipment.
12.3 In case an event of force majeure happens, the affected Party shall
exert its best efforts to comply with its obligations under this
Contract. If an event of force majeure prevents the carrying out of
only a portion of the Project and that portion is not critical to the
accomplishment of the Project as a whole, the affected Party shall
continue to perform its obligations on the portion not affected by the
event of force majeure.
12.4 The Party invoking an event of force majeure must immediately notify
in writing the other Party and specify which of its obligations it is
prevented from complying with by the event of force majeure, and give
an estimate of the period during which it is likely that it shall be
prevented from complying with the said obligations. After the
occurrence of the event of force majeure is proven, the Schedule and
the performance bond may, after discussions in good faith, be amended
by Contract of the Parties.
12.5 The amendment of the Schedule pursuant to Section 12.4 shall not give
ACL the right to seek or demand an adjustment or modification of the
Price.
13 CHANGES
-------
13.1 Any request by AZCOM for a change in the Work or any part thereof
shall be subject to the conformity of ACL. Such request shall be
subject to later written confirmation by AZCOM. The additional cost
and expenses which may arise on account of such changes, if any, shall
be borne by AZCOM, and the date of completion of the Work may be
extended by agreement of the parties.
13.2 ACL may, with the consent of AZCOM, make minor adjustments in the Work
as, in its sole discretion, may appear necessary for the proper
accomplishment of its obligations under this Contract. The said
adjustments shall be subject to the following conditions: (a) the
general configuration, general characteristics and quality of the Work
are maintained;
17
<PAGE>
(b) the Schedule is not changed or modified; (c) any additional costs
or expenses which may arise as a consequence of such adjustments shall
be for the account of ACL; and (d) such adjustments shall be reported
in writing to AZCOM.
14. APPLICABLE DOCUMENTS
--------------------
The following annexes shall, by this reference, form an integral part of
this Contract:
Annex A - Equipment List and Price Schedule
Annex B - AZCOM-ACL Protocol dated October 25, 1999
Annex C - Joint Order No. 1-91 (Comprehensive Import Supervision
Scheme)
15. ORDER OF PRECEDENCE
-------------------
In case of any conflict in the interpretation of the terms and conditions
of the various documents cited in this Contract, the order of precedence
shall be: this Contract; Equipment List and Price Schedule (Annex A);
Protocol (Annex B); Joint Order No. 1-91 (Annex C); and Supply Contract.
16 SEVERABILITY
------------
If any part, term or provision of this Contract shall become invalid or
unenforceable, the validity or enforceability of the remaining portions or
provisions shall not be affected, and the rights and obligations of the
parties shall be construed as if this Contract did not contain the
particular invalid or unenforceable part, term or provision.
17 SUCCESSION AND ASSIGNMENT
-------------------------
17.1 This Contract shall be binding upon the successors and assigns of the
Parties and shall not, except as otherwise provided in Section 18.2
hereof, be assigned in whole or in part by a Party without the prior
written consent of the other party, and which consent shall not be
unreasonably withheld.
17.2 ACL may assign or sub-contract to its subsidiary or associated company
in the Philippines or any other local entity its rights and
obligations which ACL decides may be more appropriately performed by
its subsidiary or associated company in the Philippines or other local
entity. Before any such assignment or sub-contracting is entered into
by ACL, it shall seek the comments of AZCOM on such intended course of
action. However, AZCOM's comments shall not relieve or diminish ACL's
obligations and responsibilities under this Contract. ACL shall
continue to be responsible for the workmanship and quality of the work
of the assignee or sub-contractee, including all acts of default or
negligence of such
18
<PAGE>
assignee or sub-contractee, its employees or personnel, as if they
were the acts of default or negligence of ACL. There is no employer-
employee relationship between the employees of ACL and AZCOM and vice-
versa.
18 TERMINATION
-----------
18.1 In case of default on the part of ACL:
18.1.1 If ACL fails to comply with any of the terms and conditions of
this Contract after proper written notice by AZCOM, AZCOM
shall have the right to terminate this Contract thirty (30)
days after a notice of termination has been served on ACL.
18.1.2 In the event of such termination, AZCOM shall be entitled to
retain and apply the balance, which may otherwise be due to
ACL under this Contract to pay for the cost to complete the
Project. If the said balance is not sufficient to cover the
cost of the inoperative or non-functional Equipment or System,
the additional cost needed to make the Equipment operative or
functional shall be paid by ACL to AZCOM
18.2 In case of default on the part of AZCOM:
18.2.1 If AZCOM fails to comply with any of the terms and conditions
of this Contract after proper written notice by ACL, ACL shall
have the right to terminate this Contract thirty (30) days
after a notice of termination has been served on AZCOM.
18.2.2 In case of such termination, AZCOM shall pay ACL the value of
the delivered Equipment and release the performance bond
submitted by ACL.
19 ARBITRATION
-----------
19.1 In the event of any dispute or difference of opinion arising out of or
relating to this Contract or breach thereof, the parties shall exert
their best efforts to settle such dispute or difference amicably.
19.2 If such dispute or difference is not amicably settled within sixty
(60) calendar days from its occurrence, the matter shall be settled
through arbitration by a panel of three (3) arbitrators, one to be
named by each Party and the third arbitrator shall be chosen by the
two earlier designated arbitrators. In case they fail to select a
third arbitrator within fifteen (15) calendar days from the date they
commenced the discussion of the said selection, the third arbitrator
shall be appointed by the chairpersons of the National Bar
Associations of the countries of the Parties. No one shall be
nominated or act as an arbitrator who is in any way financially
interested in this Contract or in the business affairs of any of the
parties.
19.3 If any Party is dissatisfied with the decision of the arbitrators, the
Party concerned shall, within ten (10) calendar days from receipt of
the decision, notify the arbitrators that it
19
<PAGE>
disputes the same and the matter shall thereupon be settled under the
Rules of Conciliation and Arbitration of the International Chamber of
Commerce. The arbitration proceedings shall be conducted in Geneva,
Switzerland in the English Language. The resulting award shall be
final and binding on the parties.
20 INTERPRETATION
--------------
20.1 The table of contents and headings of the sections are included for
convenience of reference only. They shall not affect the construction
and interpretation of any provision of this Contract. The word
"hereof" is used in this Contract to refer to this Contract as a whole
and not to any individual section or part of this Contract. Reference
to sections are to sections of this Contract.
20.2 To interpret the commercial terms and abbreviations used in this
Contract, which have not been otherwise defined, the provisions of the
latest issue of INCOTERMS shall be used. All the other terms and
conditions of this Contract shall be interpreted in accordance with
the laws of New York State, USA provided that nothing in this Section
20 shall be construed to authorize the amendment or modification of
the annexes cited in Section 14 hereof.
20.3 Any granting of time and other indulgence or waiver of obligation on
the part of one party to the other shall be isolated or peculiar to
that particular occasion or purpose and shall be without prejudice to
future compliance with the terms and conditions of this Contract.
21 ADDRESSES
---------
21.1 AZCOM and ACL specify their respective addresses as follows:
For AZCOM:
AZ COMMUNICATIONS NETWORK INCORPORATED
8/F DPC Place, 2322 Chino Roces Avenue
Makati City, Philippines
Attention: Felizardo P. dela Merced
For ACL:
AIRSPAN COMMUNICATIONS LIMITED
Cambridge House, Oxford Road
Uxbridge Middlesex, UB8 1UN UK
Attention: Henrik Smith-Petersen
20
<PAGE>
21.2 Any letter or notice sent to these addresses shall be considered
delivered upon its actual receipt by the addressee. In the event any
party changes its address, it shall notify the other party of the
change of address in writing within five (5) calendar days from the
date the change of address took effect.
22 EXECUTION IN COUNTERPARTS
-------------------------
This Contract may be executed in counterparts by both Parties and shall
become effective upon receipt by either Party of a copy of this Contract
duly executed by the other.
23 EFFECTIVITY OF THE CONTRACT
---------------------------
This Contract shall become effective after it is signed by AZCOM and ACL.
IN WITNESS WHEREOF, the parties have affixed their signatures on the date and
place first above written.
AZ COMMUNICATIONS AIRSPAN COMMUNICATIONS LIMITED
NETWORK INCORPORATED
By: By:
_________________________ ______________________
Witnessed By:
_________________________ _____________________
<PAGE>
ANNEX A
OF
CONTRACT NO. CN99-002
AZCOM-ACL PROTOCOL
PROVISIONING, ENGINEERING, FURNISHING, INSTALLATION, TESTING AND COMMISSIONING
FOR THE
ESTABLISHMENT OF A COMPLETE
WIRELESS ACCESS SYSTEM NETWORK
OCTOBER 25, 1999
<PAGE>
Equipment Price List
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equipment Description -Demand Assigned Quantity Unit Price Extended Price
for 20 BS, 322 STs Required
- ------------------------------------------------------------------------------------------
Subscriber Terminal
L 128 Internal Subscriber Terminal * * *
DA Modules
CT Rack with combiner & 2 DA shelves * * *
CT Expansion Rack with alarm & 2 DA shelves * * *
Basic RF plug in set for CT
(PA+MON+2PSU+DIPLNA) * * *
RF plug in expansion set for omni/multi-sector CT
(PA+PSU+DIPLNA) * * *
Basic DA Card set (rf+AU+TU+SC+2PSU) * * *
DA Modem Card * * *
AC Rack with alarm & 1 AC shelf * * *
Basic AC Card Set (64kbit/s)
(2PSU+SC+CTU+XTU) * * *
----------
*
Antenna Modules
Omni Antenna System, incl. Feeder and kit * * *
Sitespan NMS
Sitespan HW platform * * *
Sitespan Client / Server Software License * * *
Sitespan Shelf License * * *
STMON * * *
----------
*
Misc.
System Spares * * *
Tools (CT and ST Installation and Maintenance) * * *
Survey Tool * * *
Pump-up mast for use with survey tool * * *
----------
TCP/IP to RS232 Converter for NMS Backhaul * * *
----------
*
Mandatory Services
Documentation Set (CD ROM) * * *
Design/Engineering Services * * *
Installation and Commissioning * * *
Project Management * * *
- ------------------------------------------------------------------------------------------
</TABLE>
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equipment Description - Demand Assigned (Cont.) Quantity Unit Price Extended Price
for 20 BS, 322 STs Required
- ------------------------------------------------------------------------------------------
Inland Transportation and Warehousing * * *
Technical Assistance * * *
Factory Inspection / Foreign Training * * *
Local Training * * *
----------
*
- ------------------------------------------------------------------------------------------
Total Cost of Equipment and Services in US$ *
</TABLE>
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
Detailed Equipment List
AS 4000 Equipment (X3 Band)
Description Qty
- -------------------------------------------------------------------------------
Antennas
Omni Antenna System *
Feeder Install Kit *
Feeder cable *
CT Rack + RF Plug in cards
Rack hardware with 2 DA modem shelves (powder coat painted) *
EPI PSU *
X3 - RF Diplexer and LNA *
Combiner Mon *
Combiner Mon PSU *
Dual Power Amplifier to include packaging *
DA Expansion rack
Expansion "carcus" rack with cables and power distribution panel
and "standard" Expansion rack vent and blanking panels *
DA modem shelf (powder coat painted) *
Blanking panels for FA modem shelf (to fill in for non-fitted DA shelf) *
DA Modem Shelf Card set for 1 RF carrier
DA AU card *
DA SC card *
DA TU card *
DA CT RF card (C2 band) *
DA Modem Card *
DA Shelf PSU *
DA Access Concentrator rack
Access Concentrator "carcus" rack with cables and power *
distribution paneland "standard" AC rack vent and blanking panels
DA Access Concentrator shelf (powder coat painted) *
DA Access Concentrator Shelf Card set for 1 RF carrier
DA SC card *
DA TU card *
DA Shelf PSU *
Subscriber Terminals
ST-L128 Leased Line Data Terminal (Indoor and X3 Outdoor Units) *
ST L128 PSU - 220Vac, 3-prong (US standard) power plug *
25m Drop Cable with one end connectorised and connector kit *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
Description Qty
- -------------------------------------------------------------------------------
Sitespan
Hardware / Software Platform *
Sitespan Client / Server License *
Shelf License (per shelf) *
STMON License and Media *
Misc
System Spares Set *
CT Installation and Maintainence Tools *
ST Installation Tools *
Survey Tool *
Pump-up Mast for Survey Tool *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
Detailed Spares List
- -------------------------------------------------------------------------------
Description Qty
- -------------------------------------------------------------------------------
CT Rack + RF Plug in cards
EPI PSU *
X3 - RF Diplexer and LNA *
Combiner Mon *
Combiner Mon PSU *
Dual Power Amplifier *
DA Modem Shelf Cards
DA AU card *
DA SC card *
DA TU card *
DA CT RF card (X3 Band) *
DA Modem Card *
DA Shelf PSU *
DA Access Concentrator Shelf Cards
DA SC card *
DA TU card *
DA Shelf PSU *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
ANNEX B
OF
CONTRACT NO. CN99-002
AZCOM-ACL PROTOCOL
PROVISIONING, ENGINEERING, FURNISHING, INSTALLATION, TESTING
AND COMMISSIONING
FOR THE
ESTABLISHMENT OF A COMPLETE
WIRELESS ACCESS SYSTEM NETWORK
OCTOBER 25, 1999
<PAGE>
TABLE OF CONTENTS
1. Project Description
2. Definitions
3. Responsibilities of ACL
3.1 Supply of Equipment, Spares, Tools & Test Equipment and
Documentation
3.2 Design and Engineering
3.3 Installation, Testing and Commissioning
3.4 Foreign and Local Training
3.5 Emergency Technical Assistance
3.6 Inland Transportation
3.7 Storage
4. Responsibilities of AZCOM
5. Technical Details
6. Design Review Meeting
7. Implementation Schedule
8. Factory Testing and Inspection
9. System Acceptance
10. Maintenance Spares
11. Tools and Test Equipment
12. Repair Service
13. Documentation
14. Warranty
List of Attachments
Attachment 1 Scope of Work
Attachment 2 Network Configuration and Requirements
Attachment 3 Technical Specifications
Attachment 4 Interface Configuration
Attachment 5 Deployment Plan
Attachment 6 Training Program
<PAGE>
AZCOM-ACL PROTOCOL
This document defines the technical details of the Scope of Work as well as the
responsibilities of AZ COMMUNICATIONS NETWORK INCORPORATED and AIRSPAN
COMMUNICATIONS LIMITED in the implementation of the Project covered by Contract
No. CN99-002.
1. PROJECT DESCRIPTION
This Project covers the design, engineering, supply, installation,
testing and commissioning of an integrated turnkey project for the
establishment of a complete network. It includes the following:
1.1. Base Stations
The base stations, at X3 Band, shall be capable of supporting
the following number of Subscriber Terminals:
Location Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
- ---------------------------------------------------------------------------
Manila 1 * * * * * * *
Cavite * * * * * * *
Calamba * * * * * * *
RBS ??? * * * * * * *
P. Princesa * * * * * * *
Batangas * * * * * * *
Lucena * * * * * * *
Legaspi * * * * * * *
Naga * * * * * * *
Manila 2 * * * * * * *
San Fernando, LU * * * * * * *
Baguio * * * * * * *
Dagupan * * * * * * *
Angeles * * * * * * *
Malolos * * * * * * *
Cabanatuan * * * * * * *
Tarlac * * * * * * *
Cebu * * * * * * *
Bacolod * * * * * * *
Iloilo * * * * * * *
Dumaguete * * * * * * *
Davao * * * * * * *
Gen. Santos * * * * * * *
Iligan * * * * * * *
Zamboanga * * * * * * *
Cagayan de Oro * * * * * * *
BST 1 * * * * * * *
BST 2 * * * * * * *
BST 3 * * * * * * *
BST 4 * * * * * * *
BST 5 * * * * * * *
BST 6 * * * * * * *
BST 7 * * * * * * *
BST 8 * * * * * * *
- -------------------------------------------------------------------------------
Increment * * * * * * *
Cumulative * * * * * * *
- -------------------------------------------------------------------------------
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
The Network shall be designed to accommodate the above projected growth
in capacity. Note that the above does not include allocation for
spares.
1.2. Subscriber Terminals using Code Division Multiple Access (CDMA) wireless
air interface to connect the subscriber to the Base Station at X3 Band
<TABLE>
<CAPTION>
Location Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Total
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Manila South * * * * * * * *
Cavite * * * * * * * *
Calamba * * * * * * * *
RBS * * * * * * * *
Batangas * * * * * * * *
Legaspi * * * * * * * *
Manila North * * * * * * * *
San Fernando, LU * * * * * * * *
Angeles * * * * * * * *
Malolos * * * * * * * *
Cabanatuan * * * * * * * *
Tarlac * * * * * * * *
Cebu * * * * * * * *
Iloilo * * * * * * * *
Davao * * * * * * * *
Cagayan de Oro * * * * * * * *
Baguio * * * * * * * *
Dagupan * * * * * * * *
Bacolod * * * * * * * *
General Santos * * * * * * * *
Lucena * * * * * * * *
Naga * * * * * * * *
Iligan * * * * * * * *
Puerto Princesa * * * * * * * *
Dumaguete * * * * * * * *
Zamboanga * * * * * * * *
BST 1 * * * * * * * *
BST 2 * * * * * * * *
BST 3 * * * * * * * *
BST 4 * * * * * * * *
BST 5 * * * * * * * *
BST 6 * * * * * * * *
BST 7 * * * * * * * *
BST 8 * * * * * * * *
- -----------------------------------------------------------------------------------
Total * * * * * * * *
Note that the above does not include allocation for spares.
</TABLE>
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
1.3. Supply of Spares
1.4. Supply of Maintenance Tools and Test Equipment
1.5. Documentation
1.6. Installation, Testing and Commissioning Services
1.7. Foreign and Local Training Services
1.8. Inland Transportation and Storage
1.9. Emergency Technical Assistance
Please refer to Attachments 1 and 2 for the Scope of Work and Network
Configuration and Requirements respectively.
2. DEFINITIONS
All defined terms in Contract No. CN99-002, when used in this document,
shall have the same meaning as in the Contract stated. The following
additional terms shall have the meanings as indicated hereunder:
Inland Transportation The delivery of Equipment from the Manila
seaport and/or airport to the storage area and
Job Sites.
Installation The assembly, mounting and wiring of the
Equipment and consequently the testing of the
Equipment.
Job Site The premises where the Work shall be performed,
but not including the subscriber premises.
Pre-Acceptance Test The execution of measurements and the necessary
adjustments of the parameters and the
performance of the Equipment working as a System
before the System Acceptance Test. The test is
required to ascertain compliance of the
Equipment with the Specifications
Network The complete configuration of the Equipment from
the frame relay switching system, base stations,
up to the subscriber terminals providing managed
data communication connectivity and other
services to the subscribers.
Ready for Service The date the Project shall be available for
commercial service.
<PAGE>
Site Survey The exploration of Job Sites to determine the
existing conditions.
System A part or segment of the Network which can be
put into workable commercial operation.
Warranty The written assurance of ACL to AZCOM that the
Equipment and Spares delivered by ACL fully
complies with the Specifications.
<PAGE>
3. RESPONSIBILITIES OF ACL
3.1. Supply of Equipment, Spares, Tools & Test Equipment and
Documentation
3.1.1. ACL shall supply and deliver all Equipment necessary to
establish, operate and maintain a complete working
Network under this Project as described in Section 1 to
conform with the applicable provisions of the Technical
Specifications (Attachment 3) as contained in this
Annex B of Contract No. CN99-002.
3.1.2. The list of Equipment, Spares and tools and test
equipment to be provided are indicated in Annex A.
3.1.3. All Equipment to be supplied by ACL shall be pre-wired,
pre-assembled and tested in the country of origin in
accordance with the existing standard practices of the
telecommunications organization operating in the said
country.
3.1.4. ACL agrees that all items under Annex A and the
attachments to this Protocol are included in the Price
and no claim for additional payment on the grounds of
omitted items will be entertained. On the basis of the
updated/revised bill of materials after detailed
engineering, a contract cost adjustment shall be
mutually agreed by both parties for any modifications
made by AZCOM that shall result to the revision of
previously agreed Equipment quantities based on the
accepted unit prices offered by ACL. Likewise,
corresponding price reduction based on unit prices
offered shall be made in case ACL recommends a change or
modification resulting in the reduction of Equipment
quantities to be provided. However, any expenses caused
by modifications and/or changes made by ACL to meet the
System performance requirements, circuit requirements
and other performance criteria as contained in this
Protocol such that said modification and/or changes will
result to an increase in Equipment quantity and/or
change in types of Equipment/materials and services
shall be borne by ACL. However, cost implications due to
change in Equipment quantities and services caused by
reasons of no fault of ACL shall be mutually discussed
and agreed upon by both parties.
3.2. Design and Engineering
3.2.1. ACL shall undertake the design and engineering of the
Project as described in Section 1 and shall assume full
and overall responsibility of the Equipment to be
installed under this Project as to:
a. engineering and operational consistency
b. functional integration of the Network
c. operational and functional interconnection with AZCOM
frame relay network in accordance with Attachment 4
<PAGE>
3.2.2. The design and engineering shall include the following
among others:
a. site survey
b. preparation of engineering plans
c. preparation of radio frequency plans
d. preparation of bill of materials
3.2.3. Prior to the preparation of the final detailed plans,
the preliminary design such as site layout and floor
layout for the network node shall be submitted to AZCOM
for concurrence one (1) month prior to the commencement
of installation (for the first five Systems, it shall be
submitted 1 week before installation). AZCOM reserves
the right to modify or alter any or all parts of the
design. However, in such cases, any changes should be
discussed and mutually agreed by both parties so that
the original time schedule as per Attachment 5 can be
achieved.
For the Base Stations and Subscriber Terminals, a common
or typical installation document shall be provided for
all sites.
3.2.4. ACL shall supply all the information required for the
installation, testing and maintenance of the Equipment.
3.2.5. ACL shall supply in two (2) sets, all the document
necessary for the installation, testing and maintenance,
of the Equipment. The installation documents to be
provided by ACL for each station/switch location shall
include, but shall not be limited to the following:
- Equipment Layout Plans
- Floor Layout Plans
- MDF/DDF and Terminal Block Wiring Plans
- Network Configuration Plans
- Cabling Plans
- Grounding Plans
- Power Distribution Plans
- Installation Instructions
- Interface Configuration
<PAGE>
3.2.6. Two (2) sets of final plans and drawings for each radio
station/switch location, bill of materials, and
implementation Schedules, shall be submitted to AZCOM
prior to the commencement of the Installation for
concurrence. AZCOM reserves the right to modify or alter
any or all parts of the plan. However in such cases, any
changes should be discussed and agreed upon by both
parties so that the original time schedule as per
Attachment 5 can be achieved.
3.2.7. All installation plans to be submitted by ACL to AZCOM
shall be signed and sealed by a Electronics and
Communications Engineer for switching and transmission
systems and Electrical Engineer for electrical systems.
3.2.8. ACL shall provide all grounding connections for the
Equipment to be supplied for this Project.
3.2.9. ACL shall submit to AZCOM within two (2) weeks after
signing of this Contract the following Equipment
information for each site:
- Equipment dimension, weight and floor loading
- Equipment AC power consumption
- Heat dissipation
- Typical Equipment Layouts
3.3. Installation, Testing and Commissioning
3.3.1. ACL shall be responsible for the installation, testing
and commissioning of all Equipment to be provided under
this Contract.
3.3.2. Antenna installation and orientation shall also be
handled by ACL.
3.3.3. ACL shall likewise install one (1) Subscriber Terminal
per radio channel at the subscriber premises in
accordance with the ST Installation Procedure document
that will be delivered within two (2) weeks from signing
of this Contract. The number of Subscriber Terminals
installed by ACL shall in no case be less than twenty
five (25).
3.3.4. ACL shall install, test and commission 48VDC power
equipment provided by AZCOM for use of the Equipment.
Details of the equipment are provided in Attachment 3.2.
3.3.5. ACL shall provide the necessary number with the
corresponding qualifications of personnel required for
the installation of the Equipment. The Installation
shall be in accordance with the installation documents
and the appropriate Philippine government regulations.
The Installation shall include, but not be limited to
the following:
- Mechanical installation of the system
<PAGE>
- Interconnection of the Equipment and internal cabling
- Interconnection of the Equipment to the AC power
supply and ground terminals
- Interconnection to AZCOM frame relay network in
accordance with Attachment 4
3.3.6. Other tools and test equipment which may be necessary
for the implementation of the project and which are not
purchased under this Contract shall be for the account
of ACL including all cost and expenses which may be
incurred in connection with the importation and re-
exportation of ACL's tools and test equipment to and
from their place of origin. This excludes specialized
tools and equipment required by AZCOM to perform
Performance Monitoring.
3.3.7. ACL shall inform AZCOM of the schedule of Installation,
testing and commissioning activities at least one (1)
week before the start of each activity.
3.3.8. ACL shall provide personnel for the entire project
implementation period who will coordinate with AZCOM on
all activities related to the planning, installation and
acceptance testing/commissioning of the complete
Equipment as described in Section 1.
3.3.9. Acceptance test procedures, schedules, dates and
standards shall be prepared by ACL and submitted to
AZCOM at least two (2) weeks before the scheduled System
Acceptance Testing. AZCOM shall signify the concurrence
or comments for modification within one (1) week
thereafter.
3.3.10. ACL shall arrange the time-schedule of the installation,
commissioning, acceptance testing and other related
activities of the entire project and inform AZCOM
immediately for any changes. ACL shall submit monthly
reports to AZCOM showing actual project status of
development in terms of:
- Equipment and materials delivery, quantities
installed or in storage, location, etc.
- Current status of Work
- Actual work progress data like percent of completion
of the Project or parts
- Installed and tested Equipment or System
- Summary of test results
- Variances and explanations
<PAGE>
3.3.11. ACL shall analyze reasons and consequences of delays
and/or advancement of any particular project activity.
3.3.12. ACL shall inform AZCOM of any problem that may arise
prior to or during installation and commissioning.
3.4. Foreign and Local Training
3.4.1. ACL shall provide a suitable, adequate and comprehensive
training program for AZCOM engineers, operation and
maintenance personnel.
3.4.2. Foreign training shall be conducted at ACL factory
and/or training facility in manufacturer's locality. The
following expenses associated in the training program,
including instructors' fees; the cost of training
materials and venue; lodging; local transportation;
shall be for the account of ACL. ACL shall, likewise,
provide all necessary assistance to AZCOM's personnel in
visa arrangements for the periods of their stay in the
manufacturer's locality.
3.4.3. For the instructor for the local training, ACL shall
bear all expenses which includes the cost of travel
between ACL's country and the Philippines; and the cost
of the instructor's accommodation and subsistence
allowance in the Philippines.
3.4.4. Training Program
3.4.4.1. The training program as described in Attachment
6 should assure AZCOM to be self-sufficient and
independent to engineer, install, maintain and
operate the System.
3.4.4.2. The training course for engineers shall be
aimed towards future engineering of the
Equipment, redimensioning, rearrangement,
reconfiguration and expansion of the System,
and providing technical support to operation
and maintenance group as the need arises.
3.4.4.3. The training course for operation and
maintenance personnel shall be aimed towards
operation, maintenance and repair of the
Equipment to be installed.
3.4.4.4. The training course for installation and
testing personnel shall include an overall
knowledge of hardware and operational aspects
of the Equipment and shall cover the
installation practices, acceptance testing,
testing operation practices and maintenance
standard practices.
<PAGE>
- -------------------------------------------------------------------------------
Training Course No. of Location No. of weeks
Trainees
- -------------------------------------------------------------------------------
Planning & Engineering/
Operation & Maintenance
- -------------------------------------------------------------------------------
Radio Planning 6 Foreign 2 days
- -------------------------------------------------------------------------------
WAS Eng'g/Oprns/Maint. 6 Foreign 3 days
- -------------------------------------------------------------------------------
Installation & Testing
- -------------------------------------------------------------------------------
CT Installation 6 Local 1 week
- -------------------------------------------------------------------------------
ST Installation 10 Local 1 week
- -------------------------------------------------------------------------------
Troubleshooting & Repair 4 Local 1 week
- -------------------------------------------------------------------------------
3.4.4.5. On-the-job training shall be done in accordance
with the implementation schedule as per
Attachment 5.
3.4.4.6. As part of the Installation services, ACL shall
accommodate AZCOM installation and testing
personnel to participate in the installation
and testing.
3.4.4.7. ACL shall provide the corresponding instruction
aids (slides, transparencies and the like) and
training manuals for use of AZCOM.
3.4.4.8. ACL shall make available the presence of
qualified trainer expert on the topics
mentioned in Attachment 6.
3.4.4.9. The language of instruction shall be in English
and all instructors shall be proficient in both
written and spoken English. AZCOM reserves the
right to request immediate replacement if any
instructors is found to be deficient.
3.5. Emergency Technical Assistance
ACL shall provide emergency technical assistance to AZCOM during
the Warranty Period, which shall include the following:
3.5.1. A technical assistance office, which shall be
responsible for the emergency technical assistance
obligations, shall be located in Manila for the duration
of the technical assistance period.
3.5.2. ACL shall provide emergency technical assistance for
both hardware and software as required by AZCOM within
two (2) hours of a request for such assistance. The two
(2) hour response requirement applies at any time other
than normal duty hours. ACL's technical assistance
representative shall ensure availability at all times
for recall. The technical assistance shall be initially
conducted from Manila office by means of verbal advices
or written instructions to AZCOM employees in charge of
the System operation. If within two (2) hours after such
consultation, the System cannot be put into normal
operation, or if the faulty part cannot be identified,
ACL's expert shall be on the
<PAGE>
respective site within twenty four (24) hours to provide
on-site technical assistance.
3.5.3. The technical assistance shall include the following
services:
3.5.3.1. Technical assistance in a manner such that
AZCOM will progressively become qualified in
maintaining and operating the Equipment.
3.5.3.2. Assist in troubleshooting, correcting
deficiencies, inspection, and use of on site
test equipment.
3.5.3.3. Assist AZCOM in test and analysis to determine
defective components and shipment of defective
components to ACL's plant for repair.
3.5.3.4. Maintain records of all technical assistance
performed, and submit monthly reports of the
same to AZCOM.
3.5.3.5. Propose maintenance support scheme for both
hardware and software. Define routine and
corrective maintenance routines for any System.
3.5.3.6. Provide software support on the Equipment at no
cost to AZCOM and shall assist with regard to
establishment of AZCOM's own software
specialist group and software support
facilities.
3.5.3.7. Provide, at no cost to AZCOM during the
warranty period, software updates as and when
introduced by ACL for use in connection with
the offered Equipment. A software update means
an error corrected version without change of
features of the last release delivered.
3.5.3.8. Provide assistance in the design work
particularly in the introduction of new
techniques for sub-systems to be interfaced
with other types of equipment or any other
future engineering requirements.
3.5.3.9. Provide assistance for the reconfiguration and
the necessary documentation for such
reconfiguration.
3.5.3.10.The technical assistance shall supplement the
performance of AZCOM's operations and
maintenance personnel to ensure effective
"operation and maintenance" of the System. This
includes, subject to AZCOM's approval, setting
up specific operation and maintenance methods,
procedures and conventions, and assistance
during implementation.
3.5.3.1l.Coordination of supplemental schedules,
services and supplies including suggestions,
shall be by monthly review meetings in Manila.
Emergency co-ordination shall be by the most
expeditious means.
<PAGE>
3.6. Inland Transportation
3.6.1. ACL shall provide at its own expense the necessary
vehicle for the transportation of its personnel in the
Philippines.
3.6.2. ACL shall provide at its own expense the necessary
inland transportation to deliver the supplied Equipment
from ACL's storage area to Job Sites. All risks involved
in the transportation and storage of the Equipment shall
be ACL's responsibility.
3.7. Storage
Storage of all supplied items under Contract No. CN99-002 shall
be the responsibility of ACL. The security and store keeping of
materials and Equipment shall also be the responsibility of ACL.
<PAGE>
4. RESPONSIBILITIES OF AZCOM
4.1. AZCOM under ACL's supervision shall be responsible for the
System Acceptance of the Equipment under this Agreement.
4.2. AZCOM shall provide the following:
4.2.1. Building space for Equipment and facilities like
electrical, air conditioning/ventilation and other
building requirements mutually agreed by AZCOM and ACL.
4.2.2. Security for Equipment at the Job Site.
4.2.3. AC power including the necessary mains and ground
connections in the main distribution panel.
4.2.4. Installation of DDF and patch panel provided by ACL.
4.2.5. The necessary plans of the equipment rooms with data
about positions of Equipment as well as outlets of
central main current and grounding connections which are
necessary for the project and construction planning.
4.2.6. Assistance to ACL's survey personnel in determining the
local information necessary for station planning.
4.2.7. Custom clearance of the deliveries on best efforts
basis. ACL shall inform AZCOM about its deliveries as
quickly as possible.
4.2.8. Vehicles necessary for the transportation of personnel
of AZCOM during the entire Work.
4.2.9. Necessary data on existing facilities required by ACL
for the Project and construction planning such as floor
plan/equipment layouts of stations.
4.2.10. AZCOM shall favorably endorse ACL's applications for the
necessary visas and work permits of its personnel.
4.2.11. AZCOM shall provide to ACL for each System anomaly
reports in accordance with the procedure to be agreed
upon by both parties after the start of technical
assistance.
4.2.12. AZCOM shall perform regular System maintenance as
required under ACL's maintenance recommendation.
<PAGE>
5. TECHNICAL DETAILS
5.1. The Equipment shall have sufficient flexibility to accommodate
future growth, introduction of new services, and for subscribers
to modify services to meet their needs. The system architecture
shall meet all the relevant international recommendations, and
use of industry standards operating system that allows
commercial software to be used for the service management
system. Its architecture shall aim for open network provisioning
and multi-vendor environment.
5.2. The Equipment shall be able to economically permit expansion of
the Network without degradation or interruption of service. Such
expansion maybe due to Network growth or due to increase in
loading resulting from changes in traffic pattern.
5.3. The Equipment shall also conform with the provisions of the
latest issue of the Electronics Code of the Philippines and
shall be designed considering the Philippine's environmental
conditions.
5.4. ACL shall ensure that the Equipment and materials delivered
under this Project shall conform with the latest international
and national standards and the Technical Specifications detailed
in Attachment 3.
5.5. The Network shall comply with the following availability
percentages:
--------------------------------------------------------------
Distance of ST from CT Availability
--------------------------------------------------------------
Within 2 Kms 99.86%
Within 2 to 5 Kms 99.7%
Within 5 to 15 Kms 99.5%
--------------------------------------------------------------
The above availability percentages include effects of equipment
reliability, equipment failure rate and atmospheric effects.
<PAGE>
6. DESIGN REVIEW MEETING
6.1. The first design review meeting will be held in Manila three (3)
weeks after signing of this Contract or at any other time
mutually agreed by both parties.
6.2. All technical details necessary for the implementation shall be
discussed and mutually agreed upon by both parties during the
design review meeting.
6.3. Other design review meetings may be held according to necessity.
6.4. The schedules of other meetings will be discussed and mutually
agreed upon by both parties.
6.5. Any change in the implementation Schedule proposed by AZCOM and
ACL shall be discussed and mutually agreed upon by both parties.
6.6. The foreign training schedule shall be discussed and mutually
agreed upon by both Parties.
7. IMPLEMENTATION SCHEDULE
7.1. Details of the proposed time schedule for the design and
engineering, manufacturing, delivery, installation, testing,
commissioning and acceptance shall be in accordance with
Attachment 5.
7.2. ACL shall be responsible for the timely delivery of the
Equipment and shall ensure that the time schedule in accordance
with Attachment 5 is followed strictly.
8. FACTORY TESTING AND INSPECTION
8.1. Two (2) representatives of AZCOM shall witness factory test of
the Equipment for a period of three (3) calendar days, at ACL's
designated factories/plants. ACL shall provide all necessary
assistance to AZCOM's representatives in visa arrangements for
the period of their stay in the Manufacturer's locality.
8.2. ACL shall give an advance notice of at least two (2) weeks (or
other mutually agreed upon time) prior to factory testing and
submit to AZCOM the test/inspection procedures also at least two
(2) weeks prior to the same.
9. SYSTEM ACCEPTANCE
9.1. System Acceptance
9.1.1. On the completion of the Installation of the Equipment
and, when a System is in ACL's opinion has been
substantially completed, ACL shall give five (5) days
prior written notice to AZCOM regarding its intention to
commence the System Acceptance Test.
<PAGE>
9.1.2. Substantial completion shall mean that except for some minor
deficiencies (which are enumerated below), all the materials,
equipment and accessories have been properly installed or
constructed, and the technical requirements and specifications
are fully complied. Minor deficiencies shall be limited to the
following and shall be corrected by ACL within three (3) months,
starting from the issuance of System Acceptance Certificate.
a. Minor faults or defects that will not affect the System's
normal operation.
b. Defective modules/units which are not service affecting that
are immediately replaceable from spare parts pool.
c. Lacking spare modules/units and accessories at site. Spare
modules mean initially un-assigned modules/units and/or
assigned modules/units not affecting the project execution at
any of the sites.
d. Incomplete equipment/distributor labelling, instruction
booklets, As-Built drawings and documentation.
9.1.3. One (1) copy of the agreed test documents shall be made
available to AZCOM two (2) weeks prior to the commencement of
the System Acceptance Test.
9.1.4. The System Acceptance Tests on completely installed Systems
shall be performed by AZCOM, under the supervision of ACL in
accordance with the agreed Acceptance Test Program.
Test shall include but not be limited to:
a. visual inspection;
b. review of the factory test results;
c. tests to verify that technical performance is in compliance
with the Specifications;
d. end-to-end link test;
9.1.5. After the completion of the above tests, AZCOM, as part of the
System Acceptance Test, shall continuously observe and monitor
for forty eight (48) days the stability of the performance of
the overall System which is hereinafter called "stability
testing".
During this period, no adjustment shall be made on any part of
the System. Should there be any fluctuation in the parameters
observed in any section of the System, the cause of the
fluctuation shall be investigated and the faults causing such
abnormalities shall be promptly rectified by ACL to meet the
Specifications and the requirements of the Contract. After
rectification of the faults, the stability testing shall be
continuously observed and monitored for seven (7) consecutive
days and shall be repeated and cease only when the overall
System has attained the level of stability in its performance in
accordance with the Specifications and the requirements of the
contract.
<PAGE>
9.1.6. Any incomplete or unsatisfactory aspect of the System or of the
performance thereof shall be dealt with in accordance with the
following:
9.1.6.1. In the event that the results of System Acceptance
Tests carried out are not in accordance with the
requirements of the Contract, action shall be taken by
ACL to locate and isolate the faults.
9.1.6.2. Any faults located by ACL or notified to ACL by AZCOM
shall be rectified promptly by ACL.
9.1.6.3. Each corrective action shall be performed by ACL and
witnessed by AZCOM. A detailed written report
containing particulars relating to the faults together
with the results of the re-testing shall be submitted
to AZCOM immediately after the corrective actions.
9.1.6.4. ACL shall recommend the Equipment for re-testing only
when all faults have been corrected to meet the
requirement of the Contract. AZCOM may also perform
additional tests it deems necessary. Such additional
test procedures shall be agreed upon by both parties.
9.1.6.5. The rectification of any particulars referred to in
this clause shall be carried out by ACL at its own
expense and effected promptly upon receipt of notice
thereof.
9.1.6.6. If ACL fails to rectify any such particulars within a
reasonable time, AZCOM may elect to have any or all of
such particulars rectified through other means. In
which event ACL shall compensate AZCOM, within the
limits of ACL's liability under the Contract, for all
losses, damages, costs, charges, and expenses which
AZCOM may sustain by reason of ACL's failure to effect
the necessary corrective measures on the particulars
referred to.
9.1.7. Each System will be initially accepted after ACL has
demonstrated to AZCOM that all the requirements of the
Specifications have been complied with, and provided that the
result shows that:
a. the System is functioning properly according to the technical
specifications; and
b. the requirements of the Contract have been met.
In which event, ACL will be granted by AZCOM a certificate of
System Acceptance five (5) days from the date of System
Acceptance. The date of the certificate shall be the completion
date of the stability test.
9.1.8. In the event that AZCOM does not grant a certificate of System
Acceptance but nevertheless AZCOM and ACL mutually agree in
writing that the System can be put in commercial service, ACL
shall issue a waiver on their rights for the
<PAGE>
issuance of System Acceptance certificate up to a certain period
of time. Such shall not relieve ACL of his responsibility under
this Contract and ACL shall continue to be responsible for any
damage attributable to any part of the System which requires
corrective action.
9.1.9. Items requiring corrective actions and items not provided shall
be jointly identified by AZCOM and ACL. When the outstanding
corrective action has been taken and the outstanding items
delivered and approved by AZCOM in writing, a certificate of
System Acceptance will be granted.
9.1.10. After the execution of the System Acceptance Test protocol, the
representative from AZCOM shall indicate the outcome of each
test. Providing there are no major failures, the representative
of AZCOM shall sign and date the test protocol, indicating that
the System is acceptable.
9.2. Performance Monitoring
During the Warranty Period the Network shall be, at AZCOM's discretion,
tested to ensure that the System performance is in line with the System
specifications.
These tests shall be as follows:
- System Functionality Tests
- Long Term BER Tests
- Output Power Measurements on the Base Station
Before any test is conducted, AZCOM shall notify ACL two weeks in
advance that a test is to be conducted. ACL shall have the option of
being present at any test. If a test is conducted whilst ACL is not
present and the results are a failure, AZCOM shall notify ACL so that
the test can be repeated after an investigation by ACL. If the test
fails again ACL shall be given 30 days to apply corrective action. If
after 30 days no corrective action has been taken or a subsequent test
again fails, the System under test shall be deemed to have failed
Performance Monitoring and the Warranty Period shall be extended.
Once a system has failed Performance Monitoring ACL shall be required to
take corrective action, including the complete replacement of the System
in question.
The System Functionality tests as defined by AZCOM may include, but are
not limited to the following:
- System Installation and Service Provisioning
- System Connectivity: 64kbit/s and 128kbit/s Leased Line Data
Services
- Network Management System functionality test
The Long Term BER Test shall be:
- 168 hour BER. A Pass shall be when the average BER is better than
10/-7/.
The Output Power Test shall be:
- CT Output Power is within 1.5dB of commissioned level.
<PAGE>
(Commissioned values are as defined within the Acceptance Test Protocol/
Results)
9.3. Acceptance for Spares and Tools and Test Equipment
9.3.1. The Spares shall be accepted prior to the System Acceptance Test
of the last System, while the Acceptance Test of tools and test
equipment shall be conducted prior to their delivery to AZCOM's
warehouse.
9.3.2. Acceptance test for Spares and tools and test equipment shall be
conducted according to the agreed test procedures which shall be
submitted by ACL to AZCOM six (6) weeks prior to acceptance
test.
9.3.3. This test shall be conducted once and shall be considered as
final. After passing the acceptance test successfully,
acceptance certificate for Spares and tools and test equipment
shall be issued within two (2) weeks therefrom. If AZCOM does
not issue the said certificate within two (2) weeks for reasons
not attributable to the fault of ACL, the acceptance certificate
shall be deemed to have been issued by AZCOM.
9.3.4. Warranty of Spares, tools and test equipment shall be for
eighteen (18) months from the date of Acceptance.
9.4. Subscriber Terminal Acceptance Test
Upon the delivery of the Subscriber Terminals to ACL's warehouse in the
Philippines, an acceptance test shall be performed. After a successful
ST Acceptance Test and subsequent issuance of an Acceptance Test
Certificate by AZCOM the Warranty Period on the subscriber terminals
shall start.
The Subscriber Terminal Acceptance Test shall be in two parts. The
second test shall only be undertaken if the first test fails.
The first test shall be a sample test. AZCOM shall randomly select 4% of
subscriber terminals within a delivery batch. These terminals shall be
tested for normal leased line data operation, and be given a 60-minute
BER test conducted over the air. The BER results shall be better than
10 /-7/.
If during this first test more than 20% of the terminals fail, the
second test shall be performed. If less than 20% of the terminals fail
the whole batch of Subscriber Terminals shall be accepted and a
successful acceptance test certificate issued.
The second test shall be a complete test of all the subscriber
terminals. This test shall be for normal leased line data operation, and
include a 60-minute BER test conducted over the air. The BER results
shall be better than 10 /-7/. Only Subscriber Terminals that pass
this test shall be accepted by AZCOM.
<PAGE>
10. MAINTENANCE SPARES
10.1. The supply of the Spares at reasonable costs shall be available
for a period of ten (10) years from the date of the System
Acceptance of the last System. If the manufacture of any of the
Spares ceases due to technical development, ACL shall supply
equivalent replacement parts together with the accessories, if
needed, at reasonable cost. The ordering procedure shall be
included in the system documentation.
10.2. ACL shall guarantee that the quantity of spare parts to be
supplied with the main Equipment will be sufficient during the
Warranty Period. If the quantity is not sufficient for the said
period due to equipment failures caused by faulty design and
manufacturing defects, ACL shall supply at its own cost or at no
cost to AZCOM the additional Spares required to cover the
shortfall.
10.3. The list of Spares to be supplied should fully identify the item
to facilitate future ordering. It should be possible in the
future to order the needed parts with no prior agreement with
ACL.
10.4. In case Spares will be used during installation and
commissioning, ACL shall replenish the same prior to the
acceptance test of the Spares at no cost to AZCOM.
10.5. All Spares used during the Warranty Period shall be replenished
by ACL within one (1) month at no cost to AZCOM.
11. TOOLS AND TEST EQUIPMENT
Tools and test equipment to be supplied for the Equipment shall be in
accordance with Annex A. The tools and test equipment provided under
this Contract shall be made available for testing and acceptance work
without any hindrance up to the acceptance of the last System.
12. REPAIR SERVICE
ACL shall guarantee the availability of repair services after Warranty
Period for all repairable Equipment supplied under Contract No. CN99-
002. The procedures for repair service including turn around time for
each item shall be mutually agreed upon by the Parties within two (2)
weeks from signing of this Contract.
13. DOCUMENTATION
ACL shall provide the installation documents, operation and maintenance
manuals and brochures of all Equipment installed within two (2) weeks
from signing of this Contract. Two (2) complete sets of such
documents/manuals shall also be provided to Engineering and Operation
and Maintenance groups. All documentation shall be written in English.
<PAGE>
14. WARRANTY
14.1. ACL shall be fully responsible for the proper functioning of all
the Systems covered under this Contract during the period from
System Acceptance up to the end of the Warranty Period.
14.2. During the Warranty Period, ACL shall promptly replace/repair
defective parts at no cost to AZCOM.
AZCOM and ACL agree that any matter not covered by this protocol shall
be discussed and mutually resolved in good spirit for the benefit of the
successful implementation of the Project.
For: AZCOM For: ACL
-------------------------------- ------------------------------
-------------------------------- ------------------------------
<PAGE>
LIST OF ATTACHMENTS
Attachment 1 Scope of Work
Attachment 2 Network Configuration and Requirements
1. Typical Base Station Diagram
2. Typical Subscriber Terminal Diagram
3. WAS Network Diagram
4. AZCOM Network Diagram
Attachment 3 Technical Specification
3.1 Wireless Access Network
3.1.1 ETSI EN301 124 Specifications
3.1.2 Airspan Frequency Plan
3.1.3 Technical Reference/Brochure
3.2 DC Power Supply
Attachment 4 Interface Configuration
Attachment 5 Deployment Plan
Attachment 6 Training Program
<PAGE>
i
Exhibit 10.4
Note: Portions of this exhibit indicated by "[*]" are subject to a confidential
treatment request, and have been omitted from this exhibit. Complete,
unredacted copies of this exhibit have been filed with the Securities and
Exchange Commission as part of this Company's confidential treatment request.
CONTRACT
between
SUNTEL PRIVATE LTD
and
AIRSPAN COMMUNICATIONS LTD
for
Purchase Order No
LP/0442/99
April 26, 1999
<PAGE>
ii
This Contract is entered into between:
Suntel (Private) Ltd. ("The Purchaser")
of the one part
and
Airspan Communications Ltd ("Contractor")
of the other part.
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Contract
--------
Table Of Contents
-----------------
<TABLE>
Introduction
<S> <C>
Clause 1 Definitions
Clause 2 Contractor's Scope of Supply
Clause 3 Contractor's Subcontractors
3.1 General
3.2 Technical information
Clause 4 Specifications
4.1 General
4.2 Technical Specification
4.3 System Description
4.4 Design, construction and manufacture
4.5 Information from The Purchaser
Clause 5 The Purchaser's Share of Responsibilities
Clause 6 Changes
6.1 General
6.2 Changes demanded by The Purchaser
6.3 Changes proposed by the Contractor
6.4 Contractor's obligation to propose changes
6.5 The Purchaser's approval of changes
6.6 Supplementary agreement
6.7 Variations in prices
6.7.1 Increase or decrease in prices
6.7.2 Reimbursements to The Purchaser for increased costs
Clause 7 Project Group, Progress Report, Time Schedule and Delays
7.1 Project group
7.2 Progress report
7.3 Time schedule
7.4 Delays
Clause 8 Inspection
8.1 General
8.2 No prejudice
</TABLE>
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<TABLE>
<S> <C>
8.3 Subcontractors
Clause 9 Acceptance Procedure and Actual Date of Delivery
9.1 General
9.2 Quality assurance
9.3 System test (or Site Acceptance Test)
9.4 Acceptance test (or System Acceptance Test)
9.5 Actual Date of Delivery
Clause 10 Warranties and Certain Consequences in the Event of Breaches of
Warranties
10.1 Warranty period
10.2 Corrective Measures Activity
10.3 Warranty of Corrective Measures
10.4 Notification of defects
10.7 Warranty regarding replaced or corrected parts
10.8 Warranty of Reliability and Maintainability
10.9 Warranty of Documentation
10.9.1 Sufficient and adequate for Operation and Maintenance
10.9.2 Additional Documentation
10.10 Spares Warranty
10.11 Warranty of right to use and reproduce etc.
10.12 Repairs Warranty
10.13 Warranty for production
10.15 Title and intellectual property rights
10.16 Exceptions from warranties
10.17 Records of events
Clause 11 Delivery
11.1 Equipment and Software
11.1.1 Contractual Date of Delivery
11.1.2 Passing of Title
11.1.3 Software license
11.2 Installation
11.3 Training
11.4 Documentation
11.5 Spare parts
11.6 Test Instruments
11.7 Marking
</TABLE>
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<TABLE>
<S> <C>
11.8 Packing
11.9 Order Procedure
Clause 12 Liquidated Damages in the Event of Delays in Delivery
12.1 General
12.2 WLL System, training, documentation, spare parts and test
instruments
12.3 Delays caused by The Purchaser or Force Majeure Events
Clause 13 Prices
Clause 14 Payments
14.1 General
14.2.1 Equipment and Software
14.4.1 Invoicing
14.4.2 Interest
Clause 15 Liability for Accidents, Damage and Loss
15.1 Liability before passing of risk
15.2 Other indemnification
15.3 Gross misconduct
15.4 Limitation of The Purchaser's liability
15.5 Obligations to limit damages and loss
Clause 16 Patents and Other. Intellectual and Industrial Property Rights
Clause 17 Force Majeure
Clause 18 Optional Orders
18.1 WLL System
18.2 Terms and conditions
18.3 Exercise of option
Clause 19 Network and Maintenance
Clause 20 Non Waiver
Clause 21 Language
Clause 22 The Purchaser's Approval
Clause 23 Compliance with the Law
Clause 24 Assignment
Clause 25 Termination
Clause 26 Cancellation
26.1 General
26.2 Cancellation due to Contractor
26.3 Cancellation with reference to Force Majeure
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<TABLE>
<S> <C>
26.4 Consequences of cancellation according to 26.2
26.5 Consequences of cancellation according to 26.3
26.6 Ownership to Equipment etc.
26.7 Survival of Clauses
Clause 27 Entire Agreement Modifications of the Contract
Clause 28 Order of Priority
Clause 29 Applicable Law
Clause 30 Confidentiality
Clause 31 Disputes
Clause 32 Notices
Clause 33 Support Bond
Clause 34 Contract Period
</TABLE>
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List of Annexes to the Contract Document
----------------------------------------
Annex 1 Technical Specifications
Annex 2 Compliance List to the Technical Specifications
Annex 3 System Description
Annex 4 Price Summary
Annex 5 Price Lists
Annex 6 Discount Table
Annex 7 Equipment and Software
Annex 8 Optional Equipment and Software
Annex 9 Turn-key services
Annex 10 Training
Annex 11 Documentation
Annex 12 Spare Parts
Annex 13 Test Equipment
Annex 14 Logistics
Annex 15 Quality
Annex 16 System Requirements
Annex 17 Acceptance Procedure
Annex 18 Time Schedule
Annex 19 Share of Responsibilities
Annex 20 Subcontractors and Local Support
Annex 21 Network Operations and Maintenance
Annex 22 Vendor Financing
Annex 23 Insurance
Annex 24 Availability
Annex 25 Definition of Service Effecting Errors
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Annex 26 Software License
Annex 27 Project Organisation
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Clause 1- Definitions
---------------------
For the purpose of this Contract the following words and abbreviations shall
have the meaning herein assigned to them unless the subject matter or context
would obviously require otherwise:
"Actual Date of Delivery" with respect to the WLL System shall mean the date
defined in Clause 9.5. And applies to the first phase of the project as defined
in Annex 18.
"Delivery" shall be delivery of equipment that is not part of the phase 1.
"The Purchaser's Share of Responsibility" shall mean all buildings, facilities
and equipment as well as all labour and services to be or caused to be provided
by The Purchaser under this Contract as further set out in Clause 5.
"Contract" shall mean this Contract between the Purchaser and the Contractor,
including all Annexes as amended from time to time and incorporated herein and
all documents to which reference may properly be made in order to ascertain the
right and obligations of the parties.
"Contract Price" shall mean that the sum so named in the Contract together with
any additions thereto or deductions therefrom as are agreed in writing under the
Contract.
"Contractor's Scope of Supply" shall mean all Equipment, Software,
Documentation, Installation, spare parts, test instruments, services and other
activities to be supplied by the Contractor.
"Contractual Date of Delivery" with respect to the WLL System shall mean the
date defined in Clause 11.1.1.
"Day" shall mean calendar day.
"CIP" as defined in INCOTERMS 1990.
"Documentation" shall mean all necessary written and drawn information about the
WLL System for operation, maintenance and training.
"Equipment" shall mean the hardware including standard software (except
documentation other than documentation included in Software) collectively
(including spare parts) that is to be supplied by the Contractor under this
Contract.
"WLL System" shall mean all Equipment and Software to be supplied by the
Contractor meeting all the requirements of this Contract including the details
set out in Annexes 7-13 and 21, when properly installed, interfaced and used in
conjunction with the Contractor's Scope of Supply obligations defined in the
Technical Specification.
"Installation" shall mean assembling and testing.
"Latest Version" shall mean the last maintained release of software issued to
The Purchaser and in use on the System.
"Licence" shall mean the Licence grated to The Purchaser by Supplier.
"Month" shall mean calendar month.
"Object Code" shall mean Software either written directly or translated from
Source Code, which when presented on a suitable medium may be directly executed
by and through computer hardware and/or firmware and which code may be stored on
any storage medium whatsoever.
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ii
"Premises" shall mean the place or places other than the Contractor's premises
to which the Equipment and Software are to be delivered or where Contractor's
Scope of Supply obligations are to be carried out.
"Software" shall mean all operating systems, application, programs, compilers,
utilities, service software and other programs and associated documentation
provided by the Contractor for inclusion in the WLL System.
"Software Release" shall mean revisions to Software containing new features or
enhancements.
"Source Code" shall mean Software in assembly language or any higher-level
language and all available appropriate documentation.
"Specifications" shall have the meaning set out in Clause 4.1 and shall include
Technical Specifications.
"System" shall be as described in Annex 3.
"Technical Specifications" shall have the meaning as set out in Subclause 4.1.
"Tender" means the tender published by Suntel.
"Time Schedule" shall have the meaning appearing in Subclause 7.3.
"Week" shall mean calendar week.
"Limited commercial traffic" is defined as commercial service provided with
subscriber terminals used and provided for site and system acceptance (which are
supplied in the first phase of this contract).
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Clause 2 - Contractor's Scope of Supply
---------------------------------------
The Contractor undertakes to supply and shall deliver to The Purchaser in
accordance with the terms and conditions of this Contract the WLL System, all of
which shall meet the requirements set out in this Contract.
In the performance of its undertakings under this Contract the Contractor shall
provide (if purchased) the Purchaser with a WLL System consisting of
- - Equipment and Software set out in Annex 7
- - Optional Equipment and Software set out in Annex 8
- - Turn-Key Services set out in Annex 9
- - Training set out in Annex 10
- - Documentation set out in Annex 11
- - Spare parts set out in Annex 12
- - Test Equipment set out in Annex 13
- - Network operations and maintenance set out in Annex 21
all on the terms and conditions set out in this Contract.
The Contractor shall consequently, with regard to the Contractor's Scope of
Supply and services unless otherwise specifically stated in this Contract, bear
the responsibility for providing:
all design, engineering, labour, materials, equipment, software, services, tools
and instruments, Documentation, information, manufacture, assembling, technical
marking, packing, transportation, action, unloading, Installation,
commissioning, inspection, testing, delivery, training and maintenance support
with respect to the WLL System
and undertakes - without extra costs to The Purchaser - to provide hardware,
software, documentation, services or other activities which are necessary to
fulfil the Contractor's obligations as set forth in this Contract.
Concerning design responsibility the Contractor shall be solely responsible for
the design and adequacy of the System and shall not claim any additional payment
nor be relieved from any obligation imposed on it by this Contract on grounds of
misunderstanding or insufficient information received from and/or supplied by
The Purchaser and/or its representatives on any matter whatsoever related to
this Contract.
The Contractor's responsibility for the design of the System shall not in any
way be diminished nor shall its design approach be restricted or limited by The
Purchaser's acceptance of the Contractor's guidance or recommendations as to
engineering standards
and design specifications or by The Purchaser's suggestions or recommendations
on any aspect of the said design.
The System shall be commercially functional and fully available for at least
99.50 % of the time, 24 hours a day, throughout the full calendar year. The
definition and calculation for availability is given Annex 24 Availability.
Failure to meet the above parameters will be deemed as breach of performance and
shall be referred to the project group, which shall determine the impact of
extent of any penalty, according to the terms and conditions within the
contract.
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Clause 3 - Contractor's Subcontractors
--------------------------------------
3.1 General
- ------------
Subject to any expressed provision to the contrary contained in this
Contract, The Purchaser hereby agrees that the Contractor in the
performance of this Contract may enter into subcontract and purchase
arrangements with subcontractors with respect to the services, work at site
units of the Equipment and Software, therein referred to, provided that any
subcontracting by Contractor is subject to the prior written consent of The
Purchaser on a case by case basis. This consent of The Purchaser shall in
no way affect the Contractor or relieve the Contractor from its
responsibilities or obligations under this Contract nor create any
contractual or employer - employee relationship between The Purchaser and
any subcontractor or supplier of the Contractor.
The Contractor may substitute individual subcontractors, provided that the
Equipment offered by another subcontractor can be integrated in the WLL
System and in particular that it and its spare parts are pin-to-pin
compatible with the substituted ones, while maintaining the full
responsibility of the Contractor for all requirements and guarantees
specified.
Contractor's subcontractors, their names, addresses and equipment or
services to be supplied, are set out in Annex 20.
3.2 Technical information
- --------------------------
The Contractor shall without charge furnish The Purchaser with such
technical information as The Purchaser may from time to time require - in
order to be able to make reliable evaluations and to operate, maintain,
repair and replace - with respect to any materials and components that the
Contractor will purchase from other sources as well as materials and
components that the above subcontractors and suppliers will employ in the
performance of the Contract, provided that the said information is or can
reasonably be made available to the Contractor.
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Clause 4 - Specifications
-------------------------
4.1 General
- ------------
In satisfying its obligations under this Contract the Contractor shall
incorporate into the Contractor's Scope of Supply the standards and
specifications defined in Subclauses 4.2 - 4.3 (inclusive), all of
which will hereinafter collectively be referred to as the
"Specifications". The said term shall also include any subsequent
amendment or addition to the said standards or specifications.
4.2 Technical Specification
- ----------------------------
The Contractor's Scope of Supply shall in all respects satisfy those
technical and performance specifications that are set out in Annex 1,
and 2 hereto.
4.3 System Description
- -----------------------
The Contractor's Scope of Supply shall in all respects satisfy those
descriptions that are set out in Annex 3 hereto.
4.4 Design, Construction and Manufacture
- -----------------------------------------
The WLL System shall
(i) be designed, constructed, manufactured and assembled so as to achieve
reliability in accordance with the provisions set out in Annex 1, 2 and 3
and Annex 15 and otherwise in accordance with good engineering and
manufacturing practices, and
(ii) be such as to ensure that the WLL System will function properly, both
separately and as an integrated and reliable part of the networks to which
it is connected. The Contractor shall always take into account the
importance that The Purchaser attaches to the requirements that the WLL
System shall be easy to handle with respect to operation and maintenance.
The Contractor shall execute the Contract with the care, skill and
diligence expected from a competent contractor.
4.5 Information from The Purchaser
- -----------------------------------
To the extent the Contractor has not obtained from The Purchaser all
necessary information already prior to the signing of this Contract (and
has not been provided by The Purchaser under Clause 5), the Contractor
undertakes to take all such actions as are necessary to obtain all
information regarding technical features and characteristics of as well as
other circumstances relating to the relevant networks, The Purchaser'
equipment and information regarding WLL recommendations released by ETSI
(that are defined below) to enable the Contractor to fulfil its
undertakings under this Contract and to provide The Purchaser with
Contractor's Scope of Supply fulfilling all the requirements set out in the
Specifications or otherwise in this Contract.
To the extent the Contractor so requests in writing The Purchaser shall
furnish the Contractor with such information as is referred to above that
is readily available to The Purchaser or, if the information is not so
available, advise the Contractor of such knowledge (if any) as The
Purchaser may have readily available, on how to obtain the required
information.
Relevant WLL ETSI Recommendations
---------------------------------
ETS 301 055 - Transmission and Multiplexing (TM);
Digital Radio Relay Systems (DRRS);
Direct Sequence Code Division Multiple Access (DS-CDMA)
point-to-multipoint DRRS in frequency bands
in the band 1 GHz to 3 GHz
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Clause 5 - The Purchaser's Share of Responsibilities
----------------------------------------------------
The Purchaser's shall provide or cause to be provided the facilities,
equipment, labour and services that are set out in Annex 19.
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Clause 6 - Changes
------------------
6.1 General
- ------------
The parties recognise that changes to the Contractor's Scope of Supply or
otherwise of this Contract may be necessary or desired after the date of
signing of the Contract. The following provisions shall apply to The
Purchaser and the Contractor's rights and obligations with respect to such
changes. To be deemed to be a change under this Clause 6, the change shall
have been demanded by The Purchaser or proposed by the Contractor, as the
case may be.
Any new or changed Software and Equipment shall be considered as an
integrated part of the WLL System and shall fall under the conditions
of this Contract.
6.2 Changes Demanded by The Purchaser
- ---------------------------------------
The Purchaser shall have the right at any time to request reasonable
changes in the Specifications and other changes in the Contractor's Scope
of Supply. The Contractor agrees to effect all such reasonable changes as
The Purchaser may request, subject to changing price as provided in Clause
6.7.1 and reasonable other conditions.
6.3 Changes Proposed by the Contractor
- ---------------------------------------
The Contractor shall inform The Purchaser about any possible change,
possible improvement or development regarding the WLL System and
related technology that comes to the Contractor's knowledge during the
validity of this Contract and that is not already known to The
Purchaser.
The Contractor may propose such changes of the Contractor's Scope of Supply
as the Contractor deems appropriate.
6.4 The Contractor's Obligation to Propose Changes
- ---------------------------------------------------
The Contractor shall be obliged to propose such changes to the Contractor's
Scope of Supply as are necessary or advisable in order to
(i) achieve technical improvements of the WLL System, or otherwise
implement technical or economical improvements or new technology or
experiences;
(ii) obtain consents necessary from authorities Sri Lanka or
(iii) otherwise minimise the cost of day-to-day operation and maintenance
of the WLL System.
6.5 The Purchaser's Approval of Changes
- ----------------------------------------
The Contractor may not, without the prior written consent of The Purchaser,
make any change to any part of the Contractor's Scope of Supply, - even if
after such change Contractor's Scope of Supply still complies with the
Specifications.
6.6 Supplementary Agreement
- ----------------------------
For each change, whether proposed by the Contractor or The Purchaser, the
Contractor shall provide The Purchaser with a written offer. Such
offer shall set forth in detail the change of the Contractor's Scope
of Supply and shall contain information on possible changes of
- Equipment
- Software
- Documentation
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- Training
- Turn-key Services
- Spare parts
- Test Equipment
- Prices
- Contractual Date of Delivery
- Other Dates according to Time Schedule
Warranties
and on other changes of The Purchaser's Scope of Supply resulting from the
change in question as well as on any other terms and conditions that
according to the Contractor shall govern the change. The information
on prices shall be split on the various items that The Purchaser
reasonably requires and be accompanied by all necessary drawings and
specifications including a description of the consequences for the WLL
System, the environments, the reliability, the maintainability, the
training of The Purchaser's staff, the Contractor's Scope of Supply
and The Purchaser's Share of Responsibility etc. sufficiently detailed
so as to permit The Purchaser to judge on the reasonableness of the
prices and other terms and conditions.
If the change has been proposed by The Purchaser the offer shall be
submitted by the Contractor as soon as practicable, however, in no
case later than thirty (30) days after receipt of The Purchaser's
proposal. The Contractor shall be bound by any offer referred to
herein for such a period of time as is required to enable The
Purchaser to evaluate and make decision on the basis of the offer.
Any change according to Subclauses 6.2, 6.3 and 6.6 above has to be agreed
by The Purchaser in' the form of a written numbered change order or
supplementary order ("Supplementary Agreement"). The Contractor shall
not commence any work relating to such a change until The Purchaser
has authorised the same and all the related terms and conditions.
However, if The Purchaser so requests in writing, the Contractor shall
be obliged to commence and carry out minor or urgent changes,
notwithstanding that all of the terms and conditions have not at that
time been agreed to by The Purchaser.
6.7 Variations in Prices
- -------------------------
6.7.1 Increase or decrease in Prices
------------------------------------
In the event that a change referred to in Clause 6 would result in
(i) a material increase of the Contractor's costs for the Contractor's
performance under this Contract or
(ii) a material decrease of the Contractor's costs for the Contractor's
performance under this Contract
then the parties shall mutually in writing agree upon, in good faith, such
price increase or decrease as the case may be.
In the ascertainment and determination of such an increase or decrease,
rates and prices specified in this Contract shall as far as possible serve
as a guide. Where this is not possible, the increase or decrease shall be
an amount that is reasonable in view of all the circumstances.
6.7.2 Reimbursements to The Purchaser for increased costs
- ---------------------------------------------------------
6.7.2.1 It is expressly agreed that The Purchaser shall in no event bear
any increase of Contract Prices resulting from changes required in
order to make the WLL System meet the requirements set out in this
Contract.
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6.7.2.2 Any costs or expenses incurred by The Purchaser due to such a
change shall be reimbursed by the Contractor on demand and may be
set off by The Purchaser against any payment The Purchaser shall
make to the Contractor under this Contract.
6.7.2.3 In the event that any change would require a change of The
Purchaser's Share of Responsibility or of any other equipment
belonging to The Purchaser, and the Contractor has failed to
inform The Purchaser of this fact prior to the conclusion of the
Supplementary Agreement referred to in Subclause 6.6 above, the
Contractor shall reimburse The Purchaser for all such increase of
costs that The Purchaser will incur due to such a change and the
provisions of set-off in Subclause 6.7.2.2 above shall apply.
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Clause 7 - Project Group, Progress Report, Time Schedule and Delays
-------------------------------------------------------------------
7.1 Project Group
- ------------------
For the supervision of the parties' performance under this Contract, the
Contractor and The Purchaser shall on The Purchaser's request form a joint
project group consisting of representatives from each party ("Project
Group") which shall decide when and where to meet. Each party shall bear
all costs for its own representatives. Minutes of meetings shall be kept
and signed by one representative of each party authorized to this effect.
When considered necessary representatives of subcontractors and experts of
the parties shall attend the meetings. It is incumbent upon the Contractor
to see to it that representatives of the Contractor's subcontractors will
attend, if so required. The costs for such experts shall be borne by the
party in question. The costs for representatives of the subcontractors of a
party shall be borne by the party in question or subcontractor, as they may
have agreed separately.
At the meetings the Project Group shall discuss the progress of the
Contractor's Scope of Supply and The Purchaser's Share of Responsibility
and review the operation and maintenance facilities of the WLL System.
The Project Group shall supervise the test procedures for Acceptance Tests
set out in Annex 17.
The Project Group is authorized to make decisions within the technical
scope of the Contract . A technical change or correction which entails
increased costs or extension of the delivery time shall promptly, but
latest at the next meeting be notified in writing by the Contractor. If
such notice is not made, the Contractor has no right to demand compensation
for such increased costs or to demand acceptance by The Purchaser of
prolongation of the delivery time.
A decision binding on the parties shall be deemed to have been made only if
all the representatives of both parties agree and the decision is contained
in duly signed minutes. The Project Group shall, however, not be authorized
to make decisions that will affect Contract Price(s) or the Contractual
Date of Delivery or otherwise decisions resulting in modifications of the
Contract. In the event that any of the representatives deem a question to
fall outside the authority or competence of the Project Group the question
shall be referred for resolution to the Engineering Vice Presidents or
their equivalents of each party.
A detailed description of the Project Organisation, including names of the
persons participating and their experiences in the field is set out in
Annex 27.
7.2 Progress Report
- --------------------
The Contractor shall every week submit to The Purchaser a Progress Report
in three copies up until System Acceptance is achieved. The Progress Report
shall contain, as a minimum, a report of all activities related to the
Contract that have taken place since the last report, as well as
information regarding future activities and the progress of the
Contractor's Scope of Supply. After System Acceptance progress reports
shall be issued at a frequency mutually agreed.
The Progress Report shall furthermore contain a complete review of the
status of accomplishments, developments and implementation of the
Contractor's Scope of Supply obligations against the Time Schedule.
7.3. Time Schedule
- ------------------
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As an integral part of this Contract is attached as Annex 18 a Time
Schedule indicating crucial milestone dates. The Contractor and The
Purchaser undertake to fulfil their undertakings under this Contract in
accordance with the Time Schedule. Time is of the essence of this Contract.
7.4 Delays
- -----------
Without prejudice to the provisions of Clause 17, each party to this
Contract shall promptly notify the other party in writing where the
notifying party has a reasonable belief that circumstances exist or are
likely to occur that would be reasonably expected to prevent the Contractor
(or any of its subcontractors or suppliers) or The Purchaser (or any of its
assignees) from fulfilling its obligations under this Contract according to
the Time Schedule.
In a case where any party, at any time, reasonably believes that any other
party is unable to fulfil its obligations on the respective date set out in
the Time Schedule, the parties shall meet to determine what action is
required. Any notification and/or action that might be determined as a
consequence hereof shall be without prejudice to any right or remedy the
parties may have under this Contract.
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Clause 8 - Inspection
---------------------
8.1 General
- ------------
At such times and in such manner as The Purchaser shall deem appropriate
for the purpose of inspecting or testing the contractual work in
progress and activities under this Contract, including the
Contractor's own tests and results thereof, representatives of The
Purchaser shall be given notices of the testing and shall have access
to the Contractor's and its subcontractor's works as well as other
places where activities under this Contract are in preparation or
progress. The Purchaser shall have full access to and on request be
provided with all test records relating to the Contractor's Scope of
Supply. Any inspection or test carried out by The Purchaser or its
representatives shall not unduly delay the Contractor.
The Purchaser shall at all reasonable times have access to the Contractor's
Scope of Supply, and the Contractor shall provide appropriate
facilities for such access and for the purpose of inspection and
testing. The Purchaser shall also have full access to all relevant
plants, offices and Contractor's Scope of Supply sites of the
Contractor and any of its Subcontractors to enable The Purchaser to
inspect the Contractor's Scope of Supply and monitor progress.
The Contractor shall permit The Purchaser or its designated representatives
to carry out the following inspection activities at any time: (i) to
audit the Contractor's quality assurance system and its application to
the Contractor's Scope of Supply including, without limitation, to the
manufacture, development, and/or provision of raw materials and
components; and (ii) to inspect all parts of the Contractor's Scope of
Supply to the extent reasonably practicable to ensure that their
quality meets the requirements of the Contract.
The factory inspection or audit of parts of the System in accordance with
this Clause shall not in any way prejudice any right or remedy which
The Purchaser may have against the Contractor, or relieve the
Contractor of any of its liabilities, and in particular it is without
prejudice to the Contractor's obligations relating to the performance
of the System under Clause 4.
Any approval given by or on behalf of The Purchaser in respect of any
aspect of the Contractor's Scope of Supply carried out or proposed by
the Contractor, or in respect of any part of the System, shall not
relieve the Contractor of any obligations under the Contract.
The Purchaser or its representatives may request that the Contractor
performs such reasonable tests and repeated tests (in addition to and
apart from such tests as are referred to in Clause 9) as The Purchaser
(or its representatives) will consider necessary to be assured that
the result of the activities will comply with the requirements of this
Contract. The Contractor shall, without extra costs to The Purchaser,
provide with all labour, facilities, test equipment and other things
and services necessary for this purpose.
In the event that Software or Equipment is in the course of the inspection
found to be defective or otherwise not in conformity with the
Specifications, the Contractor shall within shortest possible time
take all necessary action to repair all faults, defects or non-
conformance.
8.2 Subcontractors
- -------------------
The Contractor shall ensure that the provisions of this Clause 8 also apply
to all subcontracts or orders made or placed by the Contractor with any one
of its subcontractors and that the provisions of this Clause 8 are held
good by the said subcontractors.
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Clause 9 Acceptance Procedure and Actual Date of Delivery
---------------------------------------------------------
9.1 General
- ------------
The Acceptance Procedure falls into the following main events:
- Quality assurance
- Visual Inspection
- System test (known as Site Acceptance)
- Acceptance test (known as System Acceptance)
- TEC tests
Except to the extent otherwise specifically provided in this Contract the
Contractor shall be responsible for the performance of the quality
surveillance, inspections, tests (including repeated tests, if any)
which are required for the completion of Contractor's Scope of Supply
and for the demonstration of its compliance with the Specifications
and other requirements set out in this Contract. For the purpose of
achieving this object the Contractor shall except to the extent
otherwise specifically provided in this Contract be obliged at its
own expense
(i) to carry out the said surveillance and perform and supervise the
tests;
(ii) provide with or place at The Purchaser's disposal, as the case may
be, all equipment, tools, programs (software), labour, supplies, and
services required for the performance of the said surveillance and
tests; and
(iii) to issue reports, keep and provide records, and issue certificates as
to the results of the surveillance and tests. The said surveillance and all the
tests shall be performed at the Contractor's risk.
CONTRACT
between
SUNTEL PRIVATE LTD
and
AIRSPAN COMMUNICATIONS LTD
for
Purchase Order No
LP/0442/99
April 26, 1999
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This Contract is entered into between:
Suntel (Private) Ltd. ("The Purchaser")
of the one part
and
Airspan Communications Ltd ("Contractor")
of the other part.
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Contract
--------
Table Of Contents
-----------------
<TABLE>
<CAPTION>
Introduction
<S> <C>
Clause 1 Definitions
Clause 2 Contractor's Scope of Supply
Clause 3 Contractor's Subcontractors
3.1 General
3.2 Technical information
Clause 4 Specifications
4.1 General
4.2 Technical Specification
4.3 System Description
4.4 Design, construction and manufacture
4.5 Information from The Purchaser
Clause 5 The Purchaser's Share of Responsibilities
Clause 6 Changes
6.1 General
6.2 Changes demanded by The Purchaser
6.3 Changes proposed by the Contractor
6.8 Contractor's obligation to propose changes
6.9 The Purchaser's approval of changes
6.10 Supplementary agreement
6.11 Variations in prices
6.11.1 Increase or decrease in prices
6.11.2 Reimbursements to The Purchaser for increased costs
Clause 7 Project Group, Progress Report, Time Schedule and Delays
7.1 Project group
7.2 Progress report
7.3 Time schedule
7.4 Delays
Clause 8 Inspection
8.1 General
8.2 No prejudice
</TABLE>
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<TABLE>
<S> <C>
8.3 Subcontractors
Clause 9 Acceptance Procedure and Actual Date of Delivery
9.1 General
9.2 Quality assurance
9.3 System test (or Site Acceptance Test)
9.4 Acceptance test (or System Acceptance Test)
9.5 Actual Date of Delivery
Clause 10 Warranties and Certain Consequences in the Event of Breaches of
Warranties
10.1 Warranty period
10.2 Corrective Measures Activity
10.3 Warranty of Corrective Measures
10.4 Notification of defects
10.7 Warranty regarding replaced or corrected parts
10.8 Warranty of Reliability and Maintainability
10.9 Warranty of Documentation
10.9.1 Sufficient and adequate for Operation and Maintenance
10.9.2 Additional Documentation
10.10 Spares Warranty
10.11 Warranty of right to use and reproduce etc.
10.12 Repairs Warranty
10.13 Warranty for production
10.15 Title and intellectual property rights
10.16 Exceptions from warranties
10.17 Records of events
Clause 11 Delivery
11.1 Equipment and Software
11.1.1 Contractual Date of Delivery
11.1.2 Passing of Title
11.1.3 Software license
11.4 Installation
11.5 Training
11.4 Documentation
11.5 Spare parts
11.6 Test Instruments
11.7 Marking
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<TABLE>
<S> <C>
11.8 Packing
11.9 Order Procedure
Clause 12 Liquidated Damages in the Event of Delays in Delivery
12.1 General
12.2 WLL System, training, documentation, spare parts and test
instruments
12.3 Delays caused by The Purchaser or Force Majeure Events
Clause 13 Prices
Clause 14 Payments
14.1 General
14.2.2 Equipment and Software
14.4.3 Invoicing
14.4.4 Interest
Clause 15 Liability for Accidents, Damage and Loss
15.1 Liability before passing of risk
15.2 Other indemnification
15.3 Gross misconduct
15.4 Limitation of The Purchaser's liability
15.5 Obligations to limit damages and loss
Clause 16 Patents and Other. Intellectual and Industrial Property Rights
Clause 17 Force Majeure
Clause 18 Optional Orders
18.4 WLL System
18.5 Terms and conditions
18.6 Exercise of option
Clause 19 Network and Maintenance
Clause 20 Non Waiver
Clause 21 Language
Clause 22 The Purchaser's Approval
Clause 23 Compliance with the Law
Clause 24 Assignment
Clause 25 Termination
Clause 26 Cancellation
26.1 General
26.2 Cancellation due to Contractor
26.3 Cancellation with reference to Force Majeure
</TABLE>
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26.4 Consequences of cancellation according to 26.2
26.5 Consequences of cancellation according to 26.3
26.6 Ownership to Equipment etc.
26.7 Survival of Clauses
Clause 27 Entire Agreement Modifications of the Contract
Clause 28 Order of Priority
Clause 29 Applicable Law
Clause 30 Confidentiality
Clause 31 Disputes
Clause 32 Notices
Clause 33 Support Bond
Clause 34 Contract Period
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List of Annexes to the Contract Document
----------------------------------------
Annex 1 Technical Specifications
Annex 2 Compliance List to the Technical Specifications
Annex 3 System Description
Annex 4 Price Summary
Annex 5 Price Lists
Annex 6 Discount Table
Annex 7 Equipment and Software
Annex 8 Optional Equipment and Software
Annex 9 Turn-key services
Annex 10 Training
Annex 11 Documentation
Annex 12 Spare Parts
Annex 13 Test Equipment
Annex 14 Logistics
Annex 15 Quality
Annex 16 System Requirements
Annex 17 Acceptance Procedure
Annex 18 Time Schedule
Annex 19 Share of Responsibilities
Annex 20 Subcontractors and Local Support
Annex 21 Network Operations and Maintenance
Annex 22 Vendor Financing
Annex 23 Insurance
Annex 24 Availability
Annex 25 Definition of Service Effecting Errors
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Annex 26 Software License
Annex 27 Project Organisation
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Clause 1- Definitions
---------------------
For the purpose of this Contract the following words and abbreviations shall
have the meaning herein assigned to them unless the subject matter or context
would obviously require otherwise:
"Actual Date of Delivery" with respect to the WLL System shall mean the date
defined in Clause 9.5. And applies to the first phase of the project as defined
in Annex 18.
"Delivery" shall be delivery of equipment that is not part of the phase 1.
"The Purchaser's Share of Responsibility" shall mean all buildings, facilities
and equipment as well as all labour and services to be or caused to be provided
by The Purchaser under this Contract as further set out in Clause 5.
"Contract" shall mean this Contract between the Purchaser and the Contractor,
including all Annexes as amended from time to time and incorporated herein and
all documents to which reference may properly be made in order to ascertain the
right and obligations of the parties.
"Contract Price" shall mean that the sum so named in the Contract together with
any additions thereto or deductions therefrom as are agreed in writing under the
Contract.
"Contractor's Scope of Supply" shall mean all Equipment, Software,
Documentation, Installation, spare parts, test instruments, services and other
activities to be supplied by the Contractor.
"Contractual Date of Delivery" with respect to the WLL System shall mean the
date defined in Clause 11.1.1.
"Day" shall mean calendar day.
"CIP" as defined in INCOTERMS 1990.
"Documentation" shall mean all necessary written and drawn information about the
WLL System for operation, maintenance and training.
"Equipment" shall mean the hardware including standard software (except
documentation other than documentation included in Software) collectively
(including spare parts) that is to be supplied by the Contractor under this
Contract.
"WLL System" shall mean all Equipment and Software to be supplied by the
Contractor meeting all the requirements of this Contract including the details
set out in Annexes 7-13 and 21, when properly installed, interfaced and used in
conjunction with the Contractor's Scope of Supply obligations defined in the
Technical Specification.
"Installation" shall mean assembling and testing.
"Latest Version" shall mean the last maintained release of software issued to
The Purchaser and in use on the System.
"Licence" shall mean the Licence grated to The Purchaser by Supplier.
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"Month" shall mean calendar month.
"Object Code" shall mean Software either written directly or translated from
Source Code, which when presented on a suitable medium may be directly executed
by and through computer hardware and/or firmware and which code may be stored on
any storage medium whatsoever.
"Premises" shall mean the place or places other than the Contractor's premises
to which the Equipment and Software are to be delivered or where Contractor's
Scope of Supply obligations are to be carried out.
"Software" shall mean all operating systems, application, programs, compilers,
utilities, service software and other programs and associated documentation
provided by the Contractor for inclusion in the WLL System.
"Software Release" shall mean revisions to Software containing new features or
enhancements.
"Source Code" shall mean Software in assembly language or any higher-level
language and all available appropriate documentation.
"Specifications" shall have the meaning set out in Clause 4.1 and shall include
Technical Specifications.
"System" shall be as described in Annex 3.
"Technical Specifications" shall have the meaning as set out in Subclause 4.1.
"Tender" means the tender published by Suntel.
"Time Schedule" shall have the meaning appearing in Subclause 7.3.
"Week" shall mean calendar week.
"Limited commercial traffic" is defined as commercial service provided with
subscriber terminals used and provided for site and system acceptance (which are
supplied in the first phase of this contract).
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Clause 2 - Contractor's Scope of Supply
---------------------------------------
The Contractor undertakes to supply and shall deliver to The Purchaser in
accordance with the terms and conditions of this Contract the WLL System, all of
which shall meet the requirements set out in this Contract.
In the performance of its undertakings under this Contract the Contractor shall
provide (if purchased) the Purchaser with a WLL System consisting of
- - Equipment and Software set out in Annex 7
- - Optional Equipment and Software set out in Annex 8
- - Turn-Key Services set out in Annex 9
- - Training set out in Annex 10
- - Documentation set out in Annex 11
- - Spare parts set out in Annex 12
- - Test Equipment set out in Annex 13
- - Network operations and maintenance set out in Annex 21
all on the terms and conditions set out in this Contract.
The Contractor shall consequently, with regard to the Contractor's Scope of
Supply and services unless otherwise specifically stated in this Contract, bear
the responsibility for providing:
all design, engineering, labour, materials, equipment, software, services, tools
and instruments, Documentation, information, manufacture, assembling, technical
marking, packing, transportation, action, unloading, Installation,
commissioning, inspection, testing, delivery, training and maintenance support
with respect to the WLL System
and undertakes - without extra costs to The Purchaser - to provide hardware,
software, documentation, services or other activities which are necessary to
fulfil the Contractor's obligations as set forth in this Contract.
Concerning design responsibility the Contractor shall be solely responsible for
the design and adequacy of the System and shall not claim any additional payment
nor be relieved from any obligation imposed on it by this Contract on grounds of
misunderstanding or insufficient information received from and/or supplied by
The Purchaser and/or its representatives on any matter whatsoever related to
this Contract.
The Contractor's responsibility for the design of the System shall not in any
way be diminished nor shall its design approach be restricted or limited by The
Purchaser's acceptance of the Contractor's guidance or recommendations as to
engineering standards
and design specifications or by The Purchaser's suggestions or recommendations
on any aspect of the said design.
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The System shall be commercially functional and fully available for at least
99.50 % of the time, 24 hours a day, throughout the full calendar year. The
definition and calculation for availability is given Annex 24 Availability.
Failure to meet the above parameters will be deemed as breach of performance and
shall be referred to the project group, which shall determine the impact of
extent of any penalty, according to the terms and conditions within the
contract.
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Clause 3 - Contractor's Subcontractors
--------------------------------------
3.1 General
- ------------
Subject to any expressed provision to the contrary contained in this
Contract, The Purchaser hereby agrees that the Contractor in the
performance of this Contract may enter into subcontract and purchase
arrangements with subcontractors with respect to the services, work at site
units of the Equipment and Software, therein referred to, provided that any
subcontracting by Contractor is subject to the prior written consent of The
Purchaser on a case by case basis. This consent of The Purchaser shall in
no way affect the Contractor or relieve the Contractor from its
responsibilities or obligations under this Contract nor create any
contractual or employer - employee relationship between The Purchaser and
any subcontractor or supplier of the Contractor.
The Contractor may substitute individual subcontractors, provided that the
Equipment offered by another subcontractor can be integrated in the WLL
System and in particular that it and its spare parts are pin-to-pin
compatible with the substituted ones, while maintaining the full
responsibility of the Contractor for all requirements and guarantees
specified.
Contractor's subcontractors, their names, addresses and equipment or
services to be supplied, are set out in Annex 20.
3.2 Technical information
- --------------------------
The Contractor shall without charge furnish The Purchaser with such
technical information as The Purchaser may from time to time require - in
order to be able to make reliable evaluations and to operate, maintain,
repair and replace - with respect to any materials and components that the
Contractor will purchase from other sources as well as materials and
components that the above subcontractors and suppliers will employ in the
performance of the Contract, provided that the said information is or can
reasonably be made available to the Contractor.
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Clause 4 - Specifications
-------------------------
4.1 General
- ------------
In satisfying its obligations under this Contract the Contractor shall
incorporate into the Contractor's Scope of Supply the standards and
specifications defined in Subclauses 4.2 - 4.3 (inclusive), all of
which will hereinafter collectively be referred to as the
"Specifications". The said term shall also include any subsequent
amendment or addition to the said standards or specifications.
4.2 Technical Specification
- ----------------------------
The Contractor's Scope of Supply shall in all respects satisfy those
technical and performance specifications that are set out in Annex 1,
and 2 hereto.
4.3 System Description
- -----------------------
The Contractor's Scope of Supply shall in all respects satisfy those
descriptions that are set out in Annex 3 hereto.
4.4 Design, Construction and Manufacture
- -----------------------------------------
The WLL System shall
(i) be designed, constructed, manufactured and assembled so as to achieve
reliability in accordance with the provisions set out in Annex 1, 2 and 3
and Annex 15 and otherwise in accordance with good engineering and
manufacturing practices, and
(ii) be such as to ensure that the WLL System will function properly, both
separately and as an integrated and reliable part of the networks to which
it is connected. The Contractor shall always take into account the
importance that The Purchaser attaches to the requirements that the WLL
System shall be easy to handle with respect to operation and maintenance.
The Contractor shall execute the Contract with the care, skill and
diligence expected from a competent contractor.
4.5 Information from The Purchaser
- -----------------------------------
To the extent the Contractor has not obtained from The Purchaser all
necessary information already prior to the signing of this Contract (and
has not been provided by The Purchaser under Clause 5), the Contractor
undertakes to take all such actions as are necessary to obtain all
information regarding technical features and characteristics of as well as
other circumstances relating to the relevant networks, The Purchaser'
equipment and information regarding WLL recommendations released by ETSI
(that are defined below) to enable the Contractor to fulfil its
undertakings under this Contract and to provide The Purchaser with
Contractor's Scope of Supply fulfilling all the requirements set out in the
Specifications or otherwise in this Contract.
To the extent the Contractor so requests in writing The Purchaser shall
furnish the Contractor with such information as is referred to above that
is readily available to The Purchaser or, if the information is not so
available, advise the Contractor of such knowledge (if any) as The
Purchaser may have readily available, on how to obtain the required
information.
Relevant WLL ETSI Recommendations
---------------------------------
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ETS 301 055 - Transmission and Multiplexing (TM);
Digital Radio Relay Systems (DRRS);
Direct Sequence Code Division Multiple Access (DS-CDMA)
point-to-multipoint DRRS in frequency bands
in the band 1 GHz to 3 GHz
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Clause 5 - The Purchaser's Share of Responsibilities
----------------------------------------------------
The Purchaser's shall provide or cause to be provided the facilities, equipment,
labour and services that are set out in Annex 19.
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Clause 6 - Changes
------------------
6.1 General
- ------------
The parties recognise that changes to the Contractor's Scope of Supply or
otherwise of this Contract may be necessary or desired after the date of
signing of the Contract. The following provisions shall apply to The
Purchaser and the Contractor's rights and obligations with respect to such
changes. To be deemed to be a change under this Clause 6, the change shall
have been demanded by The Purchaser or proposed by the Contractor, as the
case may be.
Any new or changed Software and Equipment shall be considered as an
integrated part of the WLL System and shall fall under the conditions
of this Contract.
6.2 Changes Demanded by The Purchaser
- --------------------------------------
The Purchaser shall have the right at any time to request reasonable
changes in the Specifications and other changes in the Contractor's Scope
of Supply. The Contractor agrees to effect all such reasonable changes as
The Purchaser may request, subject to changing price as provided in Clause
6.7.1 and reasonable other conditions.
6.3 Changes Proposed by the Contractor
- ---------------------------------------
The Contractor shall inform The Purchaser about any possible change,
possible improvement or development regarding the WLL System and
related technology that comes to the Contractor's knowledge during the
validity of this Contract and that is not already known to The
Purchaser.
The Contractor may propose such changes of the Contractor's Scope of Supply
as the Contractor deems appropriate.
6.4 The Contractor's Obligation to Propose Changes
- ---------------------------------------------------
The Contractor shall be obliged to propose such changes to the Contractor's
Scope of Supply as are necessary or advisable in order to
(i) achieve technical improvements of the WLL System, or otherwise
implement technical or economical improvements or new technology or
experiences;
(ii) obtain consents necessary from authorities Sri Lanka or
(iii) otherwise minimise the cost of day-to-day operation and maintenance
of the WLL System.
6.5 The Purchaser's Approval of Changes
- ----------------------------------------
The Contractor may not, without the prior written consent of The Purchaser,
make any change to any part of the Contractor's Scope of Supply, - even if
after such change Contractor's Scope of Supply still complies with the
Specifications.
6.6 Supplementary Agreement
- ----------------------------
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For each change, whether proposed by the Contractor or The Purchaser, the
Contractor shall provide The Purchaser with a written offer. Such
offer shall set forth in detail the change of the Contractor's Scope
of Supply and shall contain information on possible changes of
- Equipment
- Software
- Documentation
- Training
- Turn-key Services
- Spare parts
- Test Equipment
- Prices
- Contractual Date of Delivery
- Other Dates according to Time Schedule
Warranties
and on other changes of The Purchaser's Scope of Supply resulting from the
change in question as well as on any other terms and conditions that
according to the Contractor shall govern the change. The information
on prices shall be split on the various items that The Purchaser
reasonably requires and be accompanied by all necessary drawings and
specifications including a description of the consequences for the WLL
System, the environments, the reliability, the maintainability, the
training of The Purchaser's staff, the Contractor's Scope of Supply
and The Purchaser's Share of Responsibility etc. sufficiently detailed
so as to permit The Purchaser to judge on the reasonableness of the
prices and other terms and conditions.
If the change has been proposed by The Purchaser the offer shall be
submitted by the Contractor as soon as practicable, however, in no
case later than thirty (30) days after receipt of The Purchaser's
proposal. The Contractor shall be bound by any offer referred to
herein for such a period of time as is required to enable The
Purchaser to evaluate and make decision on the basis of the offer.
Any change according to Subclauses 6.2, 6.3 and 6.6 above has to be agreed
by The Purchaser in' the form of a written numbered change order or
supplementary order ("Supplementary Agreement"). The Contractor shall
not commence any work relating to such a change until The Purchaser
has authorised the same and all the related terms and conditions.
However, if The Purchaser so requests in writing, the Contractor shall
be obliged to commence and carry out minor or urgent changes,
notwithstanding that all of the terms and conditions have not at that
time been agreed to by The Purchaser.
6.7 Variations in Prices
- -------------------------
6.7.1 Increase or decrease in Prices
-------------------------------------
In the event that a change referred to in Clause 6 would result in
(iii) a material increase of the Contractor's costs for the Contractor's
performance under this Contract or
(iv) a material decrease of the Contractor's costs for the Contractor's
performance under this Contract
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then the parties shall mutually in writing agree upon, in good faith,
such price increase or decrease as the case may be.
In the ascertainment and determination of such an increase or decrease,
rates and prices specified in this Contract shall as far as possible
serve as a guide. Where this is not possible, the increase or decrease
shall be an amount that is reasonable in view of all the circumstances.
6.7.2 Reimbursements to The Purchaser for increased costs
- -----------------------------------------------------------
6.7.2.1 It is expressly agreed that The Purchaser shall in no event
bear any increase of Contract Prices resulting from changes
required in order to make the WLL System meet the requirements
set out in this Contract.
6.7.2.2 Any costs or expenses incurred by The Purchaser due to such a
change shall be reimbursed by the Contractor on demand and may
be set off by The Purchaser against any payment The Purchaser
shall make to the Contractor under this Contract.
6.7.2.3 In the event that any change would require a change of The
Purchaser's Share of Responsibility or of any other equipment
belonging to The Purchaser, and the Contractor has failed to
inform The Purchaser of this fact prior to the conclusion of
the Supplementary Agreement referred to in Subclause 6.6 above,
the Contractor shall reimburse The Purchaser for all such
increase of costs that The Purchaser will incur due to such a
change and the provisions of set-off in Subclause 6.7.2.2 above
shall apply.
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Clause 7 - Project Group, Progress Report, Time Schedule and Delays
-------------------------------------------------------------------
7.1 Project Group
- ------------------
For the supervision of the parties' performance under this Contract, the
Contractor and The Purchaser shall on The Purchaser's request form a joint
project group consisting of representatives from each party ("Project
Group") which shall decide when and where to meet. Each party shall bear
all costs for its own representatives. Minutes of meetings shall be kept
and signed by one representative of each party authorized to this effect.
When considered necessary representatives of subcontractors and experts of
the parties shall attend the meetings. It is incumbent upon the Contractor
to see to it that representatives of the Contractor's subcontractors will
attend, if so required. The costs for such experts shall be borne by the
party in question. The costs for representatives of the subcontractors of a
party shall be borne by the party in question or subcontractor, as they may
have agreed separately.
At the meetings the Project Group shall discuss the progress of the
Contractor's Scope of Supply and The Purchaser's Share of Responsibility
and review the operation and maintenance facilities of the WLL System.
The Project Group shall supervise the test procedures for Acceptance Tests
set out in Annex 17.
The Project Group is authorized to make decisions within the technical
scope of the Contract. A technical change or correction which entails
increased costs or extension of the delivery time shall promptly, but
latest at the next meeting be notified in writing by the Contractor. If
such notice is not made, the Contractor has no right to demand compensation
for such increased costs or to demand acceptance by The Purchaser of
prolongation of the delivery time.
A decision binding on the parties shall be deemed to have been made only if
all the representatives of both parties agree and the decision is contained
in duly signed minutes. The Project Group shall, however, not be authorized
to make decisions that will affect Contract Price(s) or the Contractual
Date of Delivery or otherwise decisions resulting in modifications of the
Contract. In the event that any of the representatives deem a question to
fall outside the authority or competence of the Project Group the question
shall be referred for resolution to the Engineering Vice Presidents or
their equivalents of each party.
A detailed description of the Project Organisation, including names of the
persons participating and their experiences in the field is set out in
Annex 27.
7.2 Progress Report
- --------------------
The Contractor shall every week submit to The Purchaser a Progress Report
in three copies up until System Acceptance is achieved. The Progress Report
shall contain, as a minimum, a report of all activities related to the
Contract that have taken place since the last report, as well as
information regarding future activities and the progress of the
Contractor's Scope of Supply. After System Acceptance progress reports
shall be issued at a frequency mutually agreed.
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The Progress Report shall furthermore contain a complete review of the
status of accomplishments, developments and implementation of the
Contractor's Scope of Supply obligations against the Time Schedule.
7.3. Time Schedule
- ------------------
As an integral part of this Contract is attached as Annex 18 a Time
Schedule indicating crucial milestone dates. The Contractor and The
Purchaser undertake to fulfil their undertakings under this Contract in
accordance with the Time Schedule. Time is of the essence of this Contract.
7.4 Delays
- -----------
Without prejudice to the provisions of Clause 17, each party to this
Contract shall promptly notify the other party in writing where the
notifying party has a reasonable belief that circumstances exist or are
likely to occur that would be reasonably expected to prevent the Contractor
(or any of its subcontractors or suppliers) or The Purchaser (or any of its
assignees) from fulfilling its obligations under this Contract according to
the Time Schedule.
In a case where any party, at any time, reasonably believes that any other
party is unable to fulfil its obligations on the respective date set out in
the Time Schedule, the parties shall meet to determine what action is
required. Any notification and/or action that might be determined as a
consequence hereof shall be without prejudice to any right or remedy the
parties may have under this Contract.
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Clause 8 - Inspection
---------------------
8.1 General
- ------------
At such times and in such manner as The Purchaser shall deem appropriate
for the purpose of inspecting or testing the contractual work in
progress and activities under this Contract, including the
Contractor's own tests and results thereof, representatives of The
Purchaser shall be given notices of the testing and shall have access
to the Contractor's and its subcontractor's works as well as other
places where activities under this Contract are in preparation or
progress. The Purchaser shall have full access to and on request be
provided with all test records relating to the Contractor's Scope of
Supply. Any inspection or test carried out by The Purchaser or its
representatives shall not unduly delay the Contractor.
The Purchaser shall at all reasonable times have access to the
Contractor's Scope of Supply, and the Contractor shall provide
appropriate facilities for such access and for the purpose of
inspection and testing. The Purchaser shall also have full access to
all relevant plants, offices and Contractor's Scope of Supply sites of
the Contractor and any of its Subcontractors to enable The Purchaser
to inspect the Contractor's Scope of Supply and monitor progress.
The Contractor shall permit The Purchaser or its designated representatives
to carry out the following inspection activities at any time: (i) to
audit the Contractor's quality assurance system and its application to
the Contractor's Scope of Supply including, without limitation, to the
manufacture, development, and/or provision of raw materials and
components; and (ii) to inspect all parts of the Contractor's Scope of
Supply to the extent reasonably practicable to ensure that their
quality meets the requirements of the Contract.
The factory inspection or audit of parts of the System in accordance with
this Clause shall not in any way prejudice any right or remedy which
The Purchaser may have against the Contractor, or relieve the
Contractor of any of its liabilities, and in particular it is without
prejudice to the Contractor's obligations relating to the performance
of the System under Clause 4.
Any approval given by or on behalf of The Purchaser in respect of any
aspect of the Contractor's Scope of Supply carried out or proposed by
the Contractor, or in respect of any part of the System, shall not
relieve the Contractor of any obligations under the Contract.
The Purchaser or its representatives may request that the Contractor
performs such reasonable tests and repeated tests (in addition to and
apart from such tests as are referred to in Clause 9) as The Purchaser
(or its representatives) will consider necessary to be assured that
the result of the activities will comply with the requirements of this
Contract. The Contractor shall, without extra costs to The Purchaser,
provide with all labour, facilities, test equipment and other things
and services necessary for this purpose.
In the event that Software or Equipment is in the course of the inspection
found to be defective or otherwise not in conformity with the
Specifications, the Contractor shall within shortest possible time
take all necessary action to repair all faults, defects or non-
conformance.
8.2 Subcontractors
- -------------------
The Contractor shall ensure that the provisions of this Clause 8 also apply
to all subcontracts or orders made or placed by the Contractor with any one
of its
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subcontractors and that the provisions of this Clause 8 are held good by
the said subcontractors.
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Clause 9 Acceptance Procedure and Actual Date of Delivery
----------------------------------------------------------
9.1 General
- ------------
The Acceptance Procedure falls into the following main events:
- Quality assurance
- Visual Inspection
- System test (known as Site Acceptance)
- Acceptance test (known as System Acceptance)
- TEC tests
Except to the extent otherwise specifically provided in this Contract the
Contractor shall be responsible for the performance of the quality
surveillance, inspections, tests (including repeated tests, if any)
which are required for the completion of Contractor's Scope of
Supply and for the demonstration of its compliance with the
Specifications and other requirements set out in this Contract. For
the purpose of achieving this object the Contractor shall except to
the extent otherwise specifically provided in this Contract be
obliged at its own expense
(i) to carry out the said surveillance and perform and supervise the
tests;
(ii) provide with or place at The Purchaser's disposal, as the case may
be, all equipment, tools, programs (software), labour, supplies, and
services required for the performance of the said surveillance and
tests; and
(iii) to issue reports, keep and provide records, and issue certificates
as to the results of the surveillance and tests. The said
surveillance and all the tests shall be performed at the
Contractor's risk.
All reasonable direct costs to which The Purchaser may be put by any repetition
of an inspection or a test shall be reimbursed by the Contractor on demand and
may be deducted by The Purchaser from any moneys to be paid by The Purchaser
under this Contract.
9.2 Quality Assurance
- ----------------------
The Contractor shall be responsible for carrying out a continuous quality
surveillance in accordance with the quality assurance procedure laid down
in Annex 15 in order to ensure that the Equipment and the Software in all
--
respects will meet all the requirements set out in this Contract.
9.3 System Test (or Site Acceptance Test)
- ------------------------------------------
The Contractor shall be responsible for carrying out a System test for each
site. Representatives of The Purchaser shall be present. The object of the
System test is to establish that each part of the WLL System will fulfil
all the functional and technical requirements set out in this Contract.
As soon as possible after completion of the System test, the Contractor
shall furnish to The Purchaser a report regarding the test. To the extent
an unsuccessful test so requires, the Contractor shall cure the discovered
deviation from the requirements and provide for repeated test.
Prior to the start of any System Acceptance Test the Contractor shall have
proved that the System tests have been successful and have cured to the
satisfaction of The Purchaser the deviation from the requirements or any
other defect or deficiency that
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has been observed in the course of the System test. If the Purchaser agrees
a System Acceptance Test can take place without all System Tests being
complete.
To the extent an unsuccessful test so requires, the Contractor shall cure
the discovered deviation from the requirements and provide for a repeated
test.
At the time when the Contractor has successfully completed a Systems Test
(Site Acceptance Test), the Purchaser shall accept the title and risk for
that part of the network that has been successfully tested. Alternatively,
provision of revenue producing traffic for more than one month will
constitute completion of System Test for a specific site.
9.4 Acceptance Test
- --------------------
When,
(i) the tests and inspections referred to above in this Clause 9 have
demonstrated that all Equipment and Software delivered by the
Contractor complies with all relevant requirements, standards and
Specifications;
(ii) such Equipment and Software as shall be installed by Contractor has
been installed on Premises ready for operation;
(iii) relevant training referred to in Clause 11 has been performed;
(iv) relevant documentation has been delivered in accordance with Clause
11,
and
(v) relevant Test Equipment have been delivered in accordance with
Clause 11, then The Purchaser shall perform an acceptance test
("System Acceptance Test"). The purpose of this Acceptance Test is
to establish whether the Equipment and the Software complies with
all the relevant requirements and Specifications when operated and
otherwise handled by The Purchaser personnel duly trained by the
Contractor utilising the Documentation supplied by the Contractor.
The detailed test procedure and criteria of a successful Acceptance
Test shall be agreed upon in accordance with Clause 7.1.
9.5 Actual Date of Delivery
- ----------------------------
The Acceptance Test shall be deemed to have been successfully performed
when it has been demonstrated that all relevant requirements of this
Contract are met or when the Purchaser has carried commercial traffic for a
period of more than 90 days.
The Actual date of Delivery is when all defects, deficiencies, or
deviations from the requirements discovered in connection with the
Acceptance test, or prior thereto, have been cured to the satisfaction of
The Purchaser, and a successful Acceptance Test has shown that Contractor's
Scope of Supply with respect to WLL System meets all the requirements of
this Contract.
It is recognised by the parties that even after the Acceptance Test, some
minor defects and deficiencies that are non-essential for the proper
operation or
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maintenance of the WLL System might exist. The parties shall by agreement
enter these defects or deficiencies into a list of defects which shall also
include a time schedule for the taking by Contractor of the necessary
corrective measures. The stipulations of this Contract as regards warranty
obligations contained in Clause 10 below shall apply to Contractor's duty
to take such corrective measures.
If the Purchaser fails to make any or all sites available for Installation
of the equipment one hundred and twenty days (120) after the contract
signature, the Purchaser shall by default accept the equipment, for that
part of the network that cannot be installed, and make all relevant
payments applicable to Site and System Acceptance. At this time, title and
risk for the equipment that cannot be installed shall pass from the
Contractor to the Purchaser.
If the System Acceptance Test (required before Actual Date of Delivery can
be achieved) is delayed because of the Purchaser's failure to make sites
"ready for installation", the System Acceptance Test shall be conducted
only on those sites that have passed Site Acceptance.
The Time Schedule and Milestones for the implementation and preparation of
the Sites by the Purchaser shall be defined in Annex 18.
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Clause 10 Warranties and Certain Consequences in the Event of
---------------------------------------------------------------
Breaches of Warranties
----------------------
10.1 Warranty Period
- ----------------------
The Contractor warrants that the WLL System installed and ready for
operation and Spare Parts delivered to The Purchaser, at all times during
a warranty period of eighteen (18) months from the Actual Date of
Delivery of the WLL System will conform to all the requirements set out
in the Specifications. Subject to the provisions of Subclause 10.2 and
10.3 any lack of conformity that is in existence, or will occur, or will
appear prior to or during the warranty period, and any other defect,
deficiency, or malfunction that is due to construction, manufacture,
workmanship, materials, programming, transportation or installation which
appear prior to the expiration of the warranty period shall be considered
such a defect will be covered by Contractors warranty obligations. Design
faults shall be warranted for twenty-four (24) months from the Actual
Date of Delivery.
10.2 Corrective Measures Activity
- -----------------------------------
In case of breach of warranty obligations defined in Subclause 10.1 above
the Contractor shall at its own risk and expense cure the defect by
repair, replacement, modification, adjustment, delivery and installation
of additional Equipment or Software, or performance of additional work or
implement any other adequate corrective measures (all such measures
collectively referred to as "Corrective Measures").
10.3 Warranty of Corrective Measures
- --------------------------------------
The Contractor shall be obliged to take the necessary Corrective Measures
and other actions referred to in this Clause 10 within the shortest
practicable time, however not later than at such a final date for the
Corrective Measures specified by The Purchaser taking into account the
breach to be cured, the work to be done and The Purchaser operational and
maintenance requirements. The Contractor shall at the request of The
Purchaser render such assistance, advice or instruction that in the
Contractor's reasonable opinion would be sufficient to remedy the defect.
If the Contractor or The Purchaser would deem it necessary to arrange
that the Corrective Measures are taken by the Contractor's personnel, the
Contractor shall make such personnel available as fast as possible but no
longer than forty eight (48) hours from the moment when The Purchaser has
dispatched a request.
If the Corrective Measures will be in the form of replacement and The
Purchaser does not have the relevant spare part available the Contractor
shall make the spare part available as soon as the circumstances permit,
but in no case later than forty eight (48) hours from the moment when The
Purchaser has dispatched a request for such a spare part.
Major Service effecting errors shall be corrected within 5 working days
from the moment The Purchaser has dispatched a request for correcting
such an error and the Contractor has acknowledge this request.
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Minor Service effecting errors and Non Service effecting errors shall be
corrected within eight (8) weeks from the moment The Purchaser has
dispatched a request for correcting such an error and the Contractor has
acknowledge this request.
Major, Minor and Non Service Effecting errors are defined in Annex 25.
If the Contractor in spite of proper notification should not be able to
carry out his duties within the agreed period of time, The Purchaser
shall have the right to correct the defects) or have it (them) corrected
by others.
If spare parts purchased by The Purchaser have been used for replacement
of defective parts or any interim repair of the defective parts has been
made, the Contractor shall at his own expense repair the replaced part or
make the final repair thereof, as the case may be, or deliver spare parts
in replacement. The Purchaser shall bear the risk and costs of transport
to the Premises of Contractor and the Contractor shall bear the risk and
costs of the return transport for such defective parts as well as of
repaired parts and parts supplied in replacement.
10.4 Notification of Defects
- ------------------------------
The Purchaser shall notify the Contractor of a defect not later than
thirty (30) days from The Purchaser's discovery thereof. Notice of
defects and requests for Corrective Measures shall, at the discretion of
The Purchaser, be made by fax, letter or hand delivery.
The Purchaser shall also be entitled for the purpose hereof to avail
itself of any guarantee or other security provided by the Contractor in
accordance with this Contract.
10.7 Warranty Regarding Replaced or Corrected Parts
- -----------------------------------------------------
In the event that any part of the WLL System has been corrected,
repaired, replaced, modified or adjusted pursuant to a warranty
obligation, a fresh warranty period of the same duration as set forth in
Subclause 10.1 shall apply to such a part or if replaced to the new part.
This fresh period shall start to run as from the date when The Purchaser
confirms that the repair, replacement, modification or adjustment has
been successfully completed.
10.8 Warranty of Reliability and Maintainability
- --------------------------------------------------
Without prejudice to the provision of Subclause 10.1 above Contractor
warrants that the reliability and maintainability of the WLL System will
comply with the provisions set out in the Specifications, so that the
respective values which can be derived from the parameters contained in
Annex 15 will be obtained during the warranty period of eighteen (18)
months. The compliance with the parameters shall be demonstrated with the
methods set out in Annex 15.
In the event the WLL System does not fulfil the reliability and
maintainability specified in the Specifications the Contractor shall be
obliged to take such Corrective Measures at its own risk and expense as
are necessary to have the WLL System to fulfil the Specifications with
regard to the aforesaid parameters.
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10.9 Warranty of Documentation
- --------------------------------
10.9.1 Sufficient and Adequate for Operation and Maintenance
--------------------------------------------------------------
The Contractor warrants for the technical life time of the WLL
System that the information contained in the Documentation, will
be continuously updated, will be provided in a timely manner and
will be sufficient and adequate for the proper operation and
maintenance of the WLL System.
To any damage or defect caused or revealed by lack of documents
stated in Subclause 10.9.1 the provisions of Subclause 10.2
shall apply, notwithstanding whether the damage or defect
existed or appeared prior to the expiration of the respective
warranty period set out in Subclause 10.1.
10.9.2 Additional Documentation
---------------------------------
The Purchaser may wish to develop certain additional
documentation with respect to the functioning of the WLL System.
The Contractor shall be obliged to check the accuracy and
completeness of such documentation and within a reasonable
period of time from The Purchaser's request to such effect
submit in writing to The Purchaser its approval or disapproval
of the said documents. In the event of disapproval Contractor
shall specify in what respect the documentation is incorrect or
incomplete and what measures should be taken to make the
documentation correct and complete. Any compensation for
Contractor's work referred to in this Subclause 10.9.2 shall for
each case be agreed upon between the parties.
10.10 Spares Warranty
- ----------------------
The Contractor warrants that it is able to supply The Purchaser with
spares, or equivalent replacement parts, or substitute parts with an
equal or greater level of functionality that maintains backwards
compatibility for repair and maintenance of Equipment delivered for a
period up to ten (10) years from Actual Date of Delivery. Such parts
shall be provided at reasonable prices and delivery times.
If the Contractor after the above mentioned period intends to stop the
manufacturing of a type of spares or equivalent replacement parts, the
Contractor shall inform The Purchaser about his intention at least twelve
(12) months in advance.
10.11 Warranty of Right to Use and Reproduce Etc.
- -------------------------------------------------
The Contractor warrants that The Purchaser shall have the right to use
all and any Software as well as of all and any Documentation (and parts
thereof) that the Contractor has supplied without thereby infringing any
right of the Contractor, its subcontractors or employees, or a third
party, or being obliged to pay any compensation to the Contractor, its
subcontractors or employees, or to any third party. The Purchaser's right
to reproduce, change or modify software and documents is limited to the
rights defined in the software license that is granted by the Contractor
for use by The Purchaser in the WLL System delivered by the Contractor to
The Purchaser. This is defined in Annex 26.
10.12 Repairs Warranty
- -----------------------
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The Contractor warrants that it, during a period of at least up to ten
(10) years from Actual Date of Delivery or from the date of
discontinuation of commercial availability of the related equipment,
whichever comes the latest, is capable of and will, at The Purchaser's
request, repair defective material in Equipment delivered under this
Contract.
Contractor warrants that if The Purchaser so wishes it shall enter into
Annual Operations and Maintenance Contract with The Purchaser in forms
set out in Annex 21 and be bound to all conditions there is in the
License included without limitation to conditions as to price and for as
long as The Purchaser requires for a period of up to ten years.
10.13 Warranty for Production of Equipment and Software
- --------------------------------------------------------
The Contractor warrants to ensure the supply to The Purchaser of
Equipment and Software in every respect for upgrading, extensions, and
maintenance of the WLL System at least for a period up to ten (10) years
after the Actual Date of Delivery., at prices and within reasonable
delivery times and on other reasonable conditions. In the event that the
Contractor intends to cease to supply Equipment and Software for the WLL
System, the Contractor shall inform The Purchaser thereof at least twelve
(12) months in advance. The Contractor shall at the request of The
Purchaser -without charge supply all drawings and other technical
information and documents that will be required or of assistance in the
provision, operation and maintenance of the WLL System. Equipment and
Software purchased pursuant to this Subclause 10.13 shall be subject to
the same warranties as set out in this Clause 10.
10.15 Title and Intellectual Property Rights
- ---------------------------------------------
The Contractor warrants that Contractor will deliver to The Purchaser
good title to all of the items falling within Contractor's Scope of
Supply and each such item shall be free of any claim, encumbrance or lien
whatsoever.
For the technical life time of the WLL System the Contractor warrants in
accordance with Clause 16 and furthermore that it shall not be necessary
for The Purchaser to obtain any license or any similar grant under a
patent or any other industrial or intellectual property right for the WLL
System either from the Contractor or any other person in order to be able
to interface the WLL System, with equipment of design, construction or
makes other than the Contractor's or its subcontractors'.
In the event of breach of this warranty the provisions of Clause 16 shall
apply.
10.16 Exceptions from Warranties
- ---------------------------------
The Contractor will have no liability or responsibility arising out of
(i) deviations from the requirements of this Contract that are caused
by such damage to or loss of the WLL System as is accidental and
occurs after the time when the risk of loss and damage has passed
to The Purchaser;
(ii) deviations from requirements of this Contract that are caused by
The Purchaser or any other person for which the Contractor is not
responsible, or any changes, repairs or replacements made by The
Purchaser or said other
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person, provided that The Purchaser or such other person has acted
contrary to instructions contained in manuals or other
documentation provided by the Contractor under this Contract;
(iii) breaches of warranties of which The Purchaser has not notified the
Contractor during the respective warranty period, or before thirty
(30) days have elapsed after-the expiry of the said period
provided, however, that this exemption from liability and
responsibility shall not apply if the Contractor, or any of its
representatives, nevertheless knew of the breach;
(iv) deviations from the requirements of this Contract that are caused
by non-fulfilment of The Purchaser's undertakings of The
Purchaser's Share of Responsibility
Notwithstanding the foregoing of this Subclause 10.16 the Contractor
shall be obliged to cure at the expense of The Purchaser also deviations
from the requirements for which the Contractor has no liability or
responsibility, if The Purchaser so requests.
10.17 Records of Events
- ------------------------
The Purchaser will during the warranty period in Subclause 10.1 keep
records of events that might be of importance for determining the type of
defect, the time of its occurrence, the notification and curing thereof
etc. These records shall prevail unless proved to be inaccurate in any
specific respect. The Purchaser shall keep the records available to the
Contractor on request.
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Clause 11 - Delivery
--------------------
11.1 Equipment and Software
- -----------------------------
11.1.1 Contractual Date of Delivery
-----------------------------------
The WLL System shall have been delivered and successfully tested
according to Subclauses 9.4 on the date set out in the Time
Schedule (Annex 18). The said date is in this Contract referred to
as the Contractual Date of Delivery.
The schedule and quantities of material shown in Annex 18 is an
estimate and is not a binding commitment by The Purchaser. The
Purchaser considers this list to be the Tender's minimum delivery
obligation.
11.1.2 Passing of Title
-----------------------
The title to as well as the risk of damage to and loss of the WLL
System, for that part of the system in question, shall pass to The
Purchaser on completion of a successful Site Acceptance test.
The Purchaser shall be responsible for the operation and
maintenance of the WLL System from the date of Site Acceptance.
This shall not limit or compromise any claim which The Purchaser
may have against the Contractor under any warranty or other
provision of the Contract. Prior to the Site Acceptance, The
Purchaser's responsibility for the operation of the WLL System
shall be confined to such responsibility as follows from The
Purchaser's performance of the tests referred to in Clause 9.
11.1.3 Software
---------------
11.1.3.1
The Purchaser is granted a non-exclusive perpetual restricted royalty-
free license to use the Software, but only in conjunction with The
Purchaser's use and maintenance of WLL System in accordance with this
Contract, and not otherwise.
Use of this Software shall not include the right to copy, reproduce
and modify the software.
The Purchaser agrees that the Software provided to it by the
Contractor under this Contract or any renewals, extensions, or
expansions thereof, or in implementation of any of the foregoing,
shall, as between the parties hereto, be treated as the exclusive
property of the Contractor and as proprietary and a trade secret of
Contractor. The Purchaser shall:
(a) not provide or make the Software or any portions or aspects
thereof available to any person except to its employees or agents
on a "need to know" basis;
(b) not modify the Software without the prior written consent of
Contractor.
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If Contractor modifies or changes the Software to permit
additional features or services, such Software will at The
Purchaser request be made available to The Purchaser on prices
based on a predetermined methodology. In any case the Contractor
shall provide all such features and services free of charge
within the first twelve 12 months from the date of signing the
Contract.
Nothing in this Clause shall limit Contractor's warranties in
Clause 10.
The Purchaser and any successor to The Purchaser's title to the
WLL System shall have the right without further consent of
Contractor to assign this license to any other party which
acquires the WLL System, provided any such other party (either
assignee or sublicensee) agrees in writing to abide by the terms
and conditions of this license.
Notwithstanding anything in this Contract to the contrary, it is
understood that The Purchaser is receiving no title or ownership
rights to such Software, which rights shall remain with
Contractor.
11.1.3.2 As applicable and generally available to Contractor's customers,
Contractor shall license to The Purchaser a copy of any diagnostic
software utilized by Contractor with respect to the installation and
maintenance services of the Software and System.
11.1.3.3 The Contractor shall offer and The Purchaser at its discretion may
accept a new Software Release containing new facilities on a regular
basis (at least once per year) for a period of ten (10) years after
Actual Delivery Date of the Contractor's Scope of Supply. The new
release shall indicate what modifications are required on
implementation to the Software and hardware used by The Purchaser. In
the event that The Purchaser chooses not to accept the installation
of new Software Releases, the Contractor shall continue to support
the Latest Version of Software including the correction of any faults
or bugs.
11.1.3.4 During a period of five (5) years after acceptance of a version of
Software, the Contractor shall provide without charge at The
Purchaser's request, maintenance releases correcting software faults
identified in the Latest Version by The Purchaser, or by the
Contractor or by its other customers.
11.1.3.5 New releases and maintenance releases shall be subject to acceptance
tests to be agreed upon by the parties.
11.1.3.6 Unless the parties have agreed otherwise in writing, new releases and
maintenance releases shall not alter the applications or the uses to
which the System or parts of the System can be put, whether or not in
conjunction with existing files, and shall in all respects be
compatible with the Latest Version of the Software. Software updates
shall be backward compatible to existing hardware, features, and
functionalities, unless mutually agreed otherwise.
11.1.3.7 The Contractor shall fully disclose and supply and keep supplied in
confidence to The Purchaser the Latest Version of all Documentation
and the Software, with relevant information about their release
status.
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11.1.3.8 The Contractor shall ensure that the Documentation supplied to The
Purchaser fully describes the Software accepted and licensed for the
System under Clause 11.1.3.1 of this Contract. Documentation will
fully describe new features, functionalities, errors corrected and
new errors detected.
11.1.3.9 At the request of The Purchaser, the Contractor shall provide all
necessary interfaces, interface specifications and standard protocols
for systems or products provided by The Purchaser or other parties,
including the physical components of such interfaces, and the proper
functioning of these interfaces, and all relevant documentation.
11.1.3.10 If the System delivered by the Contractor fails to function properly
in conjunction with a third party product in use by The Purchaser,
the Contractor shall, at the request of The Purchaser consult with
the relevant contractors and cooperate closely with them in tracing
and repairing the cause of the malfunction.
11.1.3.11 In the event that third party Software supplied by the Contractor
under this Contract becomes unavailable or essential modifications
cannot be carried out for any reason whatsoever, the Contractor shall
at no charge to The Purchaser, procure and supply to The Purchaser
suitable alternative third party Software to enable the continued
operation and Contractor's Scope of Supply ability of the System.
11.1.3.12 In the situations referred to in Sub-clause 11.1.3.11 The Purchaser
shall have an unlimited license to use the Software and shall have
the right to make modifications to the Software (or have them made)
only for use with the System.
The obligations of The Purchaser under this Clause shall survive the
termination of this Contract for any reason.
11.2 Turn-key Services
- ------------------------
The turn-key services of the WLL System shall be done to the satisfaction
of The Purchaser.
No service or work by the Contractor may, without The Purchaser's written
approval thereof, commence earlier than on the date of start of service
set out in the Time Schedule. The scope of work regarding Turn-key
services is set out in Annex 9.
11.3 Training
- ---------------
The Contractor shall provide The Purchaser's personnel with the training
required for the proper operation and maintenance of the WLL System. The
scope of Contractor's undertaking in this respect, as well as the terms
and other conditions applicable thereto are set out in Annex 10.
11.4 Documentation
- --------------------
The Contractor shall have provided The Purchaser with the Documentation
set out in Annex 11 on or before the dates set out in the Time Schedule.
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11.5 Spare Parts
- ------------------
The Contractor shall have provided The Purchaser with the spare parts set
out in Annex 12 on the dates set out in the Time Schedule.
11.6 Test Equipment
- ---------------------
The Test Equipment set out in Annex 13 shall have been delivered at
Premises on or before the dates set forth in the Time Schedule.
11.7 Marking
- --------------
All Equipment, parts thereof, and spare parts shall be clearly and
durably marked with the Contractor's code number and - if any - status
revision which shall make it possible to identify all Equipment, parts
thereof and spare parts for the purpose of warranty. The Contractor shall
well in advance before dispatch of the Equipment or spare parts furnish
The Purchaser with a packing list indicating the Contractor's code
numbers applicable to the respective parts.
11.8 Packing
- --------------
All Equipment and Spare parts shall be packed in a manner that is
suitable for the transportation and for the storing in The Purchaser's
premises.
11.9 Order Procedure
- ----------------------
The deliveries shall be executed in accordance with the provisions stated
in Annex 14. In order to state the extent of each delivery a suborder
specification shall be sent to the Contractor as a firm order. The
suborder specifications shall contain information regarding quantities of
Equipment and Spare Parts to be delivered, delivery dates, delivery
address and invoice address.
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Clause 12 - Liquidated Damages in the Event of Delays in Delivery
-----------------------------------------------------------------
12.1 General
- ----------------
The parties acknowledge that the Contractor's fulfillment of its undertakings
set out in the Time Schedule (Annex 18) is of utmost importance to The
Purchaser. The parties also acknowledge that delays will cause severe damage to
The Purchaser and that such damage may, from a practical point of view, be
difficult to quantify. In the event of delay, the parties agree that The
Purchaser shall receive liquidated damages in accordance with the following
provisions without The Purchaser being obligated to prove that it has suffered
damage or to prove the amount of damage. The Purchaser's right to receive
liquidated damages shall be without prejudice to any other right that it may
have under this Contract or otherwise.
Any liquidated damages to which The Purchaser is entitled shall be paid by the
Contractor upon demand and The Purchaser shall be entitled to wholly or partly
set off liquidated damages against any amount that The Purchaser shall pay to
the Contractor under this Contract.
12.1.1 Liquidated Damages for Delay
- -------------------------------------
Should the service start date of the System, or any material portion of
the System be delayed for any reason except for events excepted under
this Contract, where the delay is fully or substantially attributable
to the fault of default of the Contractor (including its sub-
contractors), Contractor shall pay liquidated damages equal to one
percent (1%) of the value of that part of the network that The
Purchaser is unable to use for each week or fraction of a week of delay
beyond Actual Date of Delivery as specified in Annex 18. A grace period
of two weeks shall be given before the first week of delay is counted.
Upon the lapse of the second week of delay, however, the full delay
shall be counted in computing the liquidated damages.
12.2 WLL System, Training, Documentation, Spare Parts and Test Instruments
- ------------------------------------------------------------------------------
In the event that Contractor does not fulfil any of its undertakings
with respect to WLL System, training, Documentation, spare parts or
test instruments on the respective dates set out in the Time Schedule,
the Contractor shall pay liquidated damages to The Purchaser for each
whole day of delay amounting to (0.1%) of the respective Contract
Price.
Maximum liquidated damages according to these Clauses 12.1.1 and 12.2
shall in no case exceed ten per cent (10 %) of the Total Contract
Price.
12.3 Delays Caused by The Purchaser or Force Majeure Events
- ---------------------------------------------------------------
The Purchaser shall not be entitled to liquidated damages according to
the above provisions of this Clause 12 to the extent the delay in
question is caused by failure solely on part of The Purchaser to fulfil
any part of its Share of Responsibility or by a Force Majeure Event
defined in Clause 17.
In the event that The Purchaser delays in carrying out any of its
undertakings under this Contract the Contractor shall nevertheless be
obliged to fulfil its obligations within the time agreed on, to the
extent that the fulfilment of The Purchaser's obligations is not
necessary to enable the Contractor or its subcontractors and suppliers
to fulfil their obligations. In the event that it can reasonably be
assumed
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that the Contractor will be delayed with respect to any of its
undertakings under this Contract, The Purchaser shall have the right to
postpone the performance of any of its undertakings to the extent such
performance is not necessary to enable the Contractor to fulfil its
obligations.
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Clause 13 - Prices
------------------
13.1 The Contract Prices given shall be fixed until 18th August 2002 and shall
include obligations of Contractor hereunder. The Contract Prices for the
WLL System and work and services to be provided by the Contractor under
this Contract shall be the prices set out in Annex 5. The prices
-------
represent the Contract Prices for the respective items and the sum of all
the Contract Prices constitutes the total price of the Contractor's Scope
of Supply. This total price is called the Total Contract Price.
--------------------
13.2 The prices shall be CIP Colombo.
13.3 Change of any law relating to the Contract items, except those affecting
the customs duties, import taxes, VAT, shall not affect the price of
these items.
13.5 All sums of money stated or referred to in this Contract are exclusive of
VAT. The Purchaser shall only pay VAT, if applicable in Sri Lanka.
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Clause 14 - Payments
--------------------
14.1 General
- --------------
The Purchaser shall pay to the Contractor the Contract Prices referred
to in Clause 13 above in accordance with the following provisions. The
terms of payments are as follows:
Phase One - Infrastructure, Network Management, Subscriber Terminals
required for Acceptance Testing, and Services
. 20% on signing of the contract
. 5% on Site Acceptance for the completion of each site (9 Sites)
. 30% on Actual date of Delivery (System Acceptance)
. 5% 6 months after the Actual date of Delivery
Phase Two - Subscriber Terminals for Commercial Service
. 20% on signing of the contract
. 40% on delivery of equipment
. 40% 90 days after delivery of equipment
Phase Three - Subscriber Terminals for Commercial Service
. 20% on signing of the contract
. 40% on delivery of equipment
. 40% 90 days after delivery of equipment
Phase Four - Subscriber Terminals for Commercial Service
. 20% on signing of the contract
. 40% on delivery of equipment
. 40% 90 days after delivery of equipment
A bridge finance option will be provided to Suntel for all payments beyond the
Contract signature payment (20%) for 1999. This option will allow Suntel to
remit only the interest due (as defined in Clause 14.5) on the first day of the
month following the date of payment due for all outstanding payments. The
payment of the principle will be due on January 5th, 2000 for all payments
covered through bridge financing.
14.2 Terms and Conditions
- ---------------------------
Orders shall be placed through a single "purchase order" issued by buyer.
14.3 Bank Guarantee
- ---------------------
The Contractor is required to put up a Bank Guarantee equal in Value to all
payments made before Systems Acceptance
14.4 Invoicing
- ----------------
Payment shall be effected by The Purchaser's receipt of the Contractor's
invoice in triplicate for the amount in question that The Purchaser will
approve of, provided, however, that The Purchaser shall not be obliged to
make any payment earlier than
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the date following from sub-clause 14.1 above. Any value added tax, or
other taxes to which Contractor is subject to within Sri Lanka and which
shall be paid by The Purchaser under this Contract shall be invoiced as a
separate item.
Invoice address:
Attn: Accounts Payable
Airspan Communications Limited
Oxford Road, Uxbridge
Middlesex
United Kingdom
14.5 Interest
- --------------
The rate per annum of the interest referred to in Subclause 26.4 shall be
defined during negotiations.
14.6 Keeping Records
- ---------------------
14.6.1 For all items specified. in this Contract, the Contractor
shall keep and maintain such books, records, vouchers and
accounts with respect to its billing of chase items to The
Purchaser for ten (10) years tram the date of Final
Acceptance.
14.6.2 For any item quoted can a cost incurred basis, the
Contractor shall keep and maintain such books, records.
vouchers and accounts of all costs with respect to the
engineering provision and installation of facilities of the
System for ten (10) years from the date of fulfillment of
a11 Contractor's Scope of Supply obligations.
14.6.3 The Contractor shall obtain from his Subcontractors such
supporting rewords for other than the cost of feed cost
items, subject to the conditions of Sub-Clause 14.6.2, as
flay be reasonably required, and shall maintain such records
for a period of ten (10) years from the date of fulfillment
of all costs required to be kept, maintained and obtained
pursuant to this Clause.
14.6.4 The Contractor shall afford the Purchaser the right to
review the said books, records, vouchers and accounts of all
costs required to be kept, maintained and obtained pursuant
to this Clause.
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Clause 15 - Liability for Accidents, Damage and Loss
----------------------------------------------------
15.1 Liability Regarding Before Passing of Risk
- -------------------------------------------------
Without prejudice to provision of Clause 5 any damage to the WLL
System or Documentation supplied or to be supplied by the Contractor
occurring before the relevant time according to Clause 11 when the
risk of damage to or loss of the WLL System and Documentation passes
to The Purchaser shall be remedied by the Contractor at its own
expense, provided that the damage or loss has not been caused by
negligent act or omission by The Purchaser or anybody employed by The
Purchaser (other than the Contractor or its Subcontractors). If the
damage or loss has been so caused by The Purchaser the Contractor
shall nevertheless, if The Purchaser so request, remedy the damage and
loss, at the expense of The Purchaser at a reasonable price to be
agreed between the Contractor and The Purchaser.
15.2 Other Indemnification
- ----------------------------
The Contractor shall indemnify and hold The Purchaser and its
officers, servants and employees harmless from any loss, damage,
liability or expense on account of damage to property and injury,
including death, to all persons, including but not limited to
employees of the Contractor, arising out of or resulting from any act
or omission of the Contractor, its Subcontractors, or anybody employed
by the Contractor or its Subcontractors, or anybody else for which the
Contractor or its Subcontractors is responsible. With respect to the
Contractor's Scope of Supply this Subclause 15.2 shall apply only
after the risk of damage or loss has passed to The Purchaser; until
that time Subclause 15.1 shall prevail.
15.3 Fraud or Gross Misconduct
- --------------------------------
Without prejudice to any further responsibilities or liabilities of
the Contractor under law, if the Contractor, or any of its
Subcontractors, or anybody employed by the Contractor or its
Subcontractors, or anybody else for which the Contractor or its
Subcontractors is responsible, has been guilty of fraud, actions
against good faith, or "Gross Misconduct" the Contractor shall -
notwithstanding any provision of this Contract to the contrary - be
liable for any loss or damage (whether direct, indirect, incidental or
consequential) suffered by as a result thereof, whether it be defects
(as defined in Clause 10) in, damage to, or loss of the Contractor's
Scope of Supply, or injuries to persons, or any other breach of this
Contract.
Contractor's liability for the said defects shall extend also to
defects which have not appeared prior to the expiration of the
warranty period in question and to defects which have not for any
other reason been notified by The Purchaser in accordance with the
provisions of Clause 10. "Gross Misconduct" means any act or omission
implying neglect to take into consideration such serious effects as a
careful Contractor normally would have been able to foresee, or a
deliberate disregard of the consequences of such an act or omission.
15.4 Limitation of The Purchaser's Liability
- ----------------------------------------------
The Purchaser shall not be liable for any damage to or loss of the WLL
System and documentation, save as to the extent provided for in
Subclause 15.1.
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The Purchaser shall not be liable for any direct, indirect, incidental
or consequential damage or loss, including loss of income or loss of
profit, suffered by the Contractor or its subcontractors as a result
of such a damage, loss or breach or as a result of any breach by The
Purchaser of this Contract, unless expressly otherwise provided for in
this Contract.
15.5 Obligations to Limit Damages and Loss
- -----------------------------------------------
The party suffering loss or damage shall always be obliged to take all
reasonable measures to mitigate the damage or loss occurred.
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Clause 16 - Patents and Other Intellectual
and Industrial Property Rights
------------------------------
The Contractor undertakes to fully indemnify and hold The Purchaser, its
officers, employees, representatives and customers harmless from and fully
indemnify them for any and all cost expenses, damages and liabilities therefore
against any claim for an infringement or alleged infringement of any
intellectual property right relating to use of the Equipment and Software
delivered under this Contract.
In particular the Contractor undertakes to defend at its own expense any claim,
suit or proceeding based upon any claim that the Contractor's Scope of Supply,
or the use or maintenance thereof infringes any licence or any right of a third
person to patent, copyright, design or any intellectual or industrial property
rights or application therefore, as well as to hold The Purchaser, its officers,
employees, and representatives harmless from and fully indemnify them for any
and all costs, expenses, damages and liabilities therefor. In the event that the
WLL System or the use of the WLL System or documentation would be held in a suit
to constitute infringement and its further use would be enjoined, the Contractor
will promptly at its own expense either
(i) procure for The Purchaser the right to continue the use, or
(ii) replace or modify the WLL System, or Documentation, so that it becomes non-
infringing while staying fully compliant with the Specifications. Any such
replacement or modification shall, however, be approved of by The Purchaser
in advance, which approval shall not be unreasonably withheld. The
Purchaser shall without delay inform the Contractor of any claim that has
come to the notice of The Purchaser and shall proceed in dealing with such
claims in agreement with the Contractor.
The Purchaser shall be at all times kept informed by Contractor of the
institution or assertion of any IPR claims or proceedings and shall without
prejudice to its rights be entitled but not obligated to participate in such
claims, suits or proceedings.
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Clause 17 - Force Majeure
-------------------------
Should Force Majeure Event occur after the signing of this Contract which
prevents the performance of any obligation of either party on the date or dates
provided for in this Contract, the performance of the obligation may be
postponed for such time, on a day by day basis, as the performance necessarily
has had to be delayed on account thereof, it being understood that such
postponement shall not be deemed a change of the Time Schedule or of any day
defined by reference to the Time Schedule.
The term of Force Majeure Event shall mean events such as war or warlike
hostilities, mobilisation or general military call-up, acts of Government
including refusal issue of required export licenses (but shall exclude failure
to obtain security clearance for own employees), civil war, revolution,
rebellion, insurrection or riots, sabotage and any strike or labour action and
other circumstances of a similar exceptional character and farreaching
influence, provided that any such event is beyond the control of the party, its
subcontractors and suppliers. It is expressly understood that no circumstance
shall be considered Force Majeure Event which the party or the subcontractor or
the supplier invoking the event of Force Majeure reasonably ought to have taken
into account at the date of signing of this Contract.
Immediately upon becoming aware of the commencement of any Force Majeure Event
causing a delay, and immediately upon becoming aware of the termination of such
an event of Force Majeure, the party desiring to invoke it as cause for
postponement shall advise the other party of the said event, failing which its
right to demand an extension of the time of performance shall be definitely
barred. To avail itself of the right to invoke any Force Majeure Event as a
cause for postponement the party shall also as soon as practicable after the
termination of the event submit to the other party reasonable proof of the
nature of such Force Majeure Event and its effect upon the performance
timetable. Each parties shall make all reasonable efforts to reduce to a minimum
and mitigate the effect of any delay occasioned by a Force Majeure Event. The
obligation of Contractor in this respect shall particularly include the
repairing or causing the repair of such damage as may have been done to its or
its subcontractor's manufacturing facilities or to Contractor's Scope of Supply.
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Clause 18 - Optional Orders
---------------------------
18.1 WLL System
- ---------------
The Purchaser shall during a period of time commencing on the date of signing of
this Contract by both parties up to 3 years or the end of year 2002 (whichever
the latest) have the right (but not the obligation) to order on fair and
reasonable terms from the Contractor Equipment, Software, Spare Parts,
Documentation and Services set out in Annexes 7, 8, 9, 10, 11, 12 and 13.
18.2 Other Terms and Conditions
- -------------------------------
In addition to the terms and conditions referred to in Subclauses 18.1 - 18.3
(inclusive) the provisions contained in this Contract including the Annexes
thereto (as amended by the parties subsequent to the conclusion of this
Contract) shall apply between the parties.
18.3 Exercise of Option
- -----------------------
The options referred to in this Clause 18 shall be exercised by a written
numbered order to the Contractor signed by one or more authorised officers or
representatives of The Purchaser. Such order shall be lodged with the Contractor
not later than on the date referred in Subclause 18.1 and shall be accompanied
by a proposed time schedule.
It is incumbent upon Contractor to acknowledge receipt of the order not later
than thirty (30) days thereafter.
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Clause 19 - Network and Maintenance
-----------------------------------
The Contractor undertakes to supply to The Purchaser, Network and Maintenance of
the WLL System in accordance with the prices and conditions set out in Annex 21
during a period of five (5) years from expiry of the warranty period.
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CLAUSE 20 - Non Waiver
----------------------
The failure of either party to insist upon strict adherence to any term or
condition of this Contract on any occasion shall not be considered a waiver of
any right thereafter to insist upon strict adherence to that term or condition
or any other term or condition of this Contract.
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Clause 21 - Language
--------------------
All manuals, other documentation and training to be provided by Contractor under
this Contract as well as all notices and other communications between the
parties hereunder shall be in English unless the parties in any specific case
agree otherwise.
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Clause 22 - The Purchaser's Approval
------------------------------------
To the extent provided in the Contract, the Specifications, design,
calculations, construction, materials and technical arrangements used in the WLL
System may be subject to The Purchaser's approval. No such approval shall affect
the Contractor's obligations hereunder or at any time limit The Purchaser's
right to demand that the Contractor's Scope of Supply in all respects shall
satisfy the Specifications and other requirements of the Contract.
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Clause 23 - Compliance with the Law
-----------------------------------
The Contractor and its subcontractors shall abide by all applicable laws,
regulations and ordinances of the Country of Sweden and shall obtain from
competent authorities all necessary permits, licenses, and authorisations
required to complete the Contractor's Scope of Supply. The Contractor and its
Subcontractors shall establish such standards and procedures on the Premises as
are necessary to comply with regulations governing employment with special
reference to safety regulations issued from time to time by any competent
authority in Sri Lanka or by The Purchaser. If it comes to the knowledge of The
Purchaser that any such regulations are not being observed, it shall immediately
inform the Contractor and, in such event, The Purchaser shall be entitled to
refuse admission to the Premises of any person who is responsible for such
contravention. Before commencing installation, the Contractor shall give The
Purchaser a full description of those risks or dangerous procedures which may
be, respectively, encountered or utilised in the course of installation.
If and to the extent requested to do so, The Purchaser will assist the
Contractor in obtaining the required information of any such laws, regulations
and ordinances, including safety regulations, as are referred to in this Clause
23. It is recognised by the parties that the presence on the Premises of any of
the Contractor's or its subcontractor's personnel might require the approval of
The Purchaser or any other authority and that such personnel might also be
required to undertake an obligation to observe secrecy with respect to
information received or obtained when present on the Premises and to sign
documents to such an effect. The Purchaser shall not be responsible for any
acts, default or unsatisfactory performance, neglect or omissions of the
Contractor that violate the laws, statutes, orders, rules, decrees, or
regulations of any jurisdiction in which the Contractor's Scope of Supply
obligations are carried out.
In any event, if any third party should nevertheless make a direct claim against
The Purchaser because of such act, default, unsatisfactory performance or
omission of Contractor, The Purchaser shall notify the Contractor as soon as
possible, and the Contractor shall be entitled to undertake and manage any legal
proceedings involving the Contractor. The Contractor shall upon the request of
The Purchaser assist The Purchaser in defending themselves against such claim
and indemnify and hold The Purchaser harmless against any and all costs,
charges, expenses, compensations and other payments made by The Purchaser in
respect of such third party claim.
The Contractor shall be deemed to have satisfied itself that it has obtained all
necessary information with respect to the Contractor's Scope of Supply and the
Contract including but not limited to the matters such as: (i) fees, pilotage
and any dues payable to port authorities, (ii) conditions affecting labour
including Contractor's Scope of Supply permits, and (iii) rules and regulations
of governments and/or port authorities.
The Contractor shall be deemed to have fully examined and independently verified
all documents and drawings, specifications, schedules, terms and conditions of
the Order, regulations and other information in relation to the Contract and to
have fully understood and satisfied himself as to all information which is
relevant as to the risks whether political or otherwise, contingencies, costs,
and other circumstances which could affect the Contract. The Purchaser, its
servants, and agents shall have no liability in law or equity or in Contract or
in tort or pertinent to any other cause of action with respect to any such
information, risks, contingencies or other circumstances.
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Clause 24 - Assignment and Sub-contracted Contractor's Scope of Supply
----------------------------------------------------------------------
The Purchaser may assign this Contract or any of its rights or obligations
hereunder to any corporation being the successor of The Purchaser.
24.1 The Contractor may also, without prior written consent of The Purchaser,
assign a contract, sub-contract, or any significant part of the
Contractor's Scope of Supply/. In any event, the Contractor shall not be
relieved from responsibility under this Contract for such parts of the
Contractor's Scope of Supply that are sub-contracted, and the Contractor
shall be responsible and liable for the acts, defaults or unsatisfactory
performance of any Subcontractor or its employees, servants and agents, as
fully as if they were the acts or defaults of the Contractor or of the
Contractor's employees, servants and agents.
24.2 The Contractor shall ensure that any sub-contracts entered into by the
Contractor shall contain such provisions of this Contract as should be made
applicable to such sub-contracts.
24.3 Any assignment, mortgage, charge, encumbrance or sub-contract in
contravention of this Clause shall, as against The Purchaser, be void and
of no effect.
24.4 The Contractor shall protect, defend, indemnify and keep indemnified The
Purchaser against all claims, demands, actions, suits, proceedings, writs,
judgements, orders, decrees, damages, losses and expenses suffered or
incurred by The Purchaser arising out of or related to any assignment,
mortgage, charge, encumbrance or sub-contract, whether permitted or not.
24.5 The assignment of any part of the Contractor's Scope of Supply to any
Subcontractors will be performed according to the Contract and will not
affect the Contractor's Scope of Supply.
24.6 The Parties agree that no contractual relationship is created between The
Purchaser and any of the Contractors Subcontractors, suppliers or agents.
The Contractor shall indemnify The Purchaser for any expenses or damages
caused to The Purchaser as a result of any claim or demand against The
Purchaser by any Subcontractor, supplier or agent.
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CLAUSE 25 - Termination
-----------------------
This Contract, or any individual order under this Contract, may be terminated at
any time by written notice from The Purchaser. Such notice shall specify the
effective date of termination and the actions to be taken by the Contractor in
connection with the termination. If such termination is not due to the
Contractor's failure to fulfil his obligations, which would entitle The
Purchaser to cancel the Contract, or any part of it, The Purchaser shall pay a
proportional price for all work in progress, equipment on order for the
Purchaser, equipment that has been manufactured for the Purchaser and resides in
finished goods, work performed, for material, administration, and profit on the
amount of work performed under the Contract, and refund any other direct cost
incurred due the termination, deducting amounts previously paid. The title to
the work performed under this Contract prior to the termination shall vest in
The Purchaser upon payment of the proportional price.
The compensation to be paid to the Contractor under this Clause shall be tried
to be determined by negotiations, however, the amount shall under no
circumstances exceed the Contract Price.
In case of termination, the Contractor shall make every effort to reduce the
costs incurred.
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Clause 26 Cancellation
----------------------
26.1 General
- ------------
Without prejudice to any other rights or remedies The Purchaser may have,
The Purchaser may cancel this Contract according to the following
provisions. The Purchaser may also cancel an order under this Contract,
without thereby cancelling any part of this Contract, according to the same
provisions.
26.2 Cancellation Due to the Contractor
- ---------------------------------------
The Purchaser may cancel this Contract, in its entirety or with respect to any
portion thereof or an order under the Contract, with immediate effect by written
notice to that effect:
(i) Insolvency etc.
--------------
if Contractor has become voluntarily or involuntarily declared
bankrupt or otherwise is insolvent or has entered into liquidation or
has enter into composition proceedings with its creditors or if the
Contractor has taken any action in furtherance of any such
proceedings or has disposed or contemplates to dispose of all or the
major part of its assets;
(ii) Material breach of Contract
---------------------------
if the Contractor commits a material breach of any of its obligations
under this Contract other than delay in the performance of its
undertaking referred to in (iii) below and fails to cure such breach
within thirty (30) days after having received The Purchaser's notice
thereof;
(iii) Delays
------
if due to any circumstance for which the Contractor or any of its
subcontractors or suppliers are responsible the Actual Date of
Delivery is delayed for more than an aggregate period of ninety (90)
days;
(iv) Non-compliance with the requirements
------------------------------------
if the Contractor's Scope of Supply in any important respect does not
meet the requirements set out in this Contract and the Contractor has
not cured the defect within the times specified in the Contract, or,
if no specification is made, within a reasonable time, such
reasonable time not to exceed thirty (30) days and fails to cure the
defect within an additional reasonable period of time, not exceeding
sixty (60) days unless otherwise agreed by The Purchaser, from
receipt of The Purchaser's notice to that effect as has been fixed by
The Purchaser in said notice.
26.3 Cancellation With Reference to Force Majeure etc.
------------------------------------------------
The Purchaser may cancel this Contract with immediate effect by written
notice if any Force Majeure Event according to Clause 17 (whether
preventing the Contractor or The Purchaser) causes the Actual Date of
Delivery to be delayed or can reasonably be anticipated to be delayed for
more than two hundred and twenty (150) days. The Purchaser shall exercise
its right to cancel the Contract according to this Subclause 26.3 not later
than sixty (60) days after having received the Contractor's notice of the
of the Force Majeure Event in question.
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26.4 Consequences of Cancellation According to 26.2
----------------------------------------------
In the event that The Purchaser cancels the Contract according to any of
the provisions of Subclause 26.2 the Contractor shall immediately upon The
Purchaser's demand refund to The Purchaser all amounts paid by The
Purchaser under this Contract prior to the effective date of the
cancellation plus interest on the said amounts from the respective dates of
The Purchaser's payment up to the date of refundment (all dates inclusive)
at the rate set out in Subclause 14.5. The Purchaser shall make available
to the Contractor for restitution, dismantling and removal at the
Contractor's own risk and expense what the Contractor may have delivered to
The Purchaser under this Contract. This Contract shall cease to have any
force or effect except that Contractor shall hold The Purchaser harmless in
respect of all direct costs loss and damage suffered by The Purchaser on
account of such a cancellation, including without limitation The
Purchaser's total costs for completing all the Contractor's undertakings,
whether performed by The Purchaser itself or other contractors engaged by
The Purchaser for the purpose, to the extent these costs plus any
compensation to the Contractor as set forth below in this Subclause 26.4
exceed the Total Contract Price according to this Contract. The Purchaser
shall make all reasonable efforts to mitigate such loss, damage and costs.
In the event that The Purchaser decides to complete the WLL System or parts
thereof either itself or by engaging other contractors, The Purchaser shall
have the right to acquire - against compensation and on terms and
conditions with respect to warranties and other matters that are reasonable
in the circumstances - such Equipment, Software, Documentation, services
and other items within the Contractor's Scope of Supply as well as the
Contractor's rights under subcontracts and supply agreements as can be used
for the completion, operation and maintenance of the WLL System.
26.5 Consequences of Cancellation According to 26.3
----------------------------------------------
In the event that The Purchaser cancels the Contract pursuant to Subclause
26.3 the Contract shall cease to have any force or effect and the
Contractor shall immediately upon The Purchaser's demand refund to The
Purchaser all amounts paid by The Purchaser under this Contract. The
Purchaser shall make available to the Contractor for restitution,
dismantling and removal at the Contractor's own risk and expense what the
Contractor has delivered to The Purchaser under this Contract prior to the
effective date of the cancellation.
In the event that The Purchaser decides to complete the WLL System or parts
thereof either itself or by engaging other contractors, The Purchaser shall
have the right to acquire against a compensation and on terms and
conditions with respect to warranties and other matters that are reasonable
in the circumstances - such Equipment, Software, documentation, services
and other items within the Contractor's Scope of Supply as can be used for
the completion, operation and maintenance of the WLL System.
The Purchaser may require the Contractor to promptly remove at its own
expense any and all of Equipment, or parts thereof, that may have been
delivered to or installed and not acquired by The Purchaser.
26.6 Ownership to Equipment etc.
---------------------------
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The ownership to such Equipment, Software, materials, Documentation and
work within the Contractor's Scope of Supply for which the Contractor is
entitled to compensation according to Subclauses 26.4 or 26.5 shall
immediately upon the cancellation pass to or notwithstanding the
cancellation rest with The Purchaser, as the case may be. The Purchaser
shall be free to use the same without incurring any liability to the
Contractor or any third party. It is agreed that The Purchaser may exercise
its rights to cancel the Contract, or an order under the Contract
notwithstanding whether Equipment, Software, documentation and work
installed, delivered, and performed by the Contractor can be restituted in
substantially the same condition as delivered by the Contractor. In the
event of cancellation pursuant to Subclause 26.2, Equipment, Software and
Documentation of which the value has decreased due to negligence on part of
The Purchaser or anybody for which The Purchaser is responsible shall be
acquired by The Purchaser according to provisions agreed upon by the
parties.
26.7 Survival of Clauses
-------------------
The provisions of Subclause 11.1.3 and Clause 16, to the extent applicable,
and of Clause 29, 30 and 31 shall survive the cancellation or termination
of this Contract.
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Clause 27 - Entire Agreement. Modifications of the Contract
-----------------------------------------------------------
The parties state that with respect to the subject matter hereof this Contract
Document and the Annexes, thereto, which form an integral part of the Contract,
constitute the sole and exclusive understanding of the parties in respect of the
subject matter hereof and supersede all prior agreements, arrangements or
understandings relating to the subject matter, including any bid, tender,
quotation, offer or proposal, general sales conditions or terms or provisions
that the Contractor has submitted.
No change or modification of this Contract may be made except in writing and
executed by the respective duly authorised representatives of each of the
parties hereto.
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Clause 28 - Order of Priority
-----------------------------
In the event of any discrepancy between any data, stipulation or provision given
in any of the Clauses of this main Contract Document, on the one hand, and data,
stipulation or provision given in any of the Annexes, on the other hand, the
data, stipulation or provision contained in a Clause of this Contract Document
shall prevail. In the event of any discrepancy between the Technical
Specifications and the Product Description the Technical Specification shall
prevail over the Product Description, except to such an extent as the Product
Description is more advantageous to The Purchaser, in which latter case the
Product Description shall prevail.
To the extent the Technical Specifications or the Product Description contains
something that is not dealt with in any provisions of the Clauses of this
Contract Document, the Technical Specifications and the Product Description, as
the case may be, shall prevail notwithstanding the foregoing.
To the extent the Technical Specifications or the Product Description contains
anything that is not dealt with in the other of them, the one containing the
data, stipulation, provision or whatever might be concerned shall prevail over
the other.
The Purchaser shall have the right to decide what document, data, stipulation or
provision that shall prevail if such a decision is notified to the Contractor
well in advance of the commencement of the manufacturing process in question.
In the event that the Contractor and The Purchaser have different opinions as to
the interpretation of the Specifications, the opinion of The Purchaser shall
always prevail, notwithstanding the foregoing, provided that The Purchaser's
opinion is not unreasonable. The Contractor shall as soon as possible inform The
Purchaser of any inconsistency, ambiguity or incompletion found in the
Specifications.
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Clause 29 - Applicable Law
--------------------------
This Contract shall be governed by and construed in accordance with the law of
Sweden.
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Clause 30 Confidentiality
-------------------------
Each party (as "Receiving party" hereunder) shall keep in confidence, with the
same degree of care as used for its own confidential information, any
information which is disclosed to it by the other party (as "Disclosing party"
hereunder) in writing or other tangible form and clearly marked or identified in
writing as "confidential" or by similar legend, for a period of three years from
the date of first disclosure to the receiving party hereunder of such
information, except that the foregoing obligations shall not apply or cease to
apply, to any information which:
(i) is publicly known at the time of disclosure or becomes thereafter
publicly available through no fault of the receiving party;
(ii) was already known to the receiving party free from confidentiality
restrictions, prior to receiving it from the disclosing party;
(iii) is disclosed to the receiving party by any third party without
confidentiality restrictions;
(iv) is independently developed by the receiving party;
(v) is necessary to disclose to any lawful authorities for obtaining any type
approval of the hardware/software goods covered hereunder;
(vi) is inherently disclosed or is necessary to be disclosed by The Purchaser
by or for the proper installation, operation, use, maintenance and/or
repair of the goods procured hereunder or the provisions of services
thereby.
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Clause 31 - Arbitration
-----------------------
31.1 The Contractor and The Purchaser shall endeavour to settle any difference
of opinion which may arise during the execution of this Contract in an
amicable manner.
31.2 Any difference of opinion concerning any matters under this Contract shall
be referred for resolution by arbitration to an expert sitting as a single
arbitrator to be agreed upon by the parties hereunder or failing such
Contract to a single arbitrator to be named by the President of the [_],
upon the request of any party to this Contract. Arbitration proceedings
shall take place in Stockholm Upon the request of any party the arbitration
shall be in English. The arbitrator from time to time acting hereunder
shall have all the powers conferred on arbitrators by the [_] Arbitration
Law 1968 or any statutory modification thereof for the time being in force.
Judgment upon any award rendered by the arbitrator may be entered in any
court in Sweden having jurisdiction or application may be made to such
court for a judicial acceptance of the award and an order of enforcement,
as the case may be. The arbitrator shall not be bound by the rules of
evidence and procedure, but shall be bound by the substantive law of the
Sweden and shall be obliged to disclose the reason for his award.
31.3 The fact that a dispute is brought before a court or before a duly
appointed expert does not release the Contractor from its obligations to
fulfil its commitments as provided by this Contract.
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Clause 32 - Notices
-------------------
Any and all notices or information other than information or proposal of pure
technical nature shall be given by any party by prepaid mail or by fax or hand
delivery to the other party at the following address:
If to The Purchaser
Jan Campbell, 110 Sir James Peiris Mawatha, Colombo, Sri Lanka
If to Contractor
Steve Mallinson, Cambridge House, Oxford Road, Uxbridge, UK.
Notices, information or proposals of pure a technical nature shall be forwarded
to the following address:
If to The Purchaser
Mahinda Ramasundera, 110 Sir James Peiris Mawatha, Colombo, Sri Lanka
If to Contractor
Paul Senior, Cambridge House, Oxford Road, Uxbridge, UK.
The aforementioned addresses of either party may be changed at any time by
giving fifteen (15) days prior notice to the other party in accordance with the
foregoing. Either party may also by fifteen (15) days prior notice to the other
party give further specification as to which address notice, information or
proposals of various nature shall be forwarded.
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Clause 33 - Support Bond
------------------------
In addition to the other clauses within this Contract, The Contractor agrees to
placing of a Support Bond.
The Guarantor for this bond shall be as follows:
Lloyd Bank Plc.
Guarantees, International Services Centre
P.O. Box 63
Two Brindley Place, Birmingham
B1 2AB
United Kingdom
The following wording will be used:
The Guarantor hereby issues an irrevocable Guarantee No. ______ in the following
terms:
The Beneficiary shall the Purchaser known as Suntel Private Ltd.
The Principal shall be the Contractor, known as Airspan Communication Limited.
Failure of the Contractor's performance obligations in respect of the supply of
equipment for Telecommunications Network Infrastructure under Contract for
Purchase Order No. LP/0442/99 dated April 26, 1999 due to the end of its
activities, due to its winding up, appointment of receiver(s) or entering into a
company voluntary arrangement, or closure of the product line used within this
supply of the contract.
The Support Bond shall be posed within 1 month after The Contractor receives the
principal and interest payment from milestones through System Acceptance (Actual
Date of Delivery) and receipt by The Contractor of all and any other associated
payments for deliveries covered under the bridging phase.
The Support Bond shall have value equal to 60% of contract value in the first
year after the Actual date of Delivery (Phase 1), 50% of contract value in the
second year after the Actual date of Delivery (Phase 1), and 40% of contract
value in the third year after the Actual date of Delivery (Phase 1).
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Clause 34 - Contract Period
---------------------------
This Contract comes into force when signed by both parties and shall remain in
force as long as any of the parties has any obligation under the Contract to
fulfil.
This Contract has been made in duplicate and each of the parties has taken one
copy.
<TABLE>
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<S> <C>
Place: LONDON Place: COLOMBO
Date: Date:
Eric Stonestrom J. Campbell
Managing Director Managing Director
Airspan Communications Limited Suntel (Private) Ltd.
The Contractor The Purchaser
</TABLE>
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(
All reasonable direct costs to which The Purchaser may be put by any
repetition of an inspection or a test shall be reimbursed by the
Contractor on demand and may be deducted by The Purchaser from any
moneys to be paid by The Purchaser under this Contract.
9.2 Quality Assurance
- -----------------------
The Contractor shall be responsible for carrying out a continuous quality
surveillance in accordance with the quality assurance procedure laid down
in Annex _15 in order to ensure that the Equipment and the Software in all
respects will meet all the requirements set out in this Contract.
9.3 System Test (or Site Acceptance Test)
- -------------------------------------------
The Contractor shall be responsible for carrying out a System test for
each site. Representatives of The Purchaser shall be present. The object
of the System test is to establish that each part of the WLL System will
fulfil all the functional and technical requirements set out in this
Contract.
As soon as possible after completion of the System test, the Contractor
shall furnish to The Purchaser a report regarding the test. To the extent
an unsuccessful test so requires, the Contractor shall cure the discovered
deviation from the requirements and provide for repeated test.
Prior to the start of any System Acceptance Test the Contractor shall have
proved that the System tests have been successful and have cured to the
satisfaction of The Purchaser the deviation from the requirements or any
other defect or deficiency that has been observed in the course of the
System test. If the Purchaser agrees a System Acceptance Test can take
place without all System Tests being complete.
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To the extent an unsuccessful test so requires, the Contractor shall cure
the discovered deviation from the requirements and provide for a repeated
test.
At the time when the Contractor has successfully completed a Systems Test
(Site Acceptance Test), the Purchaser shall accept the title and risk for
that part of the network that has been successfully tested. Alternatively,
provision of revenue producing traffic for more than one month will
constitute completion of System Test for a specific site.
9.4 Acceptance Test
- ---------------------
When,
(i) the tests and inspections referred to above in this Clause 9 have
demonstrated that all Equipment and Software delivered by the Contractor
complies with all relevant requirements, standards and Specifications;
(ii) such Equipment and Software as shall be installed by Contractor has
been installed on Premises ready for operation;
(iii) relevant training referred to in Clause 11 has been performed;
(iv) relevant documentation has been delivered in accordance with Clause
11,
and
(v) relevant Test Equipment have been delivered in accordance with
Clause 11, then The Purchaser shall perform an acceptance test ("System
Acceptance Test"). The purpose of this Acceptance Test is to establish
whether the Equipment and the Software complies with all the relevant
requirements and Specifications when operated and otherwise handled by The
Purchaser personnel duly trained by the Contractor utilising the
Documentation supplied by the Contractor. The detailed test procedure and
criteria of a successful Acceptance Test shall be agreed upon in
accordance with Clause 7.1.
9.5 Actual Date of Delivery
- -----------------------------
The Acceptance Test shall be deemed to have been successfully performed
when it has been demonstrated that all relevant requirements of this
Contract are met or when the Purchaser has carried commercial traffic for
a period of more than 90 days.
The Actual date of Delivery is when all defects, deficiencies, or
deviations from the requirements discovered in connection with the
Acceptance test, or prior thereto, have been cured to the satisfaction of
The Purchaser, and a successful Acceptance Test has shown that
Contractor's Scope of Supply with respect to WLL System meets all the
requirements of this Contract.
It is recognised by the parties that even after the Acceptance Test, some
minor defects and deficiencies that are non-essential for the proper
operation or maintenance of the WLL System might exist. The parties shall
by agreement enter these defects or deficiencies into a list of defects
which shall also include a time schedule for the taking by Contractor of
the necessary corrective measures. The
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stipulations of this Contract as regards warranty obligations contained in
Clause 10 below shall apply to Contractor's duty to take such corrective
measures.
If the Purchaser fails to make any or all sites available for Installation
of the equipment one hundred and twenty days (120) after the contract
signature, the Purchaser shall by default accept the equipment, for that
part of the network that cannot be installed, and make all relevant
payments applicable to Site and System Acceptance. At this time, title and
risk for the equipment that cannot be installed shall pass from the
Contractor to the Purchaser.
If the System Acceptance Test (required before Actual Date of Delivery can
be achieved) is delayed because of the Purchaser's failure to make sites
"ready for installation", the System Acceptance Test shall be conducted
only on those sites that have passed Site Acceptance.
The Time Schedule and Milestones for the implementation and preparation of
the Sites by the Purchaser shall be defined in Annex 18.
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Clause 10 Warranties and Certain Consequences in the Event of
---------------------------------------------------------------
Breaches of Warranties
----------------------
10.1 Warranty Period
- ----------------------
The Contractor warrants that the WLL System installed and ready for
operation and Spare Parts delivered to The Purchaser, at all times during
a warranty period of eighteen (18) months from the Actual Date of
Delivery of the WLL System will conform to all the requirements set out
in the Specifications. Subject to the provisions of Subclause 10.2 and
10.3 any lack of conformity that is in existence, or will occur, or will
appear prior to or during the warranty period, and any other defect,
deficiency, or malfunction that is due to construction, manufacture,
workmanship, materials, programming, transportation or installation which
appear prior to the expiration of the warranty period shall be considered
such a defect will be covered by Contractors warranty obligations. Design
faults shall be warranted for twenty-four (24) months from the Actual
Date of Delivery.
10.2 Corrective Measures Activity
- -----------------------------------
In case of breach of warranty obligations defined in Subclause 10.1 above
the Contractor shall at its own risk and expense cure the defect by
repair, replacement, modification, adjustment, delivery and installation
of additional Equipment or Software, or performance of additional work or
implement any other adequate corrective measures (all such measures
collectively referred to as "Corrective Measures").
10.3 Warranty of Corrective Measures
- --------------------------------------
The Contractor shall be obliged to take the necessary Corrective Measures
and other actions referred to in this Clause 10 within the shortest
practicable time, however not later than at such a final date for the
Corrective Measures specified by The Purchaser taking into account the
breach to be cured, the work to be done and The Purchaser operational and
maintenance requirements. The Contractor shall at the request of The
Purchaser render such assistance, advice or instruction that in the
Contractor's reasonable opinion would be sufficient to remedy the defect.
If the Contractor or The Purchaser would deem it necessary to arrange
that the Corrective Measures are taken by the Contractor's personnel, the
Contractor shall make such personnel available as fast as possible but no
longer than forty eight (48) hours from the moment when The Purchaser has
dispatched a request.
If the Corrective Measures will be in the form of replacement and The
Purchaser does not have the relevant spare part available the Contractor
shall make the spare part available as soon as the circumstances permit,
but in no case later than forty eight (48) hours from the moment when The
Purchaser has dispatched a request for such a spare part.
Major Service effecting errors shall be corrected within 5 working days
from the moment The Purchaser has dispatched a request for correcting
such an error and the Contractor has acknowledge this request.
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Minor Service effecting errors and Non Service effecting errors shall be
corrected within eight (8) weeks from the moment The Purchaser has
dispatched a request for correcting such an error and the Contractor has
acknowledge this request.
Major, Minor and Non Service Effecting errors are defined in Annex 25.
If the Contractor in spite of proper notification should not be able to
carry out his duties within the agreed period of time, The Purchaser
shall have the right to correct the defects) or have it (them) corrected
by others.
If spare parts purchased by The Purchaser have been used for replacement
of defective parts or any interim repair of the defective parts has been
made, the Contractor shall at his own expense repair the replaced part or
make the final repair thereof, as the case may be, or deliver spare parts
in replacement. The Purchaser shall bear the risk and costs of transport
to the Premises of Contractor and the Contractor shall bear the risk and
costs of the return transport for such defective parts as well as of
repaired parts and parts supplied in replacement.
10.4 Notification of Defects
- ------------------------------
The Purchaser shall notify the Contractor of a defect not later than
thirty (30) days from The Purchaser's discovery thereof. Notice of
defects and requests for Corrective Measures shall, at the discretion of
The Purchaser, be made by fax, letter or hand delivery.
The Purchaser shall also be entitled for the purpose hereof to avail
itself of any guarantee or other security provided by the Contractor in
accordance with this Contract.
10.7 Warranty Regarding Replaced or Corrected Parts
- -----------------------------------------------------
In the event that any part of the WLL System has been corrected,
repaired, replaced, modified or adjusted pursuant to a warranty
obligation, a fresh warranty period of the same duration as set forth in
Subclause 10.1 shall apply to such a part or if replaced to the new part.
This fresh period shall start to run as from the date when The Purchaser
confirms that the repair, replacement, modification or adjustment has
been successfully completed.
10.8 Warranty of Reliability and Maintainability
- --------------------------------------------------
Without prejudice to the provision of Subclause 10.1 above Contractor
warrants that the reliability and maintainability of the WLL System will
comply with the provisions set out in the Specifications, so that the
respective values which can be derived from the parameters contained in
Annex 15 will be obtained during the warranty period of eighteen (18)
months. The compliance with the parameters shall be demonstrated with the
methods set out in Annex 15.
In the event the WLL System does not fulfil the reliability and
maintainability specified in the Specifications the Contractor shall be
obliged to take such Corrective Measures at its own risk and expense as
are necessary to have the WLL System to fulfil the Specifications with
regard to the aforesaid parameters.
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10.9 Warranty of Documentation
- --------------------------------
10.9.1 Sufficient and Adequate for Operation and Maintenance
--------------------------------------------------------------
The Contractor warrants for the technical life time of the WLL
System that the information contained in the Documentation, will
be continuously updated, will be provided in a timely manner and
will be sufficient and adequate for the proper operation and
maintenance of the WLL System.
To any damage or defect caused or revealed by lack of documents
stated in Subclause 10.9.1 the provisions of Subclause 10.2
shall apply, notwithstanding whether the damage or defect
existed or appeared prior to the expiration of the respective
warranty period set out in Subclause 10.1.
10.9.2 Additional Documentation
---------------------------------
The Purchaser may wish to develop certain additional
documentation with respect to the functioning of the WLL System.
The Contractor shall be obliged to check the accuracy and
completeness of such documentation and within a reasonable
period of time from The Purchaser's request to such effect
submit in writing to The Purchaser its approval or disapproval
of the said documents. In the event of disapproval Contractor
shall specify in what respect the documentation is incorrect or
incomplete and what measures should be taken to make the
documentation correct and complete. Any compensation for
Contractor's work referred to in this Subclause 10.9.2 shall for
each case be agreed upon between the parties.
10.10 Spares Warranty
- ----------------------
The Contractor warrants that it is able to supply The Purchaser with
spares, or equivalent replacement parts, or substitute parts with an
equal or greater level of functionality that maintains backwards
compatibility for repair and maintenance of Equipment delivered for a
period up to ten (10) years from Actual Date of Delivery. Such parts
shall be provided at reasonable prices and delivery times.
If the Contractor after the above mentioned period intends to stop the
manufacturing of a type of spares or equivalent replacement parts, the
Contractor shall inform The Purchaser about his intention at least twelve
(12) months in advance.
10.11 Warranty of Right to Use and Reproduce Etc.
- --------------------------------------------------
The Contractor warrants that The Purchaser shall have the right to use
all and any Software as well as of all and any Documentation (and parts
thereof) that the Contractor has supplied without thereby infringing any
right of the Contractor, its subcontractors or employees, or a third
party, or being obliged to pay any compensation to the Contractor, its
subcontractors or employees, or to any third party. The Purchaser's right
to reproduce, change or modify software and documents is limited to the
rights defined in the software license that is granted by the Contractor
for use by The Purchaser in the WLL System delivered by the Contractor to
The Purchaser. This is defined in Annex 26.
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10.12 Repairs Warranty
- -----------------------
The Contractor warrants that it, during a period of at least up to ten
(10) years from Actual Date of Delivery or from the date of
discontinuation of commercial availability of the related equipment,
whichever comes the latest, is capable of and will, at The Purchaser's
request, repair defective material in Equipment delivered under this
Contract.
Contractor warrants that if The Purchaser so wishes it shall enter into
Annual Operations and Maintenance Contract with The Purchaser in forms
set out in Annex 21 and be bound to all conditions there is in the
License included without limitation to conditions as to price and for as
long as The Purchaser requires for a period of up to ten years.
10.13 Warranty for Production of Equipment and Software
- --------------------------------------------------------
The Contractor warrants to ensure the supply to The Purchaser of
Equipment and Software in every respect for upgrading, extensions, and
maintenance of the WLL System at least for a period up to ten (10) years
after the Actual Date of Delivery, at prices and within reasonable
delivery times and on other reasonable conditions. In the event that the
Contractor intends to cease to supply Equipment and Software for the WLL
System, the Contractor shall inform The Purchaser thereof at least twelve
(12) months in advance. The Contractor shall at the request of The
Purchaser -without charge supply all drawings and other technical
information and documents that will be required or of assistance in the
provision, operation and maintenance of the WLL System. Equipment and
Software purchased pursuant to this Subclause 10.13 shall be subject to
the same warranties as set out in this Clause 10.
10.15 Title and Intellectual Property Rights
- ---------------------------------------------
The Contractor warrants that Contractor will deliver to The Purchaser
good title to all of the items falling within Contractor's Scope of
Supply and each such item shall be free of any claim, encumbrance or lien
whatsoever.
For the technical life time of the WLL System the Contractor warrants in
accordance with Clause 16 and furthermore that it shall not be necessary
for The Purchaser to obtain any license or any similar grant under a
patent or any other industrial or intellectual property right for the WLL
System either from the Contractor or any other person in order to be able
to interface the WLL System, with equipment of design, construction or
makes other than the Contractor's or its subcontractors'.
In the event of breach of this warranty the provisions of Clause 16 shall
apply.
10.16 Exceptions from Warranties
- ---------------------------------
The Contractor will have no liability or responsibility arising out of
(c) (i) deviations from the requirements of this Contract that are
caused by such damage to or loss of the WLL System as is
accidental and occurs after the time when the risk of loss and
damage has passed to The Purchaser;
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(d) deviations from requirements of this Contract that are caused by
The Purchaser or any other person for which the Contractor is not
responsible, or any changes, repairs or replacements made by The
Purchaser or said other person, provided that The Purchaser or
such other person has acted contrary to instructions contained in
manuals or other documentation provided by the Contractor under
this Contract;
(e) breaches of warranties of which The Purchaser has not notified
the Contractor during the respective warranty period, or before
thirty (30) days have elapsed after-the expiry of the said period
provided, however, that this exemption from liability and
responsibility shall not apply if the Contractor, or any of its
representatives, nevertheless knew of the breach;
(f) deviations from the requirements of this Contract that are caused
by non-fulfilment of The Purchaser's undertakings of The
Purchaser's Share of Responsibility
Notwithstanding the foregoing of this Subclause 10.16 the Contractor
shall be obliged to cure at the expense of The Purchaser also deviations
from the requirements for which the Contractor has no liability or
responsibility, if The Purchaser so requests.
10.17 Records of Events
- -------------------------
The Purchaser will during the warranty period in Subclause 10.1 keep
records of events that might be of importance for determining the type
of defect, the time of its occurrence, the notification and curing
thereof etc. These records shall prevail unless proved to be inaccurate
in any specific respect. The Purchaser shall keep the records available
to the Contractor on request.
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Clause 11 - Delivery
--------------------
11.1 Equipment and Software
11.1.1 Contractual Date of Delivery
The WLL System shall have been delivered and successfully
tested according to Subclauses 9.4 on the date set out in the
Time Schedule (Annex 18). The said date is in this Contract
referred to as the Contractual Date of Delivery.
The schedule and quantities of material shown in Annex 18 is an
estimate and is not a binding commitment by The Purchaser. The
Purchaser considers this list to be the Tender's minimum
delivery obligation.
11.1.2 Passing of Title
The title to as well as the risk of damage to and loss of the
WLL System, for that part of the system in question, shall pass
to The Purchaser on completion of a successful Site Acceptance
test.
The Purchaser shall be responsible for the operation and
maintenance of the WLL System from the date of Site Acceptance.
This shall not limit or compromise any claim which The
Purchaser may have against the Contractor under any warranty or
other provision of the Contract. Prior to the Site Acceptance,
The Purchaser's responsibility for the operation of the WLL
System shall be confined to such responsibility as follows from
The Purchaser's performance of the tests referred to in Clause
9.
11.1.3 Software
11.1.3.1
The Purchaser is granted a non-exclusive perpetual restricted royalty-
free license to use the Software, but only in conjunction with The
Purchaser's use and maintenance of WLL System in accordance with this
Contract, and not otherwise.
Use of this Software shall not include the right to copy, reproduce
and modify the software.
The Purchaser agrees that the Software provided to it by the
Contractor under this Contract or any renewals, extensions, or
expansions thereof, or in implementation of any of the foregoing,
shall, as between the parties hereto, be treated as the exclusive
property of the Contractor and as proprietary and a trade secret of
Contractor. The Purchaser shall:
(g) not provide or make the Software or any portions or aspects
thereof available to any person except to its employees or
agents on a "need to know" basis;
(h) not modify the Software without the prior written consent of
Contractor.
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If Contractor modifies or changes the Software to permit additional
features or services, such Software will at The Purchaser request be
made available to The Purchaser on prices based on a predetermined
methodology. In any case the Contractor shall provide all such
features and services free of charge within the first twelve 12 months
from the date of signing the Contract.
Nothing in this Clause shall limit Contractor's warranties in Clause
10.
The Purchaser and any successor to The Purchaser's title to the WLL
System shall have the right without further consent of Contractor to
assign this license to any other party which acquires the WLL System,
provided any such other party (either assignee or sublicensee) agrees
in writing to abide by the terms and conditions of this license.
Notwithstanding anything in this Contract to the contrary, it is
understood that The Purchaser is receiving no title or ownership
rights to such Software, which rights shall remain with Contractor.
11.1.3.2
As applicable and generally available to Contractor's customers, Contractor
shall license to The Purchaser a copy of any diagnostic software utilized
by Contractor with respect to the installation and maintenance services of
the Software and System.
11.1.3.3
The Contractor shall offer and The Purchaser at its discretion may accept a
new Software Release containing new facilities on a regular basis (at least
once per year) for a period of ten (10) years after Actual Delivery Date of
the Contractor's Scope of Supply. The new release shall indicate what
modifications are required on implementation to the Software and hardware
used by The Purchaser. In the event that The Purchaser chooses not to
accept the installation of new Software Releases, the Contractor shall
continue to support the Latest Version of Software including the correction
of any faults or bugs.
11.1.3.4
During a period of five (5) years after acceptance of a version of
Software, the Contractor shall provide without charge at The Purchaser's
request, maintenance releases correcting software faults identified in the
Latest Version by The Purchaser, or by the Contractor or by its other
customers.
11.1.3.5
New releases and maintenance releases shall be subject to acceptance tests
to be agreed upon by the parties.
11.1.3.6
Unless the parties have agreed otherwise in writing, new releases and
maintenance releases shall not alter the applications or the uses to which
the System or parts of the System can be put, whether or not in conjunction
with existing files, and shall in all respects be compatible with the
Latest Version of the Software. Software updates shall be backward
compatible to existing hardware, features, and functionalities, unless
mutually agreed otherwise.
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11.1.3.7
The Contractor shall fully disclose and supply and keep supplied in
confidence to The Purchaser the Latest Version of all Documentation and the
Software, with relevant information about their release status.
11.1.3.8
The Contractor shall ensure that the Documentation supplied to The
Purchaser fully describes the Software accepted and licensed for the System
under Clause 11.1.3.1 of this Contract. Documentation will fully describe
new features, functionalities, errors corrected and new errors detected.
11.1.3.9
At the request of The Purchaser, the Contractor shall provide all necessary
interfaces, interface specifications and standard protocols for systems or
products provided by The Purchaser or other parties, including the physical
components of such interfaces, and the proper functioning of these
interfaces, and all relevant documentation.
11.1.3.10
If the System delivered by the Contractor fails to function properly in
conjunction with a third party product in use by The Purchaser, the
Contractor shall, at the request of The Purchaser consult with the relevant
contractors and cooperate closely with them in tracing and repairing the
cause of the malfunction.
11.1.3.11
In the event that third party Software supplied by the Contractor under
this Contract becomes unavailable or essential modifications cannot be
carried out for any reason whatsoever, the Contractor shall at no charge to
The Purchaser, procure and supply to The Purchaser suitable alternative
third party Software to enable the continued operation and Contractor's
Scope of Supply ability of the System.
11.1.3.12
In the situations referred to in Sub-clause 11.1.3.11 The Purchaser shall
have an unlimited license to use the Software and shall have the right to
make modifications to the Software (or have them made) only for use with
the System
The obligations of The Purchaser under this Clause shall survive the
termination of this Contract for any reason.
11.2 Turn-key Services
- ----------------------
The turn-key services of the WLL System shall be done to the satisfaction
of The Purchaser.
No service or work by the Contractor may, without The Purchaser's written
approval thereof, commence earlier than on the date of start of service set
out in the Time Schedule. The scope of work regarding Turn-key services is
set out in Annex 9.
11.3 Training
- -------------
The Contractor shall provide The Purchaser's personnel with the training
required for the proper operation and maintenance of the WLL System. The
scope of Contractor's undertaking in this respect, as well as the terms and
other conditions applicable thereto are set out in Annex 10.
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11.4 Documentation
- ------------------
The Contractor shall have provided The Purchaser with the Documentation set
out in Annex 11 on or before the dates set out in the Time Schedule.
11.5 Spare Parts
- ----------------
The Contractor shall have provided The Purchaser with the spare parts set
out in Annex 12 on the dates set out in the Time Schedule.
11.6 Test Equipment
- -------------------
The Test Equipment set out in Annex 13 shall have been delivered at
Premises on or before the dates set forth in the Time Schedule.
11.7 Marking
- ------------
All Equipment, parts thereof, and spare parts shall be clearly and durably
marked with the Contractor's code number and - if any - status revision
which shall make it possible to identify all Equipment, parts thereof and
spare parts for the purpose of warranty. The Contractor shall well in
advance before dispatch of the Equipment or spare parts furnish The
Purchaser with a packing list indicating the Contractor's code numbers
applicable to the respective parts.
11.8 Packing
- ------------
All Equipment and Spare parts shall be packed in a manner that is suitable
for the transportation and for the storing in The Purchaser's premises.
11.9 Order Procedure
- --------------------
The deliveries shall be executed in accordance with the provisions stated
in Annex 14. In order to state the extent of each delivery a suborder
specification shall be sent to the Contractor as a firm order. The suborder
specifications shall contain information regarding quantities of Equipment
and Spare Parts to be delivered, delivery dates, delivery address and
invoice address.
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Clause 12 - Liquidated Damages in the Event of Delays in Delivery
-----------------------------------------------------------------
12.1 General
- --------------
The parties acknowledge that the Contractor's fulfillment of its undertakings
set out in the Time Schedule (Annex 18) is of utmost importance to The
Purchaser. The parties also acknowledge that delays will cause severe damage to
The Purchaser and that such damage may, from a practical point of view, be
difficult to quantify. In the event of delay, the parties agree that The
Purchaser shall receive liquidated damages in accordance with the following
provisions without The Purchaser being obligated to prove that it has suffered
damage or to prove the amount of damage. The Purchaser's right to receive
liquidated damages shall be without prejudice to any other right that it may
have under this Contract or otherwise.
Any liquidated damages to which The Purchaser is entitled shall be paid by the
Contractor upon demand and The Purchaser shall be entitled to wholly or partly
set off liquidated damages against any amount that The Purchaser shall pay to
the Contractor under this Contract.
12.1.1 Liquidated Damages for Delay
- -----------------------------------
Should the service start date of the System, or any material portion of
the System be delayed for any reason except for events excepted under
this Contract, where the delay is fully or substantially attributable to
the fault of default of the Contractor (including its sub-contractors),
Contractor shall pay liquidated damages equal to one percent (1%) of the
value of that part of the network that The Purchaser is unable to use for
each week or fraction of a week of delay beyond Actual Date of Delivery
as specified in Annex 18. A grace period of two weeks shall be given
before the first week of delay is counted. Upon the lapse of the second
week of delay, however, the full delay shall be counted in computing the
liquidated damages.
12.2 WLL System, Training, Documentation, Spare Parts and Test Instruments
- ----------------------------------------------------------------------------
In the event that Contractor does not fulfil any of its undertakings with
respect to WLL System, training, Documentation, spare parts or test
instruments on the respective dates set out in the Time Schedule, the
Contractor shall pay liquidated damages to The Purchaser for each whole
day of delay amounting to (0.1%) of the respective Contract Price.
Maximum liquidated damages according to these Clauses 12.1.1 and 12.2
shall in no case exceed ten per cent (10%) of the Total Contract Price.
12.3 Delays Caused by The Purchaser or Force Majeure Events
- -------------------------------------------------------------
The Purchaser shall not be entitled to liquidated damages according to
the above provisions of this Clause 12 to the extent the delay in
question is caused by failure solely on part of The Purchaser to fulfil
any part of its Share of Responsibility or by a Force Majeure Event
defined in Clause 17.
In the event that The Purchaser delays in carrying out any of its
undertakings under this Contract the Contractor shall nevertheless be
obliged to fulfil its obligations within the time agreed on, to the
extent that the fulfilment of The Purchaser's obligations is not
necessary to enable the Contractor or its subcontractors and suppliers to
fulfil their obligations. In the event that it can reasonably be assumed
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that the Contractor will be delayed with respect to any of its
undertakings under this Contract, The Purchaser shall have the right to
postpone the performance of any of its undertakings to the extent such
performance is not necessary to enable the Contractor to fulfil its
obligations.
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Clause 13 - Prices
------------------
13.1 The Contract Prices given shall be fixed until 18th August 2002 and
shall include obligations of Contractor hereunder. The Contract Prices for
the WLL System and work and services to be provided by the Contractor under
this Contract shall be the prices set out in Annex 5. The prices represent
-------
the Contract Prices for the respective items and the sum of all the
Contract Prices constitutes the total price of the Contractor's Scope of
Supply. This total price is called the Total Contract Price.
--------------------
13.2 The prices shall be CIP Colombo.
13.3 Change of any law relating to the Contract items, except those
affecting the customs duties, import taxes, VAT, shall not affect the price
of these items.
13.5 All sums of money stated or referred to in this Contract are exclusive
of VAT. The Purchaser shall only pay VAT, if applicable in Sri Lanka.
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Clause 14 - Payments
--------------------
14.1 General
- ------------
The Purchaser shall pay to the Contractor the Contract Prices referred to
in Clause 13 above in accordance with the following provisions. The terms
of payments are as follows:
Phase One - Infrastructure, Network Management, Subscriber Terminals
required for Acceptance Testing, and Services
. 20% on signing of the contract
. 5% on Site Acceptance for the completion of each site (9 Sites)
. 30% on Actual date of Delivery (System Acceptance)
. 5% 6 months after the Actual date of Delivery
Phase Two - Subscriber Terminals for Commercial Service
. 20% on signing of the contract
. 40% on delivery of equipment
. 40% 90 days after delivery of equipment
Phase Three - Subscriber Terminals for Commercial Service
. 20% on signing of the contract
. 40% on delivery of equipment
. 40% 90 days after delivery of equipment
Phase Four - Subscriber Terminals for Commercial Service
. 20% on signing of the contract
. 40% on delivery of equipment
. 40% 90 days after delivery of equipment
A bridge finance option will be provided to Suntel for all payments beyond the
Contract signature payment (20%) for 1999. This option will allow Suntel to
remit only the interest due (as defined in Clause 14.5) on the first day of the
month following the date of payment due for all outstanding payments. The
payment of the principle will be due on January 5th, 2000 for all payments
covered through bridge financing.
14.2 Terms and Conditions
- -------------------------
Orders shall be placed through a single "purchase order" issued by buyer.
14.3 Bank Guarantee
- -------------------
The Contractor is required to put up a Bank Guarantee equal in Value to all
payments made before Systems Acceptance
14.4 Invoicing
- --------------
Payment shall be effected by The Purchaser's receipt of the Contractor's
invoice in triplicate for the amount in question that The Purchaser will
approve of, provided, however, that The Purchaser shall not be obliged to
make any payment earlier than
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the date following from sub-clause 14.1 above. Any value added tax, or
other taxes to which Contractor is subject to within Sri Lanka and which
shall be paid by The Purchaser under this Contract shall be invoiced as a
separate item.
Invoice address:
Attn: Accounts Payable
Airspan Communications Limited
Oxford Road, Uxbridge
Middlesex
United Kingdom
14.5 Interest
- -------------
The rate per annum of the interest referred to in Subclause 26.4 shall be
defined during negotiations.
14.6 Keeping Records
- --------------------
14.6.5 For all items specified. in this Contract, the Contractor
shall keep and maintain such books, records, vouchers and
accounts with respect to its billing of chase items to The
Purchaser for ten (10) years tram the date of Final
Acceptance.
14.6.6 For any item quoted can a cost incurred basis, the
Contractor shall keep and maintain such books, records.
vouchers and accounts of all costs with respect to the
engineering provision and installation of facilities of the
System for ten (10) years from the date of fulfillment of
a11 Contractor's Scope of Supply obligations.
14.6.7 The Contractor shall obtain from his Subcontractors such
supporting rewords for other than the cost of feed cost
items, subject to the conditions of Sub-Clause 14.6.2, as
flay be reasonably required, and shall maintain such records
for a period of ten (10) years from the date of fulfillment
of all costs required to be kept, maintained and obtained
pursuant to this Clause.
14.6.8 The Contractor shall afford the Purchaser the right to
review the said books, records, vouchers and accounts of all
costs required to be kept, maintained and obtained pursuant
to this Clause.
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Clause 15 - Liability for Accidents, Damage and Loss
----------------------------------------------------
15.1 Liability Regarding Before Passing of Risk
- -----------------------------------------------
Without prejudice to provision of Clause 5 any damage to the WLL System or
Documentation supplied or to be supplied by the Contractor occurring before
the relevant time according to Clause 11 when the risk of damage to or loss
of the WLL System and Documentation passes to The Purchaser shall be
remedied by the Contractor at its own expense, provided that the damage or
loss has not been caused by negligent act or omission by The Purchaser or
anybody employed by The Purchaser (other than the Contractor or its
Subcontractors). If the damage or loss has been so caused by The Purchaser
the Contractor shall nevertheless, if The Purchaser so request, remedy the
damage and loss, at the expense of The Purchaser at a reasonable price to
be agreed between the Contractor and The Purchaser.
15.2 Other Indemnification
- --------------------------
The Contractor shall indemnify and hold The Purchaser and its officers,
servants and employees harmless from any loss, damage, liability or expense
on account of damage to property and injury, including death, to all
persons, including but not limited to employees of the Contractor, arising
out of or resulting from any act or omission of the Contractor, its
Subcontractors, or anybody employed by the Contractor or its
Subcontractors, or anybody else for which the Contractor or its
Subcontractors is responsible. With respect to the Contractor's Scope of
Supply this Subclause 15.2 shall apply only after the risk of damage or
loss has passed to The Purchaser; until that time Subclause 15.1 shall
prevail.
15.3 Fraud or Gross Misconduct
- ------------------------------
Without prejudice to any further responsibilities or liabilities of the
Contractor under law, if the Contractor, or any of its Subcontractors, or
anybody employed by the Contractor or its Subcontractors, or anybody else
for which the Contractor or its Subcontractors is responsible, has been
guilty of fraud, actions against good faith, or "Gross Misconduct" the
Contractor shall - notwithstanding any provision of this Contract to the
contrary - be liable for any loss or damage (whether direct, indirect,
incidental or consequential) suffered by as a result thereof, whether it be
defects (as defined in Clause 10) in, damage to, or loss of the
Contractor's Scope of Supply, or injuries to persons, or any other breach
of this Contract.
Contractor's liability for the said defects shall extend also to defects
which have not appeared prior to the expiration of the warranty period in
question and to defects which have not for any other reason been notified
by The Purchaser in accordance with the provisions of Clause 10. "Gross
Misconduct" means any act or omission implying neglect to take into
consideration such serious effects as a careful Contractor normally would
have been able to foresee, or a deliberate disregard of the consequences of
such an act or omission.
15.4 Limitation of The Purchaser's Liability
- --------------------------------------------
The Purchaser shall not be liable for any damage to or loss of the WLL
System and documentation, save as to the extent provided for in Subclause
15.1.
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The Purchaser shall not be liable for any direct, indirect, incidental or
consequential damage or loss, including loss of income or loss of profit,
suffered by the Contractor or its subcontractors as a result of such a
damage, loss or breach or as a result of any breach by The Purchaser of
this Contract, unless expressly otherwise provided for in this Contract.
15.5 Obligations to Limit Damages and Loss
- ------------------------------------------
The party suffering loss or damage shall always be obliged to take all
reasonable measures to mitigate the damage or loss occurred.
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Clause 16 - Patents and Other Intellectual
and Industrial Property Rights
------------------------------
The Contractor undertakes to fully indemnify and hold The Purchaser, its
officers, employees, representatives and customers harmless from and fully
indemnify them for any and all cost expenses, damages and liabilities therefore
against any claim for an infringement or alleged infringement of any
intellectual property right relating to use of the Equipment and Software
delivered under this Contract.
In particular the Contractor undertakes to defend at its own expense any claim,
suit or proceeding based upon any claim that the Contractor's Scope of Supply,
or the use or maintenance thereof infringes any licence or any right of a third
person to patent, copyright, design or any intellectual or industrial property
rights or application therefore, as well as to hold The Purchaser, its officers,
employees, and representatives harmless from and fully indemnify them for any
and all costs, expenses, damages and liabilities therefor. In the event that the
WLL System or the use of the WLL System or documentation would be held in a suit
to constitute infringement and its further use would be enjoined, the Contractor
will promptly at its own expense either
(iii) procure for The Purchaser the right to continue the use, or
(iv) replace or modify the WLL System, or Documentation, so that it becomes
non-infringing while staying fully compliant with the Specifications.
Any such replacement or modification shall, however, be approved of by
The Purchaser in advance, which approval shall not be unreasonably
withheld. The Purchaser shall without delay inform the Contractor of
any claim that has come to the notice of The Purchaser and shall
proceed in dealing with such claims in agreement with the Contractor.
The Purchaser shall be at all times kept informed by Contractor of the
institution or assertion of any IPR claims or proceedings and shall without
prejudice to its rights be entitled but not obligated to participate in such
claims, suits or proceedings.
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Clause 17 - Force Majeure
-------------------------
Should Force Majeure Event occur after the signing of this Contract which
prevents the performance of any obligation of either party on the date or dates
provided for in this Contract, the performance of the obligation may be
postponed for such time, on a day by day basis, as the performance necessarily
has had to be delayed on account thereof, it being understood that such
postponement shall not be deemed a change of the Time Schedule or of any day
defined by reference to the Time Schedule.
The term of Force Majeure Event shall mean events such as war or warlike
hostilities, mobilisation or general military call-up, acts of Government
including refusal issue of required export licenses (but shall exclude failure
to obtain security clearance for own employees), civil war, revolution,
rebellion, insurrection or riots, sabotage and any strike or labour action and
other circumstances of a similar exceptional character and farreaching
influence, provided that any such event is beyond the control of the party, its
subcontractors and suppliers. It is expressly understood that no circumstance
shall be considered Force Majeure Event which the party or the subcontractor or
the supplier invoking the event of Force Majeure reasonably ought to have taken
into account at the date of signing of this Contract.
Immediately upon becoming aware of the commencement of any Force Majeure Event
causing a delay, and immediately upon becoming aware of the termination of such
an event of Force Majeure, the party desiring to invoke it as cause for
postponement shall advise the other party of the said event, failing which its
right to demand an extension of the time of performance shall be definitely
barred. To avail itself of the right to invoke any Force Majeure Event as a
cause for postponement the party shall also as soon as practicable after the
termination of the event submit to the other party reasonable proof of the
nature of such Force Majeure Event and its effect upon the performance
timetable. Each parties shall make all reasonable efforts to reduce to a minimum
and mitigate the effect of any delay occasioned by a Force Majeure Event. The
obligation of Contractor in this respect shall particularly include the
repairing or causing the repair of such damage as may have been done to its or
its subcontractor's manufacturing facilities or to Contractor's Scope of Supply.
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Clause 18 - Optional Orders
---------------------------
18.1 WLL System
- ---------------
The Purchaser shall during a period of time commencing on the date of signing of
this Contract by both parties up to 3 years or the end of year 2002 (whichever
the latest) have the right (but not the obligation) to order on fair and
reasonable terms from the Contractor Equipment, Software, Spare Parts,
Documentation and Services set out in Annexes 7, 8, 9, 10, 11, 12 and 13.
18.2 Other Terms and Conditions
- -------------------------------
In addition to the terms and conditions referred to in Subclauses 18.1 - 18.3
(inclusive) the provisions contained in this Contract including the Annexes
thereto (as amended by the parties subsequent to the conclusion of this
Contract) shall apply between the parties.
18.3 Exercise of Option
The options referred to in this Clause 18 shall be exercised by a written
numbered order to the Contractor signed by one or more authorised officers or
representatives of The Purchaser. Such order shall be lodged with the Contractor
not later than on the date referred in Subclause 18.1 and shall be accompanied
by a proposed time schedule.
It is incumbent upon Contractor to acknowledge receipt of the order not later
than thirty (30) days thereafter.
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Clause 19 - Network and Maintenance
-----------------------------------
The Contractor undertakes to supply to The Purchaser, Network and Maintenance of
the WLL System in accordance with the prices and conditions set out in Annex 21
during a period of five (5) years from expiry of the warranty period.
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CLAUSE 20 - Non Waiver
----------------------
The failure of either party to insist upon strict adherence to any term or
condition of this Contract on any occasion shall not be considered a waiver of
any right thereafter to insist upon strict adherence to that term or condition
or any other term or condition of this Contract.
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Clause 21 - Language
--------------------
All manuals, other documentation and training to be provided by Contractor under
this Contract as well as all notices and other communications between the
parties hereunder shall be in English unless the parties in any specific case
agree otherwise.
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Clause 22 - The Purchaser's Approval
------------------------------------
To the extent provided in the Contract, the Specifications, design,
calculations, construction, materials and technical arrangements used in the WLL
System may be subject to The Purchaser's approval. No such approval shall affect
the Contractor's obligations hereunder or at any time limit The Purchaser's
right to demand that the Contractor's Scope of Supply in all respects shall
satisfy the Specifications and other requirements of the Contract.
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Clause 23 - Compliance with the Law
-----------------------------------
The Contractor and its subcontractors shall abide by all applicable laws,
regulations and ordinances of the Country of Sweden and shall obtain from
competent authorities all necessary permits, licenses, and authorisations
required to complete the Contractor's Scope of Supply. The Contractor and its
Subcontractors shall establish such standards and procedures on the Premises as
are necessary to comply with regulations governing employment with special
reference to safety regulations issued from time to time by any competent
authority in Sri Lanka or by The Purchaser. If it comes to the knowledge of The
Purchaser that any such regulations are not being observed, it shall immediately
inform the Contractor and, in such event, The Purchaser shall be entitled to
refuse admission to the Premises of any person who is responsible for such
contravention. Before commencing installation, the Contractor shall give The
Purchaser a full description of those risks or dangerous procedures which may
be, respectively, encountered or utilised in the course of installation.
If and to the extent requested to do so, The Purchaser will assist the
Contractor in obtaining the required information of any such laws, regulations
and ordinances, including safety regulations, as are referred to in this Clause
23. It is recognised by the parties that the presence on the Premises of any of
the Contractor's or its subcontractor's personnel might require the approval of
The Purchaser or any other authority and that such personnel might also be
required to undertake an obligation to observe secrecy with respect to
information received or obtained when present on the Premises and to sign
documents to such an effect.
The Purchaser shall not be responsible for any acts, default or unsatisfactory
performance, neglect or omissions of the Contractor that violate the laws,
statutes, orders, rules, decrees, or regulations of any jurisdiction in which
the Contractor's Scope of Supply obligations are carried out.
In any event, if any third party should nevertheless make a direct claim against
The Purchaser because of such act, default, unsatisfactory performance or
omission of Contractor, The Purchaser shall notify the Contractor as soon as
possible, and the Contractor shall be entitled to undertake and manage any legal
proceedings involving the Contractor. The Contractor shall upon the request of
The Purchaser assist The Purchaser in defending themselves against such claim
and indemnify and hold The Purchaser harmless against any and all costs,
charges, expenses, compensations and other payments made by The Purchaser in
respect of such third party claim.
The Contractor shall be deemed to have satisfied itself that it has obtained all
necessary information with respect to the Contractor's Scope of Supply and the
Contract including but not limited to the matters such as: (i) fees, pilotage
and any dues payable to port authorities, (ii) conditions affecting labour
including Contractor's Scope of Supply permits, and (iii) rules and regulations
of governments and/or port authorities.
The Contractor shall be deemed to have fully examined and independently verified
all documents and drawings, specifications, schedules, terms and conditions of
the Order, regulations and other information in relation to the Contract and to
have fully understood and satisfied himself as to all information which is
relevant as to the risks whether political or otherwise, contingencies, costs,
and other circumstances which could affect the Contract. The Purchaser, its
servants, and agents shall have no liability in law or equity or in Contract or
in tort or pertinent to any other cause of action with respect to any such
information, risks, contingencies or other circumstances.
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Clause 24 - Assignment and Sub-contracted Contractor's Scope of Supply
----------------------------------------------------------------------
The Purchaser may assign this Contract or any of its rights or obligations
hereunder to any corporation being the successor of The Purchaser.
24.1 The Contractor may also, without prior written consent of The Purchaser,
assign a contract, sub-contract, or any significant part of the
Contractor's Scope of Supply/. In any event, the Contractor shall not be
relieved from responsibility under this Contract for such parts of the
Contractor's Scope of Supply that are sub-contracted, and the Contractor
shall be responsible and liable for the acts, defaults or unsatisfactory
performance of any Subcontractor or its employees, servants and agents, as
fully as if they were the acts or defaults of the Contractor or of the
Contractor's employees, servants and agents.
24.2 The Contractor shall ensure that any sub-contracts entered into by the
Contractor shall contain such provisions of this Contract as should be made
applicable to such sub-contracts.
24.3 Any assignment, mortgage, charge, encumbrance or sub-contract in
contravention of this Clause shall, as against The Purchaser, be void and
of no effect.
24.4 The Contractor shall protect, defend, indemnify and keep indemnified The
Purchaser against all claims, demands, actions, suits, proceedings, writs,
judgements, orders, decrees, damages, losses and expenses suffered or
incurred by The Purchaser arising out of or related to any assignment,
mortgage, charge, encumbrance or sub-contract, whether permitted or not.
24.5 The assignment of any part of the Contractor's Scope of Supply to any
Subcontractors will be performed according to the Contract and will not
affect the Contractor's Scope of Supply.
24.6 The Parties agree that no contractual relationship is created between The
Purchaser and any of the Contractors Subcontractors, suppliers or agents.
The Contractor shall indemnify The Purchaser for any expenses or damages
caused to The Purchaser as a result of any claim or demand against The
Purchaser by any Subcontractor, supplier or agent.
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CLAUSE 25 - Termination
-----------------------
This Contract, or any individual order under this Contract, may be terminated at
any time by written notice from The Purchaser. Such notice shall specify the
effective date of termination and the actions to be taken by the Contractor in
connection with the termination. If such termination is not due to the
Contractor's failure to fulfil his obligations, which would entitle The
Purchaser to cancel the Contract, or any part of it, The Purchaser shall pay a
proportional price for all work in progress, equipment on order for the
Purchaser, equipment that has been manufactured for the Purchaser and resides in
finished goods, work performed, for material, administration, and profit on the
amount of work performed under the Contract, and refund any other direct cost
incurred due the termination, deducting amounts previously paid. The title to
the work performed under this Contract prior to the termination shall vest in
The Purchaser upon payment of the proportional price.
The compensation to be paid to the Contractor under this Clause shall be tried
to be determined by negotiations, however, the amount shall under no
circumstances exceed the Contract Price.
In case of termination, the Contractor shall make every effort to reduce the
costs incurred.
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Clause 26 Cancellation
----------------------
26.1 General
- ---- -------
Without prejudice to any other rights or remedies The Purchaser may have,
The Purchaser may cancel this Contract according to the following
provisions. The Purchaser may also cancel an order under this Contract,
without thereby cancelling any part of this Contract, according to the same
provisions.
26.2 Cancellation Due to the Contractor
- ---- ----------------------------------
The Purchaser may cancel this Contract, in its entirety or with respect to any
portion thereof or an order under the Contract, with immediate effect by written
notice to that effect:
(v) Insolvency etc.
--------------
if Contractor has become voluntarily or involuntarily declared
bankrupt or otherwise is insolvent or has entered into liquidation or
has enter into composition proceedings with its creditors or if the
Contractor has taken any action in furtherance of any such proceedings
or has disposed or contemplates to dispose of all or the major part of
its assets;
(ii) Material breach of Contract
---------------------------
if the Contractor commits a material breach of any of its obligations
under this Contract other than delay in the performance of its
undertaking referred to in (iii) below and fails to cure such breach
within thirty (30) days after having received The Purchaser's notice
thereof;
(vi) Delays
------
if due to any circumstance for which the Contractor or any of its
subcontractors or suppliers are responsible the Actual Date of
Delivery is delayed for more than an aggregate period of ninety (90)
days;
(vii) Non-compliance with the requirements
------------------------------------
if the Contractor's Scope of Supply in any important respect does not
meet the requirements set out in this Contract and the Contractor has
not cured the defect within the times specified in the Contract, or,
if no specification is made, within a reasonable time, such reasonable
time not to exceed thirty (30) days and fails to cure the defect
within an additional reasonable period of time, not exceeding sixty
(60) days unless otherwise agreed by The Purchaser, from receipt of
The Purchaser's notice to that effect as has been fixed by The
Purchaser in said notice.
26.3 Cancellation With Reference to Force Majeure etc.
------------------------------------------------
The Purchaser may cancel this Contract with immediate effect by
written notice if any Force Majeure Event according to Clause 17
(whether preventing the Contractor or The Purchaser) causes the Actual
Date of Delivery to be delayed or can reasonably be anticipated to be
delayed for more than two hundred and twenty (150) days. The Purchaser
shall exercise its right to cancel the Contract according to this
Subclause 26.3 not later than sixty (60) days after having received
the Contractor's notice of the of the Force Majeure Event in question.
26.4 Consequences of Cancellation According to 26.2
----------------------------------------------
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In the event that The Purchaser cancels the Contract according to any of
the provisions of Subclause 26.2 the Contractor shall immediately upon The
Purchaser's demand refund to The Purchaser all amounts paid by The
Purchaser under this Contract prior to the effective date of the
cancellation plus interest on the said amounts from the respective dates of
The Purchaser's payment up to the date of refundment (all dates inclusive)
at the rate set out in Subclause 14.5. The Purchaser shall make available
to the Contractor for restitution, dismantling and removal at the
Contractor's own risk and expense what the Contractor may have delivered to
The Purchaser under this Contract. This Contract shall cease to have any
force or effect except that Contractor shall hold The Purchaser harmless in
respect of all direct costs loss and damage suffered by The Purchaser on
account of such a cancellation, including without limitation The
Purchaser's total costs for completing all the Contractor's undertakings,
whether performed by The Purchaser itself or other contractors engaged by
The Purchaser for the purpose, to the extent these costs plus any
compensation to the Contractor as set forth below in this Subclause 26.4
exceed the Total Contract Price according to this Contract. The Purchaser
shall make all reasonable efforts to mitigate such loss, damage and costs.
In the event that The Purchaser decides to complete the WLL System or parts
thereof either itself or by engaging other contractors, The Purchaser shall
have the right to acquire - against compensation and on terms and
conditions with respect to warranties and other matters that are reasonable
in the circumstances - such Equipment, Software, Documentation, services
and other items within the Contractor's Scope of Supply as well as the
Contractor's rights under subcontracts and supply agreements as can be used
for the completion, operation and maintenance of the WLL System.
26.5 Consequences of Cancellation According to 26.3
----------------------------------------------
In the event that The Purchaser cancels the Contract pursuant to Subclause
26.3 the Contract shall cease to have any force or effect and the
Contractor shall immediately upon The Purchaser's demand refund to The
Purchaser all amounts paid by The Purchaser under this Contract. The
Purchaser shall make available to the Contractor for restitution,
dismantling and removal at the Contractor's own risk and expense what the
Contractor has delivered to The Purchaser under this Contract prior to the
effective date of the cancellation.
In the event that The Purchaser decides to complete the WLL System or parts
thereof either itself or by engaging other contractors, The Purchaser shall
have the right to acquire against a compensation and on terms and
conditions with respect to warranties and other matters that are reasonable
in the circumstances - such Equipment, Software, documentation, services
and other items within the Contractor's Scope of Supply as can be used for
the completion, operation and maintenance of the WLL System.
The Purchaser may require the Contractor to promptly remove at its own
expense any and all of Equipment, or parts thereof, that may have been
delivered to or installed and not acquired by The Purchaser.
26.6 Ownership to Equipment etc.
---------------------------
The ownership to such Equipment, Software, materials, Documentation and
work within the Contractor's Scope of Supply for which the Contractor is
entitled to compensation according to Subclauses 26.4 or 26.5 shall
immediately upon the
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86
cancellation pass to or notwithstanding the cancellation rest with The
Purchaser, as the case may be. The Purchaser shall be free to use the same
without incurring any liability to the Contractor or any third party. It is
agreed that The Purchaser may exercise its rights to cancel the Contract,
or an order under the Contract notwithstanding whether Equipment, Software,
documentation and work installed, delivered, and performed by the
Contractor can be restituted in substantially the same condition as
delivered by the Contractor. In the event of cancellation pursuant to
Subclause 26.2, Equipment, Software and Documentation of which the value
has decreased due to negligence on part of The Purchaser or anybody for
which The Purchaser is responsible shall be acquired by The Purchaser
according to provisions agreed upon by the parties.
26.7 Survival of Clauses
-------------------
The provisions of Subclause 11.1.3 and Clause 16, to the extent applicable,
and of Clause 29, 30 and 31 shall survive the cancellation or termination
of this Contract.
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Clause 27 - Entire Agreement. Modifications of the Contract
-----------------------------------------------------------
The parties state that with respect to the subject matter hereof this Contract
Document and the Annexes, thereto, which form an integral part of the Contract,
constitute the sole and exclusive understanding of the parties in respect of the
subject matter hereof and supersede all prior agreements, arrangements or
understandings relating to the subject matter, including any bid, tender,
quotation, offer or proposal, general sales conditions or terms or provisions
that the Contractor has submitted.
No change or modification of this Contract may be made except in writing and
executed by the respective duly authorised representatives of each of the
parties hereto.
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Clause 28 - Order of Priority
-----------------------------
In the event of any discrepancy between any data, stipulation or provision given
in any of the Clauses of this main Contract Document, on the one hand, and data,
stipulation or provision given in any of the Annexes, on the other hand, the
data, stipulation or provision contained in a Clause of this Contract Document
shall prevail. In the event of any discrepancy between the Technical
Specifications and the Product Description the Technical Specification shall
prevail over the Product Description, except to such an extent as the Product
Description is more advantageous to The Purchaser, in which latter case the
Product Description shall prevail.
To the extent the Technical Specifications or the Product Description contains
something that is not dealt with in any provisions of the Clauses of this
Contract Document, the Technical Specifications and the Product Description, as
the case may be, shall prevail notwithstanding the foregoing.
To the extent the Technical Specifications or the Product Description contains
anything that is not dealt with in the other of them, the one containing the
data, stipulation, provision or whatever might be concerned shall prevail over
the other.
The Purchaser shall have the right to decide what document, data, stipulation or
provision that shall prevail if such a decision is notified to the Contractor
well in advance of the commencement of the manufacturing process in question.
In the event that the Contractor and The Purchaser have different opinions as to
the interpretation of the Specifications, the opinion of The Purchaser shall
always prevail, notwithstanding the foregoing, provided that The Purchaser's
opinion is not unreasonable. The Contractor shall as soon as possible inform The
Purchaser of any inconsistency, ambiguity or incompletion found in the
Specifications.
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Clause 29 - Applicable Law
--------------------------
This Contract shall be governed by and construed in accordance with the law of
Sweden.
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Clause 30 Confidentiality
-------------------------
Each party (as "Receiving party" hereunder) shall keep in confidence, with the
same degree of care as used for its own confidential information, any
information which is disclosed to it by the other party (as "Disclosing party"
hereunder) in writing or other tangible form and clearly marked or identified in
writing as "confidential" or by similar legend, for a period of three years from
the date of first disclosure to the receiving party hereunder of such
information, except that the foregoing obligations shall not apply or cease to
apply, to any information which:
(i) is publicly known at the time of disclosure or becomes thereafter publicly
available through no fault of the receiving party;
(ii) was already known to the receiving party free from confidentiality
restrictions, prior to receiving it from the disclosing party;
(iii) is disclosed to the receiving party by any third party without
confidentiality restrictions;
(iv) is independently developed by the receiving party;
(v) is necessary to disclose to any lawful authorities for obtaining any type
approval of the hardware/software goods covered hereunder;
(vi) is inherently disclosed or is necessary to be disclosed by The Purchaser
by or for the proper installation, operation, use, maintenance and/or
repair of the goods procured hereunder or the provisions of services
thereby.
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Clause 31 - Arbitration
-----------------------
31.1 The Contractor and The Purchaser shall endeavour to settle any difference
of opinion which may arise during the execution of this Contract in an
amicable manner.
31.2 Any difference of opinion concerning any matters under this Contract shall
bereferred for resolution by arbitration to an expert sitting as a single
arbitrator to be agreed upon by the parties hereunder or failing such
Contract to a single arbitrator to be named by the President of the [],
upon the request of any party to this Contract. Arbitration proceedings
shall take place in Stockholm Upon the request of any party the arbitration
shall be in English. The arbitrator from time to time acting hereunder
shall have all the powers conferred on arbitrators by the [ ] Arbitration
Law 1968 or any statutory modification thereof for the time being in force.
Judgment upon any award rendered by the arbitrator may be entered in any
court in Sweden having jurisdiction or application may be made to such
court for a judicial acceptance of the award and an order of enforcement,
as the case may be. The arbitrator shall not be bound by the rules of
evidence and procedure, but shall be bound by the substantive law of the
Sweden and shall be obliged to disclose the reason for his award.
31.3 The fact that a dispute is brought before a court or before a duly
appointed expert does not release the Contractor from its obligations to
fulfil its commitments as provided by this Contract.
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Clause 32 - Notices
-------------------
Any and all notices or information other than information or proposal of pure
technical nature shall be given by any party by prepaid mail or by fax or hand
delivery to the other party at the following address:
If to The Purchaser
Jan Campbell, 110 Sir James Peiris Mawatha, Colombo, Sri Lanka
If to Contractor
Steve Mallinson, Cambridge House, Oxford Road, Uxbridge, UK.
Notices, information or proposals of pure a technical nature shall be forwarded
to the following address:
If to The Purchaser
Mahinda Ramasundera, 110 Sir James Peiris Mawatha, Colombo, Sri Lanka
If to Contractor
Paul Senior, Cambridge House, Oxford Road, Uxbridge, UK.
The aforementioned addresses of either party may be changed at any time by
giving fifteen (15) days prior notice to the other party in accordance with the
foregoing. Either party may also by fifteen (15) days prior notice to the other
party give further specification as to which address notice, information or
proposals of various nature shall be forwarded.
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Clause 33 - Support Bond
------------------------
In addition to the other clauses within this Contract, The Contractor agrees to
placing of a Support Bond.
The Guarantor for this bond shall be as follows:
Lloyd Bank Plc.
Guarantees, International Services Centre
P.O. Box 63
Two Brindley Place, Birmingham
B1 2AB
United Kingdom
The following wording will be used:
The Guarantor hereby issues an irrevocable Guarantee No. ______ in the following
terms:
The Beneficiary shall the Purchaser known as Suntel Private Ltd.
The Principal shall be the Contractor, known as Airspan Communication Limited.
Failure of the Contractor's performance obligations in respect of the supply of
equipment for Telecommunications Network Infractructure under Contract for
Purchase Order No. LP/0442/99 dated April 26, 1999 due to the end of its
activities, due to its winding up, appointment of receiver(s) or entering into a
company voluntary arrangement, or closure of the product line used within this
supply of the contract.
The Support Bond shall be posed within 1 month after The Contractor receives the
principal and interest payment from milestones through System Acceptance (Actual
Date of Delivery) and receipt by The Contractor of all and any other associated
payments for deliveries covered under the bridging phase.
The Support Bond shall have value equal to 60% of contract value in the first
year after the Actual date of Delivery (Phase 1), 50% of contract value in the
second year after the Actual date of Delivery (Phase 1), and 40% of contract
value in the third year after the Actual date of Delivery (Phase 1).
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Clause 34 - Contract Period
---------------------------
This Contract comes into force when signed by both parties and shall remain in
force as long as any of the parties has any obligation under the Contract to
fulfil.
This Contract has been made in duplicate and each of the parties has taken one
copy.
Place: LONDON Place: COLOMBO
Date: Date:
Eric Stonestrom J. Campbell
Managing Director Managing Director
Airspan Communications Limited Suntel (Private) Ltd.
The Contractor The Purchaser
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<PAGE>
[AIRSPAN LOGO APPEARS HERE]
Wireless Fixed Access
System Description
This is the unpublished work, the copyright of which vests in Airspan
Communications Corporation. All Rights Reserved The information contained herein
is the property of Airspan Communication Corporation and is supplied without
liability for errors or omissions. No part may be reproduced or used except by
contract or other permission. The copyright and the foregoing restriction on
reproduction and use extend to all media in which the information may be
embodied.
Date: December 1998
Version: 1.21A
<PAGE>
1. TABLE OF CONTENTS
1. TABLE OF CONTENTS...................... 2
2. EXECUTIVE SUMMARY...................... 2
3. WIRELESS LOCAL LOOP (WLL) OVERVIEW..... 2
3.1. "Wireless Fixed Access".......... 2
3.2. "Fixed Cellular"................. 2
3.3. "Wireless Drop".................. 2
3.4. "Microwave Point to Multipoint".. 2
3.5. "Microwave Point to Point"....... 2
4. WIRELESS FIXED ACCESS.................. 2
4.1. System Overview.................. 2
4.2. Conformance to Standards......... 2
4.3. System Interfaces................ 2
4.4. Equipment Overview............... 2
4.5. The Management Systems........... 2
5. SYSTEM AIR INTERFACE................... 2
5.1. CDMA Technology.................. 2
5.2. Air-Interface Structure.......... 2
5.3. Frequency Ranges Supported....... 2
5.4. Radio Link Budget................ 2
5.5. Cell Planning Criteria........... 2
6. SERVICES SUPPORTED..................... 2
6.1. Wireline-equivalent services..... 2
6.2. Data services support............ 2
6.3. Access to the Internet........... 2
6.4. High bandwidth transmission...... 2
6.5. Speech Coding.................... 2
6.6. System Security.................. 2
7. SYSTEM CAPACITY........................ 2
7.1. Radio (RF) Channel Capacity...... 2
7.2. Infrastructure Capacity
- Demand Assigned System....... 2
7.3. System Capacity Limits........... 2
8. EQUIPMENT DETAILS..................... 2
8.1. Infrastructure.................. 2
8.2. Power Requirements.............. 2
8.3. Antenna configurations.......... 2
8.4. Installation and Commissioning.. 2
8.5. Subscriber (ST) Equipment....... 2
9. RF AND DEPLOYMENT PLANNING............ 2
APPENDIX A: VOCABULARY/L1................. 2
APPENDIX B: RF CHANNEL PLANS/L1........... 2
<PAGE>
2. EXECUTIVE SUMMARY
This document describes Airspan Communications Corporation (ACC)'s Wireless
Fixed Access(WFA) systems. These systems meet the requirements of network
operators who wish to offer "copper equivalent" services via radio.
Airspan's systems were created to:
. Support a complete range of telecommunication services including telephony,
Group 3 and Group 4 facsimile, payphone, data modems, high speed leased line
data, Internet Access and basic rate ISDN.
. Be economical to deploy in urban, suburban and rural areas.
. Have capacity that can be easily expanded as the customer base grows.
. Minimize initial capital outlay.
. Operate in a Point-to-Multipoint system configuration.
. Conform to the ETSI standards EN 301 055 and 301 124 for CDMA Point-to-
Multipoint systems in the 1-3GHz and 3-11GHz bands.
Airspan's systems are best described as a "flexible access tool" for network
operators to provide a variety of services to their end-user customers.
Significantly, they are able to provide services that are the same quality and
performance as wireline services, by supporting a transparent connection to the
operator's network. The combination of voice coding at either 64kbit/s PCM or
32kbit/s ADPCM, Bit Error Rates (BER) of 1 x 10-7 and low delay (typically
{less than}10ms) ensure that advanced telephony services, including G3 facsimile
and high speed data modems (up to 56kbit/s) for Internet applications are fully
supported. They are also the only fixed WLL systems to fully support basic rate
ISDN service in the 2B + D channel format.
Airspan's systems support numerous applications within both existing and new
telecommunications networks, and has been deployed in both developed and
developing country environments. For example:
. In developing countries to reduce the waiting list for telephony services,
in residential, business and payphone applications. This enables rapid
deployment of a low cost / high value telephony infrastructure that
typically exceeds the quality and performance of existing copper access
networks.
. In developed countries as a "copper alternative", to modernize the access
networks, reduce operating costs and thus reduce the cost of universal
service provision.
. In both developed and developing countries to provide a "local loop bypass",
allowing a new operator to provide wireless based services at a quality
normally only available with wireline networks. Additionally the system is
cost effective and quick to deploy compared with traditional copper access
networks.
. In private networks to provide a range of telephony and leased line data
services supported by transmission rates of N x 64kbit/s (N = 1 to 6).
<PAGE>
3. WIRELESS LOCAL LOOP (WLL) OVERVIEW
"Wireless Local Loop" (WLL) is a loose term used to describe the application of
radio technology in the local access network, as an alternative to traditional
copper pairs between the local exchange and subscribers' premises. However, like
most generic terms, WLL covers a very broad spectrum of solutions. Numerous
architectures exist, each described as WLL, and each significantly different to
the other.
All Wireless Local Loop solutions are designed as an alternative to a copper
access infrastructure, as shown below. This "generalized architecture" is
globally applicable and represents 99% of all wireline access infrastructures
installed around the world today.
[GRAPHIC APPEARS HERE]
This copper access architecture consists of three parts, the Feeder network, the
Distribution network and the Drop.
It is generally accepted that five different WLL architectures exist, each is an
alternative to all or some of the copper access network architecture shown
above. The different architectures are shown below:
[GRAPHIC APPEARS HERE]
<PAGE>
3.1. "WIRELESS FIXED ACCESS"
"Wireless Fixed Access" is the term used to describe products and
architectures that are direct alternatives to copper-based "Wireline" Drop,
Distribution and Feeder Networks. These types of systems deliver the same
Services, Quality and Grade of Service as copper. Generally they are
optimized to substitute copper-based networks in semi-rural (for example
Western European Rural) and Suburban environments. This is the architecture
supported by Airspan's systems.
3.2. "FIXED CELLULAR"
"Fixed Cellular" as the name implies is the application of Mobile Cellular
Radio technology to the local loop. These types of system replace the
distribution and drop parts of the network, but usually require
installation of special Base Station sites, as the system may be configured
to support mobile subscribers as well as wireline replacement. The major
disadvantage of "Fixed Cellular" is that the equipment was originally
designed for mobile voice telephony, and not designed to provide the same
services, quality, or Grade of Service as copper. Fixed Cellular is
suitable for rural / suburban and urban deployments, and can be planned for
in-building coverage. It can also provide full mobility if required.
3.3. "WIRELESS DROP"
"Wireless Drop" is an alternative to copper-based drop segments e.g. the
last 100 meters. This architecture is typically based on cordless telephony
technology, such as CT2, DECT or PHS. Because it has a limited range
(typically {less than}5km) it is suitable for suburban and urban
deployments. In some deployments it can also provide limited mobility. The
network cost of this type of solution can be high due to the large number
of cells and supporting infrastructure required. Airspan's systems can be
deployed to provide a cost effective "backhaul" for these networks.
3.4. "Microwave Point to Multipoint"
"Microwave Point to Multipoint" is a very mature technology that was
developed to provide telephony service in extremely sparsely populated
areas. These types of systems are designed to provide long distance feeder
and distribution links are specifically designed for this application, and
are suitable for very remote, rural telephony. Typically they are low
capacity systems, and are configured to provide multiple multi-line drops,
rather than drops for individual customer premises.
3.5. "MICROWAVE POINT TO POINT"
The last category is "Microwave Point to Point" and is typically used for
the direct connection of larger (business) customers to the switching
network. This
<PAGE>
type of system is designed for N x 2Mbit/s distribution and is typically
deployed in urban / suburban areas at 10GHz +.
Each of these architectures can be deployed separately or in combinations
in an operator's network to deliver the required services to subscribers.
Careful assessment is therefore required to determine which technologies
are most appropriate.
<PAGE>
4. WIRELESS FIXED ACCESS
4.1. SYSTEM OVERVIEW
Airspan's Wireless Fixed Access (WFA) systems are digital point to
multipoint radio access systems providing wireless access for fixed end-
users to a telecommunication operator's network.
The systems are specifically designed for Wireless Fixed Access
applications and are not "fixed" versions of mobile cellular or cordless
systems. They deliver telephony, voice-band facsimile/data, higher rate
digital data and basic rate ISDN. Distances up to 25km can be covered. They
are therefore an attractive alternative to traditional copper "local loops"
for the delivery of these services to end-users.
[GRAPHIC APPEARS HERE]
GENERAL SYSTEM ARCHITECTURE
The systems use point to multipoint microwave radio links between the
individual end-user's premises and the network operator's "local point of
presence" as an alternative to the copper pair "local loop". The "local
point of presence" would typically be the local exchange premises. If
greater flexibility or range is required, the Central Terminal (cell site)
equipment can be remotely located in a suitable building or an
environmentally protected wayside cabinet, and connected to the local
exchange via radio, cable or fiber digital transmission links.
Both Fixed Assigned (FA) and Demand Assigned (DA) access to the air-
interface between the Central Terminal and Subscriber Terminals is
supported.
The range of services supported includes:
. Analogue telephony (POTS).
. Voice-band Group 3 facsimile and data up to 33.6kbit/s (extending to
56kbit/s where there are digital interfaces between Airspan and the switch
network).
<PAGE>
. Payphones, including pulse metering.
. CLASS services.
. 64kbit/s and n x 64kbit/s leased line data services.
. Basic rate ISDN (2B + D).
A portfolio of Subscriber Terminals (ST) are available supporting one or
more lines at each end-user location.
4.2. CONFORMANCE TO STANDARDS.
Airspan's WFA system architecture is in accordance with the ETSI standards
EN 301 055 and 301 124 for Direct Sequence Code Division Multiple Access
(DS - CDMA) Point-to Multipoint digital radio systems as shown below:
[GRAPHIC APPEARS HERE]
The ETSI standard permits an operator to use systems from different
vendors. The standard addresses:
. Interoperability on Radio interface: Spectrum Masks, Spurious Emissions,
Receiver Specs, Co and Adjacent Channel Interference Performance are
defined. Reference is made to relevant ITU-R and CEPT standards.
. Host Network Interconnection is covered by references to relevant ETSI V5.x
standards and TMN standards.
. Subscriber Services and Interconnection is covered by reference to relevant
ITU-T standards.
<PAGE>
4.3. SYSTEM INTERFACES
Interfaces between the various elements of Airspan's systems are as
follows:
4.3.1. THE EXCHANGE INTERFACE
The interface between the WFA systems and the switch is N x 2Mbit/s
G703 / G704 (1 per radio carrier typically 4 per CT).
For the FIXED ASSIGNED system the following signaling protocols are
supported:
. Channel Associated Signaling (CAS). Variants are available to interface
with switches from Ericsson (AXE), Nortel (DMS-100) and Siemens (EWSD).
Variants can be made available to interface with other manufacturers
digital switches that have 2Mbit/s subscriber ports. This protocol also
supports 2 wire analogue interfaces via channel banks, such as the LS-
120.
. Common Channel Signaling (CCS). UK DASS2 is available to interface with
GPT (System X) and Ericsson (AXE) switches. DSS1 signaling to support
Euro-ISDN is available to interface with Alcatel (S12) and Ericsson
(AXE) switches.
In addition V5.1 is supported.
For the DEMAND ASSIGNED system the Access Concentrator (AC) provides the
primary network interface which is N x 2Mbit/s, as per ITU recommendation
G.703, short haul 6dB, G.704 and ETSI ETS 300-166.
All signaling is digital using either Channel Associated Signaling (CAS) or
Common Channel Signaling (CCS) protocols. The DA system interfaces to
digital switching systems that have 2Mbit/s subscriber ports.
Support for 2 wire VF interfacing is via external channel bank equipment,
such as the LS-120.
. Channel Associated Signaling. Support for timeslot 16 ABCD bit CAS is
provided. Airspan's management systems allow for flexible configuration
of the protocol, to interface with switches from various manufacturers.
. Common Channel Signaling. V5.1 and V5.2 are supported by the DA system.
Proprietary protocols such as DASS2 and DSS1 may be supported through
appropriate software loads.
. The V5.1 network interface as specified in ETS 300-324-1 is used for
the presentation of traffic at a non-concentrated interface. The V5.1
interface supports both POTS and ISDN services.
. The V5.2 network interface as specified in ETS 300-347-1 is used for
the presentation of traffic at a concentrated interface. The V5.2
interface supports both POTS and basic rate ISDN services. The AC
supports V5.2 groups of up to 16 E1 links.
. The AC supports dedicated data services using 64kbit/s timeslots.
Cross-connect at the 64 kbit/s level from any input / output port is
configurable via the management systems.
<PAGE>
4.3.2. THE RADIO (CELL) SITE
The network-side (backhaul) interface to the Central Terminal is up to
4 x 2Mbit/s G703 / G704 interfaces. This is connected to the Access
Concentrator or directly to the Switch. In the DA system this backhaul
supports concentrated and compressed traffic.
4.3.3. THE SUBSCRIBER SITE
This is normally country specific in line with the national customer
terminal interface specification(s), and versions are available that
meet most requirements.
4.4. EQUIPMENT OVERVIEW
Airspan's systems consist of four main network elements:
. The Subscriber Terminal (ST) which is located at the end-user's
premises.
. The Central Terminal (CT) which is located at the radio site or at the
switch site.
. The Access Concentrator (AC) which is normally located at the switch
site. This is only required for the Demand Assigned version of the
system.
. The Management system (EM or SC) which is normally located at an
Operator's network management center.
4.4.1. SUBSCRIBER TERMINALS
The portfolio includes 2 subscriber terminal types: internal and external
[GRAPHIC APPEARS HERE]
<PAGE>
4.4.1.1. THE SUBSCRIBER TERMINAL - EXTERNAL
The external ST consists of an outdoor wall or pole mounted Customer Radio
Unit (CRU) , an indoor AC Power Supply Unit (ACPSU) and termination jacks
(NTU) into which end-users plug standard Customer Premises Equipment, as
shown in the figure below:
[GRAPHIC APPEARS HERE]
There is a range of external STs available, each supporting different
services and numbers of lines:
The ST-V2 supports two 64kbit/s analogue telephony lines at the end-users
premises. This ST may operate in either Fixed or Demand Assigned modes.
The ST-V4 supports four 32kbit/s analogue telephony lines at the end-users
premises. This ST is optimized for pole mounting and may operate in either
Fixed or Demand Assigned modes.
The ST-I1 supports a basic rate ISDN, 2B+D (2 x 64kbit/s + 16kbit/s ) "S"
interface, and normally operates in Fixed Assigned mode.
The ST-D128 supports two 64kbit/s data channels on a G.703 interface, an
optional converter can be used to provide either 2 x 64kbit/s V.35, 2 x
64kbit/s X.21 or 128kbit/s interfaces for data applications.
The ST-M120 is a multi-line terminal that allows the provision of up to 120
VF "graded telephony" lines to an end-users premises. Lines are provided in
modules of 6.
The ACPSU can be supplied with or without backup batteries.
4.4.1.2. THE SUBSCRIBER TERMINAL - INTERNAL
The architecture of the internal ST is different from the external ST in
that the outdoor radio unit includes only the antenna and an RF front end.
The outdoor unit is therefore smaller, lighter and easier to install in
most applications. The majority of the electronics is in the indoor
enclosure. This is connected to the outdoor unit by a drop cable.
[GRAPHIC APPEARS HERE]
<PAGE>
There is a range of Internal STs available, each supporting different
services and numbers of lines.
The ST-R1 supports one 32kbit/s or 64kbit/s analogue telephony line at
the end-users premises. Provisioning is by the management system.
The ST-R2 supports two 32kbit/s or 64kbit/s analogue telephony lines at
the end-users premises. Provisioning is by the management system.
The ST-B1 supports a basic rate ISDN, 2B+D (2 x 64kbit/s + 16kbit/s ) "S"
interface, and normally operates in Fixed Assigned mode.
The ST-L128 supports 654kb/s or 128 kb/s clear channel data services via
an RS530 interface.
Internal STs are powered from the AC mains supply, with or without backup
batteries.
4.4.2. THE CENTRAL TERMINAL
The CENTRAL TERMINAL (CT) is the Base Station. This is deployed in omni
or sectored cell configurations supporting variable numbers of STs per
cell. The CT is a multi-service platform hosting single and dual line
telephony, multi-line telephony, digital data leased lines and ISDN basic
rate interfaces. The CT can operate in two modes, depending on the type
of service and traffic levels supported. Fixed Assignment is used when
STs must have a dedicated radio link. Demand Assignment is utilized when
STs can share the available radio resources, and sustain an "engineered"
grade of service.
The CT provides the traffic interface to the network switching, either
directly for Fixed Assigned systems or via the Access Concentrator for
Demand Assigned systems. The CT also provides an interface to the
management systems.
4.4.3. THE ACCESS CONCENTRATOR
The Access Concentrator (AC) is required when the system is operating in
"Demand Assigned" mode to de-multiplex the traffic concentrated on the air-
interface for presentation to the network switching equipment. Also in
system versions using 32kbit/s compression the decompression to 64kbit/s is
performed within the AC.
<PAGE>
4.5. THE MANAGEMENT SYSTEMS
Airspan's Management systems monitor, test and configure the WFA systems:
. SiteSpan Site Controller: a standalone "CRAFT terminal" for
installation, operation and maintenance of the system.
. SiteSpan Manager: a scaleable, distributed PC based management system.
. Element Manager (SNMP): a centralized, UNIX based management system.
[GRAPHIC APPEARS HERE]
For Demand Assigned systems, interfaces for connection to the management system
are supported as follows:
. AC: 2 x RS232, 9600 baud
. AC: 2 x Ethernet, optional
. CT modem shelf: 2 x RS232, 9600 baud
. CT modem shelf: 1 x Ethernet, optional
. CT modem shelf: embedded within E1, backhauled to the AC.
Management communications routing is flexible. The AC supports consolidation of
management communications from dependent CT equipments to provide a single
management interface.
<PAGE>
5. SYSTEM AIR INTERFACE
5.1. CDMA TECHNOLOGY
Airspan's systems use a radio air-interface, specifically designed for
Wireless Fixed Access to provide high quality, and low delay bearers for
telephony, data and ISDN services
The systems use Direct Sequence Spread Spectrum Code Division Multiple
Access (DS-CDMA) on the air-interface between the CT and STs, allowing
multiple radio links to share the same RF channel. A set of specialized
codes is used which are shared between the ST and its corresponding modem
in the CT.
There are two stages to the CDMA modulation / demodulation process. Firstly
direct sequence spreading is performed on each individual radio link by a
pseudo-random noise (PN) code. Then multiple access, where multiple links
share the same RF channel, is achieved by using a set of orthogonal
Rademacher - Walsh (RW) codes. The PN and RW codes are combined into a
unique and shared composite code used to modulate and demodulate each radio
link.
Airspan's systems implement a version of CDMA optimized for fixed access
This is significantly different from other commercial CDMA implementations,
such as IS-95, which are optimized for mobile cellular and PCS
applications.
The following table demonstrates the difference in implementation and
performance between the two systems:
<TABLE>
<CAPTION>
Cellular (IS-95) Fixed (Airspan)
------------------------------- ---------------------
<S> <C> <C>
Application PCS Wireless Fixed Access
Frequency of operation 8-900,1800-1900 MHz 1.3-3.6GHz
RF Channels (BW) 1.23MHz 3.5MHz
Channel Bit Rate 9.6kbit/s To 144kbit/s
Processing Gain 21 dB 12-24dB
Processing Delay {greater than}20ms {less than}1ms
FEC 1/3 1/2
Code Structure Quasi Orthogonal Orthogonal
Receiver Type Rake Coherent
RF Synchronized No Yes
Synchronized Base Yes No
Stations Required
</TABLE>
<PAGE>
5.2. AIR-INTERFACE STRUCTURE
The system's Radio Interface structure supports both "Fixed" and "Demand"
assignment of radio channels. The air-interface protocol and structure is
compatible between both assignment types. The basic structure of the
interface is shown below:
[GRAPHIC APPEARS HERE]
SYSTEM AIR-INTERFACE STRUCTURE
Depending on the service applications and traffic levels to be supported,
this structure is used in two different ways:
5.2.1. FIXED ASSIGNMENT
The "Fixed Assigned" radio interface makes a permanent allocation of a
radio link, operating within a RF channel to a subscriber terminal. Each
link provides up to 144kbit/s of User Payload and 16kbit/s of OAM. In
telephony applications where the subscriber is "on-hook" the ST will use
"rate switching", reducing the link bandwidth to 10kbit/s, and hence
decreasing the level of Access Noise on the RF channel. For Fixed Assigned
telephony applications each subscriber terminal supports 2 subscriber
circuits.
[GRAPHIC APPEARS HERE]
FIXED ASSIGNED AIR-INTERFACE STRUCTURE
<PAGE>
5.2.2. Demand Assignment
The "Demand Assigned" Radio interface makes a temporary call by call
assignment of channels, to Subscriber Terminals in residential telephony
applications, where the per line traffic allows the provision of Graded
Service. The radio interface differs in that links are allocated as
either Traffic, or Control channels.
[GRAPHIC APPEARS HERE]
DEMAND ASSIGNED AIR-INTERFACE STRUCTURE
Within each RF Channel a pool of traffic channels (TCH) supports a mix of
32, 64, and 144kbit/s services. Pool management is dynamic so that
channels may be made available as 32, 64, and 144kbit/s on demand. The
size of the traffic pool is automatically and dynamically sized based on
radio interface performance and the grade of service requirements thus
controlling the level of Access Noise. The pool can be extended if the
interference level permits, or reduced if access noise is too great. The
DA access protocol can also support one or more priority channels which
allow guaranteed access for emergency calls. The channels allocated to
traffic are pooled and configured as either 10 - 13 x 144kbit/s, 20 - 26 x
64kbit/s, or 40 - 52 x 32kbit/s. Two links are reserved for OAM and Call
Control.
Each link operates using a master RW code to provide a 160kbit/s channel.
These links are then sub-divided using 2nd level RW codes that allow the
construction of 2 x 80kbit/s or 4 x 40kbit/s smaller granularity links,
while maintaining the same Spectral Density. Hence TCHs are composed of
either 160kbit/s, 80kbit/s or 40 kbit/s links.
STs maintain communication with CT via the Call Control link, using an
"Ethernet" like protocol. All STs are continually polled, and receive
regular downloads of available TCHs and their channelisation (i.e.
144kbit/s, 64kbit/s or 32kbit/s).
STs track available TCHs to permit "fast acquisition". When a user's line
goes "off-hook", STs request allocation of a TCH from the available pool.
The CT instructs STs to "seize" a particular TCH, if access noise permits.
<PAGE>
Traffic engineering is via the management system, which allows the
following parameters to be programmed:
. Minimum / maximum number of traffic channels
. Number of access channels
. Demand access protocol type
. BER grade of service threshold
. Call blocking threshold
. Number of priority channels
5.3. FREQUENCY RANGES SUPPORTED.
Airspan's systems operate in various frequency ranges within the ITU-R and
ETSI 2GHz and 3GHz frequency ranges. The specific channel plans available
(see Appendix B) operate in frequency bands at:
. 1.9GHz, in accordance with US PCS Band allocations
. 2.0-2.3GHz, in accordance with CEPT/ERC/Rec. 13-01E, Annex C, with
175MHz duplex spacing
. 2.3-2.5GHz, in accordance with ITU-R 746, with 94MHz duplex spacing
. 3.4-3.6GHz, in accordance with CEPT/ERC/Rec. 14-03E (Turku 1996), with
100MHz duplex spacing
The systems operate in Licensed spectrum, normally co-ordinated with other
users by the licensing authority. Coexistence with other systems is in-
line with ETS 301 055 and 301 124.
5.4. RADIO LINK BUDGET
Airspan's systems operate in rural, suburban and urban areas in either
omni-cell or sectored cell configurations.
System performance is governed by the link loss relative to available Link
Budget. Therefore for shorter links Line Of Sight (LOS) propagation is not
necessarily required and Near Line Of Sight (NLOS) links operate
satisfactorily.
The system range is dependent on the location and ground height of the CT
sites and tower heights, relative to the ST locations and the environment
in which the system is operating. Ref. 5.5.
<PAGE>
5.4.1. LINK BUDGET (UPLINK)
The following example is based on operation at 2.2GHz:
ST PA output power +21.0 dBm
ST Cable and connector loss -0.5 dB
ST antenna gain +9.0 dBi
ST effective radiated power (a), per link +29.5 dBm
Central Terminal (CT) antenna gain (b), Omni +10.5 dBi
CT Cable and connector loss (d), 50m length -3.5 dB
CT Receiver sensitivity for 10-7 BER (e) -98 dBm
Maximum path loss (j=a+b-d-e) 134.5 dB
Fade Margin for 99% Link availability 4 - 10 dB
5.4.2. LINK BUDGET (DOWN-LINK).
CT PA output power, per link +21.0 dBm
CT Cable and connector loss, 50m length -3.5 dB
CT antenna gain, Omni +10.5 dBi
CT effective radiated power, Per Link (a) +28.0 dBm
ST antenna gain (b) 9.0 dBi
ST Cable and connector loss (C) -0.5 dB
ST Receiver sensitivity for 10-7 BER (d) -98 dBm
Maximum path loss (j=a+b+c-d) 134.5 dB
Fade margin for 99% Link availability 4 - 10 dB
5.5. CELL PLANNING CRITERIA
Airspan's portfolio includes AirPlan, an RF coverage prediction tool which
is used to optimize CT site locations for area coverage. See section 9.
The system range depends on the propagation conditions which are a function
of the environment in which the system is deployed:
. In a Rural environment 2nd order propagation is assured, giving a range
of typically 8 - 15km. Line density is typically 1 - 10 per km2.
. In a Sub-urban environment 3rd order propagation is assured, giving a
range of typically 5 - 8km. Line density is typically 10 - 100 per km2
. In an Urban environment 4th order propagation is assured, giving a
range of typically 3 - 5km. Line density is typically 100 - 500 per
km2..
<PAGE>
Typical planning parameters used are as follows:
Propagation prediction model See comments below
Link Availability % 99%
Required C/I for frequency allocation 8.0dB
Frequency reuse for maximum load N = 3
Minimum RF spacing, one sector Adjacent plus One - 7MHz
Minimum RF spacing, one site Adjacent - 3.5MHz
Guard band requirements Per CEPT / ITU channel plan
The system adheres to the typical microwave propagation model, i.e. for
rural areas:
Path Loss = 32.44 + 20Log D + 20Log F, assuming 0.6 FZC is achieved.
Testing has shown that the impact of an obstruction on the system closely
mirrors theoretical work on propagation modeling by ITU-R (CCIR) for
microwave point-to-point systems in the 2 and 4GHz bands.
The model that best describes the effect of grazing on the radio path is a
derivative from a "multiple knife edge diffraction" model. The basic work
on this model was done by Bullington in 1947, and was finally refined by
Deygout in 1966, when it appeared in CCIR Report 715. This methodology is
an extension of a single knife edge diffraction calculation.
In 1971 ASIS showed how this approach could be extended using "multiple
rounded obstacles", in place of multiple knife edges. This is the basis for
the Airspan's propagation model. The technique employed to calculate these
type of losses is defined in CCIR Rec. 526-2, and involves representing the
path as a series of "cascaded cylinders".
<PAGE>
6. SERVICES SUPPORTED
6.1. WIRELINE-EQUIVALENT SERVICES.
The following services are supported:
. TELEPHONY, including the in-band support for G3 facsimile and data
modems operating at up to 56kbit/s.
. CLASS services as supported by the Local Switch.
. LEASED LINE data services supporting currently 2 x 64kbit/s per ST.
Future enhancement to 6 x 64kbit/s are planned.
. BASIC RATE ISDN. All ISDN implementations fully support:
- ETS 300 011 / 012 -
- ETS 300 125 - Basic Call Layer 2 Data Link Layer
I.440 & I.441 - Q.921
- ETS 300 102 - Basic Call Layer 3 (Q.931)
Interfaces are generally defined by the ITU-T (CCITT)
recommendations, I.420 (for Basic Rate) and I.421 for Primary Rate.
Specification for Bearer Services are based on ITU-T
recommendations I.230 and I.231.
- Circuit Mode Bearer Service 64kbit/s unrestricted 8kHz structured
(ETS 300 108)
- Circuit Mode Bearer Service 64kbit/s 8kHz structured for
3.1kHz Audio (ETS 300 110) Specification for Basic
Teleservices are:
- Definition of Teleservices (I.240) Blue Book, Teleservices
supported by an ISDN (I.241)
- Telephony Part 1, Telefax 4 Part 3, Mixed Mode Part 4
- Circuit Mode Teleservice Telephony 3.1kHz (ETS 300 111)
- Circuit Mode Telefax Group 4 (ETS 300 120)
- Telephony 7 kHz (ETS 300 263)
- Video Telephony (ETS 300 264)
The systems also supports the following ISDN Supplementary Services.
- Calling Line Identification Presentation (CLIP) ETS 300 092
- Calling Line Identification Restriction (CLIR) ETS 300 093
- Direct Dialling In (DDI) ETS 300 064
- Multiple Subscriber Number (MSN) ETS 300 052
- Terminal Portability (TP) ETS 300 055
- Sub Addressing (SUB) ETS 300 061
- Call Forwarding Unconditional (CFU) ETS 300 027
<PAGE>
- Call Waiting (CW) ETS 300 058
- Call Hold (HOLD) ETS 300 141
- Closed User Group (CUG) ETS 300 138
- Advice of Charge at end of Call (AOC-E) ETS 300 182 Fixed
Assigned Radio Interfaces are fully Service Transparent.
- Full support for D-channel Services, including D-Channel
Packet Access
- Support Varies by Network Interface Types (assumed to be V5.1)
D-Channel Packet Access Specifications supported include:
- ETS 300 007- Support of packet-mode terminal equipment by an
ISDN
- ETS 300 048 - ISDN Packet Mode Bearer Services (PMBS) ISDN
Virtual Call (VC) and Permanent Virtual Call (PVC)
- ETS 300 049 - ISDN Packet Mode Bearer Services (PMBS) ISDN
Virtual Call (VC) and Permanent Virtual Call (PVC)
- ETS 300 099 - Specification of the Packet Handler Access Point
Interface (PHI)
In addition the following D-channel based Supplementary Services are
supported.
- ETS 300 286 - User to User Signaling (UUS)
Demand Assigned Radio Interfaces are "Semi" Service Transparent.
- Only support limited D-channel based Services
- Bandwidth for Packet Access and/or D-Channel Supplementary
Services is limited to 40kbit/s per RF channel.
6.2. DATA SERVICES SUPPORT
6.2.1. DATA RATES.
Up to 56kbit/s in the voice band using the 64kbit/s codec, and
9.6kbit/s using the 32kbit/s ADPCM codec.
6.2.2. BIT ERROR RATES.
Typically better than 10-6
6.2.3. TRANSMISSION DELAYS.
One way system delays are below 10ms, having a minimal impact on data
applications.
6.2.4. DIRECT DATA INTERFACES.
The external and internal STs support ISDN and the internal ST also
supports RS-232 and / or 10baseT interfaces.
<PAGE>
6.3. ACCESS TO THE INTERNET
The following options are currently supported by the system:
. Use of in-band data modem on a circuit switched basis
. Use of ISDN on a circuit switched basis
. Use of leased lines on a dedicated basis
Use of packet based access in conjunction with circuit switched
telephony service is a future feature.
6.3.1. PACKET ACCESS CAPABILITIES.
The Demand Assigned system has a number of characteristics which make
it highly suitable for packet based Internet access.
. Residential Internet access is mostly asymmetric, with
downstream traffic typically 10 times upstream rate. The
system has greater capacity on the CDMA downlink than on CDMA
uplink.
. The ST already contains a digital interface (i.e. RS-232 link)
. The ST will operate at up to 384kbit/s. STs can receive data
on multiple RW links, making the potential bandwidth of any
digital service up to 384kbit/s downstream and up to 128kbit/s
upstream.
. In this application the system is "end-to-end digital" -
removing analogue A/D and offering improved performance
compared with copper/voice band modem solutions.
. The system has error protection facilities that can ensure
high quality data delivery.
. The system has built-in HDLC facilities that enable the system
to support packet data access.
[GRAPHIC APPEARS HERE]
WIRELESS INTERNET ACCESS
<PAGE>
6.4. HIGH BANDWIDTH TRANSMISSION.
. Up to 384kbit/s is supported to an ST to support video and
multi-media applications.
. The next generation implementation will in addition support
user bit rates of up to 2Mbit/s, and will therefore offer
operators a radio-based alternative to copper-based DSL
systems - extending the range of DSL service beyond that of
copper.
6.5. SPEECH CODING
The system is based on either 64kbit/s PCM, to support full wireline
equivalent services, or 32kbit/s ADPCM for those applications where
higher line density and quasi-wireline services are required.
6.6. System Security
ST authentication is carried out on a per call basis. Authentication
uses encryption techniques to prevent an authentication response from
being decoded and mimicked. An authentication request is issued by the
CT equipment, which transmits a random code to the ST. The ST response
is formed by non-linearly combining the random code with a known key.
The key used for authentication comprises a static portion based on an
unalterable electronic serial number (ESN) and a dynamic portion, which
is updated following each authentication. Full authentication is
delayed until the time critical phase of call set-up has been
completed.
Authentication failure causes an alarm to be generated. Service
blocking on authentication failure is configurable via the management
system.
The ST serial number contains a portion which is unique and
unalterable, i.e. not held in a memory that could be altered or
duplicated. This portion of the serial number is 32-bits in size.
<PAGE>
7. SYSTEM CAPACITY - DEMAND ASSIGNED
7.1. RADIO (RF) CHANNEL CAPACITY.
The capacity calculations shown below are for a single (3.5+3.5MHz) RF channel
operating in a single Omni-cell or cell sector.
7.1.1. NUMBER OF TRAFFIC CHANNELS (TCHS) FOR ISOLATED CELL.
144kbit/s 64kbit/s 32kbit/s
--------- -------- --------
Omni-directional cell 13 26 52
Three sector cell 39 78 156
7.1.2. NUMBER OF TCHS FOR CONTIGUOUS CELL PATTERN.
144kbit/s 64kbit/s 32kbit/s
--------- -------- --------
Omni-directional cell 10 20 40
Three sector cell 30 60 120
7.1.3. DYNAMIC FREQUENCY ALLOCATIONS
Where multiple RF channels are supported from a single CT equipment,
then STs will be offered service from all RF channels to support:
. Fault tolerance: should a CT modem shelf fail, an ST may
automatically switch to an alternative frequency for service
for the duration of outage
. Increased trunking efficiency of the air-interface
. Traffic load balancing: An ST may be moved through manual
intervention using the management system in order to balance
traffic load across multiple CTs
. Frequency diversity: An ST may be moved through manual
intervention using the management system in order to improve
radio link performance
At provisioning, an ST will be allocated a 'home' CT shelf (RF Channel)
through which all usual management communications may be directed. The
ST will be notified of other potential RF channels via management
communications.
7.2. INFRASTRUCTURE CAPACITY
The following models show typical infrastructure line capacity as a
function of:
. RF Spectrum allocation
<PAGE>
. Isolated Cell [1] or Contiguous [2] deployment
. Various per line traffic levels, based on 1% GOS (Erlang B)
7.2.1. 32KBIT/S TELEPHONY
Spectrum Allocated: 10.5 + 10.5 MHz 21 + 21 MHz 42 + 42 MHz
--------------- ----------- -----------
Cell Configuration 3 - Sector 3 - Sector 3 - Sector
#RF / Sector 1 2 4
#RF / Cell 3 6 12
[1] [2] [1] [2] [1] [2]
--- --- --- --- --- ---
TCH / Sector 52 40 104 80 208 160
Erls. / Sector (1%Gos) 40 26 85 65 180 140
Erls. / Cell 120 78 255 195 540 420
Lines per cell / Traffic (mE)
[1] [2] [1] [2] [1] [2]
--- --- --- --- --- ---
- - 40 mE 3,000 1950 6,375 4,875 13,500 10500
- - 75 mE 1,600 1,040 3,400 2,600 7,200 5,600
- - 100 mE 1,200 780 2,550 1,950 5,400 4200
7.2.2. 64KBIT/S TELEPHONY OR DATA SERVICE
Spectrum Allocated: 10.5 + 10.5 MHz 21 + 21 MHz 42 + 42 MHz
--------------- ----------- -----------
Cell Configuration 3 - Sector 3 - Sector 3 - Sector
#RF / Sector 1 2 4
#RF / Cell 3 6 12
[1] [2] [1] [2] [1] [2]
--- --- --- --- --- ---
TCH / Sector 26 20 52 40 104 80
Erls. / Sector (1%Gos) 17 12 40 29 85 65
Erls. / Cell 51 36 120 78 255 195
Lines per cell / Traffic (mE)
[1] [2] [1] [2] [1] [2]
--- --- --- --- --- ---
- - 40 mE 1275 900 3000 1950 16375 4875
- - 75 mE 680 480 1600 1040 3400 2600
- - 100 mE 510 360 1200 780 2550 1950
7.3. SYSTEM CAPACITY LIMITS
. Up to 2048 Subscriber Terminals (STs) per RF channel.
. Up to 4 RF channels per Central Terminal (CT). Supported by up
to 4 x 2Mbit/s links to the host Access concentrator (AC).
<PAGE>
. Up to 12 RF channels provisioned in 3 Central Terminals per
Cell site. Supported by up to 12 x 2Mbit/s links to the host
Access Concentrator (AC).
. The AC supports up to 64 x 2Mbit/s links to the Switch for
each group of 4 x 2Mbit/s links to the CT.
<PAGE>
8. EQUIPMENT DETAILS
8.1. INFRASTRUCTURE
All internal CT and AC system components are be packaged so that they fit
into an ETSI style equipment practice, 2200mm x 600 mm x 300mm. The
mechanical design is modular and does not preclude the co-location of CT RF
/ modem shelves and AC shelves. Up to 4 RF channels (CT modem shelves)
share a single RF combiner shelf. There is no forced air cooling.
[GRAPHIC APPEARS HERE]
8.1.1. TEMPERATURE AND HUMIDITY LIMITS
-5 to +45 deg. C. 95% relative humidity.
8.2. Power Requirements
Supply voltages: -21.8 to -70VDC. -48VDC nom.
Consumption: AC Shelf (68 E1 ports): 140W
CTRF Combiner (4RF): 300W
CT Modem Shelf: 120W (Up to 4 per CT)
8.3. Antenna configurations.
. Omni antenna assembly
. Directional antenna assembly (65deg.)
. Directional antenna assembly (120deg.)
Typical height of the antenna tower employed is 15m.
<PAGE>
The antenna interface is N-type connector, 50 ohm. Provision is made
for earthing the RF feeder to the top of the tower and at the building
entry point.
8.4. INSTALLATION AND COMMISSIONING
Up to 5 man-days per CT including rigging of antenna system on an
existing tower.
8.5. SUBSCRIBER (ST) EQUIPMENT
8.5.1. SIZE
External ST Outdoor Radio unit (CRU) 305 x 250 x 95mm
External ST Indoor PSU 225 x 300 x 100mm
Internal ST (ST-R) 280 x 190 x 35mm
8.5.2. WEIGHT
External ST: CRU: 4kg, PSU: 7kg
Internal ST: 0.7kg
8.5.3. POWER CONSUMPTION
External ST: 14W
Internal ST: 6W
8.5.4. BATTERY BACKUP.
24V battery backup is typically 4 hours, using standard rechargeable
batteries. Charge time is 10 hours. This can be extended by the use of
external batteries. Optional solutions are available to extend to 24
hours.
8.5.5. PAY PHONE SUPPORT
Subscriber terminals support 12kHz or 16kHz subscriber pulse metering
SPM and polarity reversals.
8.5.6. RINGER LOADS AND DROP DISTANCES.
External ST: Ringer load REN = 4
VF Drop length 5km max (cable quality dependent)
Internal ST: Ringer load REN = 2
VF Drop length 200m max (cable quality dependent)
8.5.7. ST Antenna characteristics.
External directional antennas are used for both ST types.
8.5.8. EXTERNAL ST
Flat plate Antennas are integrated into the outdoor radio unit (CRU)
enclosure
<PAGE>
Gain 9.0dBi
3dB HHPBW + 15(DEGREES)
3dB VHPBW + 33(DEGREES)
Front to back ratio 20dB
Return loss 14dB
8.5.9. INDOOR ST.
Various options are available:
Gain 10dBi to 17dBi
3dB HHPBW +8(DEGREES)
3dB VHPBW +15(DEGREES)
Front to back ratio 20dB
Return loss 14dB
8.5.10. INSTALLATION & COMMISSIONING
Approximately 1.5 hours for the External ST and 1 hour for the Internal ST.
<PAGE>
9. RF AND DEPLOYMENT PLANNING
The use of radio to replace the traditional use of copper in the access network
requires modifications to an operator's normal deployment planning process, with
emphasis on radio coverage and frequency planning aspects.
As an aid to this planning process a fully equipped RF planning tool, called
AirPlanTM, including all necessary hardware and software can be supplied. The
AirPlanTM tool maps end-users to cell-sites based on the anticipated traffic
levels.
[GRAPHIC APPEARS HERE]
Thorough implementation of the RF planning process will provide an operator with
a high degree of confidence that satisfactory radio coverage can be achieved at
the desired ST locations from a given CT, or set of CT locations. Due to the
nature of radio propagation trees or other buildings in the vicinity of a
particular end-user location may affect the signal level at that location.
Therefore, the planning process cannot guarantee the viability of an end-user
connection, and certain local checks are required prior to the installation of
an ST on an end-user's building.
<PAGE>
APPENDIX A: VOCABULARY
AC Access Concentrator, Central Control Station
ADPCM Adaptive Differential Pulse Code Modulation. The technology used in the
codec (COder/DECoder) in DECT systems. A 32 kbit/s codec is specified.
BER Bit Error Ratio
CAS Channel Associated Signaling
CCS Central Controller Station
C/I Carrier to Interference ratio
CDMA Code Division Multiple Access
CRS Central Radio Station
CRU Customer Radio Unit
CT Central Terminal,
DA Demand Assignment of air-interface
DASS2 Digital Access Switching System 2.
DECT Digital European Cordless Telephony
DS-CDMA Direct Sequence-Code Division Multiple Access
DSS1 2Mbit/s Switch Interface
E1 European 2Mbit/s line standard
EM Element Manager
ERP Effective Radiated Power
ETSI European Telecommunications Standards Institute
FA Fixed Assignment of air-interface.
GSM Global System for Mobile Communications
GUI Graphical User Interface
HHPBW Horizontal Half Power Bandwidth
ISDN Integrated Services Digital Network
ITU International Telecommunications Union
LOS Line Of Sight
MTBF Mean Time Between Failure
NLOS Near Line Of Sight
NTU Network terminating Unit
PA Power Amplifier
PCM Pulse Code Modulation
<PAGE>
PCS Personal Communications Services
PHS Personal Handyphone System
PLMN Public Land Mobile Network
PN Psuedo-random Number
POTS Plain Old Telephone Service
PSTN Public Switched Telephone Network
PSU Power Supply Unit
RS Repeater Station
RW Rademacher - Walsh
SNMP Simple Network Management Protocol
SC Site Controller
SPM Subscriber Pulse Metering
ST Subscriber Terminal, Terminal Station
TE Terminal Equipment
TS Terminal Station
TCH Traffic Channel
VHPBW Vertical Half Power Bandwidth
WFA Wireless Fixed Access
WLL Wireless Local Loop
<PAGE>
APPENDIX B - RF CHANNEL PLANS
Airspan's systems support WFA system implementation in various frequency ranges
within the ITU-R and ETSI 2GHz and 3GHz frequency ranges. The specific
implementations currently available operate in frequency bands at 1.9GHz, 2.0-
2.3GHz, 2.3-2.5GHz and 3.4-3.6GHz in accordance with the "channel plans" shown
below.
The RF channelisation is 2.5/3.5/4.0MHz and Frequency Division Duplexing (FDD)
is used. The basic requirement for system operation is for a single RF channel,
with go-return spacing dependant on the channel plan used.
[GRAPHIC APPEARS HERE]
<PAGE>
2.0-2.3GHZ, CHANNEL PLAN: C1
[GRAPHIC APPEARS HERE]
2.0-2.3GHz, Channel Plan: C2
[GRAPHIC APPEARS HERE]
2.0-2.3GHZ, CHANNEL PLAN: C3
[GRAPHIC APPEARS HERE]
<PAGE>
2.3-2.5GHZ, CHANNEL PLAN: S1
[GRAPHIC APPEARS HERE]
2.3-2.5GHZ, CHANNEL PLAN: S3
[GRAPHIC APPEARS HERE]
<PAGE>
3.4-3.6GHZ, CHANNEL PLAN: X1
[GRAPHIC APPEARS HERE]
3.4-3.6GHZ, CHANNEL PLAN: X3
[GRAPHIC APPEARS HERE]
<PAGE>
ANNEX 4 - PRICE SUMMARY
- ------------------------
The pricing for this contract shall be as defined below:
<TABLE>
<CAPTION>
DESCRIPTION QUANTITY Unit EXTENDED COST
Cost (US) (US)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Infrastructure Equipment
- ---------------------------------------------------------------------------------------------------------------
Base Station consisting of 3 x Airspan Central Terminals, * * *
each equipped with two (2) FA Modems Shelves and one (1)
DA Modem Shelf. 6 x 65 degree Directional Antenna System.
Equipment operates in Airspan's C-Band. Each Base Station
is supported by a single Access Concentrator equipped
with one (1) shelf.
- ---------------------------------------------------------------------------------------------------------------
TOTAL INFRASTRUCTURE *
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
SUBSCRIBER EQUIPMENT
- ---------------------------------------------------------------------------------------------------------------
Basic Rate ISDN Terminals * * *
- ---------------------------------------------------------------------------------------------------------------
Data Terminals * * *
- ---------------------------------------------------------------------------------------------------------------
2-Line Voice Terminals * * *
- ---------------------------------------------------------------------------------------------------------------
16-Line Voice Terminals * * *
- ---------------------------------------------------------------------------------------------------------------
TOTAL SUBSCRIBER TERMINALS *
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
NETWORK MANAGEMENT EQUIPMENT
- ---------------------------------------------------------------------------------------------------------------
Sitespan Management System for 9 Base Station Sites and 9 - * *
Access Concentrators
(as detailed above)
- ---------------------------------------------------------------------------------------------------------------
TOTAL MANAGEMENT *
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
SERVICES AND MISC. TOOLS
- ---------------------------------------------------------------------------------------------------------------
Installation and Commissioning (of Infrastructure) - - *
- ---------------------------------------------------------------------------------------------------------------
Project Management - - *
- ---------------------------------------------------------------------------------------------------------------
Radio Planning - - *
- ---------------------------------------------------------------------------------------------------------------
Site Surveys - - *
- ---------------------------------------------------------------------------------------------------------------
System and Site Acceptance Testing - - *
- ---------------------------------------------------------------------------------------------------------------
Training - - *
- ---------------------------------------------------------------------------------------------------------------
Survey Tool and LCU * * *
- ---------------------------------------------------------------------------------------------------------------
TOTAL SERVICES *
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
GRAND TOTAL *
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
ANNEX 5 - PRICE LIST
- ---------------------
The detailed price list for this contract shall be is defined in section 1.
Optional detailed pricing is given in section 2.
As prices are in $US, and are quoted as CIP Colombo.
<PAGE>
SECTION 1: CONTRACT PRICING
INFRASTRUCTURE:
A Base Station designed to support:
- -----------------------------------
- - 45 Fixed Assigned Data Terminals
- - 45 Fixed Assigned ISDN Terminals
- - At least 400 Demand Assigned Voice Lines (on Single or Multiple Terminals)
(assumes a Grade of Service of 1% and 70mErl per Line)
The configuration for each Base Station consists of:
6 Sectored Antenna System with Feeders.
6 CT Racks, 3 RF Combiners.
6 Fixed Assigned Modem Shelves, 3 Demand Assigned Modem Shelves.
In-band Mgmt links to Host Switch (OMC).
CONTRACT PRICE = *
Access Concentrator designed to support voice lines from each Base Station:
- ---------------------------------------------------------------------------
Terminates 3 DA RF Channels
1 Rack, with 1 Access Concentrator Shelf
Terminates traffic to un-concentrated 2Mbit/s E1 CAS Interfaces (up to 16
Physical 2Mbit/s Interfaces)
CONTRACT PRICE = *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
SUBSCRIBER TERMINALS:
The subscriber terminals offered in this contract are priced as follows:
Dual Line Voice Subscriber Terminal ST-R2
- -----------------------------------------
- - External Antenna
- - Separate Interface Unit
- - With batteries
- - Separate PSU
- - Full Mgmt Functionality (Line Test, RX/TX Level / Loopbacks)
CONTRACT PRICE = *
Multiple Line Terminals (16-Lines) ST-M16
- -----------------------------------------
- - Modular multi-service solution (Price for Voice only)
- - External Antenna
- - Separate Interface Unit
- - Wide variety of interface options (Configured with 16 Telephone Lines)
- - Separate PSU
- - Full Mgmt Functionality (Line Test, RX/TX Level / Loopbacks)
CONTRACT PRICE = *
Basic Rate ISDN Terminal (Internal) ST-B1
- -----------------------------------------
- - So interface
- - Full ISDN Powering Classes
- - Wall or Pole Mounted
- - Full Mgmt Functionality (ISDN Test Functions, RX/TX Level / Loopbacks)
CONTRACT PRICE = *
Digital Leased Line Terminal (Internal) ST-L128
- -----------------------------------------------
- - Integrated RS.530 interface
- - V.35 and X.21 cable options
- - Wall or Pole Mounted
- - Full Mgmt Functionality (RX/TX Level)
CONTRACT PRICE = *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
SITESPAN MANAGEMENT SYSTEM:
Client Equipment View (H/W and S/W)
- -----------------------------------
CONTRACT PRICE = * PER NODE
Server Node (H/W and S/W)
- -------------------------
based on the number of nodes deployed. (A node is an Access Concentrator Shelf,
RF Combiner or Modem Shelf)
CONTRACT PRICE QTY/CUMULATIVE PRICE
- 1-200 = *
- 201-300 = *
- 301-UPWARD = *
Authentication and Fraud Module
- -------------------------------
In addition to the Standard OA&M facilities, an optional module is available
that provides Authentication of Subscriber Terminals and Fraud Prevention.
THE CONTRACT PRICE IS BROKEN INTO TWO PARTS:
- - RIGHT TO USE FEE FOR WHOLE NETWORK = *
- - PRICE PER ST = *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
OTHER EQUIPMENT AND TOOLS:
Survey Tool / Installation Aid
- ------------------------------
THE CONTRACT PRICE FOR EACH SURVEY TOOL IS *
Level Control Unit
- ------------------
THE CONTRACT PRICE FOR EACH SURVEY TOOL IS *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
SERVICES - INSTALLATION AND COMMISSIONING:
The following services are offered.
Physical Installation (6 Sectored Base Station)
- -----------------------------------------------
- - Antenna Rigging
- - Feeder Installation
- - Grounding
- - Cabling (Power, Signal, Mgmt)
- - Rack Mounting
CONTRACT PRICE = * PER BASE STATION
System Commissioning (6 Sectored Base Station)
- ----------------------------------------------
- - Load Plug-ins
- - Initial Datafill
- - RF Set-up
- - Integration with host Access Concentrator / Switch
CONTRACT PRICE = * PER BASE STATION
Site Acceptance Testing - Commissioning Tests (6 Sectored Base Station)
- -----------------------------------------------------------------------
- - Commissioning Tests
- - Site Functionality Tests
- - Site Parametric Tests
- - Integration Tests
- - ST Installations (one per RF Channel)
- - Site Coverage Tests
CONTRACT PRICE = * PER BASE STATION
Physical Installation (Access Concentrator)
- -------------------------------------------
- - Grounding
- - Cabling (Power, Signal, Mgmt)
- - Rack Mounting
CONTRACT PRICE = * PER ACCESS CONCENTRATOR
System Commissioning (Access Concentrator)
- ------------------------------------------
- - Load Plug-ins
- - Initial Datafill
- - Integration with Base Stations / Host Switch
CONTRACT PRICE = * PER BASE STATION
System Acceptance Testing - on 9 Base Station Network
- -----------------------------------------------------
- - System Functionality Tests
- - Operational Tests
- - OA&M Tests
- - Network Coverage Tests
CONTRACT PRICE = *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
MAINTENANCE AND SUPPORT CHARGES:
The annual maintenance fee, after warranty, is based on the delivered volume of
----------------------
equipment.
This fee provides extended warranty on all software and hardware units, and
entitles Suntel to all new software / firmware updates free of charge. This fee
also includes Spares Management for Infrastructure equipment as detailed below.
The contract price of the annual service fees are defined as follows;
* = 2.5% of the value of the contract (Infrastructure, Mgmt and
Subscriber Terminals)
* = * plus 1.3% of the value of the contract exceeding *
* and above = * plus 1% of the value of the contract exceeding *
The maintenance fee is calculated using the cumulative volume at the end of the
previous 12 month period, and falls due when warranty period expires.
SPARES MANAGEMENT (INFRASTRUCTURE ONLY)
Airspan also offers the service of Spares Management. This service removes the
need for Suntel to purchase a complete spares set. The price of the spares
management services is as follows;
After Warranty Period (includes extended warranty support for existing hardware
- ---------------------
but does not include software updates / new functionality).
4% OF INSTALLED INFRASTRUCTURE VALUE PER ANNUM = * (WHEN WARRANTY EXPIRES AND
EACH ANNIVERSARY THEREAFTER - MINIMUM OF 3 YEARS)
These Spares will be held in a location in Colombo, Sri Lanka.
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
TRAINING CHARGES:
Included within the Contract are two training courses, the first is held before
system deployment, the second is held after system deployment.
The first (pre-deployment) training course shall be 2 weeks in duration and
shall be limited to 12 students. If the training course is held in the UK,
Suntel are responsible for all travel and living expenses.
The second (post-deployment) training course shall be 1 week in duration and
shall be limited to 12 students. This course shall be held in Colombo, Sri
Lanka.
THE TOTAL CONTRACT PRICE FOR BOTH THE FIRST AND SECOND TRAINING COURSES IS *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
DOCUMENTATION:
One paper and one CD-ROM documentation set shall be provided free of charge.
Permission is granted by Airspan Communication Limited for the limited
copying / reproduction of this document set for Internal Suntel purposes only.
<PAGE>
SECTION 2: OPTIONAL PRICING
This section gives optional pricing for items not included within the initial
contract / purchase order.
SUBSCRIBER TERMINALS:
The price for optional subscriber terminals are as follows:
Basic Rate ISDN Terminal (External) ST-I1
- -----------------------------------------
- - So interface
- - Full ISDN Powering Classes
- - Wall or Pole Mounted
- - Full Mgmt Functionality (ISDN Test Functions, RX/TX Level / Loopbacks)
CONTRACT PRICE = *
Digital Leased Line Terminal (External) ST-S128
- -----------------------------------------------
- - 120 ohm Twisted Pair Physical Interface
- - G.703 / G.704 2Mbit/s Fractional E1
- - Multiple Power Supply Options
- - Wall or Pole Mounted
- - Full Mgmt Functionality (RX/TX Level)
- - V.35 or X.21 with optional converter
UNIT PRICE = *
Optional V.35 / X.21 Interface Converter for the External Lease Line Data
- -------------------------------------------------------------------------
Terminal
- --------
CONTRACT PRICE = *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
OTHER EQUIPMENT AND TOOLS:
Radio Planning Tool - AirPlan
- -----------------------------
AirPlan Lite = 50 Sites (Max. 150 Central Terminal Racks)
AirPlan = 500 Sites (Max. 1500 Central Terminal Racks)
ONE COPY OF AIRPLAN LITE LICENSED FOR USE ON ONE CPU = *
ONE COPY OF AIRPLAN LICENSED FOR USE ON ONE CPU = *
In addition to the initial purchase price, annual maintenance is available at
20% of purchase price.
The hardware computer platform for AirPlan is based on an industry standard Unix
Workstation from Sun Microsystems.
Hardware Configuration suitable for AirPlan or AirPlan Lite
- -----------------------------------------------------------
CONTRACT PRICE FOR AIRPLAN HARDWARE PLATFORM = *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
TRAINING CHARGES:
The initial contract include special pricing pre and post system deployment. The
price for additional training is given in the table below (per day per Student).
<TABLE>
<CAPTION>
- --------------------------------------------------------- --------------------- ----------- -----------------
COURSE TITLE COURSE DAYS STUDENT
NUMBER TUITION
- --------------------------------------------------------- --------------------- ----------- -----------------
<S> <C> <C> <C>
AS4000 Appreciation
AS001 1 *
- --------------------------------------------------------- --------------------- ----------- -----------------
AS4000 - MAS001 5 *
Installation, Commissioning and Maintenance
- --------------------------------------------------------- --------------------- ----------- -----------------
AS4000 Subscriber Terminals (ST) - STMAS001A 1 *
Installation, Commissioning and Maintenance STMAS001B 1 *
STMAS001C 1 *
- --------------------------------------------------------- --------------------- ----------- -----------------
AS4000 Subscriber Terminals (ST) - VSTMAS001A 1 *
Installation, Commissioning and Maintenance VSTMAS001B 1 *
VSTMAS001C 1 *
- --------------------------------------------------------- --------------------- ----------- -----------------
AS4000 Central Terminal (CT) - CTCAS001 3 *
Installation and Commissioning
- --------------------------------------------------------- --------------------- ----------- -----------------
AS4000 Central Terminal (CT) - CTMAS001 2 *
Maintenance
- --------------------------------------------------------- --------------------- ----------- -----------------
AS8100 (Sitespan) - SSOA001 2 *
Installation, Commissioning and System Operation
- --------------------------------------------------------- --------------------- ----------- -----------------
AS4000 Demand Assignment - MDA001 3 *
Installation, Commissioning and Maintenance
- --------------------------------------------------------- --------------------- ----------- -----------------
AS4000 - Multiline - MASM001 2 *
Installation, Commissioning and System Operation
- --------------------------------------------------------- --------------------- ----------- -----------------
AS8300 Management System - EMSAS001 2 *
System Support
- --------------------------------------------------------- --------------------- ----------- -----------------
AS8300 Management System - EMOAS001 2 *
System Operators
- --------------------------------------------------------- --------------------- ----------- -----------------
Litespan 120 - Channel Bank - MLS001 2 *
Installation, Commissioning and Maintenance
- --------------------------------------------------------- --------------------- ----------- -----------------
CP600/800 - CP601 2 *
Operations and Maintenance
- --------------------------------------------------------- --------------------- ----------- -----------------
</TABLE>
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
DOCUMENTATION:
Initial documentation is provided free-of-charge. If however Suntel require
Airspan to provide additional Documentation Sets these are available at the
following contract prices:
- - PAPER BASED = *
- - CD-ROM BASED = *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
ANNEX 6 - DISCOUNT TABLE
- ------------------------
The prices for this project are given in Annex 4 and 5. No additional discounts
are provided.
<PAGE>
ANNEX 7 - EQUIPMENT AND SOFTWARE
- ---------------------------------
INFRASTRUCTURE:
The WLL System infrastructure (Central Terminals and Access Concentrators) are
designed to support 5,000 lines (or ISDN / Data equivalents). This is achieved
using a Base Station (Central Terminal) and Switch (Access Concentrator)
configuration as shown below.
[GRAPHIC APPEARS HERE]
The Initial 5k Infrastructure - Operates 9 RF Channels.
Each Base Station consists of 6 Racks.
Three racks contain an RF Combiners, and two Fixed Assigned (FA) Modem Shelves
for ISDN and Data. The RF Combiner is equipped with Dual DIP/LNA enabling two
antennas per RF Combiner.
The other three racks contain one Demand Assigned (DA) Modem Shelf and one rack
alarm. Space is available for an upgrade to two Demand Assigned Modem Shelves.
Each Base Station operates from 6 Directional Antennas. The Antennas are high
gain and have an HPBW of 65 degrees.
Each Base Station is supported by its own Access Concentrator.
Access Concentrators are installed at two locations, 4 Access Concentrator in
two racks on one switch site, and 5 Access Concentrators in 3 racks on another.
Each Base Station is linked back to the swith site using
9, 2Mbit/s G.703 / G.704 transmission links.
<PAGE>
SUBSCRIBER TERMINALS:
The Subscriber terminals offered within this contract are described below. They
support a mix of services and lines per terminal.
o Dual-line POTS internal Subs Terminals
o ISDN 2B+D internal Subs Terminals
o 128kbps Leased Line Data Terminal
o 16-line POTS internal Subs Terminals
DUAL LINE VOICE SUBSCRIBER TERMINAL
[GRAPHIC APPEARS HERE]
o External Antenna
o Separate Indoor Interface Unit (in either a Metal or Plastic Enclosure)
o Includes Battery Backup.
o Separate PSU
o Full Mgmt Functionality (Line Test, RX/TX Level / Loopbacks)
MULTIPLE LINE VOICE TERMINALS (16-LINE)
[GRAPHIC APPEARS HERE]
o Modular multi-service solution (Voice, ISDN and Data)
o External Antenna(s)
o Separate Interface Unit
o Wide variety of interface options (Configured with 16 Telephone Lines)
o Separate PSU
o Full Mgmt Functionality (Line Test, RX/TX Level / Loopbacks)
<PAGE>
BASIC RATE ISDN TERMINALS
[GRAPHIC APPEARS HERE] or [GRAPHIC APPEARS HERE]
o So interface
o Full ISDN Powering Classes
o Wall or Pole Mounted
o Full Mgmt Functionality (ISDN Test Functions, RX/TX Level / Loopbacks)
o (Phase 1 ISDN terminals shall only be External Design)
DIGITAL LEASED LINE TERMINALS
[GRAPHIC APPEARS HERE] or [GRAPHIC APPEARS HERE]
o 120 ohm Twisted Pair Physical Interface - Includes integrated RS.530 I/F)
o G.703 / G.704 2Mbit/s Fractional E1 - Interface converter not needed
o Multiple Power Supply Options - V.35 and X.21 cable options
o Wall or Pole Mounted - As D128
o Full Mgmt Functionality (RX/TX Level)
o V.35 or X.21 with optional converter
(Phase 1 Data terminals shall only be External Design with Optional Data
Converter)
<PAGE>
SURVEY TOOL / INSTALLATION AID
The Airspan Survey Tool provides for the efficient planning of CRU location at
the Subscriber Terminal. It may also be used as a tool for surveying the signal
coverage area of a given Central Terminal.
[GRAPHIC APPEARS HERE] [GRAPHIC APPEARS HERE]
It consists of a telescopic mast attached to a tripod base, CRU, Drop Cable, and
a Test Box. The mast is erected as near to a probable CRU location as possible
and is raised to the mounting height of the CRU. The CRU is panned to assess the
signal strength at that location. The test box gives a readout of the values of
AGC and Power Control readings that can be related to the levels recorded on the
CRU calibration label. Details of the position, height, and panning angle can
then be recorded for use by the installer.
<PAGE>
LEVEL CONTROL UNIT
The Level Control Unit (LCU) can be used in two ways. This first is for system
commissioning the second is the ongoing maintenance of a System. The LCU basic
operation is poll each modem shelf (RF channel) on a hourly or daily basis to
ensure the receiver setting is at its optimum. This ensures system performance
is maintained at all times.
One Level Control Unit may be shared by up to four modem shelves in a single
rack.
The Level Control Unit operates by periodically acquiring a full low rate RF
downlink / uplink through RF cabling coupled into the CT transmit / receive
antenna ports. Knowledge of the path loss between the Level Control Unit and RF
antenna port allows the LCU to instruct the Shelf Controller to adjust RF
receive level as required.
The level control unit is an optional item
[GRAPHIC APPEARS HERE] [GRAPHIC APPEARS HERE]
<PAGE>
ANNEX 8 - OPTIONAL EQUIPMENT AND SOFTWARE
- -----------------------------------------
Radio Planning Tool - AirPlan
Radio Planning and Network Design for an Airspan deployment is based on the use
of AirPlan, Airspan's RF Planning Tool. AirPlan is a software tool that runs on
a Unix workstation that allows the operator to predict the radio coverage
Airspan equipment will attain in any given area. The results of the planning
process will be both a paper representation (in the form of reports and coverage
maps) and a Digital Model developed on AirPlan. The ongoing operational
management and extension of the Airspan network can be based on the use of this
software.
Two versions of the software are available for purchase
AirPlan Lite = 50 Sites (Max. 150 Central Terminals).
AirPlan = 500 Sites (Max. 1500 Central Terminals)
The hardware computer platform for AirPlan is based on an industry standard Unix
Workstation from Sun Microsystems
Configuration suitable for AirPlan or AirPlan Lite
SUN Sparcstation or HyperSparc
- - 512MB RAM
- - Turbo GX+
- - 20" Colour Monitor
- - Internal 3.5 floppy
- - Solaris 2.4
- - 5 GB DAT drive
- - 9 GB Hard Drive
- - CD-ROM
Other equipment such as printers and plotters can be quoted and supplied on
request.
<PAGE>
ANNEX 9 - TURN-KEY SERVICES
- ----------------------------
Airspan will undertake the following services as part of this contract:
Pre-Deployment Site Surveys
- ---------------------------
- - Physical Survey for Installation Purposes
- - Radio Survey
Pre-Deployment Radio Planning
- -----------------------------
- - Radio Measurement Survey
- - Extended Frequency Sweep
- - Initial Coverage Predictions
Pre-Deployment Training
- -----------------------
- - Installation Training (CT, AC and ST)
- - Management System
Physical Installation (6 Sectored Base Station)
- -----------------------------------------------
- - Transportation of equipment to site.
- - Fabrication of Antenna Mounting Hardware
- - Antenna Rigging
- - Feeder Installation
- - Grounding to existing points
- - Cabling (Power, Signal, Mgmt)
- - Rack Mounting
System Commissioning (6 Sectored Base Station)
- ----------------------------------------------
- - Load Plug-ins
- - Initial Datafill
- - RF Set-up
- - Integration with host Access Concentrator / Switch
Site Acceptance Testing - Commissioning Tests (6 Sectored Base Station)
- ----------------------------------------------------------------------
- - Commissioning Tests
- - Site Functionality Tests
- - Site Parametric Tests
- - Integration Tests
- - ST Installations (one per RF Channel)
- - Site Coverage Tests
Physical Installation (Access Concentrator)
- -------------------------------------------
- - Grounding
- - Cabling (Power, Signal, Mgmt)
- - Rack Mounting
System Commissioning (Access Concentrator)
- ------------------------------------------
- - Load Plug-ins
- - Initial Datafill
- - Integration with Base Stations / Host Switch
<PAGE>
Post Deployment Radio Planning - System Optimisation
- ----------------------------------------------------
- - Radio Measurement Surveys
- - Calibrated Coverage Predictions
- - Base Station Datafill Optimisation
Pre-Deployment Training
- -----------------------
- - Subscriber Terminal Installation
- - Operations and Maintenance (CT, AC and ST)
- - Operational Fault Finding
System Acceptance Testing - on 9 Base Station Network
- -----------------------------------------------------
- - System Functionality Tests
- - Operational Tests
- - OA&M Tests
<PAGE>
ANNEX 9 -- TURNKEY SERVICES
- ---------------------------
SERVICES -- INSTALLATION AND COMMISSIONING
Based on the assumptions given previously
5,000 Line Capacity using 9 Cell Sites.
Works are quoted on the basis of sharing sites with the existing WLL deployment.
It is assumed that:
Sufficient space is available within the existing shelter/cabin.
Tower/Masts exist and space is available for the Airspan Antenna Systems.
- -48V DC Battery Backed Power, Grounding and Light are available at all sites.
Environmental conditioning systems are available and rated to support up to an
additional 3000W.
Access to the sites is good.
All permissions are obtained by Suntel.
<PAGE>
SERVICES - SUBSCRIBER TERMINAL
No installation prices are offered for Subscriber Terminal Installation. This is
assumed to be the responsibility of Suntel.
<PAGE>
SERVICES RELATED TO INSTALLATION AND COMMISSIONING
In the case where additional works are required before Installation and
Commissioning take place. The following charges will apply (Final quotation will
occur after a site survey has been conducted).
DC Power Systems
48V DC Power System (from 220V AC)
Rated for 1500W
Total = *
Installation of DC Power System
Installation of Power System to site 220V AC supply
All Install Materials
Total = *
Battery Backup System
To support -48V DC Supply at 1500W
8 Hours backup
Total = *
Installation of Battery Backup System
Installation of Power System to site 220V AC supply
All Install Materials
Total = *
Air Conditioning System
Rated to support up to 6 CT Racks
Total = *
Installation of Air Conditioning System
Powered from 220V AC supply
All Install Materials
Total = *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
MAINTENANCE AND SUPPORT CHARGES
The annual maintenance fees are based on the delivered volume of equipment.
The Annual service fees are defined as follows;
0 - $10M = 2.5% of the volume
$10M - $40M = $250,000 plus 1.3% of the volume exceeding $10M
40M and above = $640,000 plus 1% of the volume exceeding $40M
The maintenance fee is calculated using the cumulative volume at the end of the
previous 12 month period.
<PAGE>
OTHER MANDATORY SERVICES
Project Management
Turn-key responsibility for the project will require Airspan to create local
project supervision and support resources. The price for these resources will be
based on the volume of equipment delivered.
The price for the 5k (Initial) shall be;
*
The price for the 10k (Upgrade) shall be;
*
Alternatively;
The price for the 15k (One-Time Project) shall be;
*
The equipment value for this calculation is based on the cumulative volume of
shipped equipment at the end of the previous 12-month period.
Radio Planning and Network Design
The Radio Planning and network design phase shall be immediately after contract
signature. The activity will span the whole life cycle of the project.
The planning process will include the following activities:
- - Site/Deployment Area Visit(s)
- - Creation of Digital Terrain and Clutter Databases
- - A Radio Measurement Survey
- - Definition of Deployment Parameters
- - Propagation Predictions
- - Equipment Definition
- - Site Acquisition
- - Network Deployment Plan - Final Report
THE PRICE FOR 5k INITIAL PLUS 10k UPGRADE OR THE 15k RADIO PLANNING AND NETWORK
DESIGN SERVICES SHALL BE *.
In addition Airspan Communications will obtain a digital database of Greater
Colombo, Sri Lanka, based on Satellite Photography and local mapping sources.
THE COST OF THIS DIGITAL DATABASE SHALL BE *. Suntel must purchase this
database at the end of the project.
Site Survey for Radio Planning/Installation Design
A detailed site survey of all locations planned for deployment must be completed
immediately after contract signature. This activity will finalise the site build
plan and confirm any additional works required to prepare the sites for
installation.
The cost per day of the site Survey shall be *. It is estimated that 60
working days will be required to survey all the proposed sites. THIS IS A TOTAL
COST OF *.
Acceptance Testing
Systems Acceptance procedures must be defined before installation works
commence. The cost for Acceptance Testing shall be as follows:
Price per day for acceptance testing = *
- - Site Acceptance (10 sites) = *
- - Mgmt System Acceptance = *
- - System Acceptance (all sites) = *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
The price for the 5k (Initial) Grand Total = *
The price for the 10k (Upgrade) Grand Total = *
GRAND TOTAL ACCEPTANCE COSTS FOR 5k + 10k = *
OR
The price for the 15k (One-Time Project) Grand Total = *
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.6
Note: Portions of this exhibit indicated by "[*]" are subject to a confidential
treatment request, and have been omitted from this exhibit. Complete,
unredacted copies of this exhibit have been filed with the Securities and
Exchange Commission as part of this Company's confidential treatment request.
SUPPLY AGREEMENT
----------------
This Supply Agreement (the "Agreement") is made effective as of the 31st day of
March, 2000 (the "Effective Date"), by and among Airspan Networks Inc.,
("Airspan") a company incorporated under the laws of the State of Washington,
with its principal place of business at 777 108th Avenue NE Suite 1895,
Bellevue, Washington 98004, and GLS LLC, ("Purchaser") a limited liability
company incorporated under the laws of the State of South Dakota, with its
principal office at 501 Fourth Street, Sergeant Bluff, IA 51054.
WITNESSETH:
WHEREAS, Airspan is engaged in the design and manufacture of various
telecommunications product lines including, among others, those Airspan products
more completely described in Exhibit A hereto (the Airspan products described in
Exhibit A of this Agreement, as from time to time amended in accordance with the
provisions of this Agreement, are hereinafter called the "Airspan Products");
and
WHEREAS, Purchaser is engaged in the operation of telecommunications systems;
and intends to build and operate an Airspan fixed wireless network; and
WHEREAS, during the Term (as defined below) of this Agreement, Airspan desires
to supply to Purchaser, and Purchaser wishes to acquire from Airspan, the
Airspan Products and services on the terms and conditions contained in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein contained, it is
hereby agreed as follows:
Scope Warranty Excusable delay
Ordering Repairs Indemnification
Price Limitation of liability Remedies
Payment Software license Responsibilities purchaser
Delivery Documentation Notices
Subcontracting Confidentiality Services
Miscellaneous
- -------------------------------------------------------------------------------
<PAGE>
1. SCOPE.
-----
1.1 This Agreement shall remain in effect for a period of sixty (60)
months from the Effective Date (the "Term").
1.2 During the Term, in accordance with each Purchase Order issued by
Purchaser and accepted by Airspan, Airspan shall:
a. Engineer, sell and deliver that equipment and services so
specified in the order ("Equipment" being defined as the hardware component
of each product being offered under the terms and conditions of this
Agreement);
b. Grant to Purchaser a non-transferrable, non-exclusive, paid-up
licence to use the Software (as defined in Section 10.1) during the useful
life of the associated Equipment on the terms and conditions set forth in
the Software Licence, Section 10. The license to use the Software (as
defined in Section 10.1) may be transferred by written authorisation from
Airspan to Purchaser, provided that Airspan will not unreasonably withhold
said written authorization;
c. Test and install the Equipment and/or Software (the "Installation
Services") if Purchaser elects to purchase the Installation Services, and
Airspan accepts the obligation to perform such services, or if such
services are included in the price of the Equipment or Software.
2. ORDERING PROCEDURE.
------------------
2.1 The following procedures shall be followed with respect to each
purchase order issued by Purchaser:
a. During the Term, Purchaser will inform Airspan of its intent to
purchase Equipment and Installation Services (but only if Airspan expressly
agrees to perform such Installation Services), and license Software, by
sending to Airspan a written order. This written order (the "Purchase
Order") will state the type of Equipment, System, or Installation Services
that Purchaser wants to purchase and the Software Purchaser wants to
licence, the price of the ordered items (the "Contract Price") as set forth
in Exhibit B, "Price List" (which is hereby incorporated by reference) and
the proposed delivery and installation dates, if applicable.
b. Each Purchase Order shall specifically incorporate by reference the
terms and conditions of this Agreement, and no additional or different
terms and conditions stated in a Purchase Order, any letter, or otherwise
shall be binding unless expressly referred and agreed to by Airspan in
writing. In the event of a
- -------------------------------------------------------------------------------
<PAGE>
conflict between the terms and conditions of this Agreement and of any
Purchase Order issued hereunder, or if the Purchase Order does not
reference the terms and conditions of this Agreement, the terms and
conditions of this Agreement shall control.
2.2 If a Purchase Order is accepted by Airspan, Airspan will issue an
order acknowledgement to Purchaser within five (5) business days of
Airspan's receipt of the written Purchase Order from Purchaser.
3. CONTRACT PRICE.
--------------
3.1 The Contract Price for each item of Equipment, Installation Services,
or Software is as specified in Exhibit B and shall be paid to Airspan in US
Dollars free of any withholding tax and any currency controls or other
restrictions. The Contract Price includes:
a. The price of the Equipment;
b. The fee for the licensing of the Software;
c. If Installation Services are ordered and such order is accepted by
Airspan, the charges for installing and testing each unit of Equipment
or Software;
d. The charges for the warranty of the Equipment and Software in
accordance with Section 7; and
e. Costs in accordance with delivery obligations set forth in Sections
5.1 and 5.2.
3.2 The Contract Price is shown in Exhibit B and shall include applicable
duties, taxes or imposts, including all export or import duties. Sales
taxes and contractor's excise taxes shall be itemized on all purchase
orders. The parties agree that the Contract Price in Exhibit B shall be
firm for a minimum period of twenty-four (24) months from the Effective
Date. Thereafter, Exhibit B may be revised by Airspan giving thirty (30)
days written notice to Purchaser.
4. PAYMENT TERMS.
-------------
4.1 Airspan will issue an invoice (the "Invoice") to Purchaser in
accordance with the payment terms below. The Invoice specifically will
identify the Equipment, Software, or other items shipped, and the Contract
Price of such
- -------------------------------------------------------------------------------
<PAGE>
items. Any Installation Services or other services provided by Airspan will
be invoiced separately following completion of such services. The Invoice
also shall state the total due to Airspan from Purchaser (the "Invoice
Total"), which shall include the Contract Price, and any applicable taxes,
duties, and other fees due pursuant to Section 3.2 of this Agreement.
Payment of the Invoice Total is due (without any right of set-off) Net
forty-five (45) days after the date of invoice.
4.2 If Purchaser disputes any invoice or part thereof, Purchaser must
notify Airspan in writing within twenty-five (25) days of the invoice date
giving details of the reason for such dispute. Purchaser and Airspan agree
to work together in good faith to resolve the dispute as quickly as
possible. Purchaser may withhold payment of such disputed amounts until
resolution of the dispute. Any parts of the invoice not under dispute shall
be paid net forty-five (45) days after the date of invoice. On resolution
of the dispute, Purchaser shall immediately pay any amounts due in full.
4.3 Purchaser will make payment by wire or telegraphic transfer to the
bank account set forth below or, on receipt of written notification from
Airspan, to another designated bank within the United States.
Bank: Seafirst Bank, 10555 N.E. 8th, Bellevue, WA98004, USA.
Account name: Airspan Networks Inc.
Account number: 68777507
Routing Number: 125 - 0000 - 24
Further instructions: "Reference (Purchaser's name), Purchase Order number,
Payment of Invoice number"
Payment will be deemed to have been made upon receipt of funds in Airspan's
bank.
4.4 If the cost to Airspan of performing this Agreement increases as a
result of any change to the law or increase in import duty or freight duty,
Airspan may add such increase to the Contract Price by notifying Purchaser
in writing of such increase.
5. DELIVERY, TITLE AND RISK OF LOSS.
--------------------------------
5.1 All Equipment and Software will be delivered by Airspan CIP (as
defined in Incoterms 2000) to an airport in South Dakota that completes
international customs clearances and shipped to a location within the city
limits of the above arrival airport, such airport and delivery location are
to be agreed upon in writing by the parties for each Purchase Order.
Airspan will be responsible for and pay all packing, shipping, freight, and
insurance charges to the agreed upon location within the city limits. If
requested by Purchaser,
- -------------------------------------------------------------------------------
<PAGE>
Airspan may arrange for shipment to be made to Purchaser's identified
warehouse facilities or freight forwarder outside of the city limits,
subject to approval in writing by Airspan and agreement to any additional
charges in advance of shipment. Unless specified in the Purchase Order,
Airspan will select the mode of shipment and the carrier.
In this Agreement, "Incoterms" means the most recent international rules
for the interpretation of trade terms published by the International
Chamber of Commerce as in force on the Effective Date. Unless the context
otherwise requires, any term or expression which is defined in or given a
particular meaning by the provisions of the Incoterms shall have the same
meaning in this Agreement, but if there is any conflict between the
provisions of the Incoterms and this Agreement, the latter shall prevail.
5.2 All risk of loss or damage to the Equipment and Software will pass to
Purchaser on collection by the freight forwarder from Airspan. However,
Airspan will insure the Equipment against loss or damage in transit to the
agreed upon location within the city limits as set forth in Paragraph 5.1.
5.3 Title to the Equipment shall pass to Purchaser on collection by the
freight forwarder from Airspan.
5.4 If Purchaser has any Airspan owned Equipment in its possession:
a. Purchaser shall ensure that Equipment is clearly marked as the
property of Airspan, and if asked, shall inform any third parties that
the Equipment is the property of Airspan;
b. Purchaser shall not purport to create any security, mortgage,
lien or pledge over the Equipment, or otherwise deal with the
Equipment without Airspan's written consent;
c. In the event of any threatened seizure of the Equipment by any
third parties, and on termination or expiration of this Agreement, or
any Contract made pursuant to it, Airspan shall have the right,
without prejudice to any other remedy, to enter without prior notice
any premises and to repossess and take away or otherwise deal with the
Equipment.
5.5 The Software shall at all times remain the exclusive property of
Airspan, subject to the uses provided herein.
5.6 Unless Purchaser clearly advises Airspan to the contrary in writing,
Airspan may make partial deliveries on account of Purchase Orders. Delay in
delivery of any instalment shall not relieve Purchaser of its obligation to
accept
- -------------------------------------------------------------------------------
<PAGE>
said installment, provided that said delay does not exceed sixty (60) days
from Airspan's scheduled ship date and unless Purchaser has clearly advised
Airspan to cancel the delayed installment in writing at least fifteen (15)
days prior to its revised planned shipment date or its actual shipment date
by Airspan.
5.7 Airspan will use reasonable efforts to meet Purchaser's requested
delivery schedules for Equipment and Software, but Airspan reserves the
right to refuse, or delay delivery to Purchaser when Purchaser's credit is
impaired, when Purchaser is delinquent in payments or fails to meet other
credit or financial requirements reasonably established by Airspan, or when
Purchaser has failed to perform its obligations under this Agreement.
5.8 Should orders for Equipment and Software exceed Airspan's available
inventory, Airspan will allocate its available inventory and make
deliveries on a basis that Airspan deems equitable, in its sole discretion,
and without liability to Purchaser on account of the method of allocation
chosen or its implementation. In any event, Airspan shall not be liable for
any direct, indirect, consequential, or special losses or damages
(including, but not limited to, loss of income or profit and loss of data)
that may be suffered by the Purchaser or by any other person for failure to
deliver or for any delay or error in delivery of Equipment or Software for
any reason whatsoever.
6. SUBCONTRACTING. Airspan reserves the right to subcontract such portions
--------------
of: (a) the Equipment manufacture and/or Software development and supply;
and/or (b) installation to subcontractors of Airspan's choice as Airspan deems
appropriate.
7. WARRANTY.
--------
7.1 THE WARRANTIES SET FORTH IN SECTIONS 7 AND 8 OF THIS AGREEMENT ARE IN
LIEU OF ALL OTHER WARRANTIES AND CONDITIONS, WHETHER EXPRESS OR IMPLIED,
INCLUDING THE IMPLIED TERMS OF SATISFACTORY QUALITY AND FITNESS FOR A PARTICULAR
PURPOSE.
7.2 Subject to Sections 7.3 and 7.4, Airspan warrants that the Equipment
sold to Purchaser under this Agreement shall, under normal use and service, be
free from defects in materials and faulty workmanship, and that the Software
licensed to Purchaser under this Agreement shall conform in all material
respects to Airspan's published specifications therefor. If Installation
Services are provided by Airspan, the warranty period shall be twelve (12)
months from the earlier of the following dates: completion of installation as
defined in 18.2; or thirty (30) days after delivery to Purchaser as set forth in
Paragraph 5.1. If Installation Services are not provided by Airspan, the
warranty period shall be twelve (12) months from completed delivery of all
equipment sold under the Purchase Order to Purchaser. (Hereinafter, these
periods of time shall be collectively referred to as the "Initial Warranty
Period.")
- -------------------------------------------------------------------------------
<PAGE>
7.3 Airspan's obligation and Purchaser's sole remedy under this warranty
are limited to the replacement or repair, at Airspan's option, of the defective
Equipment or Software within the Initial Warranty Period. Airspan shall have no
obligation to remedy any such defect if it can be shown that: (a) the Equipment
or Software was altered, repaired, or reworked by any party other than Airspan
without Airspan's written consent; (b) such defects were the result of
Purchaser's improper storage, mishandling, abuse, or misuse of the Equipment or
Software; (c) such defects were the result of Purchaser's use of the Equipment
or Software in conjunction with equipment electronically or mechanically
incompatible or of an inferior quality; or (d) the defect was the result of
damage by fire, explosion, power failure, or any act of nature.
7.4 In no event shall Airspan be obliged to provide on-site maintenance.
Subject to the provisions of this warranty clause, defective parts or components
must be returned by Purchaser to Airspan's designated facility located within
the contiguous 48 states in the United States, freight prepaid, within the
Initial Warranty Period, and said defective parts will be repaired or replaced
by Airspan at no charge to Purchaser. Risk of loss or damage to Equipment or
Software returned to Airspan for repair or replacement shall be borne by
Purchaser until delivery to Airspan. Upon delivery of such Equipment or
Software, Airspan shall assume the risk of loss or damage until that time that
the Equipment or Software being repaired or replaced is returned and delivered
to Purchaser. Purchaser will pay all transportation costs for Equipment or
Software shipped to Airspan for repair or replacement. Airspan shall pay all
transportation costs associated with returning repaired or replaced Equipment or
Software to Purchaser.
7.5 Airspan will charge Purchaser for any maintenance carried out which is
not covered by the warranties contained in Section 7.2 or Section 8 at Airspan's
then prevailing standard rates for such services.
8. WARRANTY ON REPAIRED MATERIALS. Airspan warrants that, following repair,
------------------------------
the Equipment or Software returned to Airspan for repair shall be free from
defective materials and faulty workmanship and that the Software will conform in
all material respects to Airspan's published specifications therefor for ninety
(90) days from date of shipment from Airspan to Purchaser or until the end of
the Initial Warranty Period, whichever is longer.
9. LIMITATION OF LIABILITY.
-----------------------
9.1 WITHOUT PREJUDICE TO SECTION 9.4, IN NO EVENT SHALL AIRSPAN OR ANY OF
ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES, SHAREHOLDERS, OR
AFFILIATES (AIRSPAN AND SUCH OTHER PERSONS, THE "AIRSPAN PARTIES"), HAVE ANY
LIABILITY TO PURCHASER FOR LOSS OF PROFITS, INCOME OR DATA, INCIDENTAL,
- -------------------------------------------------------------------------------
<PAGE>
CONSEQUENTIAL, OR INDIRECT DAMAGES OR LOSSES ARISING FROM THIS AGREEMENT OR ANY
COLLATERAL CONTRACT, WHETHER CAUSED BY NEGLIGENCE, BREACH OF CONTRACT OR
OTHERWISE, OR FOR LOSS, DAMAGE, OR EXPENSE INDIRECTLY ARISING FROM THE USE OF
THE EQUIPMENT OR THE SOFTWARE, OR THE INABILITY TO USE THEM EITHER SEPARATELY OR
IN COMBINATION WITH OTHER EQUIPMENT OR SOFTWARE, OR FROM ANY OTHER CAUSE.
9.2 Without prejudice to Sections 9.3 and 9.4, the liability of the
Airspan Parties, taken as a whole, for each event or series of connected events
arising out of or in connection with this Agreement, any purchase order placed
pursuant to this Agreement, or any other collateral contract, or from or in
connection with the Equipment or Software or the use thereof, or the inability
to use them either separately or in combination with other equipment or
software, or from any other cause, whether caused by negligence, breach of
contract, strict liability, breach of warranty, on grounds of failure of
essential purpose, or otherwise, shall in no circumstance exceed the total
amount payable by Distributor to Airspan under this Agreement for the provision
of the Equipment or Software which gave rise to the loss or damage or in
connection with which the loss or damage was incurred.
9.3 Airspan shall be liable for physical damage to Purchaser's property
resulting from its negligence up to a maximum of USD 1,000,000.
9.4 Nothing in this Agreement shall exclude or in any way limit Airspan
liability for death or personal injury caused by its negligence.
10. SOFTWARE LICENSE.
----------------
10.1 Airspan shall grant Purchaser a nonexclusive, license to use the
Software, only with the Equipment purchased under this Agreement. Software
licensed under this Agreement ("Software") is defined as computer programs
contained on a magnetic tape, disc, semiconductor device, or other memory,
including: (a) hardwired logic instructions which manipulate data in the
central processor and which control input-output operations, error diagnostics,
and recovery routine; and (b) instruction sequences in machine-readable code
which control call processing, peripheral equipment, and administration and
maintenance functions as well as associated documentation used to describe,
maintain, and use the programs.
10.2 Any Software provided to Purchaser by Airspan shall be treated as the
exclusive property of Airspan, and Purchaser shall: (1) treat such Software as
Confidential Information under Section 12 of this Agreement; (2) utilise such
Software or any portions or aspects thereof (including any methods or concepts
utilised therein) solely in conjunction with the Equipment; (3) return to
Airspan all memory media, documentation and/or other material that has been
modified, updated or replaced; (4)
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<PAGE>
not modify, disassemble or decompile such Software, or reverse engineer any
portion of the Software or functioning of the Airspan Products, or permit others
to do so, without Airspan's prior written consent; and (5) not reproduce or copy
such Software in whole or in part except for backup and archival purposes or as
otherwise permitted in writing by Airspan. Information to achieve
interoperability of the Software with independently created programs, within the
meaning of Article 6 of the Directive on the Legal Protection of Computer
Programs, is available from Airspan on written request.
10.3 The obligations of Purchaser under this Section 10 shall survive the
termination of this Agreement for any reason and shall continue even if the
Software is no longer utilised with the Equipment.
11. DOCUMENTATION. Airspan shall furnish that documentation, if any, specified
-------------
in Exhibit B to Purchaser to be used for the operation and ongoing maintenance
of the Equipment and Software. All such documentation is to be treated in
accordance with the terms of Section 12. Updates to the documentation shall be
at no charge during the Initial Warranty Period.
12. CONFIDENTIAL INFORMATION.
------------------------
12.1 All technical information, documentation, Software and other
proprietary information ("Confidential Information") supplied by Airspan to
Purchaser under this Agreement, except for that which may be in the public
domain, shall, as between the parties hereto, be treated as the confidential and
proprietary information of Airspan. Purchaser, except as specifically
authorised in writing by Airspan, shall: (a) not disclose any Confidential
Information received from Airspan to any person, except to its employees on a
"need-to-know" basis; (b) not reproduce any Confidential Information received
from Airspan, in whole or in part; (c) use any Confidential Information received
from Airspan only for operation and maintenance of the Equipment; and (d)
indemnify Airspan for any loss or damages resulting from a breach of this
Section 12.
12.2 If this Agreement is terminated or cancelled, or if Purchaser is
found to have breached any of the provisions of Sections 10 or 12, Purchaser
agrees to immediately return all technical information, documentation, and
Software to Airspan, with the exception of the AS8100 (Sitespan) network
operating software. In any event, the obligations of Sections 10 and 12 will
survive termination or cancellation of this Agreement.
13. EXCUSABLE DELAY.
- --- ---------------
13.1 Airspan shall not suffer any liability for non-performance, defective
performance, or late performance under this Agreement due to causes beyond its
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<PAGE>
control and without its fault or negligence such as, but not limited to, acts of
God, war (including civil war), civil unrest, acts of government, fire, floods,
explosions, the elements, epidemics, quarantine, restrictions, strikes, lock-
outs, plant shutdown, material shortages, or delays in transportation or delays
of its suppliers or subcontractors for like cause.
In the event of excusable delay as defined in the preceding sentence, then
Airspan, upon giving prompt written notice to Purchaser, shall be excused from
such performance on a day-to-day basis to the extent of such prevention,
restriction, or interference (and Purchaser shall likewise be excused from
performance of its obligations on a day-to-day basis to the extent Purchaser's
obligations relate to the performance so prevented, restricted, or interfered
with), provided that Airspan shall use its best endeavours to avoid or remove
such causes of non-performance and both parties shall proceed to perform with
dispatch whenever such causes are removed or cease to exist.
13.2 The parties reserve the right to cancel or otherwise terminate this
Agreement if the parties' performance is delayed for a period of more than sixty
(60) days as a result of excusable delay as defined in Section 13.1.
14. GENERAL INDEMNITY.
-----------------
14.1 Airspan agrees to indemnify and hold Purchaser harmless against all
costs, expenses, liabilities, damages, losses, claims, or proceedings incurred
by Purchaser in an action by a third party alleging that Purchaser's use of the
Equipment or the Software, separately or in combination, as a whole or in part,
constitutes an infringement of their intellectual property rights wherever in
the world enforceable, including applications to register and rights to apply
for any such rights ("Intellectual Property Rights"). Airspan agrees to defend
Purchaser against any such claims and to pay all litigation costs, reasonable
lawyer's fees, settlement payments, and any damages awarded or resulting from
any such claim.
14.2 Purchaser shall promptly advise Airspan of any such suit, claim, or
proceeding and shall co-operate with Airspan in the defence or settlement
thereof. Airspan shall have sole control of the defence of any action involving
such a claim and of all negotiations for its settlement.
14.3 In the event that an injunction is obtained against Purchaser's use of
the Equipment and/or the Software, in whole or in part, as a result of any such
claim, Airspan shall use its best efforts to either: (a) procure for Purchaser
the right to continue using the portions of the Equipment or the Software
enjoined from use; or (b) replace or modify the same with functionally
equivalent or better Equipment and/or Software so that Purchaser's use is not
subject to any such injunction. In the event that Airspan cannot perform the
remedies set forth in Sections 14.3(a) or 14.3(b), then Purchaser shall
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<PAGE>
have the right to return such Equipment and the Software to Airspan. In the
event of such return, Airspan shall refund the depreciated value of the
Equipment and the licence to use the Software within thirty (30) days of the
receipt by Airspan of the Equipment and the Software.
14.4 This indemnity shall not apply to claims arising in respect of the
use of the Equipment or Software supplied by Airspan or manufactured by its
suppliers in accordance with any design or any special instruction furnished by
Purchaser, or which is used by Purchaser in a manner or for a purpose not
contemplated by this Agreement.
14.5 The provisions of this Section 14 set forth the entire obligation of
Airspan with respect to any claim of infringement of Intellectual Property
Rights.
15. REMEDIES AND TERMINATION.
------------------------
15.1 Airspan shall have the right, prior to payment to Airspan of the
Invoice Total, to suspend its performance under this Agreement by written notice
to Purchaser and forthwith remove and take possession of any Equipment and
operating Software which has been delivered if Purchaser shall: (a) become
insolvent; (b) have a receiver or manager appointed over the whole or any part
of its assets or business; (c) make any composition or arrangement with its
creditors; (d) take or suffer any similar action in consequence of debt, or an
order or resolution is made for its dissolution or liquidation (other than for
the purpose of amalgamation or reconstruction); or (e) if Purchaser attempts to
resell the Equipment or Software without the consent of Airspan.
15.2 In the event of any material breach of this Agreement by either party
which shall continue for thirty (30) or more days after written notice of such
breach (including a reasonably detailed statement of the nature of such breach)
shall have been given to the breaching party by the aggrieved party, the
aggrieved party shall be entitled at its option: (a) if the aggrieved party is
Purchaser, to suspend its performance under Section 4 of the Agreement for as
long as the breach continues uncorrected; or (b) if the aggrieved party is
Airspan, to suspend performance of all of its obligations under the Agreement
for as long as the breach continues uncorrected; (c) to avail itself of any and
all remedies available at law or equity whether or not it elects to suspend its
performance under Section 15.2(a) or 15.2(b) as applicable; or (d) to terminate
this Agreement.
15.3 In the event (a) either party fails timely to discharge its
obligations under this Agreement and (b) the aggrieved party employs a lawyer in
order to collect any amount due and unpaid or to enforce any right or remedy
hereunder, then the defaulting party agrees that, in addition to all amounts due
hereunder, it shall pay all costs of collection or enforcement including court
costs and reasonable Lawyer's fees.
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<PAGE>
16. PURCHASER'S RESPONSIBILITIES. To the extent that Purchaser requests
----------------------------
Installation Services, and Airspan accepts the Purchase Order for such
Installation Services, then:
a. Purchaser shall ensure that all Airspan-designated personnel have
access to Purchaser's premises and the Equipment during the times necessary to
install, maintain, and service the Equipment. Airspan's personnel shall comply
with site and security regulations as specified by Purchaser.
b. Purchaser shall provide reasonable working space and facilities
including heat, light, ventilation, electric current and outlets for use by
Airspan's designated personnel. Adequate storage space for equipment and
materials shall be made available by Purchaser as required. All such facilities
shall be provided at no charge to Airspan.
c. Any information which Airspan reasonably requests from Purchaser and
which is required for Airspan properly to install or maintain the Equipment
shall be provided by Purchaser in a timely fashion and form reasonably specified
by Airspan.
d. Purchaser shall not perform, or attempt to perform, or cause to be
performed any maintenance or repair to the Equipment during the term of this
Agreement, other than pursuant to this Agreement, without Airspan's prior,
written consent.
17. NOTICES. All notices, requests, consents and other communications
-------
hereunder must be in writing and will be deemed to have been properly given when
actually received by the party to whom sent, at the following addresses:
If to Airspan: If to PURCHASER:
Peter Stanway Bill Cook
Contracts Manager ------------------------------
Airspan Networks Inc. GLS LLC c/o Golden West
777 108th Avenue NE Suite 1895 ------------------------------
Bellevue, Washington 2727 N. Plaza Drive
98004 ------------------------------
U.S.A. Rapid City, SD 57709-9159
------------------------------
U.S.A.
------
18. HARDWARE AND SOFTWARE VERIFICATION
----------------------------------
18.1 If Installation Services are ordered, Airspan shall, upon completion
of the installation, test the Equipment. Purchaser may witness the installation
and test performance.
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<PAGE>
18.2 When the Equipment and Software have satisfactorily completed all of
Airspan's tests, Airspan shall provide Purchaser with a "Hardware and Software
Verification" certificate. Provision of the certificate to Purchaser will be
deemed, for purposes of this Agreement, as "Completion of Installation".
19. PUBLICITY. Purchaser agrees not to publish any press releases or otherwise
---------
publicise the existence, or any of the terms, of this Agreement without the
prior written consent of Airspan.
20. MISCELLANEOUS
-------------
20.1 This Agreement shall be construed in accordance with and governed by
the laws of the State of South Dakota.
20.2 Any dispute, controversy or claim between the parties arising out
of, or in connection with, this Agreement, or the breach, termination or
validity thereof will be resolved by mutual agreement of the parties, provided
that this shall not limit the ability of the parties to seek temporary or
interim injunctive relief in the event of any breach or threatened or impending
breach of the confidentiality provisions of this Agreement. If any dispute,
controversy, or claim arising out of or relating to this Agreement, or the
breach, termination or validity thereof is unable to be resolved by mutual
agreement of the parties, each of the parties here (i) agrees that any action,
suit or proceeding with respect to this Agreement against it or its properties
or revenues must be brought exclusively in the federal and state courts siting
in Chicago, and (ii) irrevocably submits to the exclusive jurisdiction of any
such court and any appellate court from any order or judgment thereof in any
such action, suit or proceeding. The parties hereby irrevocably agree that all
claims in respect of such action, suit or proceeding may be heard and determined
in such courts. The parties hereby irrevocably waive, to the fullest extent they
may effectively do so, the defence of an inconvenient forum to the maintenance
of such action, suit or proceeding. The parties agree that a final judgment in
any such action, suit, or proceeding will be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.
20.3 Airspan's delay or failure to enforce at any time any of the
provisions of this Agreement or any right with respect thereto, or to exercise
any option herein provided shall in no way be construed to be a waiver of such
provision, rights, or options, or in any way to affect its right later to
enforce them. Airspan's exercise of any of its rights hereunder or of any
options hereunder under the terms or covenants herein shall not preclude or
prejudice Airspan from thereafter exercising the same or any right which it may
have under this Agreement, irrespective of any previous action or proceeding
taken by Airspan hereunder.
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<PAGE>
20.4 This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of Airspan and shall be binding upon and inure
to the benefit of Purchaser's heirs, legal representatives, successors and
permitted assigns.
20.5 This Agreement and any Exhibit hereto shall be modified only by an
instrument in writing that is signed by duly-authorized representatives of the
parties.
20.6 This Agreement is executed in English only, and Purchaser hereby
waives any right that it may have under the laws of any other jurisdiction to
have this Agreement executed in any other language.
20.7 The provisions of this Agreement are severable, and if any provision
is held invalid or unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability will affect only such provision or part
thereof in such jurisdiction, and will not in any manner affect the provision in
any other jurisdiction, or any other provision in this Agreement in any other
jurisdiction. To the extent legally permissible, an arrangement that reflects
the original intent of the parties will be substituted for such invalid or
unenforceable provision.
20.8 All obligations that by their nature survive the expiration,
cancellation or termination of this Agreement shall remain in effect after its
expiration, cancellation or termination.
20.9 Purchaser shall not be entitled to assign this Agreement or its rights
under it without the prior written consent of Airspan, which said consent shall
not be unreasonably withheld. Airspan may assign the Agreement or its rights
under it without recourse to Purchaser.
20.10 In the performance of its obligations under this Agreement,
Purchaser shall at all times strictly comply with all export laws, regulations,
and orders of the United Kingdom and the United States of America. Purchaser
specifically acknowledges that Equipment, Software or technology supplied or
licensed by Airspan under this Agreement are subject to U.K. and U.S. trade
sanctions and export control laws and regulations including, but not limited to,
the various Foreign Assets Control Regulations, the Export Administration
Regulations, and the International Traffic in Arms Regulations. Purchaser
specifically acknowledges that Equipment, Software, or technology obtained from
Airspan pursuant to this Agreement shall not be exported, reexported,
transhipped, disclosed, diverted, or transferred, directly or indirectly,
contrary to U.K. and U.S. laws, orders or regulations.
21. This document constitutes the entire agreement between the parties with
respect to the subject matter hereof, and supersedes all previous
communications, representations, understandings and agreements, either oral or
written, between the parties or any official or representative thereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the Effective Date, such parties acting by their officers,
being thereunto duly authorised.
Airspan Networks Inc. GLS LLC
By: ________________________________ By: _____________________________
Name: ____________________________ Name: ___________________________
Title :_____________________________ Title:___________________________
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<PAGE>
EXHIBIT A
---------
"Airspan Products"
------------------
[------------------------------------End of Exhibit A---------------------------
<PAGE>
[AIRSPAN LOGO APPEARS HERE]
WIRELESS FIXED ACCESS
System Description
AIRSPAN NETWORKS INC.
Cambridge House . Oxford Road
Uxbridge . Middlesex . UB8 1UN U.K.
Telephone: +44 (0) 1895 467 100
Fax: +44 (0) 1895 467 101
Email: [email protected]
Website: http://www.airspan.com
<PAGE>
This is the unpublished work, the copyright of which vests in Airspan Networks
Inc. (Airspan). All Rights Reserved/(C)/. The information contained herein is
the property of Airspan Networks Inc. and is supplied without liability for
errors or omissions. No part may be reproduced or used except by contract or
other permission. The copyright and the foregoing restriction on reproduction
and use extend to all media in which the information may be embodied.
Date: March 2000
Version: 1.7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
1 Executive Summary..................................................................... 5
2 Wireless Fixed Access................................................................. 7
2.1 System Overview.................................................................. 7
2.2 Conformance to Standards......................................................... 8
2.3 System Interfaces................................................................ 9
2.3.1 The Central Office / Exchange Interface (Voice & ISDN services)............. 9
2.3.2 The Operator Interfaces (TCP/IP networks)................................... 11
2.3.3 The Operator Interfaces (Leased line data networks)......................... 11
2.3.4 The Radio (Cell) Site....................................................... 11
2.3.5 The Subscriber Site......................................................... 11
2.4 Equipment Overview............................................................... 11
2.4.1 Subscriber Terminals........................................................ 12
2.4.1.1 The Subscriber Terminal................................................ 12
2.4.2 The Central Terminal........................................................ 13
2.4.3 The Access Concentrator..................................................... 14
2.5 The Management Systems........................................................... 14
3 System Air Interface.................................................................. 15
3.1 CDMA Technology.................................................................. 15
3.2 Air-Interface Structure.......................................................... 16
3.2.1 Fixed Assignment............................................................ 16
3.2.2 Demand Assignment........................................................... 17
3.3 Frequency Ranges Supported....................................................... 18
3.4 Radio Link Budget................................................................ 19
3.5 Cell Planning Criteria........................................................... 20
4 Services Supported.................................................................... 21
4.1 Wireline equivalent POTS services................................................ 21
4.2 Wireline equivalent Leased line data services.................................... 21
4.3 Wireline equivalent ISDN services................................................ 21
4.4 Data Services Support............................................................ 22
4.5 Access to the Internet........................................................... 23
4.6 Packet Access capabilities with Airspan's PacketDrive technology................. 23
4.7 Speech Coding.................................................................... 25
4.8 System Security.................................................................. 25
5 System Capacity (Demand Assigned Mode)................................................ 26
5.1 Radio (RF) Channel Capacity...................................................... 26
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
5.1.1 Number of Traffic Channels (TCHs) for isolated cell......................... 26
5.1.2 Number of TCHs for contiguous cell pattern.................................. 26
5.1.3 Dynamic frequency allocations............................................... 26
5.2 Infrastructure Capacity.......................................................... 27
5.2.1 32kbit/s Telephony.......................................................... 27
5.2.2 64kbit/s Telephony or Data Service.......................................... 27
5.3 System Capacity Limits........................................................... 28
6 Equipment Details..................................................................... 29
6.1 Infrastructure................................................................... 29
6.1.1 Temperature and humidity limits............................................. 29
6.2 Power Requirements............................................................... 30
6.3 Antenna Configurations........................................................... 30
6.4 Installation and Commissioning................................................... 30
6.5 Subscriber (ST) Equipment........................................................ 30
6.5.1 Size........................................................................ 30
6.5.2 Weight...................................................................... 30
6.5.3 Power consumption........................................................... 30
6.5.4 Battery backup.............................................................. 31
6.5.5 Pay phone Support........................................................... 31
6.5.6 Ringer loads and drop distances............................................. 31
6.5.7 ST Antenna characteristics.................................................. 31
6.5.8 Installation & Commissioning................................................ 31
7 RF and Deployment Planning............................................................ 32
Appendix A. Wireless Local Loop (WLL) background and technology
comparisons.Error! Bookmark not defined.
Appendix B. Vocabulary......................................................Error! Bookmark not defined.
Appendix C. RF channel plans................................................Error! Bookmark not defined.
</TABLE>
<PAGE>
1 EXECUTIVE SUMMARY
This document describes Airspan Networks Inc. (Airspan)'s Wireless Fixed Access
(WFA) systems. These systems meet the requirements of network operators who wish
to offer copper-equivalent services via radio.
Airspan's systems were created to:
. Support a complete range of telecommunication services including telephony,
Group 3 and Group 4 facsimile, payphone, data modems, high-speed leased
line data, Internet Access and basic rate ISDN.
. Be economical to deploy in urban, suburban and rural areas.
. Have capacity that can be easily expanded as the customer base grows.
. Minimise initial capital outlay.
. Operate in a Point-to-Multipoint system configuration.
. Conform to the ETSI standards EN 301 055 and 301 124 for CDMA Point-to-
Multipoint systems in the 1-3GHz and 3-11GHz bands.
Airspan's systems are best described as a "flexible access tool" for network
operators to provide a variety of services to their end-user customers.
Significantly, they are able to provide services that are the same quality and
performance as wireline services, by supporting a transparent connection to the
operator's network. The combination of voice coding at either 64kbit/s PCM or
32kbit/s ADPCM, Bit Error Rates (BER) of better than 1 x 10-6 and low delay
(typically 10ms), ensure that advanced telephony services, including G3
facsimile and high speed data modems (up to 56kbit/s) for Internet applications
are fully supported. They are also the only fixed WLL systems to fully support
basic rate ISDN service in the 2B + D channel format.
The latest enhancement to the AS4000 family is PacketDrive technology. This
enables high speed data applications to be delivered to customers, so that users
have access to an `always on' internet connection delivering up to 512kbit/s,
together with one or two regular POTS lines for voice communications.
<PAGE>
Airspan's systems support numerous applications within both existing and new
telecommunications networks, and has been deployed in both developed and
developing country environments. For example:
. International CLEC operators who want to differentiate their services from
incumbents by offering hybrid voice and high speed data.
. In developing countries to reduce the waiting list for telephony services,
in residential, business and payphone applications. This enables rapid
deployment of a low cost / high value telephony infrastructure that
typically exceeds the quality and performance of existing copper access
networks.
. In developed countries as a "copper alternative", to modernise the access
networks, reduce operating costs and thus reduce the cost of universal
service provision.
. In both developed and developing countries to provide a "local loop
bypass", allowing a new operator to provide wireless based services at a
quality normally only available with wireline networks. Additionally the
system is cost effective and quick to deploy compared with traditional
copper access networks.
. In leased line and ISDN data-only networks for operators with data-only
licenses.
. In private networks to provide a range of telephony and leased line data
services supported by transmission rates of N x 64kbit/s (N = 1 to 6).
<PAGE>
2 WIRELESS FIXED ACCESS
2.1 SYSTEM OVERVIEW
Airspan's Wireless Fixed Access (WFA) systems are digital point to multipoint
radio access systems providing wireless access for fixed end-users to a
telecommunication operator's network.
AS4000 is specifically designed for Wireless Fixed Access applications. AS4000
delivers a wide range of services, including telephony, voice-band
facsimile/data, basic rate ISDN, leased line data, and packet-oriented
interfaces for always-on internet connections. Distances up to 25km can be
covered. AS4000 is therefore an attractive alternative to traditional copper
"local loops" for the delivery of these services to end-users. Furthermore it
is a better services platform than pure voice WLL systems or packet-only
configurations.
GENERAL SYSTEM ARCHITECTURE
<PAGE>
AS4000 uses point to multipoint microwave radio links between the individual
end-user's premises and the network operator's "local point of presence" as an
alternative to the copper pair "local loop".
The "local point of presence" would typically be the local exchange premises. If
greater flexibility or range is required, the Central Terminal (cell site)
equipment can be remotely located in a suitable building or an environmentally
protected wayside cabinet, and connected to the local exchange via radio, cable
or fibre digital transmission links.
Both Fixed Assigned (FA) and Demand Assigned (DA) modes of bandwidth allocation
between the Central Terminal and Subscriber Terminals are supported.
The range of services supported includes:
. Analogue telephony (POTS).
. Always-on TCP/IP connections.
. Voice-band Group 3 facsimile and data up to 33.6kbit/s (extending to
56kbit/s where there are digital interfaces between Airspan and the switch
network).
. Payphones, including pulse metering.
. CLASS services.
. 64kbit/s and n x 64kbit/s leased line data services.
. Basic rate ISDN (2B + D).
A portfolio of Subscriber Terminals (ST) are available supporting one or more
lines at each end-user location.
2.2 CONFORMANCE TO STANDARDS
Airspan's WFA system architecture is in accordance with the ETSI standards EN
301 055 and 301 124 for Direct Sequence Code Division Multiple Access (DS -
CDMA) Point-to Multipoint digital radio systems as shown below:
<PAGE>
The ETSI standard permits an operator to use systems from different vendors. The
standard addresses:
. Interoperability on Radio interface: Spectrum Masks, Spurious Emissions,
Receiver Specs, Co and Adjacent Channel Interference Performance are
defined. Reference is made to relevant ITU-R and CEPT standards.
. Host Network Interconnection is covered by references to relevant ETSI V5.x
standards and TMN standards.
. Subscriber Services and Interconnection is covered by reference to relevant
ITU-T standards.
2.3 SYSTEM INTERFACES
Interfaces between the various elements of Airspan's systems are as follows:
2.3.1 THE CENTRAL OFFICE / EXCHANGE INTERFACE (VOICE & ISDN SERVICES)
The interface between the WFA systems and the switch is N x 2Mbit/s G703 / G704
(1 per radio carrier typically 4 per CT).
In the FIXED ASSIGNED mode the following signalling protocols are supported:
<PAGE>
. Channel Associated Signalling (CAS). Variants are available to interface
with switches from Ericsson (AXE), Nortel (DMS-100) and Siemens (EWSD).
Variants can be made available to interface with other manufacturers
digital switches that have 2Mbit/s subscriber ports. This protocol also
supports 2 wire analogue interfaces via channel banks, such as the LS-120.
. Common Channel Signalling (CCS). UK DASS2 is available to interface with
GPT (System X) and Ericsson (AXE) switches. DSS1 signalling to support
Euro-ISDN is available to interface with Alcatel (S12) and Ericsson (AXE)
switches. In addition V5.1 is supported.
In the DEMAND ASSIGNED mode the Access Concentrator (AC) provides the primary
network interface which is N x 2Mbit/s, as per ITU recommendation G.703, short
haul 6dB, G.704 and ETSI ETS 300-166.
All signalling is digital using either Channel Associated Signalling (CAS) or
Common Channel Signalling (CCS) protocols. The DA system interfaces to digital
switching systems that have 2Mbit/s subscriber ports.
Support for 2-wire VF interfacing is via external channel bank equipment.
. Channel Associated Signalling. Support for timeslot 16 ABCD bit CAS is
provided. Airspan's management systems allow for flexible configuration of
the protocol, to interface with switches from various manufacturers.
. Common Channel Signalling. V5.1 and V5.2 are supported by the DA system.
Proprietary protocols such as DASS2 and DSS1 may be supported through
appropriate software loads.
. The V5.1 network interface as specified in ETS 300-324-1 is used for the
presentation of traffic at a non-concentrated interface. The V5.1 interface
supports POTS, ISDN and data services.
. The V5.2 network interface as specified in ETS 300-347-1 is used for the
presentation of traffic at a concentrated interface. The V5.2 interface
supports both POTS and basic rate ISDN services. The AC supports V5.2
groups of up to 16 E1 links.
. The AC supports dedicated data services using 64kbit/s timeslots. Cross-
connect at the 64 kbit/s level from any input / output port is configurable
via the management systems.
. GR303 and T1 interfaces are also supported
<PAGE>
2.3.2 THE OPERATOR INTERFACES (TCP/IP NETWORKS)
. For operators deploying AS4000 with PacketDrive features, the network-side
interconnect consist of 100bT connections on standard ethernet cable.
. This can be flexibly combined with voice and data interfaces 2.3.3 THE
OPERATOR INTERFACES (LEASED LINE DATA NETWORKS)
. Standard G.703 2Mbit/s interfaces are presented to the network.
. The allocation of timeslots on the E1 connections can be managed and
groomed via the cross-connect functions built into the AC.
. These interfaces may form part of a combined V5.x presentation, or may be
presented on separate interfaces as desired. They can also be combined
flexibly with PacketDrive network interfaces.
2.3.4 THE RADIO (CELL) SITE
The network-side (backhaul) interface to the Central Terminal is up to 4 x
2Mbit/s G703 / G704 interfaces. This is connected to the Access Concentrator or
directly to the Switch. In the DA system this backhaul supports concentrated and
compressed traffic.
2.3.5 THE SUBSCRIBER SITE
This is normally country specific in line with the national customer terminal
interface specification(s), and versions are available that meet most
requirements.
2.4 EQUIPMENT OVERVIEW
Airspan's systems consist of four main network elements:
. The Subscriber Terminal (ST) which is located at the end-user's premises.
. The Central Terminal (CT) which is located at the radio site or at the
switch site.
. The Access Concentrator (AC) which is normally located at the switch site.
This is only required for the Demand Assigned version of the system.
. The Management system normally consists of AS8100 clients, located at an
Operator's network management centre, with AS8100 servers distributed
throughout the network.
<PAGE>
2.4.1 SUBSCRIBER TERMINALS
SUBSCRIBER TERMINAL (ST)
(EXAMPLE SHOWS ST-R2)
2.4.1.1 THE SUBSCRIBER TERMINAL
The architecture of the ST comprises two principal units. The outdoor unit
contains a directional antenna and RF front end. This is small, light and easy
to install. The remainder of the electronics is contained in a Service
Interface Unit, normally located inside a customer's premises. This is connected
to the outdoor unit by a coax drop cable. A small 12VDC mains PSU completes the
installation.
<PAGE>
There is a range of STs available, each supporting different services and
numbers of lines.
. The ST-R1 and ST-S1 supports one 32kbit/s or 64kbit/s analogue telephony
line at the end-users premises. Provisioning is by the management system.
. The ST-R2 and ST-S2 supports two 32kbit/s or 64kbit/s analogue telephony
lines at the end-users premises. Provisioning is by the management system.
. The ST-P1V2 supports an always-on 10bT Ethernet RJ11 interface for
connection to the internet, plus two 32kbit/s or 64kbit/s analogue
telephony lines at the end-users premises. Provisioning is by the
management system.
. The ST-B1 supports a basic rate ISDN, 2B+D (2 x 64kbit/s + 16kbit/s) "S"
interface, and normally operates in Fixed Assigned mode.
. The ST-L128 supports 64kb/s or 128 kb/s clear channel data services via an
RS530 interface.
. A number of MULTI-LINE STS are available, ranging from the ST-N4 4-line
unit to the ST-M16 for up to 16 analogue POTS lines.
STs are powered from the AC mains supply, with or without backup batteries.
2.4.2 THE CENTRAL TERMINAL
The Central Terminal (CT) is the Base Station. This is deployed in omni or
sectored cell configurations supporting variable numbers of STs per cell. The CT
is a multi-service platform hosting single and dual line telephony, multi-line
telephony, digital data leased lines and ISDN basic rate interfaces. The CT can
operate in two modes, depending on the type of service and traffic levels
supported. Fixed Assignment is used when STs must have a dedicated radio link.
Demand Assignment is utilised when STs can share the available radio resources,
and sustain an "engineered" grade of service.
The CT provides the traffic interface to the network switching, either directly
for Fixed Assigned systems or via the Access Concentrator for Demand Assigned
systems. The CT also provides an interface to the management systems.
<PAGE>
2.4.3 THE ACCESS CONCENTRATOR
The Access Concentrator (AC) is required when the system is operating in "Demand
Assigned" mode to de-multiplex the traffic concentrated on the air-interface for
presentation to the network switching equipment. Also in system versions using
32kbit/s compression the decompression to 64kbit/s is performed within the AC.
2.5 THE MANAGEMENT SYSTEMS
Airspan's Management systems monitor, test and configure the WFA systems:
. STMON: a standalone "CRAFT terminal" for installation, operation and
maintenance of the subscriber terminals.
. AS8100 Sitespan Manager: a scaleable, distributed PC based management
system, that can be used for commissioning or full-scale management,
including integration with an operator's OSS system.
For Demand Assigned systems, interfaces for connection to the management system
are supported as follows:
. AC: 2 x RS232, 9600 baud
. AC: 2 x Ethernet, optional
. CT modem shelf: 2 x RS232, 9600 baud
. CT modem shelf: 1 x Ethernet, optional
. CT modem shelf: embedded within E1, backhauled to the AC.
Management communications routing is flexible. The AC supports consolidation of
management communications from dependent CT equipments to provide a single
management interface.
<PAGE>
3 SYSTEM AIR INTERFACE
3.1 CDMA TECHNOLOGY
Airspan's systems use a radio air-interface, specifically designed for Wireless
Fixed Access to provide high quality, and low delay bearers for telephony, data
and ISDN services
The systems use Direct Sequence Spread Spectrum Code Division Multiple Access
(DS-CDMA) on the air-interface between the CT and STs, allowing multiple radio
links to share the same RF channel. A set of specialised codes is used which are
shared between the ST and its corresponding modem in the CT.
There are two stages to the CDMA modulation / demodulation process. Firstly
direct sequence spreading is performed on each individual radio link by a
pseudo-random noise (PN) code. Then multiple access, where multiple links share
the same RF channel, is achieved by using a set of orthogonal Rademacher - Walsh
(RW) codes. The PN and RW codes are combined into a unique and shared composite
code used to modulate and demodulate each radio link.
Airspan's systems implement a version of CDMA optimised for fixed access. This
is significantly different from other commercial CDMA implementations, such as
IS-95, which are optimised for mobile cellular and PCS applications.
The following table demonstrates the difference in implementation and
performance between the two systems:
<TABLE>
<CAPTION>
Cellular (IS-95) Fixed (Airspan)
-------------------------------- -------------------------------
<S> <C> <C>
Application PCS Wireless Fixed Access
- ----------------------------------------------------------------------------------------------------------
Frequency of operation 8-900,1800-1900 MHz 1.3-3.6GHz
- ----------------------------------------------------------------------------------------------------------
RF Channels (BW) 1.23MHz 3.5MHz
- ----------------------------------------------------------------------------------------------------------
Channel Bit Rate 9.6kbit/s To 144kbit/s
- ----------------------------------------------------------------------------------------------------------
Processing Gain 21 dB 12-24dB
- ----------------------------------------------------------------------------------------------------------
Processing Delay >20ms <1ms
- ----------------------------------------------------------------------------------------------------------
FEC 1/3 1/2
- ----------------------------------------------------------------------------------------------------------
Code Structure Quasi Orthogonal Orthogonal
- ----------------------------------------------------------------------------------------------------------
Receiver Type Rake Coherent
- ----------------------------------------------------------------------------------------------------------
RF Synchronised No Yes
- ----------------------------------------------------------------------------------------------------------
Synchronised Base Stations Required Yes No
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
3.2 AIR-INTERFACE STRUCTURE
The system's Radio Interface structure supports both "Fixed" and "Demand"
assigned modes for allocation of radio capacity to users. The air-interface
protocol and structure is compatible between both assignment types. The basic
structure of the interface is shown below:
System Air-Interface Structure
Depending on the service applications and traffic levels to be supported, this
structure is used in two different ways:
3.2.1 FIXED ASSIGNMENT
The "Fixed Assigned" mode makes a permanent allocation of a radio link,
operating within a RF channel to a subscriber terminal. Each link provides 32,
64, 128 or 144kbit/s of user payload together with OAM. In telephony
applications where the subscriber is "on-hook" the ST will use "rate switching",
reducing the link bandwidth to 10kbit/s, and hence decreasing the level of
Access Noise on the RF channel.
<PAGE>
FIXED ASSIGNED AIR-INTERFACE STRUCTURE
3.2.2 DEMAND ASSIGNMENT
The "Demand Assigned" Radio interface makes a temporary call by call assignment
of channels, to Subscriber Terminals in residential telephony applications,
where the per line traffic allows the provision of Graded Service. The radio
interface differs in that links are allocated as either Traffic, or Control
channels.
DEMAND ASSIGNED AIR-INTERFACE STRUCTURE
<PAGE>
Within each RF Channel a pool of traffic channels (TCH) supports a mix of 32,
64, and 144kbit/s services. Pool management is dynamic so that channels may be
made available as 32, 64, and 144kbit/s on demand. The size of the traffic pool
is automatically and dynamically sized based on radio interface performance and
the grade of service requirements thus controlling the level of Access Noise.
The pool can be extended if the interference level permits, or reduced if access
noise is too great. The DA access protocol can also support one or more priority
channels which allow guaranteed access for emergency calls. The channels
allocated to traffic are pooled and configured as either 10-13 x 144kbit/s, 20-
26 x 64kbit/s, or 40-52 x 32kbit/s. Two links are reserved for OAM and Call
Control.
Each link operates using a master RW code to provide a 160kbit/s channel. These
links are then sub-divided using 2nd level RW codes that allow the construction
of 2 x 80kbit/s or 4 x 40kbit/s smaller granularity links, while maintaining the
same Spectral Density. Hence TCHs are composed of 160kbit/s, 80kbit/s or 40
kbit/s links.
STs maintain communication with CT via the Call Control link, using an
"Ethernet" like protocol. All STs are continually polled, and receive regular
downloads of available TCHs and their channelisation (i.e. 144kbit/s, 64kbit/s
or 32kbit/s).
STs track available TCHs to permit "fast acquisition". When a user's line goes
"off-hook", STs request allocation of a TCH from the available pool. The CT
instructs STs to "seize" a particular TCH, if access noise permits. Traffic
engineering is via the management system, which allows the following parameters
to be programmed:
. Minimum / maximum number of traffic channels
. Number of access channels
. Demand access protocol type
. BER grade of service threshold
. Call blocking threshold
. Number of priority channels
3.3 FREQUENCY RANGES SUPPORTED
Airspan's systems operate in various frequency ranges within the PCS, ITU-R and
ETSI 2GHz and 3GHz frequency ranges. The specific channel plans available (see
Appendix B) operate in frequency bands at:
. 1.8 - 1.9GHz, for deployments in the PS A-Band with 80MHz duplex
spacing
. 2.0- 2.3GHz, in accordance with CEPT/ERC/Rec. 13-01E, Annex C, with
175MHz duplex spacing
. 2.3 - 2.5GHz, in accordance with ITU-R 746, with 94MHz duplex spacing
. 3.6GHz, in accordance with CEPT/ERC/Rec. 14-03E (Turku 1996), with
100MHz duplex spacing
<PAGE>
The systems operate in licensed spectrum, normally co-ordinated with other users
by the licensing authority. Coexistence with other systems is in-line with ETS
301 055 and 301 124.
3.4 RADIO LINK BUDGET
Airspan's systems operate in rural, suburban and urban areas in either omni-cell
or sectored cell configurations.
System performance is governed by the link loss relative to available Link
Budget. Therefore for shorter links Line Of Sight (LOS) propagation is not
necessarily required and Near Line Of Sight (NLOS) links operate satisfactorily.
The system range is dependent on the location and ground height of the CT sites
and tower heights, relative to the ST locations and the environment in which the
system is operating. Ref. 5.5.
<TABLE>
<CAPTION>
--------------------------------------------
FREQUENCY: 1.8-1.9 2.0-2.5 3.4-3.6 GHz
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UPLINK
- -----------------------------------------------------------------------------------------------------
ST PA output power +21.0 +18.0 +18.0 dBm
- -----------------------------------------------------------------------------------------------------
ST Cable and connector loss -0.5 -0.5 -0.5 dB
- -----------------------------------------------------------------------------------------------------
ST antenna gain 10.5 11.5 13.5 dBi
- -----------------------------------------------------------------------------------------------------
ST effective radiated power (a), per link 31.0 29.0 31.0 dBm
- -----------------------------------------------------------------------------------------------------
CT antenna gain (b), Omni 10.5 + 10.5 + 10.5 + dBi
- -----------------------------------------------------------------------------------------------------
CT Cable and connector loss (d), 50m -3.5 -3.5 -5.0 dB
- -----------------------------------------------------------------------------------------------------
CT Receiver sensitivity for 10-7 BER (e) -98.0 -98.0 -98.0 dBm
- -----------------------------------------------------------------------------------------------------
Maximum path loss (j=a+b-d-e) 136.0 134.0 134.5 dB
- -----------------------------------------------------------------------------------------------------
Fade Margin for 99% Link availability 4-10 4-10 4-10 dB
- -----------------------------------------------------------------------------------------------------
DOWNLINK
- -----------------------------------------------------------------------------------------------------
CT PA output power, per link 21.0 +21.0 +18.0 dBm
- -----------------------------------------------------------------------------------------------------
CT Cable and connector loss, 50m length -3.5 -3.5 -5.0 dB
- -----------------------------------------------------------------------------------------------------
CT antenna gain, Omni 10.5 + 10.5 + 10.5 + dBi
- -----------------------------------------------------------------------------------------------------
CT effective radiated power, Per Link (a) 28.0 28.0 23.5 dBm
- -----------------------------------------------------------------------------------------------------
ST antenna gain (b) 10.5 11.5 13.5 dBi
- -----------------------------------------------------------------------------------------------------
ST Cable and connector loss (d) -0.5 0.5 0.5 dB
- -----------------------------------------------------------------------------------------------------
ST Receiver sensitivity for 10-7 BER (e) -98.0 -98.0 -98.0 dBm
- -----------------------------------------------------------------------------------------------------
Maximum path loss (j=a+b+d-e) 136.0 137.0 134.5 dB
- -----------------------------------------------------------------------------------------------------
Fade margin for 99% Link availability 4-10 4-10 4-10 dB
- -----------------------------------------------------------------------------------------------------
</TABLE>
+ Note: the CT antenna gain increases to 17dB for a 65(degrees) directional
antenna
<PAGE>
3.5 CELL PLANNING CRITERIA
Airspan's portfolio includes AS8100 AirPlan, an RF coverage prediction tool
which is used to optimise CT site locations for area coverage. See section 9.
The system range depends on the propagation conditions, which are a function of
the environment in which the system is deployed:
. In a Rural environment 2nd order propagation is assured, giving a range of
typically 8 - 15km. Line density is typically 1 - 10 per km2.
. In a Sub-urban environment 3rd order propagation is assured, giving a range
of typically 5 - 8km. Line density is typically 10 - 100 per km2.
. In an Urban environment 4th order propagation is assured, giving a range of
typically 3 - 5km. Line density is typically 100 - 500 per km2.
Typical planning parameters used are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Propagation prediction model See comments below
- -------------------------------------------------------------------------------
<S> <C>
Link Availability % 99%
- -------------------------------------------------------------------------------
Required C/I for frequency allocation 8.0dB
- -------------------------------------------------------------------------------
Frequency reuse for maximum load N = 3
- -------------------------------------------------------------------------------
Minimum RF spacing, one sector Adjacent plus One - 7MHz
- -------------------------------------------------------------------------------
Minimum RF spacing, one site Adjacent - 3.5MHz
- -------------------------------------------------------------------------------
Guard band requirements Per CEPT / ITU channel plan
- -------------------------------------------------------------------------------
</TABLE>
The system adheres to the typical microwave propagation model, i.e. for rural
areas:
Path Loss = 32.44 + 20Log D + 20Log F, assuming 0.6 FZC is achieved.
Testing has shown that the impact of an obstruction on the system closely
mirrors theoretical work on propagation modelling by ITU-R (CCIR) for microwave
point-to-point systems in the 2 & 4GHz bands.
The model that best describes the effect of grazing on the radio path is a
derivative from a "multiple knife edge diffraction" model. The basic work on
this model was done by Bullington in 1947, and was finally refined by Deygout in
1966, when it appeared in CCIR Report 715. This methodology is an extension of a
single knife edge diffraction calculation.
In 1971 ASIS showed how this approach could be extended using "multiple rounded
obstacles", in place of multiple knife edges. This is the basis for the
Airspan's propagation model. The technique employed to calculate these type of
losses is defined in CCIR Rec. 526-2, and involves representing the path as a
series of "cascaded cylinders".
<PAGE>
4 SERVICES SUPPORTED
4.1 WIRELINE EQUIVALENT POTS SERVICES
The following services are supported:
. TELEPHONY, including the in-band support for G3 facsimile and data modems
operating at up to 56kbit/s.
. CLASS services as supported by the Local Switch.
4.2 WIRELINE EQUIVALENT LEASED LINE DATA SERVICES
. LEASED LINE data services supporting currently 1 x 128kbit/s or 2 x
64kbit/s per ST. Future enhancement to 8 x 64kbit/s are planned.
4.3 WIRELINE EQUIVALENT ISDN SERVICES
. BASIC RATE ISDN. All ISDN implementations fully support:
ETS 300 011 / 012
ETS 300 125 - Basic Call Layer 2 Data Link Layer I.440 & I.441 - Q.921
ETS 300 102 - Basic Call Layer 3 (Q.931)
Interfaces are generally defined by the ITU-T (CCITT) recommendations: I.420
(for Basic Rate) and I.421 for Primary Rate.
Specification for Bearer Services is based on ITU-T recommendations I.230 and
I.231.
ETS 300 108 Circuit Mode Bearer Service 64kbit/s unrestricted 8kHz
structured
ETS 300 110 Circuit Mode Bearer Service 64kbit/s 8kHz structured for
3.1kHz audio
Specifications for Basic Teleservices are:
I.240 Definition of Teleservices (Blue Book)
I.241 Teleservices supported by an ISDN. Telephony Part 1, Telefax 4 Part
3, Mixed Mode Part 4
<PAGE>
ETS 300 111 Circuit Mode Teleservice Telephony 3.1kHz
ETS 300 120 Circuit Mode Telefax Group 4
ETS 300 263 Telephony 7 kHz
ETS 300 264 Video Telephony
The systems also support the following ISDN Supplementary Services:
ETS 300 092 Calling Line Identification Presentation (CLIP)
ETS 300 093 Calling Line Identification Restriction (CLIR)
ETS 300 064 Direct Dialling In (DDI)
ETS 300 052 Multiple Subscriber Number (MSN)
ETS 300 055 Terminal Portability (TP)
ETS 300 061 Sub Addressing (SUB)
ETS 300 027 Call Forwarding Unconditional (CFU)
ETS 300 058 Call Waiting (CW)
ETS 300 141 Call Hold (HOLD)
ETS 300 138 Closed User Group (CUG)
ETS 300 138 Advice of Charge at end of Call (AOC-E)
Fixed Assigned Radio Interfaces are fully service transparent:
. Full support for D-channel Services, including D-Channel Packet Access
. Support for ISDN services is dependent on the network interface
passing the services transparently. Euro-ISDN and V5.x network
interfaces provide fully transparent connections.
D-Channel Packet Access Specifications supported include:
ETS 300 007 Support of packet-mode terminal equipment by an ISDN
ETS 300 048 ISDN Packet Mode Bearer Services (PMBS) ISDN Virtual Call (VC)
and Permanent Virtual Call (PVC)
ETS 300 049 ISDN Packet Mode Bearer Services (PMBS) ISDN Virtual Call (VC)
and Permanent Virtual Call (PVC)
ETS 300 099 Specification of the Packet Handler Access Point Interface
(PHI)
In addition the following D-channel based Supplementary Services are
supported.
ETS 300 286 User to User Signalling (UUS)
4.4 DATA SERVICES SUPPORT
. A range of STs are available (R,S,N,M-series STs) that provide full support
for DATA SERVICES OVER ANALOGUE POTS lines:
<PAGE>
. Data rates: Up to 56kbit/s in the voice band using the 64kbit/s codec,
and 9.6kbit/s using the 32kbit/s ADPCM codec.
. Bit error rates: Typically better than 1 x 10-6.
. Transmission delays: One way system delays are below 10ms, having a
minimal impact on data applications.
. A range of STs are available (B-series STs) that provide full support for
data services over ISDN lines
. A range of STs are available (L-series STs) that provide full support for
LEASED LINE Data services
. A range of STs are available (P-series STs) that provide full support for
PACKET DATA SERVICES - see below
4.5 ACCESS TO THE INTERNET
The following options are currently supported by the system:
. Use of in-band data modem on a circuit switched basis
. Use of ISDN on a circuit switched basis
. Use of leased lines on a dedicated basis
4.6 PACKET ACCESS CAPABILITIES WITH AIRSPAN'S PACKETDRIVE TECHNOLOGY
PacketDrive technology is a seamless extension of Airspan's AS4000 system. With
PacketDrive enhancements, service providers can deploy complete, wireless
Internet access services in addition to their circuit-based services
PacketDrive terminals can be added incrementally to an AS4000-based network by
employing Airspan's existing CDMA air interface, with no changes at the Central
Terminal base-station. This innovation thereby permits smooth network evolution
for existing and new Airspan-based network operators.
PacketDrive permits users to enjoy high speed Internet access, at up 512 kb/s
download speeds, together with complementary voice services. The PacketDrive
terminal provides an Ethernet port for connection to a user's computer and up to
2 voice ports.
Sophisticated Quality of Service measures are provided by the AS8100 PacketDrive
enhanced management system, which allows bandwidth to be carefully controlled
and optimally allocated. Detailed service statistics are available for tariffing
purposes.
<PAGE>
. Residential Internet access is mostly asymmetric, with downstream traffic
typically 10 times upstream rate. The system has greater capacity on the
CDMA downlink than on CDMA uplink.
. The STs operate at up to 512kbit/s. STs can receive data on multiple RW
links, making the potential bandwidth of any digital service up to
512kbit/s downstream and up to 128kbit/s upstream.
. In this application the system is "end-to-end digital" - removing analogue
A/D and offering improved performance compared with copper/voice band modem
solutions.
. The system has error protection facilities that can ensure high quality
data delivery.
. The system has built-in HDLC and TCP/IP facilities that enable the system
to support packet data access.
WIRELESS INTERNET ACCESS
<PAGE>
4.7 SPEECH CODING
The system is based on either 64kbit/s PCM, to support full wireline equivalent
services or 32kbit/s ADPCM for those applications where higher line density and
quasi-wireline services are required.
4.8 SYSTEM SECURITY
ST authentication is carried out on a per call basis. Authentication uses
encryption techniques to prevent an authentication response from being decoded
and mimicked. An authentication request is issued by the CT equipment, which
transmits a random code to the ST. The ST response is formed by non-linearly
combining the random code with a known key. The key used for authentication
comprises a static portion based on an unalterable electronic serial number
(ESN) and a dynamic portion, which is updated following each authentication.
Full authentication is delayed until the time critical phase of call set-up has
been completed.
Authentication failure causes an alarm to be generated. Service blocking on
authentication failure is configurable via the management system.
The ST serial number contains a portion which is unique and unalterable, i.e.
not held in a memory that could be altered or duplicated. This portion of the
serial number is 32-bits in size.
<PAGE>
5 SYSTEM CAPACITY (DEMAND ASSIGNED MODE)
5.1 RADIO (RF) CHANNEL CAPACITY
The capacity calculations shown below are for a single (3.5+3.5MHz) RF channel
operating in a single Omni-cell or cell sector.
5.1.1 NUMBER OF TRAFFIC CHANNELS (TCHS) FOR ISOLATED CELL
144kbit/s 64kbit/s 32kbit/s
-----------------------------------------------
Omni-directional cell 13 26 52
Three sector cell 39 78 156
5.1.2 NUMBER OF TCHS FOR CONTIGUOUS CELL PATTERN
144kbit/s 64kbit/s 32kbit/s
-----------------------------------------------
Omni-directional cell 10 20 40
Three sector cell 30 60 120
5.1.3 DYNAMIC FREQUENCY ALLOCATIONS
Where multiple RF channels are supported from a single CT equipment, then STs
will be offered service from all RF channels to support:
. Fault tolerance: should a CT modem shelf fail, an ST may automatically
switch to an alternative frequency for service for the duration of outage
. Increased trunking efficiency of the air-interface
. Traffic load balancing: An ST may be moved through manual intervention
using the management system in order to balance traffic load across
multiple CTs
. Frequency diversity: An ST may be moved through manual intervention using
the management system in order to improve radio link performance
<PAGE>
At provisioning, an ST will be allocated a 'home' CT shelf (RF Channel) through
which all usual management communications may be directed. The ST will be
notified of other potential RF channels via management communications.
5.2 INFRASTRUCTURE CAPACITY
The following models show typical infrastructure line capacity as a function of:
. RF Spectrum allocation
. Isolated Cell [1] or Contiguous [2] deployment
. Various per line traffic levels, based on 1% GOS (Erlang B)
5.2.1 32KBIT/S TELEPHONY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Spectrum Allocated: 10.5 + 10.5 MHz 21 + 21 MHz 42 + 42 MHz
---------------- ----------- -----------
- ---------------------------------------------------------------------------------------------------------
Cell Configuration 3 - Sector 3 - Sector 3 - Sector
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
#RF / Sector 1 2 4
- ---------------------------------------------------------------------------------------------------------
#RF / Cell 3 6 12
- ---------------------------------------------------------------------------------------------------------
[1] [2] [1] [2] [1] [2]
- ---------------------------------------------------------------------------------------------------------
TCH / Sector 52 40 104 80 208 160
- ---------------------------------------------------------------------------------------------------------
Erls. / Sector (1%Gos) 40 29 80 58 160 116
- ---------------------------------------------------------------------------------------------------------
Erls. / Cell 120 87 240 174 480 348
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Lines per cell / Traffic (mE)
<TABLE>
<S> <C> <C> <C>
[1] [2] [1] [2] [1] [2]
- ---------------------------------------------------------------------------------------------------------
40 mE 3,000 2,175 6,000 4,350 12,000 8,700
- ---------------------------------------------------------------------------------------------------------
75 mE 1,600 1,160 3,200 2,320 6,400 4,640
- ---------------------------------------------------------------------------------------------------------
100 mE 1,200 870 2,400 1,740 4,800 3,480
</TABLE>
5.2.2 64KBIT/S TELEPHONY OR DATA SERVICE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Spectrum Allocated: 10.5 + 10.5 MHz 21 + 21 MHz 42 + 42 MHz
--------------- ----------- -----------
- ---------------------------------------------------------------------------------------------------------
Cell Configuration 3 - Sector 3 - Sector 3 - Sector
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
#RF / Sector 1 2 4
- ---------------------------------------------------------------------------------------------------------
#RF / Cell 3 6 12
- ---------------------------------------------------------------------------------------------------------
[1] [2] [1] [2] [1] [2]
- ---------------------------------------------------------------------------------------------------------
TCH / Sector 26 20 52 40 104 80
- ---------------------------------------------------------------------------------------------------------
Erls. / Sector (1%Gos) 17 12 34 24 68 48
- ---------------------------------------------------------------------------------------------------------
Erls. / Cell 51 36 102 72 204 144
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Lines per cell / Traffic (mE)
<TABLE>
<S> <C> <C> <C>
[1] [2] [1] [2] [1] [2]
- ---------------------------------------------------------------------------------------------------------
40 mE 1,275 900 2,550 1,800 5,100 3,600
- ---------------------------------------------------------------------------------------------------------
75 mE 680 480 1,360 960 2,720 1,920
- ---------------------------------------------------------------------------------------------------------
100 mE 510 360 1,020 720 2,040 1,440
- ---------------------------------------------------------------------------------------------------------
</TABLE>
5.3 SYSTEM CAPACITY LIMITS
. Up to 2048 Subscriber Terminals (STs) per RF channel.
. Up to 4 RF channels per Central Terminal (CT). Supported by up to 4 x
2Mbit/s links to the host Access concentrator (AC).
. Up to 12 RF channels provisioned in 3 Central Terminals per Cell site.
Supported by up to 12 x 2Mbit/s links to the host Access Concentrator (AC).
. The AC supports up to 64x2Mbit/s links to the Switch, for each group of 4 x
2Mbit/s links to the CT.
<PAGE>
6 EQUIPMENT DETAILS
6.1 INFRASTRUCTURE
All internal CT and AC system components are be packaged so that they fit into
an ETSI style equipment practice, 2200mm x 600 mm x 300mm.
The mechanical design is modular and does not preclude the co-location of CT RF
/ modem shelves and AC shelves.
Up to 4 RF channels (CT modem shelves) share a single RF combiner shelf. There
is no forced air-cooling.
Smaller configurations of CTs are also available for custom applications
6.1.1 TEMPERATURE AND HUMIDITY LIMITS
- -5 to +45 deg. C. 95% relative humidity.
<PAGE>
6.2 POWER REQUIREMENTS
Supply voltages: -21.8 to -70VDC. -48VDC nom.
Consumption: AC Shelf (68 E1 ports): 140W
CTRF Combiner (4RF): 300W
CT Modem Shelf: 120W (Up to 4 per CT)
6.3 ANTENNA CONFIGURATIONS
. Omni antenna assembly
. Directional antenna assembly (65deg.)
. Directional antenna assembly (120deg.)
Typical height of the antenna tower employed is 15m.
The antenna interface is N-type connector, 50 ohm. Provision is made for
earthing the RF feeder to the top of the tower and at the building entry point.
6.4 INSTALLATION AND COMMISSIONING
Up to 5 man-days per CT including rigging of antenna system on an existing
tower.
6.5 SUBSCRIBER (ST) EQUIPMENT
6.5.1 SIZE
External Antenna 200 x 200 x 20mm
Internal ST (ST-R) 280 x 190 x 35mm
6.5.2 WEIGHT
Internal SIU: 0.7kg
6.5.3 POWER CONSUMPTION
Internal SIU+Antenna: 6W
<PAGE>
6.5.4 BATTERY BACKUP
24V battery backup is typically 4 hours, using standard rechargeable batteries.
Charge time is 10 hours. This can be extended by the use of external batteries.
Optional solutions are available to extend to 24 hours.
6.5.5 PAY PHONE SUPPORT
Subscriber terminals support 12kHz or 16kHz subscriber pulse metering SPM and
polarity reversals.
6.5.6 RINGER LOADS AND DROP DISTANCES
Ringer load: REN = 3
VF Drop length: 500m max (cable quality dependent)
6.5.7 ST ANTENNA CHARACTERISTICS
A common high gain external directional antenna is used for all ST types.
Gain 10dBi to 17dBi
3dB HHPBW + 80
3dB VHPBW + 150
Front to back ratio 20dB
Return loss 14dB
6.5.8 INSTALLATION & COMMISSIONING
Approximately 1 hours per ST with suitably trained installation engineers.
<PAGE>
7 RF AND DEPLOYMENT PLANNING
The use of radio to replace the traditional use of copper in the access network
requires modifications to an operator's normal deployment planning process, with
emphasis on radio coverage and frequency planning aspects.
As an aid to this planning process a fully equipped RF planning tool, called
AirPlan(TM), including all necessary hardware and software can be supplied. The
AirPlan(TM) tool maps end-users to cell-sites based on the anticipated traffic
levels.
Thorough implementation of the RF planning process will provide an operator with
a high degree of confidence that satisfactory radio coverage can be achieved at
the desired ST locations from a given CT, or set of CT locations. Due to the
nature of radio propagation trees or other buildings in the vicinity of a
particular end-user location may affect the signal level at that location.
Therefore, the planning process cannot guarantee the viability of an end-user
connection, and certain local checks are required prior to the installation of
an ST on an end-user's building.
<PAGE>
EXHIBIT B
---------
"Price List"
------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
SUBSCRIBER TERMINALS (ST) CONTRACT PRICE
<S> <C>
P1V2 PacketDrive Subs Terminal, Ext Antenna, PSU, batteries and cable *
R2 2-line 64k & 32k POTS internal plastic Subs Terminal, Ext Antenna, PSU, batteries and cable *
L128 128kbps internal Subs Terminal, Ext Antenna, PSU and cable *
M4/64 4-line 64k & 32k POTS Subs Terminal, Antenna, cable, PSU, batteries and cabinet *
M8/64 8-line 64k & 32k POTS Subs Terminal, Antenna, cable, PSU, batteries and cabinet *
M16 16-line 32k POTS Subs Terminal, Antenna, cable, PSU, batteries and cabinet *
- ---------------------------------------------------------------------------------------------------------------
DEMAND ASSIGNED CENTRAL TERMINAL (CT) AND ACCESS CONCENTRATOR (AC) MODULES
CT Rack with combiner & 2 DA shelves *
CT Expansion Rack with alarm & 2 DA shelves *
Basic RF plug in set for CT (PA+MON+2PSU+DIPLNA) *
RF plug in expansion set for omni/multi- sector CT (PA+PSU+DIPLNA) *
Full redundant DA Card set for 1 rf channel (rf+AU+TU+SC+2PSU+6Modem) *
AC Rack with alarm & 2 AC shelves *
Full redundant AC Card Set (GR303)(2PSU+SC+8XTU+2CU+CTU+TU) *
AC CU Card (32kbit/s ADPCM Compression Unit) *
- ---------------------------------------------------------------------------------------------------------------
CENTRAL TERMINAL ANTENNA MODULES
Omni Antenna System, including feeder and install kit *
Directional Antenna System, including feeder and install kit *
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
SOFTWARE CONTRACT PRICE
<S> <C>
AS8100 (Sitespan) main License-One time only *
AS8100 (Sitespan) Shelf License *
Annual Maintenance/Upgrade charge for AS8100 (Sitespan) *
- ---------------------------------------------------------------------------------------------------------------
OTHER
Documentation set (CD ROM) No Charge
Delivery of System including freight, duties, and insurance *
- ---------------------------------------------------------------------------------------------------------------
SERVICES
Site Survey (per day, excluding travel+exp) *
Installation (per day, excluding travel+exp) *
Radio Planning (per day, excluding travel+exp) *
Airspan Training (per day, excluding travel+exp) *
</TABLE>
- ------------------------------------End of Exhibit B----------------------------
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.7
Note: Portions of this exhibit indicated by "[*]" are subject to a confidential
treatment request, and have been omitted from this exhibit. Complete, unredacted
copies of this exhibit have been filed with the Securities and Exchange
Commission as part of this Company's confidential treatment request.
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
This Original Equipment Manufacturer Agreement ("Agreement") is established
between Motorola, Inc., a Delaware corporation, by and through its Network
Solutions Sector with offices at 1501 W. Shure Drive, Arlington Heights, IL
60004 (hereinafter "Motorola"), and Airspan Communications, Ltd., a company
incorporated under the laws of England and Wales, with offices at Cambridge
House, Oxford Rd, Uxbridge, UB8 1UN, United Kingdom (hereinafter "Company).
Motorola and Company may each be referred to individually as a "Party" or
collectively as "Parties" to this Agreement.
Recitals
WHEREAS, Motorola is in the business of designing, developing,
manufacturing, selling and licensing wireless communication system equipment and
software for the operation of cellular and wireless telecommunications systems
on a worldwide basis.
WHEREAS, Company is in the business of developing and licensing certain
hardware and software products for Wireless Local Loop applications and
providing technical support and maintenance services for such products.
WHEREAS, Motorola desires to purchase and license certain hardware
equipment, software and services for products that will be used in Wireless
Local Loop applications in the 3.5 GHz band and Company desires to provide
certain hardware, software and services to support Motorola's line of wireless
communication system products, in accordance with the terms and conditions set
forth in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby mutually acknowledged, the Parties agree as
follows:
1. Scope of Agreement.
1.1 This Agreement sets forth the terms and conditions governing the
purchase and license of the Products (as hereinafter defined) by
Motorola. Motorola shall have the right to purchase and license
Products: for Motorola's own internal use for the purpose of Customer
support; or for resale and sublicense to Customers for worldwide use
except for where a conflict may be created by existing agreements that
Company currently has in place as listed in Exhibit G, as those
agreements may be renewed, modified and assigned, provided that such
modifications do not further limit Motorola's ability to distribute as
set forth in Exhibit G . The Parties agree to follow the procedures for
Key Accounts as set forth in Exhibit L.
1.2 The Parties agree to work together in good faith to develop a
mutually acceptable process for Project Level Agreements that may
extend beyond the scope of this agreement, as set forth in Exhibit E.
1.3 The Parties anticipate that they will cooperate on one or more
opportunities which may include invitations to tender, requests for
proposal or quotation, requests for trial equipment and other
expressions of interest for the sale of Products to potential Customers
that require
-1-
<PAGE>
contemplation of terms that fall outside of this Agreement. In that
connection, the Parties may enter into specific Project Level
Agreements, as set forth in Exhibit E, which shall, among other
provisions, specify the terms and conditions of such arrangements
including the respective responsibilities of the Parties in providing
trial equipment to potential Customers. Furthermore, in the event that
system performance guarantees are required by Customers, the Parties
shall work together on a case by case basis to provide such system
performance guarantees.
2. Definitions.
(a) "Affiliate" means any corporation or other entity which
controls, is controlled by, or is under common control with a
Party. A corporation or other entity shall be deemed to
control another if it owns or controls more than fifty percent
(50%) of the voting stock or other ownership interest of the
corporation or entity. References herein to Motorola and
Company shall be deemed to include reference to their
Affiliates unless otherwise specified or the context otherwise
requires. For the avoidance of doubt, Motorola Affiliates
shall include all operating divisions of Motorola, Inc.
(b) "Confidential Information" means confidential or proprietary
data or information of either Party or any of its Affiliates
which is disclosed in oral, written, graphic, machine
recognizable, sample or any other form, by one Party to the
other Party and which is clearly designated or marked as
confidential or proprietary. In order for information
disclosed orally to be considered Confidential Information, it
must be identified as confidential at the time of disclosure
and shall be confirmed in writing by the disclosing Party
within forty-five (45) days after such disclosure.
Notwithstanding anything to the contrary herein, the receiving
Party shall have no obligation to preserve the confidentiality
of any information which was previously known to the receiving
Party free of any obligation to keep it confidential; is
distributed to third parties by the disclosing Party without
restriction; is or becomes publicly available, by other than
unauthorized disclosure by the receiving Party; is
independently developed by the receiving Party; is received
rightfully and without confidential limitation by the
receiving Party from a third party; or is disclosed to a
governmental authority lawfully demanding Confidential
Information provided that the disclosing Party provides prior
written notice to the other Party and assists the other Party
with information as they seek a protective or other such
order, provided confidentiality is otherwise maintained by the
Parties after such disclosure.
(c) "Customers" means, individually or collectively, as
applicable, all entities, their successors and assigns, in the
chain of distribution, sale and use of Products, including
without limitation, Motorola Affiliates (subsidiaries, joint
ventures, third party licensees), resellers, agents,
representatives, distributors, system operators and End Users.
(d) "Documentation" includes, but is not limited to, all product
technical, repair, marketing and user documentation and any
succeeding changes thereto, including, without limitation, all
specifications as set forth in Company's product manuals;
installation, maintenance, operating and Customer manuals,
instructions and diagnostics; system administrative materials;
configuration guides; marketing and sales brochures and
literature; and product guides as listed in Exhibit H.
Documentation shall include, if applicable, documentation
provided to Company by its suppliers or licensors to the
extent Company is authorized by them to provide such material
on the terms in this Agreement. "Documentation" does not
include Source Code.
(e) "End-User" means a customer or prospective customer of
Motorola to whom Motorola offers Products for use in the
regular course of such customer's business and not for resale.
(f) "Epidemic Failure" means a significant repetitive, verifiable
and measurable defect that occurs in any portion of the
Products which is attributable to a failure of the Products to
-2-
<PAGE>
operate in accordance with the respective Specifications and
which is of either of the following types: (i) Emergency - The
defect causes network failure or loss of important information
which is essential for the network operator to do business or
a defect that constitutes a safety risk; or (ii) High - The
defect seriously effects the way in which the network operator
conducts business but does not prevent business from
continuing, and there may be some impact on network
subscribers. There is no work-around solution available for an
Epidemic Failure.
(g) "Exhibits" means the documents attached to this Agreement and
incorporated by this reference, as may be amended from time to
time by agreement of the Parties. Exhibits include, without
limitation, the following:
Exhibit "A"--Products and Price List
Exhibit "B"-- Technical Specifications
Exhibit "C"--Acceptance Test Plan
Exhibit "D"--Technical Support and Maintenance
Exhibit"E"--Project Level Agreements Exhibit
Exhibit "F"--Motorola Trademarks
Exhibit "G"--Territories
Exhibit "H"--List of Documentation
Exhibit "I"--Warranty/Repair Procedures
Exhibit "J-1"--Motorola Supplier Assessment
Exhibit "J-2" -Action Plan
Exhibit "K"--Source Code Escrow Agreement
Exhibit "L"- Key Account Sales
(h) "Hardware" means the Company hardware equipment Products set
forth on Exhibit "A", including Spares, and all Documentation
related thereto generally supplied by the Company to its
customers. The Parties may mutually agree in writing to amend
Exhibit "A" to expand or reduce the Hardware covered under
this Agreement.
(i) "Modification" means a revision, new function or minor change
to the Software intended to correct errors or non-conformance
with Specifications and provided as a change in the then
current release of the Software. Modifications may be issued
as a "point release" of the Software (that is, the version
number of which release, in comparison to the previous
release, has not changed in the digits before the decimal
point but has changed in the first digit after the decimal
point).
(j) "Object Code" means computer programs assembled or compiled in
magnetic or electronic binary form on software media, which
are readable and usable by machines, but not generally
readable by humans without reverse-assembly, reverse-compiling
or reverse-engineering.
(k) "Order" means a written purchase order to be provided by
Motorola to Company for Products as provided herein.
(l) "Products" means, collectively, the Hardware and Software that
is listed in Exhibit "A" (which may be amended from time to
time to include new product offerings) and conforms to the
Statement of Work and Specifications.
(m) "Services" means those consulting, engineering, installation,
optimization, maintenance, repair, technical support,
training, and other services referred to herein as being
performed by Company. These Services and pricing for such
Services shall be set forth in Exhibit A. The Parties may
mutually agree in writing to amend Exhibit "A" to expand or
reduce the Services covered under this Agreement.
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(n) "Software" means the computer software (including firmware) of
any form, provided with the Products, which enables the
Products to perform their functions and procedures in
accordance with the Specifications, including all
Modifications and Upgrades, which are listed in Exhibit "A".
The Parties may mutually agree in writing to amend Exhibit "A"
to expand or reduce the Software covered under this Agreement.
Any reference to Software being "sold" or "purchased" is
understood in fact to be a reference to the Software being
licensed.
(o) "Source Code" means the original fully commented form on any
media of the Software in the language as used by Company, or
any translation or modification of such Software which
substantially preserves its original identity together with:
(i) all necessary proprietary information and technical
documentation which will enable a reasonably skilled software
engineer(s) to maintain or enhance the Software without the
aid of Company or any other person or reference to any other
materials; (ii) maintenance tools (test programs and program
specifications); (iii) proprietary or third party system
utilities (compiler and assembler descriptions); (iv) a
description of the Software's system/program generation; and
(v) descriptions and locations of hardware and software, if
any, not owned by Company but required for use and/or support
of the Software.
(p) "Spares" means field replaceable units (FRUs) such as
replacement parts, sub-assemblies, circuit cards, modules and
other electronic and mechanical assemblies necessary to
support routine operation and maintenance of the Products
which may be replaced at an End User site and which may be
purchased separately as set forth in Exhibit "A".
(q) "Specifications" means the technical performance and
functionality requirements for the Products as set forth in
Exhibit "B". From time to time, the Parties shall update
Exhibit B to include Specifications on the latest releases.
(r) "Trademarks" means trademarks, trade names, logos, service
marks, quality designations and any other proprietary words
and symbols that each party uses to identify its business
products and services.
(s) "Upgrades" means new modules, applications or modifications to
Software, or new releases, which provide substantial increase
in functionality, which are deemed to be commercially
marketable as a separate module or application and which
Company offers on a commercial basis to users of the Products
as an upgrade to those products. Upgrades may be included as
part of Maintenance. Upgrades may be made available to
Motorola and both existing and new End Users.
3. Product Requirements.
3.1 Specifications. The Products shall conform to the Specifications
and shall incorporate the features and be delivered within the
timeframes set forth in Exhibit "E".
3.2 Enhanced Features and Upgrades. Additional or enhanced Hardware
features and Upgrades that are developed by Company and offered on a
commercial basis by the Company to users of the Products shall be
incorporated into the Products and included as part of the Products.
Company shall also provide, subject to availability of personnel and
resources, Services as requested by Motorola to develop and support
additional or enhanced Hardware features and Upgrades specific to
Motorola, and the Parties agree to negotiate in good faith prices,
payment, timing and other terms and conditions for such Services.
4. Ordering Products.
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4.1 Rolling Forecasts. As of the Agreement Date, Motorola shall submit
to Company a quarterly rolling order forecast of Products expected to
be ordered during the next twelve (12) months. Every three (3) months
thereafter, Motorola shall submit to the Company a new quarterly
rolling order forecast of the number of central terminals and the
number of subscriber terminals, by type and frequency plan (i.e. upper
or lower band of 3.5 GHz), for Products expected to be ordered during
the next twelve (12) months. All forecasts are for planning purposes
only and are non-binding.
4.2 Orders. Except as provided herein, any requests for the sale and
delivery of Products shall be made by Motorola pursuant to an Order.
Each Order shall be deemed to incorporate the terms of this Agreement,
whether or not this Agreement is specifically mentioned, and shall
clearly state the date of the Order, Order number, quantity,
specification and configuration, method of shipping, preferred carrier,
destination, prices and requested delivery date. Orders shall only be
placed by a designated Motorola entity, to be agreed by the Parties.
This Agreement supersedes any terms or conditions contained on
preprinted forms submitted as, or with, purchase orders, sales
acknowledgments or invoices.
4.3 Acceptance of Orders. Company shall make all reasonable effort to
provide its acknowledgment and acceptance of Orders in writing to
Motorola within three (3) business days of Company's receipt by email
or fax. Company may request revision and resubmittal of Orders that do
not contain required information. If Company is unable to comply with
Motorola's required delivery schedule, Company shall make all
reasonable effort to inform Motorola within such three (3) business
days and the Parties shall agree to a mutually suitable alternative
delivery schedule. If Company fails to provide its acknowledgment and
acceptance of the Order, within such three (3) business days, Company
shall be deemed to have rejected the Order. Company shall make all
reasonable effort to provide its acknowledgment and acceptance of
Emergency Orders in writing to Motorola within twenty-four (24) hours
of Company's receipt by email or fax and Motorola shall confirm
Emergency Orders by a telephone call to Company. If Company fails to
provide its acknowledgment and acceptance of the Order, within such
twenty-four (24) hour period, Company shall be deemed to have rejected
the Order.
4.4 Product Availability.
(a) Standard Lead Time. The lead time for delivery of forecasted
Products shall not exceed six (6) weeks after Company's
acceptance of an Order, provided that Motorola's orders are
not materially different from the volumes of Products to be
supplied under Motorola's forecast submitted to Company under
subsection 4.1. The lead time for delivery of non-forecasted
Products shall not exceed ten (10) weeks after Company's
acceptance of an Order.
(b) Emergency Support Lead Time. Upon a verbal, promptly followed
by a written notification or fax from Motorola that a Customer
requires an emergency order, Company shall make all
commercially reasonable efforts to ensure appropriate Products
are shipped to such Customer or Motorola, as agreed by the
Parties, within twenty-four (24) hours of such request.
Motorola shall provide Company with an Order number as soon as
reasonably possible after such request. Company shall, as soon
as reasonable, provide Motorola (or Customer, if requested by
Motorola) with a waybill number and carrier information.
Invoices for any emergency Orders shall be sent immediately to
Motorola and shall be payable in accordance with the terms
herein.
4.5 Order Rescheduling. Motorola may, at no charge, request
rescheduling of the delivery of an Order by notifying Company not less
than fourteen (14) calendar days prior to the scheduled delivery date
and Motorola will use best efforts to ensure that rescheduling happens
no more than one time per order. In the event that Motorola requests an
Order reschedule less than fourteen (14) days prior to shipment that
reflects a delay of an order exceeding ninety (90) days, such Order
shall be subject to Company's actual costs, but in no event exceed ten
percent (10%) of
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the applicable order. Such rescheduling charges shall be invoiced to
Motorola upon shipment of the Product.
4.6
(a) Cancellation of Order. Motorola shall have the right to cancel
all or a portion of any Order placed with Company, at no
charge, if the Order is cancelled more than thirty (30) days
prior to the scheduled ship date. In the event of a
cancellation (except for Orders canceled in accordance with
Sections 7.2 Late Delivery, 7.3(c) Rejection, 22 Termination
or 29 Force Majeure), Company may invoice Motorola for a
cancellation charge as Company's sole and exclusive remedy for
cancellation of the Order.
If the order is cancelled thirty (30) days or less prior to
the scheduled ship date, the following cancellation charges
may be charged by the Company:
If the price for Products Then the cancellation charge
cancelled is in the following shall be in an amount equal to
amounts ... the actual charges incurred but
shall not exceed the following
percentage of the price of the
Products for the Order in
question:
Less than $1 million 5%
$1 million or more but less than 7%
$10 million
$10 million or more 10%
No Cancellation Charge shall be applied if the rescheduling of
the Order is attributable to any material non-performance of
Company in its obligations hereunder. In addition, in no event
shall Motorola be responsible for any charges related to any
manufacturing or ordering of services or materials by Company
done in advance of the factory lead time necessary to meet the
requested delivery date shown on such Order. Further, in the
event of a cancellation, Company shall take all reasonable
steps to reallocate Products to other Customers.
(b) Special Cancellation Charges. Notwithstanding the foregoing,
the following special cancellation charge schedule ("Special
Cancellation Charge Schedule") shall apply to Orders that
become subject to the Special Cancellation Charge Schedule
pursuant to the procedures set forth below:
If the price for Products Then the cancellation charge
cancelled is in the following shall be in an amount equal to
amounts ... the actual charges incurred but
shall not exceed the following
percentage of the price of the
Products for the Order in
question:
Less than $1 million 10%
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$1 million or more but less than 15%
$10 million
$10 million or more 20%
In order for an Order to become subject to the Special
Cancellation Charge Schedule, it must, if accepted by the
Company and fulfilled in accordance with its terms, result in
a 300% increase in the Company's production rates over the
quarterly run rates. The run rate shall be calculated as the
average number of: Central Terminals, Access Concentrators and
Subscriber Units produced in the previous quarter. If an Order
meets the foregoing requirement, then the Company may, in
connection with its acceptance and acknowledgement of the
Order, indicate in writing to Motorola that such Order shall
be treated as being subject to the Special Cancellation Charge
Schedule; if Company fails to indicate in connection with its
acceptance and acknowledgement of the Order, the Order shall
not be subject to the Special Cancellation Schedule. If the
Company in its Order indicates that such Order shall be
treated as being subject to the Special Cancellation Charge
Schedule, Motorola shall have seven (7) business days to
indicate to Company its acceptance of such treatment; if
Motorola fails to indicate acceptance of such treatment within
such time period, the Order shall be deemed accepted and
subject to the Special Cancellation Charge Schedule. If
Motorola indicates its rejection of such treatment with seven
business days, the order shall be deemed to be cancelled and
of no further force and effect.
4.7 No Minimum Purchase. This Agreement shall not be construed as a
purchase order for any Products. Motorola is under no obligation to
place orders for any minimum quantity of products. Notwithstanding the
foregoing, Motorola will use reasonable commercial efforts to promote
Company products and in the spirit of this Agreement, Motorola has
purchased two (2) demo/lab systems.
4.8 Factory Acceptance Testing. Company is responsible for the
development of the factory acceptance test plan ("FATP") for the
Products. The FATP must be submitted to Motorola for review and
approval or comments four (4) weeks prior to the planned start of
acceptance testing for Products to be delivered to Motorola under this
Agreement. Motorola must provide its comments concerning the FATP, if
any, within two (2) weeks and the FATP must be approved by both
Parties, which approval shall not be unreasonably withheld, prior to
the start of Product factory acceptance testing. The FATP will be a
subset of Company's standard product verification testing. Factory
acceptance testing will take place at Company's facilities. All
Products shall be subjected to factory acceptance testing. Prior to
factory acceptance testing, Company shall provide Motorola with a set
of pre-FATP engineering release notes.
4.9 Acceptance Criteria. The criteria that must be met by the Products
in order for the Products to be deemed factory accepted shall be set
forth in the FATP. Results of factory acceptance testing shall be
recorded in a Manufacturing Test Report.
5. Packaging and Shipping.
5.1 Packing Lists. Company shall include a complete packing list for
each Order stating Order number, Motorola's part number, Company's part
codes, serial number(s) and/or applicable Software version, quantity
and date shipped, and Company's invoice number. A copy of the
Manufacturing Test Report, which shall be a subset of the FATP, shall
also be packed with each Product. Configured Hardware should be
identified by one unique part number. Preloaded Software must be
identified by a separate part number which also identifies the Software
version. A receiving checklist which includes a detailed diagram of the
assembled Hardware shall also be packed in the shipment. For
international shipments, two (2) packing lists shall be provided for
each Order.
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5.2 Markings. Company shall mark the outside of all packages with
necessary shipping information including Order number, part number,
quantity shipped, addresses of Company and Customer or Customer's
designee, and other requirements agreed upon between Motorola and
Company. Company shall follow Motorola's reasonable instructions
concerning the use of any Trademarks of Motorola, or any word or symbol
likely to be confused with any Motorola Trademark, either alone or in
any combination with another word or words. Further, when using the
trademarks of Motorola, Company may only use the Trademarks of Motorola
as directed by Motorola for labeling and shipping of the Product as set
forth in Exhibit F.
5.3 Packaging. All Products shall be packaged in such a manner to
prevent physical damage (including damage from electrostatic discharge)
to the Products during shipment and delivery assuming customary and
normal standards of handling. Freight and insurance associated with the
shipment of any replacement Products due to a failure of Company to
properly package the Products shall be the responsibility of Company.
Motorola and Company will agree to work together to determine the best
method of supplying Motorola's logo and labels to Company. Such
materials shall be supplied to the Company at no charge to the Company
and shall be supplied at times and in quantities sufficient for Company
to meet Motorola's Orders.
5.4 FCA, Risk of Loss, Title. The FCA (as defined in Incoterms, 1990
edition), point of shipment shall be at Company's origin in the UK.
Title to Product Hardware and risk of loss of the Products shall pass
to Motorola at origin/Company's plant upon Company's tender of delivery
by Company to Motorola's designated freight forwarder or carrier. Title
to the Software shall not pass to Motorola or its Customer at any time.
Motorola shall pay all freight and insurance costs from point of origin
on a pre-pay and add basis and all applicable customs duties and
similar charges.
5.5 Shipping. All items shall be shipped FCA, as specified above, in
the manner specified in the Orders. If Company ships Products by a
transportation method other than that specified on the Order, Company
shall be liable for the difference, if any, between the cost of freight
incurred and cost of freight which would have been incurred had Company
complied with the Order's shipping instructions. In the event any
shipment will not meet the delivery date (except as provided herein),
routing may be changed to premium transportation at Motorola's request.
In that event, Company shall bear the expense of any difference in
freight cost for the premium transportation unless the failure to meet
the delivery date is due to acts or omissions or delays of Motorola or
its customers or due to force majeure events. Company will, at
Motorola's request, drop ship product directly to Motorola's Customers
worldwide.
5.6 Motorola must inform Company of any loss in transit or damages(s)
to the Equipment and Software, and co-operate with Company in filing
any claims with the carrier for such loss in transit or damage(s).
5.7 In this Agreement, "Incoterms" means the most recent international
rules for the interpretation of trade terms published by the
International Chamber of Commerce as in force at the date when this
Agreement is made. Unless the context otherwise requires, any term or
expression which is defined in or given a particular meaning by the
provisions of Incoterms shall have the same meaning in this Agreement,
but if there is any conflict between the provisions of Incoterms and
this Agreement, the latter shall prevail.
6. Foreign Regulatory Approvals and Export Controls.
6.1 Regulatory Approvals. Motorola and Company will work jointly to
obtain foreign government regulatory approvals for the Products. In the
event that type approval or certification has not previously been
obtained by Company, and is required (as reasonably agreed upon by the
parties), Company and Motorola will work together to secure type
approval and certification as required. In such circumstances, Company
and Motorola shall equally split 50/50 all costs and charges associated
with such approvals. However, each Party is responsible for their own
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internal costs associated with such type approvals or certification.
Company shall be free to use such approvals in its other business
activities.
6.2 Export Controls. Motorola shall obtain all export licenses and
other government authorizations necessary for the shipment of any
Products with such assistance from Company as Motorola may reasonably
request.
7. Delivery.
7.1 Delivery Date. The delivery date shall be the date that is set
forth in the Order. Delivery of Services shall be in accordance with
agreed to milestones stated in the applicable Order.
7.2 Late Delivery.
(a) As soon as Company becomes aware that any delivery is likely
to be late, Company will promptly notify Motorola and keep
Motorola informed about the circumstances causing the delay.
In the event Company fails to make delivery on time, Motorola
may give Company notice of such delinquency, allowing Company
a reasonable time to cure. In no event shall such cure period
exceed fifteen (15) days from the originally scheduled
delivery date, unless otherwise agreed upon by the parties. In
the event Company fails to deliver any portion of the ordered
Products during such period, Motorola, at its option, may
cancel the undelivered portion of such Order at no charge.
(b) Liquidated Damages. In the event Motorola incurs late fees
from its Customers attributable entirely to the fault of
Company, Motorola, at its discretion, may invoice Company for
such liquidated damages. Company shall have no liability for
late fees, liquidated damages, or the like if the delay is
attributable to a Force Majeure Event or any default by
Motorola. Company shall incur no late fees, liquidated damages
or the like unless such fees or damages are imposed on
Motorola by its customer. Under no circumstances, even if
orders submitted by Motorola and accepted by Company provide
for late fees or liquidated damages that are higher, shall the
aggregate amount of late fees or liquidated damages for an
order exceed a maximum of fifteen (15%) of the value of the
delayed items under the applicable Order. The schedule for
payment of late fees or liquidated damages shall not exceed
the following: 0.5% per day of the value of the delayed items
under the applicable Order for each day of delayed delivery
after the date falling fifteen (15) days after the scheduled
delivery date, to the extent such delay is not attributable to
a Force Majeure Event or default by Motorola. In the event
that the system may be put into commercial service without the
delayed items, then the liquidated damages will be limited to
a cap of 15 % of the value of the delayed items. However, if
the delayed items prevent the system to be put into commercial
service due to the delay, then the 15% cap applies to the
value of the total system. Payment of late fees, liquidated
damages or the like shall be the sole exclusive remedy against
Company in respect to late delivery.
7.3 Acceptance and Rejection.
(a) Delivery and Testing. When Company delivers Products to
Motorola or its Customers, Company shall provide a written
statement listing the items delivered and stating that they
are ready for Motorola's Acceptance Testing. Such statement of
readiness will be in Company's standard format and may be
accomplished via electronic transmission if stated in the
Order. Motorola and Company shall develop a joint Acceptance
Test Procedure ("ATP") and acceptance criteria, which shall be
based on the FATP, and incorporate such ATP herein as Exhibit
"C". Such Exhibit "C" shall be jointly approved by Motorola
and Company, which approval shall not be unreasonably
withheld, including how it will be applied to each such
Product delivery. At their sole option, Motorola, with the
assistance of Company for a maximum of three (3) Orders placed
by Motorola under
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this Agreement, may examine, install and test the Products in
accordance with the ATP prior to shipment to Motorola's
Customers to determine whether the Products conform to the
applicable Product Order and Exhibit "B" Specifications.
Company shall assist Motorola in developing additional test
plans as may be required for new customers.
(b) Acceptance. After installation of a Product(s), Motorola's
deployment team may perform acceptance testing upon the
Product(s) to ensure that the Product(s) is properly installed
and substantially performing in accordance with the Product
Specifications. Acceptance testing shall include a detailed
demonstration of the Products by Motorola to the relevant
Customer. This demonstration will include an interactive
operation of the Products with the various components supplied
to the Customer, and will be deemed complete upon confirmation
by Motorola's deployment team that the Products are in proper
working order per the Product Specifications. Upon receipt of
such confirmation, Company shall, for a maximum of (3) Orders
placed by Motorola under this Agreement, assist Motorola
and/or the Customer in conducting acceptance tests using
simulated and/or actual data, at Motorola's discretion, for a
period not to exceed ten (10) days from the conclusion of the
Motorola Testing Period (the "Customer's Testing Period").
Within five (5) days after completion of Customer's Testing
Period, Motorola and Customer shall complete and execute a
Hardware Acceptance Checklist and a Software Acceptance
Checklist in the forms attached as Exhibit C (each a
"Checklist"), which shall state with specificity any aspects
of the Product(s)'s performance which do not substantially
conform to the Product Specifications. If the checklists
demonstrate that the Product(s) substantially conforms to the
Product Specifications, then such Product(s) shall be
considered accepted by Motorola and the Customer.
(c) Rejection. Motorola reserves the right to refuse delivery of
any Products which are not in material compliance with the
provisions of any Order or the material provisions of this
Agreement. Motorola, at its option may return, freight
collect, all Product received, which is not in material
compliance with the order or this Agreement, in its original
condition, to Company at Company's location in the UK or may,
at its option, retain such Product and make an appropriate
adjustment to the Purchase Order agreed upon by Company.
Incorrect or Dead on Arrival (DOA) Delivery. Company will use
all commercially reasonable efforts to deliver Product
replacement to Motorola or its designated freight forwarder,
or Customers ( as designated by Motorola) for materially
incorrect shipments or DOA (i.e. Products that materially fail
to perform "out-of-box" ) shipments within twenty-four (24)
hours of notice Motorola. If Company is unable to meet these
requirements, Company shall contact Motorola and the Parties
will mutually agree upon an alternative delivery schedule.
If Motorola properly rejects the installation of a Product(s)
pursuant to Section 7.3(b), then Company will work promptly,
diligently and continuously to correct the deficiencies such
that the Product(s) is performing substantially in accordance
with the Product Specifications as soon as reasonably
practicable thereafter. If the Product(s) is not so performing
within thirty (30) days following the rejection, Motorola may,
as its sole and exclusive remedy, cancel the Order, return at
Company's cost all of the Product, in its original condition,
( except for ordinary wear and tear and necessary adjustments
for installation and de-installation) to Company at Company's
location in the UK, and receive a full refund of all fees paid
to Company for the Product(s) and associated services.
(d) The provisions of this Section 7 shall also apply to
installations of Hardware or Software on a Product(s) after
the initial installation of such Product(s), except that: (i)
for a maximum of three (3) Orders placed by Motorola under
this Agreement, Company and Motorola and/or its relevant
Customer shall first test the newly-installed Hardware or
Software and subsequently test the Product(s) after
integration of the newly-installed items; (ii) Motorola may
reject such newly-installed Hardware in the manner described
in
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Subsection (b); (iii) Company shall have sixty (60) days to
correct the deficiencies with such Hardware or Software; and
(iv) if Company fails to do so, Motorola may terminate its
obligations with respect to such additional Hardware or
Software within thirty (30) days following expiration of such
60-day period, in which case Company shall refund to Motorola
all fees paid for such newly installed Product following
return by Motorola of the Products to the Company, in their
original condition, ( except for ordinary wear and tear and
necessary adjustments for installation and de-installation) at
the Company's location in the U.K..
7.4 No Waiver. Neither Motorola's acceptance of partial shipments nor
provision for delivery of Products in installments shall relieve
Company of its obligations under this Agreement.
8. Prices and Payment.
8.1 Prices. The prices payable for the Products are as set out in
Exhibit "A". Prices stated shall be firm fixed for orders placed during
the initial term of this Agreement, and thereafter, for periods after
the initial two year term, may be adjusted annually by the Company by
notice given by Company to Motorola at least ninety (90) days prior to
the then applicable contract expiration date. After the initial term of
this Agreement, price changes shall not be made more often than once a
year, effective on the anniversary of the Agreement Date unless agreed
otherwise in writing by both Parties. Company shall provide Motorola
ninety (90) days prior written notice of any intent to change its
prices for Products from those set forth on Exhibit A. Nothing herein
shall prevent the Company from adding new products and prices
associated with those products to the price list and either during or
after the initial term of this Agreement, setting prices for Upgrades
and Products incorporating Upgrades.
8.2 Payment Terms. All payments for the Products shall be made in U.S.
dollars at the applicable prices detailed in Exhibit "A", and are due
net forty-five (45) days after the date on which Motorola receives a
correct invoice therefor. Company's invoices shall contain (i)
Motorola's "Invoice to" and "Ship to" addresses as specified by the
Order, (ii) Order number, (iii) applicable price(s) and discount, and
(iv) reference to this Agreement. Payment of invoices shall not
constitute acceptance of the Products and shall be subject to
adjustments for shipment shortages and other failures of Company to
meet the requirements of this Agreement.
8.3 Late Payment Fee. Payments not made when due shall thereafter bear,
at the option of the receiving party, interest at a rate equal to the
lower of (x) 12% per annum, or (v) highest rate permitted by applicable
law.
8.4 Taxes. The prices set forth in Exhibit "A" for the Products do not
include applicable sales, use, excise or similar taxes. To the extent
Company is required by law to collect such taxes, they shall be a
separate line item on invoices and paid in full by Motorola, unless
Motorola is exempt from such taxes and furnishes Company with an
appropriate certificate of exemption.
8.5 Most Favored Customer. Notwithstanding any other provision of this
Agreement, the prices, services and warranties granted by Company to
Motorola pursuant to this Agreement taken as a whole are hereby
warranted by Company to be comparable to or more favorable to Motorola
than the comparable prices, services and warranties offered by Company
to any of its other customers, purchasing the same Products in the same
or substantially the same quantities, under substantially similar
terms, during the term of this Agreement, including any renewal
thereof. Upon discovery that Company is or has provided more favored
prices, services and warranties, taken as a whole, to any other
customer in violation of the foregoing, Company shall immediately
provide notice to Motorola of such fact and this Agreement shall be
deemed to be automatically amended to include such more favored prices,
services and warranties, taken as a whole.
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8.6 If Company breaches the warranty in 8.5 above, Motorola's sole and
exclusive remedy shall be for Company to provide the more favored price
or warranties to Motorola, effective immediately, from the date
Motorola or Company discovers the breach.
9. Product Changes.
9.1 Company shall provide Motorola ninety (90) days prior written
notice of any intent to change: (a) any material changes in quality
control for manufacturing processes for the Products; (b) any material
functionality or physical characteristics of the Products; or (c) part
number(s) before substituting Products with new numbers for Products
ordered under old numbers. This does not include Modifications that are
provided as part of normal maintenance Services.
9.2 No Discontinuance. Company may not discontinue the production or
availability of any Products at any time during the term of the
Agreement without giving Motorola seven (7) months prior written notice
(with details as to replacement products) or receiving the prior
written approval of Motorola, which will not be unreasonably withheld.
During such seven (7) month notice period, Motorola may purchase or
license additional quantities of the Products being discontinued. In
the event of a Products discontinuance under this Agreement, Company
shall provide substitute Products which under normal and proper use:
(i) shall not materially or adversely affect physical or functional
interchangeability or performance (except where there is written
agreement between the Parties that specific characteristics will be so
affected), (ii) shall not detract from the safety of the Products, and
(iii) shall be type-accepted by the appropriate authority, if required.
Company will use all commercially reasonable efforts, subject to
technology and vendor availability, to provide support for ten (10)
years after notice of product discontinuance.
9.3 Compatibility. Company shall use its commercially reasonable
efforts to ensure that all Products, including any future releases
thereof, shall be backwards compatible with, at a minimum, all
current/inservice Products, both software and hardware, and any
releases made available during the two (2) years prior to the date any
new release is first made available to Motorola; and upwardly
compatible with any future release of any Products which Motorola
purchases or licenses under this Agreement.
9.4 Change Order Process. Notwithstanding Section 9.3, any changes to
Products after acceptance thereof which affect the technical
functionality of the Products in any material respect must be submitted
in writing (in the form of a "Change Order Request") to Motorola
preferably within six (6) months but in no event less than four (4)
months prior to the intent to implement the change. Motorola will
review proposed changes within six (6) weeks of receipt of the Change
Order Request. Motorola will respond in writing with an approval or
alternative recommendation for the change. Proposed changes to Products
Specifications (Exhibit "B") as well as the introduction of future
Upgrades shall be subject to this change process. Such notice period
shall not apply in the event that the change is implemented to
introduce a bug-fix, repair or other modification to restore
functionality to that of the product specification described in Exhibit
B.
10. Product Documentation.
10.1 Documentation Deliverables. Upon execution of this agreement,
Company shall provide Motorola with two (2) complete master sets of
Documentation, of the type it generally provides to Customers of the
Products, at no additional charge. Documentation shall also be provided
to Motorola in a mutually agreed to electronic format. Company shall
notify Motorola of Company's Product release notices so that Motorola
may integrate such notices into the Documentation. Company shall
further provide any content/page updates or revisions, and series
numbers, if affected, on the date of their release for incorporation
into the master set. Prior to the first commercial installation of the
Products, Company and Motorola shall jointly develop a process for
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the delivery and revision of future documentation releases. Once
integrated, Motorola shall provide Product Documentation to Company via
electronic format and Company shall ship such integrated Documentation
to Customers when drop shipping Products.
10.2 Rights to Documentation. Company grants to Motorola a
non-exclusive, worldwide, perpetual, royalty-free license to edit,
reproduce and merge into other Product materials and Documentation or
other written materials, including any revisions thereof, Documentation
provided under this Agreement. Motorola shall be responsible for the
final style edit and formatting, to ensure consistency with the overall
Motorola documentation style, graphics and format. Motorola may use any
Documentation internally, as well as sell or otherwise make available
such Documentation to Customers. Company grants Motorola the right to
remove any trademark, copyright or other notices which may appear in
the body of any such Documentation and to place Motorola's own
trademark, copyright and other notices on such Documentation. Company
grants to Motorola all licenses under any copyrights or trademarks or
other rights which may be necessary in order to provide the foregoing
rights. Company is granted no rights in any Product Documentation or
materials that contain edited, reproduced or merged Documentation.
Motorola shall use the Documentation so licensed to Motorola only for
purposes of providing sales , marketing, maintenance and support of
Products sold by Company hereunder and for purposes of providing such
Documentation to Motorola's Customers only for use in their maintenance
and support of Products sold by Company hereunder.
10.3 Language. Motorola and Company acknowledge and agree that the
Documentation shall be in the English language. Motorola has the option
to contract with Company to have the Documentation translated into one
or more foreign languages at reasonable rates and terms. If Motorola
translates the Documentation into a foreign language, Motorola shall
provide a copy of the translation to Company and Company shall be free
to use such translations, after removing Motorola trademarks and
tradenames, in its other business activities.
11. Training.
11.1 Training Courses. Company shall provide an initial training
courses up to a maximum of three (3) courses for Motorola's personnel
to integrate, install, operate and maintain the Products and utilize
any necessary test equipment for a maximum of twenty (20) employees or
contractors of Motorola. Such courses shall be for a total of forty
(40) hours ( 5 business days) per employee. One of these courses may
include a "Train the Trainer" course. All slides and scripts developed
by Company shall be made available in electronic format for use by
Motorola at no charge, provided that Motorola shall use the same only
for maintenance and training with respect to Products sold by Company
under this Agreement. Motorola personnel sent to such courses shall
have an appropriate technical background. Concurrent with the execution
of this Agreement, Company and Motorola shall mutually agree on the
date on which the initial training course shall commence. In any event,
the initial training course shall commence within thirty (30) days of
Motorola's reasonable request. Such course shall be made available at a
location defined by Company and at no cost to Motorola. Company shall
also provide training for three (3) new Motorola employees per year at
a location defined by Company and at no cost to Motorola. For the
avoidance of doubt, Motorola shall be responsible for all travel, per
diem and accommodation costs incurred by their personnel.
11.2 On-Site and Additional Training Courses. Company shall, at
Motorola's reasonable request, and at a mutually agreeable time,
conduct on-site training courses for Motorola's Customers, or other
additional training courses, at any reasonable location designated by
Motorola on a subcontract basis at the Company's prevailing rates in
effect at the time of scheduling. Current pricing for Company's
training classes are set forth in Exhibit A; such prices shall be firm
for the initial two year term of this Agreement. Motorola shall also
pay all actually incurred, reasonable and customary travel and per diem
expenses for conduct of such courses, provided Motorola has previously
approved of such expenses in writing.
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11.3 Training Material. Company shall supply each trainee a complete
set of appropriate reproducible training aids, lesson plans, handouts
and associated materials pertaining to the Products for use by
Motorola's personnel. Company shall provide Motorola, upon Motorola's
reasonable request and at no charge, additional training material
handouts for use in any Motorola Customer training program. Company
grants to Motorola the right and license to reproduce all or any part
of the documents described in this Subsection and revisions thereof
solely for use in such training programs in connection with the
Products provided that the rights of Company in copyrighted material
that is Confidential Information are safeguarded by Motorola as set
forth in this Agreement (including those of Section 10.2).
12. Warranties.
12.1 Hardware.
(a) Hardware is warranted to be free from defects in material and
workmanship and to conform in all materials respects to the
Product Specifications for twenty-one (21) months from the
date of delivery of the applicable Hardware Products.
This Warranty applies to both domestically as well as
internationally deployed Product(s)s. Replacement or repaired
parts and depot labor at Company's facility (for repair of
parts) will be provided free of charge for the full warranty
period. Replacement or repaired parts may be drop shipped
directly to Motorola's customers or may be dropped shipped to
a Motorola's specified depot.. Motorola (or its Customer)
shall pay for costs of deinstalling defective parts and
installing replacement or repaired parts. Motorola shall
reimburse Company for costs incurred by Company in the event
of NFF (No Fault Found) in accordance with Company's prices as
set forth in Exhibit I Motorola shall prepay for shipping the
Product to Company and Company shall be responsible for the
costs of shipping the Product back to Motorola as specified by
Motorola . Motorola returns shall comply with Company's
standard MRR and other warranty procedures as set forth in
Exhibit I. Twelve month extended warranties for Hardware may
be purchased beyond the initial warranty period. Extended
warranty pricing shall be as set forth in Exhibit "A".
(b) In the event of a breach of Company's warranty in respect of
Hardware, Company shall repair or replace the part according
to the following procedures and those set forth in Exhibit I.
All costs incurred by Company during this process of repair,
repurchase or replacement of Company products, including but
not limited to, costs of repurchase or replacement shall be
borne by Company. In addition, during the warranty period,
Company will perform the following : (i) replace any defective
board with a Spare FRU within five (5) business days, for
emergencies, and ten (10) business days, for non-emergencies,
of receipt of the defective board or repair any defective
board within twenty five (25) working days of receipt.
Hardware not manufactured by Company will be repaired or
replaced within twenty-five (25) working days of receipt or
more promptly as arrangements with the manufacturers or
vendors thereof permit; (ii) provide Motorola with a list of
the Spare FRU model numbers from which the replacement of a
defective board shall be made; modifications to this list may
be made at any time with or without notice to Motorola or its
Customer; (iii) issue a Material Return and Replacement (MRR)
number to Motorola prior to Motorola's Customer's return of
the defective board; (iv) provide Motorola's Customers with
repair tags, return goods shipper forms, and shipping labels,
as reasonably required; (v) pay all transportation charges for
return of the board to Motorola's Customer; (vi) if Motorola
has provided Company with a blanket (call-off) purchase order,
provide emergency service by sending Spare FRUs within one (1)
business day after notification by Motorola to Company of such
emergency; (vii) upon Motorola's request, provide Motorola
with a copy of Company's then-current Policies and Procedures
for repair and replacement of defective equipment; (viii)
on-site repair within the USA can be performed at an
additional charge; such charge shall be quoted to Motorola's
Customer and approved before dispatch of personnel; and (ix)
Company may
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elect to either repair or replace third party equipment with
the assistance of third party service providers. Motorola End
Users shall approve the quote for field support.
12.2 Spares.
(a) Company shall provide spares for all Hardware under contract
according to the following procedures and those set forth in
Exhibit I. All orders for Spare parts then in stock will be
shipped within five (5) business days of receipt of the order,
although Company will use its reasonable efforts to ship
emergency related Spare parts orders within one (1) business
day. If ordered spare item is not in stock at such time, the
order will be shipped when spare item is available. Company
warrants that upon delivery of the Spares to Motorola and for
a period of twenty-one (21) months thereafter, all Spares
purchased hereunder will be free from defects in material,
workmanship and design and will perform in all material
aspects in accordance with the Product Specifications for such
parts. Company further warrants that each Spare will be a fit,
form and function replacement of the part it is designed to
replace and that Spares for Products having a prescribed mean
time between failures ("MTBF") will meet or exceed such MTBF
specifications.
(b) In the event spares delivered hereunder do not meet the
requirements of Section 12.2(a), Motorola may have the same
remedies as set forth with respect to Hardware (Section
12.1(b)).
12.3 Software.
(a) Company further warrants that for a period of twenty-one (21)
months from the date of delivery, the Software licensed under
this Agreement will be free from defects that result in
malfunctions and will perform in all material respects the
functions described in the Specifications in Exhibit "B". If
Motorola finds a defect in the Software's performance during
this period, Company will, replace or modify the Software in
accordance with the terms of Section 12.3(b) and those
procedures set forth in Exhibit I. so that it performs in all
material respects in accordance with the Specifications in
Exhibit "B", all in accordance with the further provisions of
Section 12.3(b).
(b) Correction of Defects. At Company's sole cost and expense,
Company agrees to respond to and make all commercially
reasonable efforts to complete correction of any breach in
warranty, during the applicable warranty period, in the
Software in accordance with Exhibit "D" and the following
definitions and priority classification:
Severity 1 Causes data corruption
or Product(s) crash or
Motorola cannot make
effective use of the
Software
Severity 2 Feature does not work
as documented, no
reasonable work-around
exists and Motorola
has a critical need of
the feature
Severity 3 Feature does not work
as documented but a
reasonable work-around
exists or Motorola can
wait for the next
release for a fix
Severity 4 Enhancement request.
Company shall correct: (i) any Severity 1 problem within
forty-eight (48) hours from verification of such defect; (ii)
any Severity 2 problem within ten (10) business days from
verification of such defect; (iii) any Severity 3 problem
within forty-five (45) days from verification of such defect;
and (iv) any Severity 4 problem on a case-by-case basis.
(c) Updates. Software Modifications shall be provided at no
additional cost to Motorola during the term of this Agreement
and any extension thereof and shall be warranted to the same
extent as the original Software for a period of twenty-one
(21) months from the date of delivery. Software Upgrades shall
be supplied under the terms of this warranty
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for the Software Warranty Period, including any extension
thereof, and during any period in which Motorola has paid or
has deemed to have paid Maintenance fees.
(d) Year 2000 Warranty. Supplier represents and warrants, in
addition to all other representations and warranties, that
until July 31, 2001, the Products supplied will be: (i) free
from any error(s) or defect(s) relating to date data
(including leap year calculations); (ii) will not generate any
invalid and/or incorrect date-related results; and (iii) such
date data will not impair the performance, output or accuracy
of Motorola's systems or products. In the event of a breach of
the foregoing warranty, Company shall repair or replace the
Software that does not comply with such warranty.
12.4 Epidemic Failures
(a) Under Warranty. In the event an Epidemic Failure occurs during
the applicable Warranty period, Company shall immediately take
remedial action at its sole expense, which may include
in-field inspection and onsite Services for replacement of all
Products and/or Software with a reasonable probability for
such a failure.
(b) Out of Warranty. If an Epidemic Failure occurs in any Products
and/or Software that has not continuously been under the
warranty as set forth herein, then within five (5) days of
notification from Motorola, Company shall prepare and propose
a corrective action plan for remedying such Epidemic Failures.
Upon approval of the corrective action plan by Motorola,
Company shall promptly implement the corrective action plan at
an agreed upon fee.
12.5 Services. All Services performed by Company under this
Agreement shall be performed in a good and workmanlike manner
in accordance with the applicable Telecommunications Industry
Standards. All Services and Maintenance obligations, as listed
in Exhibit "D", are warranted for twenty-one (21) months from
date of delivery.
12.6 Extent of Warranties.
(a) The warranties of Company, together with any applicable
service guarantees, shall run to Motorola. However, Company
agrees that Motorola can direct Customers who experience
warranty problems with Products to ship the relevant item, on
behalf of Motorola, directly to the Company and on direction
of Motorola, the Company shall drop ship to the location of
the relevant Customer items that have been repaired or
replaced pursuant to the Company warranty. Any NFF charges in
connection with any such direct shipments shall remain, as
between the Company and Motorola, the responsibility of
Motorola, however, Company shall be responsible for costs of
shipping NFF Products back to Motorola or its Customers.
(b) THE WARRANTIES IN THIS AGREEMENT ARE GIVEN IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE SPECIFICALLY
EXCLUDED AS TO ANY MATTER WHATSOEVER, INCLUDING WITHOUT
LIMITATION, IMPLIED WARRANTIES OF MERCHANTIBILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
12.7 General
The remedies set forth in this Section for breaches of
Company's warranties are Motorola's sole and exclusive remedy
for breach of such warranties. Company shall have no liability
for any breach of warranty to the extent attributable to the
failure of Motorola or its customer to handle, install, or
maintain the Products in accordance with the Documentation and
good industry practice or to install promptly the latest
Modification supplied by Company.
12.8 Warranty for Repaired Items
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Any repair or replacement of an item of Hardware or Software
provided by Company as a result of its warranty obligation
hereunder shall be warranted to the same extent as the
original item supplied by the Company (and subject to the same
exclusions and other provisions of this Section 12) for a
period equal to the longer of the original warranty period for
the original item subject to repair or replacement or nine (9)
months from the date of delivery of the repaired or
replacement item.
13. Technical Support.
13.1 Technical Assistance. Company shall provide Technical Support and
assistance in accordance with Exhibit "D", including telephone support.
Support shall be 7 x 24. The support provided in this Section shall
extend to both new and old versions of Products for three (3) years
from acceptance of the Products by Motorola. A complete description of
the technical support to be provided by Company is set forth in such
Exhibit "D".
13.2 Problem Reports. Company shall track, summarize and maintain
up-to-date status on all problem reports related to the Products
regardless of whether they are generated by Motorola or Motorola's
Customers (so long as Motorola forwards such Customer data to the
Company). Company shall provide Motorola with reports on demand of
Motorola, but no more than quarterly. Motorola shall have access to the
aforementioned information at no charge. Company shall assign a
specific individual to interface with Motorola's personnel.
14. Quality.
Airspan would have to review all referenced and associated
documentation before agreeing to clause 14 and subclauses.
14.1 Quality System. Company shall maintain a quality system for the
purpose of achieving major quality improvements in the Products and
Services supplied to Motorola. As part of Company's quality system,
Company agrees to qualify with the criteria set forth in the Motorola
Supplier Assessment, as set forth at Exhibit J-1 including Company's
participation in bi-annual or annual Supplier Assessments. Company
agrees to be subject to Supplier Assessment reviews and or audits and
to work with Motorola to endeavor to improve Company's quality systems
based on the outcome of the supplier assessments. For the purpose of
example and not limitation, Services may include training,
documentation, response center, etc.
14.2 Audit. Company shall grant Motorola the right, upon reasonable
notice and at reasonable time, to audit Company's facilities and
documents that pertain to the Products only, for purposes of verifying
compliance with the quality terms set forth in this Agreement. Audits
shall be done no more than once per year.
14.3 Quality Data. Company shall provide Motorola access to quality
data for the purpose of measuring and evaluating Company's continuous
process improvement. Company shall also participate in periodic quality
reviews to discuss product roadmaps and to conduct operation reviews.
14.4 Improvement Action Planning. Company shall create a quality
improvement action plan, coordinated with Motorola (attached hereto as
Exhibit J) and meet with Motorola on a periodic basis to review
progress of action items and their quality impact. Company agrees to
use commercially reasonable efforts to comply with the agreed upon
milestones in the improvement action plan as set forth in Exhibit J-2.
In the event that Company fails to comply with the foregoing, Motorola
may treat such action as a material breach subject to the terms and
cure periods set forth in Section 22.1(a).
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14.5 Participation. Company shall grant Motorola the right to
participate in reviews of milestones and implementation of revisions to
Products under this Agreement, all as reasonably agreed to. Motorola
agrees to promptly provide comments, as applicable.
14.6 Hardware Development. Company shall maintain a documented and
repeatable process for Hardware development and manufacturing for any
Hardware which Company develops and manufactures for Motorola.
14.7 Software Development. Company shall maintain a documented and
repeatable process for Software development for any Software which
Company develops for Motorola.
15. Company's Commitment to Customer Satisfaction.
15.1 Company acknowledges that commitment to total customer
satisfaction is essential to Motorola's continuing success in wireless
radio markets. A malfunction in the Products or Services may create
real or perceived customer satisfaction problems and a loss of goodwill
with customers. It is agreed that such problems may be outside the
scope of Company's warranty obligations set forth in this Agreement.
Company represents that it is committed to Motorola's stated
fundamental objective of Total Customer Satisfaction and will assist
Motorola in endeavoring to solve problems attributable to the Products,
when reasonably requested by Motorola. Under no circumstances however
is this Section, or Section 15.2, intended to give Motorola additional
remedies for breach of Company's warranty or to expand Company's
obligations with respect to Products out of warranty.
15.2 By way of example, and not limitation, at Motorola's reasonable
request, Company may be requested to periodically attend Customer
meetings and/or symposiums for the purpose of promoting and responding
to questions and concerns of Customers utilizing such Products, taking
action items at such meetings and working with Motorola to endeavor to
resolve customer satisfaction problems; be requested to attend on-site
meetings with individual customers who may be experiencing unique
difficulties with Products; etc. The parties shall mutually agree on
the allocation of any expenses to achieve the foregoing.
16. Intellectual Property Rights.
16.1 IPR of Company. All patents, trademarks, copyrights, mask works,
circuit layout rights, design rights, trade secrets and other
intellectual property rights in the Products and Company's Confidential
Information are and shall remain the exclusive property of Company or
its licensor.
16.2 IPR of Motorola. All patents, trademarks, copyrights, design
rights, trade secrets and other intellectual property rights in
Motorola's Confidential Information are and shall remain the exclusive
property of Motorola or its licensors.
16.3 Integration. Company shall not integrate or merge any Motorola
Confidential Information into any of the Products, unless otherwise
specifically directed by Motorola in writing.
16.4 Motorola shall not undertake any modifications to the Software
unless necessary to provide support to Customers in the event that
Motorola is provided Source Code pursuant to the escrow arrangement.
Motorola acknowledges that, except pursuant to the escrow arrangement
contemplated hereby, all Software provided hereunder will be provided
in Object Code only. Motorola shall not decompile, disassemble or
reverse such Software. .
17. Trademarks, Tradenames and Service Marks.
17.1 Right to Use Trademarks. In conjunction with the distribution and
sale of Products, Company grants Motorola the right to use all
trademarks, trade names, logos, service marks, quality designations and
any other proprietary words and symbols ("Trademarks") of Company
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associated with the Products in proposal and promotional activities.
Motorola shall comply with all reasonable rules and regulations
furnished to Motorola by Company with respect to the use of each such
Trademark.
17.2 No Use of Motorola Marks. Company shall not use any Trademarks of
Motorola, or any word or symbol likely to be confused with any Motorola
Trademark, either alone or in any combination with another word or
words, except as authorized by Motorola under section 5.2 and Exhibit F
of this agreement.
18. License Grants.
18.1 Right to Use. Company grants Motorola a perpetual, worldwide,
except as set forth in Exhibit G, non-exclusive, non-transferable,
non-assignable royalty-free right to use the Software solely for
Motorola's internal use in conjunction with sales, maintenance and
customer support in conjunction with Products supplied by Company
hereunder and for the uses contemplated by Sections 18.2, 18.3 and
18.4. The license fee is included in the price of the Products.
18.2 Right to Sublicense. Company grants Motorola a perpetual,
worldwide, except as set forth in Exhibit G, non-exclusive,
non-transferable, non-assignable right to use, reproduce, market and
distribute, and to grant Customers perpetual, worldwide, except as set
forth in Exhibit G, non-exclusive, nontransferable, non-assignable
sublicenses to use, , and copy for backup and archival purposes, the
Object Code form of the Software, in all such cases solely for use in
the Products supplied by the Company hereunder, provided that such
sublicensees agree to be bound by terms and conditions which grant no
more rights concerning the Software than those contained herein, which
includes prohibitions against further sublicensing, disclosing,
disassembling or reverse engineering the Software.
18.3 Right to Copy. Upon execution of this Agreement, Company agrees to
promptly provide Motorola two (2) copies of the Object Code form of the
Software. In lieu of ordering Software from the Company, Company agrees
that Motorola may copy the Software, in object code form, solely for
the purpose of sublicensing the Software to Customers for use in
Products supplied by the Company hereunder. Motorola agrees to provide
Company, on a quarterly basis, a certificate verifying the number of
copies made and sublicensed.
18.4 Right to Use Source Code. Company grants Motorola a perpetual,
non-exclusive, non-transferable, non-assignable, royalty-free license
to use the Source Code of the Software, but solely in the circumstances
and in accordance with the terms of Section 19 herein.
19. Source Code Escrow.
19.1 Source Code Obligation. Motorola may, at its option, enter into a
Software Source Code escrow agreement with Company. Such escrow
agreement shall state that Company shall deposit, concurrently with the
execution of this Agreement and on each anniversary of the date of this
Agreement, with a third party reasonably acceptable to the Company
("Escrow Agent"), the most recent Source Code of the Software. Under
that agreement, in the event Company enters into any voluntary or
involuntary receivership arrangement or other insolvency procedures
(with appropriate cure periods for involuntary procedures, to be set
forth in the Escrow Agreement, attached hereto as Exhibit K), or ceases
to provide, in all material respects, substantially all of the support
services required by this Agreement in respect of Products sold by the
Company hereunder, such cessation continues after appropriate notices
and cure periods as set out in the Escrow Agreement, and there is no
successor to the Company undertaking such support, Motorola may direct
the Escrow Agent to deliver to Motorola the deposited Source Code
unless Motorola is then in material default under this Agreement
according to section 22.1(a) (for these purposes, this Agreement and
Orders placed thereunder shall be taken as a whole). It is understood
that ownership of the Source Code at all times remains with Company and
that any release to Motorola of such Source Code is made as an
accommodation to Motorola and shall
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not vest any ownership or ownership rights in Motorola. In the event
that receivership or insolvency proceedings are dismissed and Company
continues as the primary obligor under this Agreement, Motorola, within
twenty (20) working days of receiving notice thereof, shall return the
Source Code and all copies to the Escrow Agent. During any period of
time in which the Source Code is in the possession of Motorola, it is
agreed that the Source Code shall be used only by Motorola and agents,
such as subcontractors, and may be used and modified solely for the
purposes of providing continuing support for Products sold by the
Company under this Agreement; for avoidance of doubt, the Source Code
shall not be used for development purposes nor duplicated, sold or
licensed to others or marketed in any manner. Motorola agrees to pay
all costs of entering into the Software Escrow Agreement and all annual
renewal costs. Except as specified in this Section, Motorola shall have
no access to the Source Code.
19.2 Specific Performance. Company expressly agrees to promptly comply
with the foregoing obligations and agrees that if Motorola, at its
option, enters into such a Software Escrow Agreement, then Motorola
shall be entitled to an order for specific performance of such
obligation in the event Company's representative, including any trustee
in bankruptcy, refuses to comply with the foregoing obligations. In the
event of bankruptcy, the Parties acknowledge that Motorola shall be
entitled to the full protection provided to licensees of intellectual
property rights specified in 11 U.S.C. ss. 365.
20. Confidentiality.
20.1 Exchange of Confidential Information. From time to time during the
performance of this Agreement, the Parties may deem it necessary to
provide each other with Confidential Information. The Parties agree:
(a) To maintain the confidentiality of such Confidential
Information and not disclose same to any third party, except
as authorized by the original disclosing Party in writing.
(b) To restrict disclosure of Confidential Information to
employees, contractors, and agents who have a "need to know".
Such Confidential Information shall be handled with the same
degree of care which the receiving Party applies to its own
confidential information but in no event less than reasonable
care.
(c) To take precautions necessary and appropriate to guard the
confidentiality of Confidential Information, including
informing its employees, contractors and agents who handle
such Confidential Information that it is confidential and not
to be disclosed to others.
(d) That Confidential Information is and shall at all times remain
the property of the disclosing Party. No use of any
Confidential Information is permitted except as otherwise
expressly provided herein and no grant under any proprietary
rights is hereby given or intended, including any license
implied or otherwise.
20.2 Responsibilities as to Employees. The receiving Party acknowledges
that Confidential Information may contain information that is
proprietary and valuable to the disclosing Party and that unauthorized
dissemination or use of the Confidential Information may cause
irreparable harm to the disclosing Party. Therefore, the receiving
Party shall take appropriate action, by instruction, agreement or
otherwise, with any employee or contractor permitted access to the
Confidential Information so as to enable it to hold the Confidential
Information in confidence or otherwise satisfy its obligations under
this Agreement.
20.3 Survival. Each Party's obligations under this Agreement to keep
confidential and restrict use of the other Party's Confidential
Information shall survive the expiration or termination of this
Agreement for a period of five (5) years.
20.4 Disclosure. Except as may be required by applicable law, neither
Party shall disclose to any third party the contents of this Agreement
or any amendments hereto without the prior written
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consent of the other Party. The foregoing shall not prevent disclosure
to a Party's accountants and lawyers.
20.5 Independent Development. Company acknowledges that Motorola and/or
third parties are, or may be developing, Products similar in
functionality to those developed hereunder by Company. Company agrees
that the receipt of Confidential Information by Motorola from Company
shall in no way prohibit Motorola and/or third parties from developing
such applications, provided that the provisions of this Section 20
regarding the ownership, protection and security of Company's
Confidential Information have not been breached.
21. Limitation of Liability and Indemnification.
21.1 Limitation of Liability. UNLESS SPECIFICALLY SET FORTH HEREIN,
AND EXCEPT FOR UNCURED MATERIAL BREACHES OF CONFIDENTIALITY
OBLIGATIONS IN THIS AGREEMENT, in no event shall either
Motorola or Company (AND THEIR EMPLOYEES, DIRECTORS, AGENTS,
OFFICERS , whether as a result of breach of contract OR
WARRANTY, tort (including WITHOUT LIMITATION negligence),
FAILURE OF ESSENTIAL PURPOSE, or otherwise, have any liability
to each other for any indirect, special, incidental or
consequential damages, LOSS OF PROFITS, LOSS OF REVENUES OR
LOSS OF SALES IN CONNECTION WITH OR RELATED TO THIS AGREEMENT.
THE TERM CONSEQUENTIAL DAMAGES AS USED HEREIN SHALL NOT BE
CONSTRUED TO INCLUDE DAMAGES AS DEFINED IN THE UNITED STATES
CODE 35 U.S.C. 284. THE PARTIES UNDERSTAND AND AGREE THAT
DAMAGES UNDER 35 U.S.C. 284 ARE A FORM OF DIRECT DAMAGES.
21.2 General Indemnity. Subject to the limitations of Section 21.1
(unless otherwise required by applicable law), Motorola and Company
agree to indemnify and save each other harmless from any and all
claims, damages, expenses, suits, loss or liability for any death,
personal injury, or physical damage to tangible property to the extent
caused by, or arising from or connected with the performance of this
Agreement due to or occasioned by the other Party, its officers,
employees, agents or representatives.
21.3 Intellectual Property Indemnification.
(a) Company agrees, subject to the provisions of Section 21.1 (the
foregoing is not a limitation on Company's obligation to
indemnify Motorola for claims of the type covered by Section
21.1 which a third party seeks to recover from Motorola as a
result of actual or claimed infringement but are intended to
limit Motorola's recovery by indemnity for damages of the type
covered by Section 21.1 which are suffered by Motorola) to
indemnify and save harmless Motorola, its successors, assigns
and Customers from any and all expenses, liabilities, damages
or other losses, including court costs and attorney's fees,
arising from or by reason of any actual or claimed
infringement of any patents, trademarks (other than trademarks
of Motorola), copyrights, maskworks, trade secrets or other
intellectual property rights by the Products and/or
Documentation or any part thereof; and to defend at its
expense any action based thereon with respect to the use,
license or sale of the Products and /or Documentation by
Motorola or the Customers. Company shall be given prompt
notice of any claim which is the subject of this Section and
shall be given the right to control the defense of the claim.
(b) If the use of any portion of the Products developed under this
Agreement is enjoined as a result of such suit, then Company,
at no expense to Motorola and the Customers, shall either
procure the right for Motorola and Customers to continue using
the Products or replace or modify same so that they becomes
non-infringing and are of equivalent or superior
functionality. If neither of the foregoing alternatives are
available on terms which are acceptable to Motorola, Motorola
may return all or any part of the Products at
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<PAGE>
Motorola's sole option, for no less than a full refund of the
purchase price or license fees paid under this Agreement.
21.4 Cap on Liability.
Except for breach of the Confidentiality obligations,
restrictions in this Agreement on use of intellectual
property, obligations under Section 21.3, and as otherwise
prohibited by law, each party's total aggregate liability
arising from or related to this Agreement shall not exceed the
higher of (x) $8,000,000 (or (y) the amount invoiced by
Company to Motorola for Products and Services sold to Motorola
pursuant to this Agreement, regardless of whether such damages
are based on breach of contract or warranty, tort (including
without limitation negligence) failure of essential purpose or
otherwise.
21.5 Customer Agreement to Limitations.
Motorola shall use reasonable efforts to attempt to secure
from its Customers an agreement to a limitation on indirect,
special, incidental, and consequential damages of the type
contemplated by Section 21.1.
22. Termination.
22.1 Right to Terminate. Either Party may terminate this Agreement upon
notice to the other if:
(a) Material Breach. The other Party breaches a material
obligation under this Agreement and such breach continues
without cure for a period of thirty (30) days after notice or,
if the breach is not one which is capable of being cured
within thirty (30) days and the breaching Party has commenced
to cure the breach within such time and continues to do so
diligently and in good faith, then the breaching Party shall
be granted an extension for a reasonable period of time at the
discretion of the non-breaching Party.
(b) Change of Control. An entity that does not currently control
Company or Motorola, as the case may be, acquires either
direct or indirect control of the other Party (Company or
Motorola, as the case may be) and such Change of Control
materially and adversely affects the rights of the terminating
party. For these purposes, Change of Control shall mean the
possession of the power, directly or indirectly, to direct or
cause the direction of management or policies of the Party,
whether through the ownership of more than fifty percent (50%)
of the then outstanding shares or other equity rights of the
Party or by contract or agency or such similar arrangement. In
such event, if a Party terminates because of a Change in
Control of the other Party, the Parties shall cooperate to
conduct an orderly termination of the Agreement. Motorola
acknowledges that Company is expecting to conduct an initial
public offering in the near future. Motorola agrees that this
event alone will not give rise to a Change of Control event
that will permit Motorola to terminate this Agreement under
this Section 22(b)
(c) Insolvency or Cessation of Business. The other Party ceases to
conduct business in the normal course in a manner that
materially adversely affects the ability of the Party to meet
its obligations under this Agreement, becomes insolvent,
enters into a general suspension of payments, moratorium,
reorganization or bankruptcy, makes a general assignment for
the benefit of creditors, admits in writing its inability to
pay debts as they mature, suffers or permits the appointment
of a receiver for substantially all of its business or assets,
or avails itself of or becomes subject to any other judicial
or administrative proceeding that relates to insolvency or
protection of creditors' rights.
22.2 Rights and Obligations at Termination. Upon expiration or
termination of this Agreement for any reason:
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<PAGE>
(a) Cease and Destroy. Each Party will promptly cease using and
destroy and certify such destruction, or return to the other
Party, all items that contain any Confidential Information (as
defined herein) of the other Party, except Motorola may retain
one copy of Confidential Information for the sole and express
purpose of supporting then-existing Customers in connection
with their use of products supplied by Company hereunder.
(b) Sale of Inventory. Motorola may sell any of its then existing
inventory of Products originally purchased from Company.
However, Company shall have no warranty and support
obligations for such product under Sections 22.2(d) and (g) if
this Agreement is terminated because of Motorola's material
default pursuant to Section 22.1(a).
(c) Right to Use. Unless otherwise provided for herein, Motorola
and Customers shall continue to have the right to use Software
in Object Code form associated with the Products sold under
this Agreement, but subject to the limitations of this
Agreement.
(d) Spares. Upon termination of the initial term or any renewal of
this Agreement, or upon termination for any reason other than
Company's total cessation of business, Company agrees to use
all commercially-reasonable efforts, subject to vendor
availability, to offer for sale to Motorola, in accordance
with the provisions set forth herein, functionally equivalent
Spares for a period no less than ten (10) years after the
expiration or termination of this Agreement. In the event
Company is unable to supply such Spares or is unable, after
notice and a reasonable period of time, to obtain another
source of supply for Motorola, then Company shall provide
Motorola and its designated third party manufacturers of such
Spares with a royalty-free, non-exclusive license to use
intellectual property so that Motorola and such manufacturers
will have sufficient information and right to manufacture or
to obtain functionally equivalent Spares from other sources,
but solely for purposes of supplying Spares for Products sold
by Company under this Agreement. Company shall be obligated to
provide support services for Hardware, as set forth in Exhibit
D, attached hereto, for a period of ten (10) years after the
date of termination, and to provide support services for
Software, as set forth in Exhibit D, attached hereto, for a
period of two (2) years after the date of termination, unless
such termination is due to a material breach by Motorola,
pursuant to Section 22.1(a). In the event of a Company
bankruptcy, for purposes of this Agreement, the Parties
acknowledge that Motorola shall be entitled to the full
protection provided to licensees of intellectual property
rights specified in 11 U.S.C. 365.
(e) Outstanding Sums. Company shall invoice Motorola for any
outstanding sums which may be owing from any Order as detailed
in Exhibit "A. In the event that Motorola terminates for
material breach as set forth herein, Motorola reserves the
right to offset any damages it incurs against any sums that
Motorola owes to Company.
(f) Source Code. In the event of a termination due to the
conditions set forth in Subsection 22.1(c) above, Company
shall provide to Motorola Source Code in accordance with the
terms of any escrow agreement entered into pursuant to Section
19.
(g) Continuation of Services. Upon termination at the end of the
initial term or any renewal thereof, unless termination is due
to a material breach by Motorola, pursuant to Section 22.1(a)
Company will provide warranty remedy, support services, of the
type required hereby, until the end of the last applicable
warranty period or term of support or maintenance agreement.
23. Term and Renewal.
This Agreement shall commence as of the Agreement Date and shall be for
an initial term of two (2) years, and may be renewed by the Parties for
successive terms of one-year each, provided that each Party executes a
written consent as to each one year renewal period sixty (60) days in
advance of the expiration date of the previous term.
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<PAGE>
24. Product Liability and Compliance with Laws.
24.1 Product Liability. Company represents and warrants that the
Products shall be produced and delivered in accordance in all material
respects with all applicable laws, rules and regulations governing
product safety of those jurisdictions from which Company or Motorola
(with the active cooperation of Company) has obtained or is in the
process of actively obtaining type certification for the Products.
24.2 Defense of Claim. Company agrees, upon receipt of notification, to
promptly assume full responsibility subject to the limitations of
Section 21.1, for the defense of any suit or proceeding which may be
brought against Motorola, its directors, officers, agents or Customers
for personal injury, death, or physical damage to tangible property
based upon a claim that the Products, or any aspect of the Products,
breached the representation of Section 24.1, have caused death or
personal injury, are defective in any way, or were negligently designed
or manufactured or fail to comply with any product safety laws. Company
further, subject to the limitations of Section 21.1, agrees to
indemnify and hold harmless Motorola, its directors, officers, agents
and Customers against any and all expenses, losses and damages,
including court costs and attorney's fees, resulting from any such suit
or proceeding, including any settlement. Motorola may be represented by
and actively participate through its own counsel in any such suit or
proceeding if it so desires, and the cost of such representation shall
be paid by Motorola.
25. Security.
Each Party agrees that, when employees or agents of the visiting Party
are on the premises of the host Party, they will at all times comply
with all security regulations in effect and of which the Party has been
apprised. The visiting Party further agrees to abide at all times with
off premises security regulation when the visiting Party has
Confidential Information of the host Party. Motorola and Company
specifically agree not to disclose to any third party any information,
systems, equipment, ideas, processes or methods of operation observed
at either Party's facilities, all of which shall be deemed Confidential
Information as defined herein.
26. Insurance.
While performing this Agreement, Company shall maintain insurance in
such amounts and in such forms and with such insurers as Motorola may
reasonably request.
27. Notices.
27.1 Form of Notices. All notices and other communications required or
contemplated under this Agreement shall be in writing and shall be
transmitted to the address shown below either by (i) personal delivery,
(ii) expedited messenger service, (iii) airmail postage prepaid return
receipt requested certified mail, or (iv) electronic telefacsimile with
confirmed answerback.
<TABLE>
<S> <C>
Motorola shall send notices as follows: Airspan Communications Ltd.
Cambridge House
Oxford Rd
UXBRIDGE, UB8 1UN, UK
Attention: Director of Marketing
Telefax: +44 1895 467152
Company shall send notices as follows: Motorola, Inc.
Network Solutions Sector
1441 West Shure Drive
Arlington Heights, Illinois 60004
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Attention:
John Thode, Wireless Access Systems Division
General Manager
Cc: Laura Jensen, Wireless Access Systems Division
Senior Marketing Manager
Telefax: 847-632-2168
Motorola
Network Solutions Sector
Global Alliance Development Department
1441 W. Shure Drive
Arlington Heights, Illinois 60004
Attn: Legal
Facsimile: 847-632-2300
</TABLE>
27.2 When Effective. Notices shall be effective upon the date of
receipt of delivery or at such time as delivery is refused by addressee
upon presentation.
28. Force Majeure.
28.1 Definition. Neither Party shall be liable for delays in delivery
or performance when caused by any of the following which include but
are not limited to, acts or events which are beyond the actual control
of the delayed Party, including but not limited to the following: (i)
acts of God, (ii) acts of the public enemy, (iii) acts or failure to
act by the other Party, (iv) acts of civil or military authority, (v)
governmental priorities, strikes or other labor disturbances, (vi)
hurricanes, (vii) earthquakes, (viii) fires, (ix) floods, (x)
epidemics, (xi) embargoes, (xii) war, (xiii) riots, and (xv) failures
of common carriers.
28.2 Extension. In the event of any such delay the date of delivery or
of performance shall be extended for a period equal to the effect of
time lost by reason of the delay.
28.3 Right to Terminate. Notwithstanding the foregoing, in the event
that such Force Majeure causes Company to be delayed in its delivery or
performance for more than seventy-five (75) days, Motorola shall have
the right to terminate this Agreement with no liability whatsoever.
28.4 Notice. A party claiming delay in delivery or performance, due to
an act of force majeure as set forth herein, shall send written notice
thereof and a statement of particulars to the other party, prior to or
at the time performance would have been required by the non-performing
party.
29. Governing Law and Dispute Resolution.
29.1 Governing Law. The validity, performance, and all matters relating
to the effect of this Agreement and any amendment hereto shall be
governed by the laws of the State of Illinois, U.S.A., which shall be
applied without regard to the U.N. Convention on International
Contracts for the Sale of Goods.
29.2 Escalation. Motorola and Company agree to attempt to settle any
claim or controversy arising out of this Agreement through consultation
and negotiation in good faith and spirit of mutual cooperation. Any
dispute between the Parties relating to this Agreement will first be
submitted in writing to a panel of two senior executives of Company and
Motorola, who will promptly meet and confer in an effort to resolve
such dispute. Each Party's executive will be identified by notice to
the other Party, and may be changed at any time thereafter by notice to
the other. Any agreed decisions of the executives will be final and
binding on the Parties. In the event the executives are unable to
resolve any dispute within thirty days after submission to
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<PAGE>
them, either Party may then refer such dispute to mediation in
accordance with Subsection 29.3. Notwithstanding the foregoing, any
disputes with respect to intellectual property rights shall be
submitted to the courts and not be subject to the provisions of this
Section 29.2 or Subsection 29.3.
29.3 Alternate Dispute Resolution ("ADR"). If those attempts fail, then
the dispute will be mediated by a mutually acceptable mediator to be
chosen by Motorola and Company within forty-five (45) days after
written notice by either Party demanding mediation. Such mediation
shall be conducted in a location to be agreed upon by the parties.
Neither Party may unreasonably withhold consent to the selection of a
mediator or location, and Motorola and Company will share the costs of
the mediator equally. Each Party shall pay its own attorneys' fees. By
mutual agreement, however, Motorola and Company may postpone mediation
until each has completed some specified but limited discovery regarding
the dispute. The Parties may also agree to replace mediation with some
other form of alternate dispute resolution, such as neutral
fact-finding or a mini-trial.
29.4 Submittal to Courts. Any dispute which cannot be resolved between
the Parties through negotiation, mediation or other form of ADR within
four (4) months of the date of the initial demand for ADR by one of the
Parties shall then be submitted to a court of competent jurisdiction.
The use of any ADR procedures will not be construed under the doctrines
of laches, waiver or estoppel to affect adversely the rights of either
Party. Nothing in this Section will prevent either Party from resorting
to judicial proceedings if (a) good faith efforts to resolve the
dispute under these procedures have been unsuccessful, or (b) interim
relief from a court is necessary to prevent serious and irreparable
injury to that Party or to others.
30. Subcontracting.
Company shall not, without the prior written consent of Motorola,
subcontract any portion of the work covered by this Agreement except
for the purchase of standard commercial supplies or raw materials
incidental to the work to be performed.
31. Assignment.
Neither this Agreement nor any right under this Agreement may be
transferred, assigned or delegated by either Party without the prior
written consent of the other Party. Any attempted assignment,
delegation or transfer shall be void.
32. Independent Contractors.
Company shall perform activities under this Agreement only as an
independent contractor and nothing contained herein shall be construed
to be inconsistent with this relationship or status. Under no
circumstances shall any personnel of Company be considered to be an
employee or agent of Motorola. Nothing in this Agreement shall be
interpreted as granting either Party the right or authority to make
commitments of any kind for the other, implied or otherwise, without
prior review and written agreement. This Agreement shall not
constitute, create, or in any way be interpreted as a joint venture,
partnership or formal business organization of any kind.
33. Authority.
Each Party hereto represents and warrants that (i) it has obtained all
necessary approvals, consents and authorizations of third parties and
governmental authorities, if applicable, to enter into this Agreement
and to perform and carry out its obligations under this Agreement, (ii)
the persons executing this Agreement on its behalf have express
authority to do so, and, in so doing, to bind the Party thereto; (iii)
the execution, delivery, and performance of this Agreement does not
violate any provision of any bylaw, charter, regulation, or any other
governing authority of the Party; and (iv) the execution, delivery and
performance of this Agreement has been duly
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<PAGE>
authorized by all necessary partnership or corporate action and this
Agreement is a valid and binding obligation of such Party, enforceable
in accordance with its terms.
34. No Right to Audit.
Nothing contained herein shall be deemed to grant Company or any third
party, by implication, estoppel or otherwise, any right to inspect or
examine any of Motorola's data, documents, instruments, records,
software, systems, premises or plants related to or in any way
connected with the Products. Motorola shall have no duty to disclose
any financial statements, balance sheets, or any other business records
to Company, Company's representatives or any third party which may
request same. By way of example, and not limitation, Motorola has no
duty to disclose the existence or location of any Customer who has
purchased Products.
35. Cumulative Remedies.
Except as otherwise provided herein, if Company breaches this
Agreement, Motorola shall have the right to assert all legal and
equitable remedies available.
36. Severability and Survivability.
In the event any one or more of the provisions of this Agreement is
held to be unenforceable under applicable law, (i) such
unenforceability shall not affect any other provision of this
Agreement; (ii) this Agreement shall be construed as if said
unenforceable provision had not been contained herein; and (iii) the
Parties shall negotiate in good faith to replace the unenforceable
provision by such as has the effect nearest to that of the provision
being replaced.
The Parties agree that where the context of any provision indicates an
intent that it shall survive the term of this Agreement then it shall
survive. For the avoidance of doubt, the following sections shall
survive: 12 - Warranty; 19 - Source Code Escrow; 20 - Confidential
Information; 21- Limitation of Liability and Indemnification; 22.2
Rights and Obligations at Termination; 29- Governing Law and Dispute
Resolution.
37. Publicity.
Neither party shall issue a press release or make any similar public
announcement regarding the transactions contemplated by this Agreement
without the other party's prior written consent to the specific
language and intended distribution of such press release or
announcement.
38. Entire Agreement.
This Agreement and Exhibits hereto constitute the entire understanding
between the Parties concerning the subject matter hereof and supersede
all prior discussions, agreements and representations, whether oral or
written and whether or not executed by Motorola and Company. In case of
inconsistencies between the terms of this Agreement and the Exhibits,
this Agreement shall govern and supercede the Exhibits. Orders issued
pursuant to this Agreement shall be deemed to be governed by the terms
of this Agreement, and in case of inconsistencies between the terms of
this Agreement and such Orders, this Agreement shall supercede, whether
or not this Agreement is specifically incorporated by reference into
such Orders. For the avoidance of doubt, this Agreement supersedes the
Non-Disclosure Agreement dated April 23rd, 1999 entered into between
the parties hereto. This Agreement or any part or provision hereof
shall not be deemed waived, amended, or modified by either Party unless
such waiver, amendment or modification is in writing and executed by
authorized representatives of both Parties.
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<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of
March 31, 2000 ("Agreement Date").
<TABLE>
<CAPTION>
Motorola Inc. AIRSPAN COMMUNICATIONS LTD.
NETWORK SOLUTIONS SECTOR
<S> <C>
By: /s/ John Thode By: /s/ Eric Stonestrom
--------------------------------------------- ------------------------------------------
(Signature) (Signature)
Name: JOHN THODE Name: ERIC STONESTROM
--------------------------------------------- ------------------------------------------
(Print - Block Letters) (Print - Block Letters)
Title: GM Title: PRESIDENT
-------------------------------------------- -----------------------------------------
(Print - Block Letters) (Print - Block Letters)
</TABLE>
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<PAGE>
EXHIBIT "A"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
PRODUCT AND PRICE LIST
----------------------
<TABLE>
<CAPTION>
PRODUCT AND PRICE LIST
- ----------------------
SUBSCRIBER TERMINALS
TRINITY 1 TRINITY 2
<S> <C> <C>
801-6112 : ST-R1 1-line 64k or 32k POTS 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU,batt) $ * $ *
801-6122 : ST-R2 2-line 64k or 32k POTS 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU,batt) $ * $ *
802-6112 : ST-S1 1-line 64k or 32k POTS 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU,batt) $ * $ *
802-6122 : ST-S2 2-line 64k or 32k POTS 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU,batt) $ * $ *
803-6122 : ST-N2 2-Line 64k or 32k POTS 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU,batt) $ * $ *
803-6121 : ST-N2 2-Line 64k or 32k POTS 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU) $ * $ *
803-6142 : ST-N4 4-Line 32k POTS 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU,batt) $ * $ *
803-6141 : ST-N4 4-Line 32k POTS 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU) $ * $ *
804-6112 : ST-B1 (ISDN 2B+D) 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU,batt) $ * $ *
804-6111 : ST-B1 (ISDN 2B+D) 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU) $ * $ *
805-6112 : ST-L128 128kbit/s or 1x64kbit/s (DATA) 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU,batt) $ * $ *
805-6111 : ST-L128 128kbit/s or 1x64kbit/s (DATA) 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU) $ * $ *
805-6122 : ST-L2x64kbit/s (DATA) 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU,batt) $ * $ *
805-6121 : ST-L2x64kbit/s (DATA) 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU) $ * $ *
806-6122 : ST-M8/32 8-line 32k POTS 3.4-3.6 GHz Plan 1 (Ants,SIUs,batt and M-series ST cabinet) $ * $ *
807-6142 : ST-M8/64 8-line 64 & 32k POTS 3.4-3.6 GHz Plan 1 (Ants,SIUs,batt and M-series ST cabinet) $ * $ *
806-6142 : ST-M16 16-line 32k POTS 3.4-3.6 GHz Plan 1 (Ants,SIUs,batt and M-series ST cabinet) $ * $ *
810-6122 : ST-P1V2 Ethernet+2-Line 64 & 32k POTS 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU,batt) $ * $ *
810-6121 : ST-P1V2 Ethernet+2-Line 64 & 32k POTS 3.4-3.6 GHz Plan 1 (Ant,SIU,PSU) $ * $ *
TOTAL SUBSCRIBER TERMINALS
- ----------------------------------------------------------------------------------------------------------------------------------
ST ANCILLIARIES
890-0001 : RS530 to V.35 (F) cable for L series STs $ *
890-0002 : SIU wall mounting bracket $ *
890-0003 : Antenna wall mounting kit (antennas are shipped with pole mount bracket as std) $ *
890-0004 : Battery for M-series ST $ *
890-0005 : Battery for S & R series ST PSU $ *
890-0006 : Battery for B,L,N & P series ST PSU $ *
890-0007 : M-series ST modular enclosure and PSU $ *
890-0008 : External Housing for M-series modular STs $ *
890-0009 : ST antenna drop cable kit (300m standard cable) $ *
890-0010 : ST antenna drop cable kit (300m low-loss cable) $ *
890-0011 : ST antenna drop cable kit (25m) $ *
890-0012 : Crimp tool for terminating standard Antenna Drop cable $ *
890-0013 : Crimp tool for terminating low-loss Antenna Drop cable $ *
TOTAL ST ANCILLIARIES
- ----------------------------------------------------------------------------------------------------------------------------------
CT AND AC RACK MECHANICS
700-0001 : CT Rack with RF Combiner shelf + 1 DA Modem shelf $ *
700-0002 : CT Rack with RF Combiner shelf + 2 DA Modem shelves $ *
700-0011 : CT Expansion Rack with 1 DA Modem shelf $ *
700-0012 : CT Expansion Rack with 2 DA Modem shelves $ *
701-0002 : CT Rack with RF Combiner shelf + 2 FA Modem shelves $ *
701-0004 : CT Rack with RF Combiner shelf + 4 FA Modem shelves $ *
702-0012 : CT Rack with RF Combiner shelf + 1 DA Modem shelf + 2FA Modem shelves $ *
703-0001 : AC Rack with 1 AC shelf $ *
703-0002 : AC Rack with 2 AC shelves $ *
TOTAL CT AND AC RACK MECHANICS
- ----------------------------------------------------------------------------------------------------------------------------------
CT ANTENNA SYSTEMS
710-6932 : Directional Antenna, 2 feeder ports, 65 Deg 3.4-3.6 GHz $ *
</TABLE>
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
710-6931 : Directional Antenna, 1 feeder port, 65 Deg 3.4-3.6 GHz $ *
710-6961 : Directional Antenna, 1 feeder port, 180 Deg 3.4-3.6 GHz $ *
711-6902 : Dual feeder port Omni Antenna system 3.4-3.6 GHz $ *
711-6901 : Single feeder port Omni Antenna dipole 3.4-3.6 GHz $ *
TOTAL CT ANTENNA SYSTEMS
- ----------------------------------------------------------------------------------------------------------------------------------
CT ANTENNA FEEDER
712-0000 : CT Antenna Feeder (1x50m)+ Installation kit $ *
713-0000 : CT Antenna Feeder (2x50m)+ Installation kit $ *
TOTAL CT ANTENNA FEEDER
- ----------------------------------------------------------------------------------------------------------------------------------
CT FA AND DA RF PLUG IN SETS
720-6100 : CT RF full plug in set 3.4-3.6 GHz Plan 1 (2PA+MON+3PSU+2DIPLNA) $ *
721-6100 : CT RF basic plug in set 3.4-3.6 GHz Plan 1 (PA+MON+2PSU+DIPLNA) $ *
722-6100 : CT RF Expansion plug in set 3.4-3.6 GHz Plan 1 (PA+PSU+DIPLNA) $ *
TOTAL CT FA AND DA RF PLUG IN SETS
- ----------------------------------------------------------------------------------------------------------------------------------
CT FA MODEM SHELF CARD SETS
730-6100 : FA CAS Modem shelf full card set 3.4-3.6 GHz Plan 1 (RF+AU+TU+SC+8Modem) $ *
731-6100 : FA Data Modem shelf full card set 3.4-3.6 GHz Plan 1 (RF+AU+TU+SC+8Modem) $ *
732-6100 : FA Euro ISDN Modem shelf full card set 3.4-3.6 GHz Plan 1 (RF+AU+TU+SC+8Modem) $ *
733-6100 : FA V5.1 Voice + ISDN Modem shelf full card set 3.4-3.6 GHz Plan 1 (RF+AU+TU+SC+8Modem) $ *
740-6100 : FA CAS Modem shelf basic card set 3.4-3.6 GHz Plan 1 (RF+AU+TU+SC) $ *
741-6100 : FA Data Modem shelf basic card set 3.4-3.6 GHz Plan 1 (RF+AU+TU+SC) $ *
742-6100 : FA Euro ISDN Modem shelf basic card set 3.4-3.6 GHz Plan 1 (RF+AU+TU+SC) $ *
743-6100 : FA V5.1 Voice + ISDN Modem shelf basic card set 3.4-3.6 GHz Plan 1 (RF+AU+TU+SC) $ *
744-0000 : FA Modem card Voice/ISDN $ *
745-0000 : FA Modem card Data $ *
TOTAL CT FA MODEM SHELF CARD SETS
- ----------------------------------------------------------------------------------------------------------------------------------
CT DA MODEM SHELF CARD SETS
750-6100 : DA Modem shelf full card set 3.4-3.6 GHz Plan 1 (RF+AU+TU+SC+2PSU+6Modems) $ *
760-6100 : DA Modem shelf basic card set 3.4-3.6 GHz Plan 1 (RF+AU+TU+SC+2PSU) $ *
761-0000 : DA Modem card $ *
TOTAL CT DA MODEM SHELF CARD SETS
- ----------------------------------------------------------------------------------------------------------------------------------
AC SHELF PLUG-INS
770-0000 : AC Shelf full card set for CAS (2PSU+SC+8XTU+CTU+CU+spare CU+spare TU) $ *
771-0000 : AC Shelf full card set for Data (2PSU+SC+8XTU+CTU+spare TU) $ *
772-0000 : AC Shelf full card set for V5.1 (2PSU+SC+8XTU+CTU+CU+spare CU+spare TU) $ *
773-0000 : AC Shelf full card set for V5.2 (2PSU+SC+2XTU+3CU+3CTU+spare CU+spare TU) $ *
774-0000 : AC Shelf full card set for Packet V5.1 (2PSU+SC+6XTU+2CTU+PTU+spare+2CU+spare CU+spare TU) $ *
775-0000 : AC Shelf full card set for Packet V5.2 (2PSU+SC+2XTU+3CTU+3PTU+spare+3CU+spare CU+spare TU) $ *
780-0000 : AC Basic Shelf card set (Generic) (2PSU+SC+CTU+XTU) $ *
781-0000 : AC Basic Shelf card set for Packet (Generic) (2PSU+SC+CTU+PTU) $ *
782-0000 : AC TU card $ *
783-0000 : AC CU card $ *
784-0000 : AC PTU card $ *
TOTAL AC SHELF PLUG-INS
- ----------------------------------------------------------------------------------------------------------------------------------
CT AND AC ANCILLIARIES
886-6101 : CT commissioning tool for FA Modem shelves 3.4-3.6 GHz Plan 1 $ *
886-6102 : CT commissioning tool for DA Modem shelves 3.4-3.6 GHz Plan 1 $ *
887-0001 : 1xDA Modem Shelf Upgrade (Mechanics only) $ *
887-0002 : 1xAC Modem Shelf Upgrade (Mechanics only) $ *
887-0003 : 1xFA Modem Shelf Upgrade (Mechanics only) $ *
887-0005 : Station alarm module for addition to any CT or AC rack $ *
TOTAL CT AND AC ANCILLIARIES
- ----------------------------------------------------------------------------------------------------------------------------------
SOFTWARE AND NMS
870-1000 : AS8100 Sitespan Desktop Hardware Platform (Windows NT PC + Serial port expansion.) $ *
870-1001 : Rack mounting AS8100 Server PC $ *
870-1010 : Rack for rack mounting AS8100 PCs $ *
870-2100 : AS8100 Sitespan Client / Server software and RTU license $ *
870-2200 : AS8100 Sitespan Additional Client/Server software RTU license $ *
870-2300 : AS8100 Sitespan Shelf License $ *
870-2900 : Annual Maintenance/Upgrade charge for Sitespan software $ *
871-1000 : V5.1 License per 1000 subscribers $ *
871-2000 : V5.2 License per 2000 subscribers $ *
872-1000 : STMON for Windows 98 and NT $ *
873-1000 : AS9000 (Airplan) Full licence (500 sites, 1 yr support) $ *
873-2000 : AS9000 (Airplan) Lite licence (50 sites, 1 yr support) $ *
</TABLE>
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
<TABLE>
<CAPTION>
TOTAL SOFTWARE AND NMS
- ----------------------------------------------------------------------------------------------------------------------------------
DOCUMENTATION
<S> <C> <C>
880-1000 : AS4000 FA Documentation (CD-ROM) $ *
880-2000 : AS4000 DA Documentation (CD-ROM) $ *
880-3000 : AS8100 (Sitespan) Documentation (CD-ROM) $ *
880-1001 : AS4000 FA Documentation (Paper) $ *
880-2001 : AS4000 DA Documentation (Paper) $ *
880-3001 : AS8100 (Sitespan) Documentation (Paper) $ *
TOTAL DOCUMENTATION
- ----------------------------------------------------------------------------------------------------------------------------------
INSTALLATION TOOLS
882-0000 : Survey Tool (meter box,cables,PSU) $ *
883-6101 : FA Survey Head Unit 3.4-3.6 GHz Plan 1 $ *
883-6102 : DA Survey Head Unit 3.4-3.6 GHz Plan 1 $ *
884-0000 : Pump-up mast for use with survey tool $ *
TOTAL INSTALLATION TOOLS
- ----------------------------------------------------------------------------------------------------------------------------------
SERVICES
885-1000 : Site Survey (per day, excl T&E) $ *
885-2000 : Installation (per day, excl T&E) $ *
885-3000 : Radio Plannng (per day, excl T&E) $ *
885-4000 : Airspan Training (per day at Uxbridge for up to 6 students, excl T+E) $ *
885-4001 : Airspan Training (per day on Customer premises for up to 6 students, excl T+E) $ *
885-4002 : Airspan Training (per day per additional student, excl T+E) $ *
885-5000 : Project Management (per manager per day, excl T&E) $ *
TOTAL SERVICES
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MOTOROLA DISCOUNT SCHEDULES
Volumes assessed
over 2 year period
- -----------------------------------------------------------------------------------------------------------------------------------
ITEM UNIT OF VOLUME LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUBSCRIBER TERMINALS units * * * * *
all types except ST-R1 (T1) * * * * *
ST-R1 (TRINITY 1 VERSION) * * * * *
(NEW CUSTOMERS ONLY)
CT, AC INCL ANTENNAS RF shelf units * * * *
* * * *
SOFTWARE RF shelf units * * * *
SITESPAN:MAIN/SHELF & STMON per
V5.1 software
application
V5.2
* * * *
SPARE FRUS units * * * *
* * * *
</TABLE>
<TABLE>
<S> <C>
SUBSCRIBER TERMINALS
all types except ST-R1 (T1)
ST-R1 (TRINITY 1 VERSION)
(NEW CUSTOMERS ONLY)
CT, AC INCL ANTENNAS 1 CT = 1 RF shelf + at least 1
fully-equipped modem shelf
SOFTWARE Same as above
SITESPAN:MAIN/SHELF & STMON
V5.1
V5.2
SPARE FRUS
</TABLE>
NOTES
1.Discounts are
not retro-active -
ie on reaching a
given volume
level, the
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
associated
discount applies
only to purchases
from that point
onward
2.Volume levels
are calculated
starting from the
effective date of
the contract, for
a period of two
years
3.After the first
two year period,
the parties will
reevaluate
discount schedule
as a part of
contract extension
4.Special Pricing
terms will be
Managed under a
Project Level
Agreement in
accordance with
Section 1.2. Such
pricing will only
be considered
on a case by case
basis and does not
replace Price List
or Discount
Structure agreed
to in Exhibit A.
5.No discount is
available for
Airplan AS9000
6a. Extended
Warranty per 12
months = 5% of
contract list
(within 60 days of
expiration of Std
warranty)
6b. Extended
Warranty per 12
months = 8.5% of
contract list
(after 60 day
extension period)
EXHIBIT "B-1"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
TECHNICAL SPECIFICATIONS
------------------------
<PAGE>
AS4000
------
EXHIBIT "B-2"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
TECHNICAL SPECIFICATIONS
------------------------
AS8100 SITESPAN
---------------
EXHIBIT "C"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
ACCEPTANCE TEST PLAN
--------------------
EXHIBIT "D"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
<PAGE>
TECHNICAL SUPPORT AND MAINTENANCE
---------------------------------
SUPPORT OBLIGATIONS
-------------------
1. END-USER SUPPORT BY MOTOROLA. Motorola will offer, to Customers of the
PRODUCTS, End User support which shall include:
1.1 Access to a "Hot Line" to report and seek resolution of problems.
Motorola's Customer Network Resolution Center (CNRC) will attempt to
resolve Customer problems.
1.2 Software updates of the PRODUCTS which includes, at a minimum, fixes
to repeated problems.
1.3 Information concerning known problems.
1.4 Warranty support during the applicable warranty period.
1.5 Opportunity to purchase future releases of Software.
2. SUPPORT BY COMPANY. Company shall provide support to Motorola's CNRC as
follows:
2.1 If Motorola cannot resolve a Customer problem and determines that the
problem is (or appears to be) associated with Products provided by the
Company, Motorola will involve the Company directly in the resolution
of the problem.
2.2 Company will provide "Hot Line" telephone support twenty-four (24)
hours per day. For Severity 1 Defects, Company will work with
Motorola, twenty- four (24) hours per day, until the problem is
resolved to the Customer's satisfaction. Company will provide and
maintain for Motorola an up-to- date listing of technical support
personnel (and include, at a minimum, for each individual, a "Hot
Line" number, a pager number, an alternative or back-up telephone
number, and an alternative or back-up pager number). In addition,
Company will provide Motorola with a list of telephone numbers of
management personnel who can be contacted by Motorola if the "Hot
Line" support is unavailable.
2.3 Company's technical support personnel will work continuously until a
Severity 1 Defect or Severity 2 Defect is resolved. Company shall
dispatch, at Motorola's reasonable request, to either Motorola's CNRC
or the End User location, an engineer to assist with the resolution of
the problem.
2.4 Hardware. During the twenty-one (21) month warranty period, the
services described in this Section 2 with respect to Hardware shall be
provided without charge by Company. After the warranty period,
Motorola shall reimburse Company, in accordance with the pricing terms
in Exhibit A (applicable only during the initial term; thereafter,
Company can change its pricing in accordance with Section 8.1).
Company shall provide proper installation instructions to ensure that
all Hardware provided pursuant to this Agreement shall be identified
with a Motorola-provided bar code at the Field Replaceable Unit
("FRU") level.
<PAGE>
2.5 Software. During the twenty-one (21) month warranty period, the
services described in this Section 2 and Section 12 of the Agreement
are included in the Software Licensing Fees; there shall be no
additional charge by Company. Company will identify all Software
updates and futures releases according to standard industry numbering
practices.
EXHIBIT "E"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
PROJECT LEVEL AGREEMENTS
------------------------
(The parties shall enter into Project Level Agreements as needed during the term
of this Agreement.)
EXHIBIT "F"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
MOTOROLA TRADEMARKS
-------------------
PRODUCT BRAND MARK SPECIFICATIONS:
The Motorola brand mark applied to products is different from the standard
Motorola brand mark. This mark is to be applied to product only. The mark to be
used on product is a modified horizontal Motorola signature. It differs from the
standard signature in that the ratio of the diameter of the emsignia logo to the
height of the letters in the word Motorola is 2.25:1, and the space between the
ring of the emsignia and the left edge of the M of the word Motorola is .75x the
height of the letters of the word Motorola. In addition, the weight of the ring
of the emsignia has been increased by a factor of two. This is the only
acceptable Motorola brand mark to be used on product.
Electronic copies of this mark are available from CSS Industrial Design Group,
Libertyville, Illinois, USA, fax number 1-847-523-8512.
In the standard horizontal signature, the emsignia diameter to letter height
ratio is 3:1, and the space between the emsignia and the word Motorola is equal
to the height of the letters. The standard horizontal signature is used on all
non-product applications.
<PAGE>
PLACEMENT OF THE BRAND MARK:
These policies have been established to treat the Motorola mega-brand as the
dominant identity element on all consumer products. In that context, the
Motorola brand mark should always be placed in a position of prominence on the
front or primary surface of the product. It should be the largest single graphic
element presented, with as much "free space" around it as the product dimensions
will allow.
If the product incorporates a "hinged" component that acts as a cover or partial
covering to the primary functional surface, the Motorola brand mark should
appear on both surfaces, so that the Identity is displayed in both the "open"
and "closed" configuration.
BRAND MARK SIZE:
The brand mark should be reproduced as large as possible but at a size that is
suitable and compatible with the overall size and dimensions of the product.
Every attempt should be made to feature the Motorola mark at a length larger
than one inch (2.54 cm), as measured from the left outside edge of the ring of
the emsignia logo, to the right extension of the A of the word MOTOROLA. In any
case, the length of the mark can be no less than .75 of an inch (1.90 cm) as
measured from the left outside edge of the ring of the emsignia logo to the
right extension of the A of the word MOTOROLA.
Length of 1 inch (2.54 cm) (shown at twice the actual size):
Length of .75 inch (1.9 cm) (shown at twice the actual size):
EXHIBIT "G"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
<PAGE>
EXCLUDED TERRITORIES
EXHIBIT G
EXCLUDED TERRITORIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
COUNTRY CUSTOMER EXPIRATION DATE * NOTES & ACTIONS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nigeria Nitel 12/2002 (open after expired) Earlier opening possible if
contract terminated
- --------------------------------------------------------------------------------------------------------------------
Saudi Arabia STC 7/2001 (new tender/open) ACL to investigate early tender
submission
- --------------------------------------------------------------------------------------------------------------------
Spain Telefonica d'Espana 3/2000 (open after expired) ACL to write to Amper
Cataluna Telecom
- --------------------------------------------------------------------------------------------------------------------
Papua New Guinea PNG Telecom 4/2001 (open after expired)
- --------------------------------------------------------------------------------------------------------------------
Sri Lanka SunTel 4/2001 (open after expired)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT "H"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
LIST OF DOCUMENTATION
The following list of Airspan documents, as identified by the file name in which
they were supplied to Motorola, are identified as being included in the
definition of documentation as set forth in this Agreement. Further, it is
mutually understood that documents as defined in this Agreement include but
are not limited to the following list:
PRODUCT DOCUMENTS
AS4000-All
- ----------
1. Antenna Install
2. Antenna Installation & Commissioning
3. AS8100 install
4. Level Control Unit Operators Manual
5. Material Return and Repair
<PAGE>
6. Survey Tool Operators Manual
AS4000-da
- ---------
1. DA Access Concentrator I&C
2. DA Central Terminal I&C
3. DA Commissioning Unit Operators Manual DA
4. DA System Overview
5. DA System Overview Spec1
6. Demand Assignment Subscriber Terminal I&C
7. Conformance_510WAS502FinalDraft
8. GRD510Draft2
AS4000-fa
- ---------
1. D128 Interface Adapters
2. Fixed Assignment O&M
3. Fixed Assignment Subscriber Terminal I&C
4. Fixed Assignment Central Terminal I&C
5. Fixed Assignment System Overview I&C
6. Fixed Assignment System Overview TPSA
7. Fixed Assignment O&M
8. Level Control Unit Operators Manual
AS8100 Sitespan
- ---------------
1. AS8100 Sitespan
2. AS8100 Sitespan for litespan
3. Litespan
4. AS8100 Sitespan 3.6
Appnote
- -------
1. Release note
2. Sitepres
3. Datapic
4. Datashe1
5. Hwcomp
6. Appcon2
7. Siteinst
8. Appras
9. Appconn
10. Ssdesc2
11. Ssprcgd
12. Spines
13. Sitespn
Subscriber Terminal
- -------------------
1. Demand Assignment Subscriber Terminal I&C
2. Fixed Assignment Subscriber Terminal I&C
MARKETING DOCUMENTS
AS4000 Product Summary
- ----------------------
1. AS4000 Product Summary
2. Mot Configurator
3. AS4000 Configurator Guide
4. Material Return and Repair
5. Product_Catalogue
<PAGE>
AS4000 System
- -------------
1. DA System Overview Spec
2. System Description
AS8000 System description
- -------------------------
1. AS8000 Sitespan
2. AS8100 Sitespan IO
3. AS8100 Sitespan 3.4 for Airspan
4. AS8100 install
5. AS8100 Sitespan 3.4 Appendix for Litespan
6. Survey Tool Operators Manual
Company Profile
- ---------------
1. Airspan Company Profile
Customer Profiles
- -----------------
1. Airspan Customer Profiles
Roadmaps
- --------
1. Product availability
2. Roadmap
Spec Sheets
- -----------
1. AS4000 Spec Sheet
2. Pre-release PacketDrive Overview
3. ST Spec Sheets
4. Airspan Quality Manual
MTBF DATA
1. Litemtbf
2. MTBF coversheets
3. Rel3mtbf
Data
- ----
1. DA
2. REL3
PRESENTATIONS
End User Presentations
- ----------------------
1. 3rd Generation mobile
2. Airspan Company & Product Overview
3. Airspan Company Overview
4. Airspan Extended Overview
5. Airspan Problem Solving
6. Airspan Short Overview
7. Airspan WLL System and Solutions
8. AS4000 CT Rack Configurations
9. AS4000 Frequencyplans
10. AS4000 Internal performance1
11. AS4000 PacketDrive
12. AS4000 ST Installation Rules
13. AS4000 Subscriber Terminals
14. AS8100 Sitespan Detail
15. AS8100 Sitespan Overview
16. AS8100 14 Jan 199
17. AS9000 Radio Planning Methodology
18. AS9000 Survey Methods
<PAGE>
19. Competition - AS vs. Innowave
20. Competition - Copper Comparison
21. Competition - Cordless Comparison
22. Competition - Gsm-Airspan Comparison
23. Competition - IS95 Comparison
24. Competition - TDMA-CDMA Comparison
25. Customer Deployment Examples
26. Customer Profiles
27. IIR%20Rural%20SA%Sept%201999%20v1c
28. Masterformat
29. WISL
30. WLL System and Solutions
TEST DOCUMENTS
1. 007_b
2. 012_a
3. VisionST RevD HQA
4. ST-R-SBus
5. ST-RF spec
6. CT RF spec.doc
7. 013_a.doc
8. fv3.doc
9. 005-8869-007 S&R Series ST
10. 005-9878-007_b S&R Series ST
SPECIFICATIONS
1. AS 8100 System Description iss 3.1
2. DA Spec Rel. 5.10 Issue 1 Jan. 25
EXHIBIT "I"
(ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
WARRANTY / REPAIR PROCEDURES
EXHIBIT "J-1"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
<PAGE>
MOTOROLA SUPPLIER ASSESSMENT
EXHIBIT "J-2"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
ACTION PLAN
-----------
Action 1 Completion of Accelerated Life Testing (ALT)
- -------- --------------------------------------------
Company shall issue a plan by the February 28, 2000 detailing the methods to be
employed and the standards to applied in performing the accelerated life testing
of the AS4000 product family including the subscriber units (ST), Central
Terminal (CT), and Access Concentrator (AC). This plan shall be maintained until
the completion date of the initial ALT testing and revised and maintained for
any subsequent ALT testing required. This initial plan shall include:
. Line responsibilities for ALT co-ordination
. Methods to be employed in performing the tests(incl. Test House detail)
. Standards to be applied
. Gantt chart showing tasks and timescales
. Methods to be employed to resolve failures
ALT testing shall be conducted per an industry-accepted technique. Successful
completion of ALT is defined as products meeting specifications after being
tested to a life based on the following:
. Subscriber Equipment: MTBF = 16.667 Years (Return rate of less than 0.25%
per month)
. Infrastructure Equipment: 8.333 Years (Return rate of less than 0.5% per
month)
In the event any of the Company's products do not successfully pass ALT testing,
<PAGE>
Company will use best efforts to identify required product changes, implement
those changes and retest the product(s) until successful completion of ALT
testing is accomplished.
Action 2 Avante Integration
- ----------------------------
Company shall complete the integration of the Avante Information System
including the MRP and Customer Support functions by 31 March 2000. In the event
this date is missed, Airspan shall provide Motorola notice and use best efforts
to successfully complete Avante integration.
Action 3 Performance Indicators
- --------------------------------
Company shall issue a Quality Plan that details the metrics to be collected and
methods to be employed to monitor both the Company's and its product
performance. This plan shall clearly identify the mechanisms for setting
targets, tracking defects, root cause analysis and the review times associated
with the data. Metric collection is to be introduced in all areas of the
company initially concentrating on product. The launch meeting of metrics is to
be held in January 2000 when the Quality Plan will be finalised.
Metrics will be developed by 28 February 2000, and include at a minimum Trend
charts, Pareto Analysis, and corrective action plans for each performance
indicator.
Following agreement of the plan metrics, they shall be analyzed on a monthly
bases with the Company's senior management.
Action 4 Supplied Material
- ---------------------------
Performance tracking of supplied material shall be implemented with the
completion of the implementation of Avante. This tracking will take into
consideration the following:
. Delivery time
. Quality
. Quantity
. Cost
Upon full implementation of Avante on 31 March 2000, Airspan shall introduce a
quarterly reporting system where supplier performance will be reported to key
suppliers with the purpose of reviewing performance metrics and establishing
continuous improvement plans/goals.
Action 5 Quality Reviews
- -------------------------
Quality Reviews shall be introduced; the initial meeting in January will review
the content of future meetings with formal reviews commencing February 2000.
These reviews shall monitor performance of departments by reviewing performance
indicators as captured by the metrics in action 3 above and establish continuous
improvement goals Airspan's with senior management.
<PAGE>
Action 6 ISO9001 Certification
- -------------------------------
Airspan shall maintain ISO9001 accreditation and keep Motorola advised of their
status by forwarding copies of the assessment reports generated by UL during
their assessment visits.
Airspan shall provide Motorola with a copy of the UL audit findings and the
developed corrective actions upon execution of this agreement.
EXHIBIT "K"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
SOURCE CODE ESCROW AGREEMENT
EXHIBIT K
---------
SOURCE CODE ESCROW AGREEMENT
This Source Code Escrow Agreement ("Escrow Agreement") dated this __ day
of _________, 2000, is entered into by and between Motorola, Inc., a Delaware
corporation, by and through its Network Solutions Sector, with offices at 1501
West Shure Drive, Arlington Heights, Illinois 60004 ("Motorola"); Airspan
Communications, Ltd., a company incorporated under the laws of England and
Wales, with offices at offices at Cambridge house, Oxford Rd., Uxbridge, UB8 1UN
("Company"), and _______________DSI Technology Escrow Services, Inc., a
______Delaware____ corporation, with offices at ________9265 Sky Park Court,
San Diego, California 92123_____________ ("Escrow Agent").
WITNESSETH
WHEREAS, Company and Motorola are parties to an Original Equipment
Manufacturer Agreement dated __________ ("Agreement") pursuant to which Company
is to provide to Motorola certain software and/or hardware ("Products" as that
term is defined in the Agreement); and
WHEREAS, the Agreement provides, inter alia, that Company shall place in
escrow certain source code for the Software ("Source Code" as that term is
defined in the Agreement), all as more particularly set forth below (hereinafter
referred to as the "Source Code"); and
WHEREAS, Escrow Agent has agreed to serve as Escrow Agent pursuant to
the terms and conditions contained herein, holding all property to be delivered
to it by Company, for the
<PAGE>
benefit of Motorola, all as more fully described herein below.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other valuable consideration, the adequacy and receipt of which
are hereby acknowledged, Company, Motorola and Escrow Agent hereby agree as
follows:
1. DEPOSITS
(a) Within five (5) days after the date hereof, Company shall deposit with
Escrow Agent, the Source Code described on Exhibit A (Software),
attached hereto and made a part hereof, which Exhibit lists software
tapes and other materials related thereto, required to be placed into
escrow.
(b) All additions to the Source Code listed on Exhibits A and B, together
with revisions thereto, shall be deposited into escrow annually on
each anniversary of the Agreement, and as provided in Section 2
below. The Escrow Agent will issue to Motorola and Company a receipt
for each delivery of Source Code.
(c) The Source Code held by the Escrow Agent shall remain the exclusive
property of Company. The Escrow Agent shall not use the Source Code
or disclose the same to any third party except as specifically
provided for herein and nothing in this Escrow Agreement shall be
construed as a conveyance by Company of all or any of its rights,
title or interest in the Source Code to the Escrow Agent, except as
specifically provided herein.
(d) The Escrow Agent will hold the Source Code in safekeeping for Company
and Motorola, pursuant to the terms and conditions set forth herein,
and act as custodian thereof, at its offices herein above indicated,
unless and until the Escrow Agent receives notice pursuant to the
terms of this Escrow Agreement that the Escrow Agent is to deliver the
Source Code to Motorola or Company, in which case the Escrow Agent
shall deliver the Source Code to the party identified therein,
subject, however, to the provisions of this Escrow Agreement. The
Source Code shall be retained by Escrow Agent at Escrow Agent's
vaulting site at all times, under the express control of an officer
designated by it, whose identity shall be made known to Motorola and
Company promptly upon designation.
(e) During all the following procedures, the Parties agree that Motorola
will not have access to the source code escrow unless the source code
has been released pursuant to Section Three of this Escrow Agreement.
(i) When DSI receives the Deposit Materials and the Exhibit B, DSI
will conduct a deposit inspection by visually matching the
labeling of the tangible media containing the Deposit Materials
to the item descriptions and quantity listed on the Exhibit B.
In addition to the deposit inspection, Motorola may elect to
cause a verification of the Deposit Materials pursuant to DSI's
standard verification procedures.
(ii) At completion of the deposit inspection, if DSI determines that
the labeling of the tangible media matches the item descriptions
and quantity on Exhibit B, DSI will date and sign the Exhibit B
and mail a copy thereof to Motorola and Company. If DSI
determines that the labeling does not match the item
descriptions or quantity on the Exhibit B, DSI will (a) note the
discrepancies in writing on the Exhibit B; (b) date and sign the
Exhibit B with the exceptions noted; and (c) mail a
<PAGE>
copy of the Exhibit B to Motorola and Company. DSI's acceptance
of the deposit occurs upon the signing of the Exhibit B by DSI.
Delivery of the signed Exhibit B to Motorola is Motorola's
notice that the Deposit Materials have been received and
accepted by DSI.
(iii) The Deposit Materials may be removed and/or exchanged only on
written instructions signed by Motorola and Company, or as
otherwise provided in this Agreement.
2. REPRESENTATION OF COMPANY TO MOTOROLA
(a) Company states that:
(i) the Source Code described in Exhibit A and Exhibit B constitutes
the most recent programs (in Source Code); and
(ii) the Source Code delivered to the Escrow Agent will be reviewed
and inspected by Escrow Agent and supplemented by Company
preferably within sixty days of each release of a new version but
in no event less than annually, on the anniversary date of this
Agreement, with all revisions, corrections, enhancements or other
changes made during such prior year, to ensure its current
status, and Company shall give written notice to Motorola of all
such supplements/deposits as they are made. In the event that
Motorola has reasonable grounds for insecurity with respect to
the performance of Company's support obligations under this
Agreement, Motorola shall send Company a written request for
assurance that Company has deposited any and all releases of the
source code into escrow. Escrow Agent shall make the Source
Code available to Motorola for such inspection.
(b) Company shall be responsible for its own costs associated with the
initial deposit of Source Code (Exhibits A and B) and update of
escrowed materials with the Escrow Agent.
3. NOTICE OF DEFAULT
(a) Company shall be deemed to be in default of its responsibilities to
Motorola if:
(i) Company becomes the subject of any proceeding under applicable
bankruptcy, receivership, insolvency or similar laws which are
not, in the case of proceedings brought against Company,
dismissed within thirty (30) days of filing, and after a cure
period not to exceed thirty (30) days, such event prevents
Company in any material respect from delivering in accordance
with the terms of the Agreement and on a timely basis, previously
ordered Products incorporating the then current version; or
(ii) Company fails to meet in all material respects, substantially
all of its material support obligations under the Agreement
within thirty (30) days of Motorola's written notice of default
given in accordance with the Agreement.
(b) Motorola shall not be entitled to treat an event under (ii) as a
default, and give a Notice of Default, if Motorola is then in material
default under the Agreement. An event of default under (ii) shall not
be deemed to have occurred if a successor to the Company is
undertaking in material respects the support required by the
Agreement.
<PAGE>
(c) Motorola shall give written notice (the "Notice of Default") to the
Escrow Agent of any default by Company of the type listed at Section
3(a) above and send a copy thereof to Company. The Notice of Default
shall be labeled "Notice of Default"; identify the Agreement and this
Escrow Agreement; specify the nature of the default; and demand that
the Escrow Agent deliver the Source Code to Motorola, unless, within
ten (10) business days of its receipt of Notice of Default, the Escrow
Agent receives written notice from Company, showing a copy to
Motorola, that Company has sought and obtained a preliminary
injunction or temporary restraining order against the transfer of the
Source Code to Motorola. Such written notice must include a copy of
the order issued by the court granting the relief described above. If
Company succeeds in obtaining a preliminary injunction or temporary
restraining order, the Escrow Agent will retain the Source Code
pending final resolution in a court of law or alternate dispute
resolution proceeding, as appropriate and subject to Section Nine of
this Escrow Agreement. If Company does not prevail in such
proceeding, the Escrow Agent will immediately and without further
delay, transfer the Source Code directly to Motorola. This provision
is subject to DSI's standard escrow fees, which are attached hereto as
Exhibit D, and Section Nine of this Escrow Agreement.
4. USE OF SOURCE CODE
Upon delivery of the Source Code to Motorola, Motorola agrees that its use
(and modification, as required) of the Source Code shall be strictly
limited to the support, maintenance, and use of the Products as previously
supplied by the Company under the Agreement. Without limiting the
foregoing, Motorola shall not duplicate, sell or license the Source Code to
others or market the Source Code in any manner.
5. DUTIES AND LIMITED OBLIGATIONS OF ESCROW AGENT
(a) Escrow Agent shall be under no obligation or responsibility to either
Company or Motorola to determine the existence, relevance,
completeness, accuracy or other aspects of the Source Code or any
portions thereof deposited from time to time by Company. Escrow Agent
shall have no obligation or responsibility to determine whether what
is deposited or accepted by it for deposit is or is not Source Code as
defined herein. Furthermore, this Escrow Agreement shall constitute
notice to any third person or entity who may acquire a right of access
to the Source Code that Escrow Agent's duty is limited as set forth
herein and that Escrow Agent is not liable to any such third person or
entity. Company and Motorola further agree that Escrow Agent shall
not be liable for any forgeries or impersonations concerning any
documents of record or other documents it is handling in its capacity
as Escrow Agent.
(b) Escrow Agent agrees to prevent any unauthorized person or persons from
gaining access to the Source Code, except as specifically provided by
this Escrow Agreement.
(c) Escrow Agent agrees not to use the Source Code for any purpose except
as provided hereunder.
(d) Company and Motorola further agree that if they disagree on any matter
connected with this Escrow Agreement, Escrow Agent will not be
required to settle the matter. If Escrow Agent is made a party to
legal proceedings, Escrow Agent will be entitled to such reasonable
compensation for services, costs and attorneys' fees as may be
awarded, which compensation shall be paid by the non-prevailing party.
<PAGE>
6. LIMITATION OF LIABILITY
(a) The Escrow Agent's liability for damage to or loss of materials stored
on magnetic media shall be limited to the physical replacement cost of
such media. The Escrow Agent reserves the right to provide
replacement of media rather than reimbursement. The Escrow Agent will
not be liable for incidental or consequential damages. This
limitation will apply regardless of the form of action, whether in
contract or tort, including negligence. Any action against Escrow
Agent must be brought within twelve (12) months after the cause of
action accrues.
(b) The Escrow Agent shall not be liable for any damages due to causes
beyond its reasonable control, including but not limited to, acts of
God.
7. INDEMNIFICATION
Motorola and Company agree to indemnify and defend Escrow Agent for and
hold it harmless against, any claim, action, damage, loss, cost or expense
incurred or suffered in connection with, including but not limited to
attorney's fees and costs, as a result of, service as Escrow Agent under
this Escrow Agreement, except for any costs or expenses suffered as a
result of Escrow Agent's sole adjudged willful misconduct or negligence.
UNLESS SPECIFICALLY SET FORTH HEREIN, IN NO EVENT SHALL EITHER MOTOROLA,
COMPANY OR ESCROW AGENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, TORT
(INCLUDING NEGLIGENCE) OR OTHERWISE, HAVE ANY LIABILITY TO EACH OTHER
FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES.IN NO EVENT
SHALL THIS SECTION ALTER COMPANY'S OR MOTOROLA'S OBLIGATIONS TO INDEMNIFY,
DEFEND AND HOLD HARMLESS ESCROW AGENT AS STATED ABOVE.
8. CONFIDENTIALITY
Escrow Agent and its employees agree to hold confidential the Source Code
and to exercise the same degree of care that a reasonable and careful
company would exercise with similar records of its own.
9. PAYMENT TO ESCROW AGENT
As payment for its services hereunder, the Escrow Agent shall receive
annual charges as set forth in Exhibit D which is attached hereto and
incorporated herein. . The first such annual charges will be paid by
Motorola within ten (10) days of the execution of this Escrow Agreement by
all parties hereto. Each year thereafter, Motorola will pay the
appropriate charges on or before the anniversary of the effective date of
this Escrow Agreement. The annual fee may be adjusted by the Escrow Agent
on an annual basis no more than (10%) percent per annum. The Escrow
Agent shall notify Company of any such adjustment to the annual fee at
least thirty (30) days prior to the annual fee due date.
10. NOTICE OF TERMINATION
Upon the termination of the Agreement, except in the case of a termination
based upon an event of the nature described in Section 3(a)(i) and/or (ii)
above, Escrow Agent shall destroy, return, or otherwise deliver the Deposit
Materials in accordance with Company's instructions. If there are no
instructions, Escrow Agent may, at its sole discretion, destroy the Deposit
Materials or return them to Company. Provided that no other beneficiaries
<PAGE>
are enrolled to this account, Company may obtain the return of the Source
Code by furnishing written notice of the termination, agreed to in writing
by an authorized signature of Motorola.
11. TERMINATION
Unless the delivery of the Source Code to Motorola is disputed by Company,
this Escrow Agreement shall terminate on the delivery of the Source Code to
either party in accordance with the terms of this Escrow Agreement. Escrow
Agent shall not retain any copies of the Source Code on termination. This
Escrow Agreement may also be terminated by: i) Escrow Agent for non-
payment of annual fees upon 30 days advance written notice to Company and
Motorola, or ii) Company or Motorola upon sixty (60) days advance written
notice provided that within fifteen (15) days after delivery of the above-
referenced sixty (60) day notice, a successor escrow agent, (agreed to by
Motorola and Company), has been appointed, and a procedure for the orderly
transfer of the Source Code from the Escrow Agent to the successor escrow
agent, has been formalized and agreed to by all parties.
12. SURVIVAL OF PROVISIONS
The parties agree that where the context of any provision indicates an
intent that it shall survive the completion, expiration, termination or
cancellation of this Escrow Agreement, then it shall so survive. The
provisions of Section 6,7 and 8 shall so survive.
13. NOTICES
All notices required to be given hereunder shall be in writing and shall be
given to the parties by certified or registered mail, return receipt
requested, or by commercial express mail at their respective addresses set
forth in Exhibit C which is attached hereto and incorporated herein, or at
such other address as shall be specified in writing to all other parties,
and shall be effective upon delivery or attempted delivery.
14. WAIVER, AMENDMENT OR MODIFICATION, SEVERABILITY
This Escrow Agreement shall not be waived, amended or modified except by
the written agreement of all of the parties affected by such waiver,
amendment or modification. Any invalidity, in whole or in part, of any
provision of this Escrow Agreement shall not affect the validity of any
other of its provisions, provided that the invalidity of any such provision
does not affect the intention of the parties with respect to the escrow
established hereunder.
15. APPLICABLE LAW
This Escrow Agreement including any dispute which may be brought as a
result hereof, shall be construed and enforced in accordance with the laws
of the State of Illinois.
16. SUBJECT HEADINGS
The subject headings of this Escrow Agreement have been placed thereon for
the convenience of the parties and shall not be considered in any question,
interpretation or construction of this Escrow Agreement.
17. ENTIRE AGREEMENT
<PAGE>
This Agreement, which includes the Exhibits described herein, embodies the
entire understanding among the parties with respect to its subject matter
and supersedes all previous communications, representations or
understandings, either oral or written. Escrow Agent is not a party to the
Original Equipment Manufacturer Agreement between Company and Motorola and
has no knowledge of any of the terms or provisions of any such Original
Equipment Manufacturer Agreement. Escrow Agent's only obligations to
Company and Motorola are as set forth in this Escrow Agreement. No
amendment or modification of this Escrow Agreement shall be valid or
binding unless signed by all the parties hereto, except that Exhibit A need
not be signed by Escrow Agent, Exhibits B, C and D need not be signed by
Motorola.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
duly executed and delivered by the proper and duly authorized officers of each
party as of the day and year first above written.
MOTOROLA, INC. AIRSPAN COMMUNICATIONS, LTD.
NETWORK SOLUTIONS SECTOR
BY: BY:
--------------------------- ---------------------------
NAME: NAME:
------------------------- -------------------------
TITLE: TITLE:
------------------------ ------------------------
ESCROW AGENT
BY:
---------------------------
NAME:
-------------------------
TITLE:
------------------------
<PAGE>
EXHIBIT A TO ESCROW AGREEMENT
MATERIALS TO BE DEPOSITED
Account Number
----------------------
Company represents to Motorola that Deposit Materials delivered to DSI shall
consist of the following:
- ------------------------------------ -----------------------------------
Company Motorola
By: By:
-------------------------------- --------------------------------
Name: Name:
------------------------------ ------------------------------
Title: Title:
----------------------------- -----------------------------
Date: Date:
------------------------------ ------------------------------
<PAGE>
EXHIBIT B TO ESCROW AGREEMENT
DESCRIPTION OF DEPOSIT MATERIALS
Company Name
------------------------------------------------------------------
Account Number
----------------------------------------------------------------
Product Name Version
--------------------------------- ------------------------
(Product Name will appear on Account History report)
DEPOSIT MATERIAL DESCRIPTION:
Quantity Media Type & Size Label Description of Each Separate Item
(Please use other side if additional space is needed)
Disk 3.5" or ____
- ----------
DAT tape ____mm
- ----------
CD-ROM
- ----------
Data cartridge tape ____
- ----------
TK 70 or ____ tape
- ----------
Magnetic tape ____
- ----------
Documentation
- ----------
Other ______________________
- ----------
PRODUCT DESCRIPTION:
Operating System
----------------------------------------------------------------
Hardware Platform
---------------------------------------------------------------
DEPOSIT COPYING INFORMATION:
Is the media encrypted? Yes / No If yes, please include any passwords and the
decryption tools.
Encryption tool name Version
-------------------------------- ---------------------
Hardware required
---------------------------------------------------------------
Software required
---------------------------------------------------------------
I certify for COMPANY that the above described ESCROW AGENT has
inspected and accepted
Deposit Materials have been transmitted to DSI: the above materials (any
exceptions are noted above):
<PAGE>
Signature Signature
------------------------- ------------------------------
Print Name Print Name
------------------------ -----------------------------
Date Date Accepted
------------------------------ --------------------------
Exhibit B#
-----------------------------
Send materials to: DSI, 9265 Sky Park Court Suite 202, San Diego, CA 92123
(858) 499-1600
<PAGE>
EXHIBIT C TO ESCROW AGREEMENT
DESIGNATED CONTACT
Account Number ______________________
<TABLE>
<CAPTION>
<S> <C>
Notices, deposit material returns and Invoices to Company should be addressed to:
communications to Company should be
addressed to:
Company Name: Address: Designated _______ Contact: P.O.#, IF
Contact: Telephone: Facsimile: REQUIRED:_____________________
Notices and communications to Motorola Invoices to Motorola should be addressed to:
should be addressed to:
Company Name: Address: Designated _______ Contact: P.O.#, IF
Contact: Telephone: Facsimile: REQUIRED:_____________________
</TABLE>
Requests from Company or Motorola to change the designated contact should be
given in writing by the designated contact or an authorized employee of Company
or Motorola.
<TABLE>
<CAPTION>
Contracts, Deposit Materials and notices to Invoice inquiries and fee remittances to DSI
DSI should be addressed to: should be addressed to:
<S> <C>
DSI Contract Administration Suite 202 9265 DSI Technology Escrow Services Inc. P.O. Box
Sky Park Court San Diego, CA 92123 45156 San Francisco, CA 94145-0156 (415)
Telephone: (858) 499-1600 Facsimile: 398-7900 (415) 398-7914
(858) 694-1919
Date:_________________________________
</TABLE>
EXHIBIT D TO ESCROW AGREEMENT
ESCROW FEES
-----------
<TABLE>
<CAPTION>
<S> <C>
SET - UP $1,050.00
ANNUAL FEE $1,350.00
UNLIMITED UPDATES $ 300.00
DEPOSITRACK $ 300.00
</TABLE>
<PAGE>
VERIFICATION SERVICES
---------------------
<TABLE>
<CAPTION>
<S> <C>
LEVEL I $ 800.00
LEVEL II $1200.00 - $1600.00
LEVEL III $3200.00 - $6400.00
LEVEL IV ALL OF THE ABOVE PLUS $200.00 PER HOUR
</TABLE>
EXHIBIT "L"
ORIGINAL EQUIPMENT MANUFACTURER (OEM) AGREEMENT
BETWEEN
MOTOROLA, INC. AND AIRSPAN COMMUNICATIONS LTD.
KEY ACCOUNT SALES
KEY ACCOUNT SALES
This Exhibit L to the OEM Agreement sets forth the procedures that will be
utilized with Key Account Sales.
1. DEFINITIONS. Capitalized terms used throughout this Exhibit L shall
have the same meaning as set forth in the definitions section of the Agreement
except as specified below.
"Key Accounts" means Airspan's major customers that are listed in Exhibit
L-1A of this Exhibit L (together with the Affiliates of the customers as
listed on Exhibit L-1), which will be reviewed on a semi-annual basis and may
be amended to reflect changes in Airspan's major customers, if reasonably
agreed upon by the Parties.
"Key Account Sale " means any sales made by Motorola to Airspan's Key
Accounts pursuant to the OEM Agreement between Motorola and Airspan.
"Key Account Sale Form" means the form used to register Motorola's sale to
Key Accounts in accordance with Exhibit L-2 set forth herein.
"Referral Fee" means 10% of the list price, as set forth in Exhibit A of the
OEM Agreement (as such list prices may be adjusted pursuant to the provisions of
the OEM Agreement) of all Products and/or Services sold by Motorola to the
applicable Key Accounts as described herein.
2. SCOPE. The Products covered by this Exhibit are those Products and
Services listed in the price list as set forth in Exhibit A of the OEM
Agreement.
<PAGE>
3. OEM SALE TO KEY ACCOUNTS. Motorola may at its option, in relation to
Airspan Product(s) and Services, sell to Airspan's Key Accounts (such situations
shall hereinafter be referred to as a "Key Account Sales"). Subsequent to any
sale made by Motorola to Airspan's Key Accounts, Motorola shall fill out an Key
Account Sale Form to inform Airspan that Motorola made a sale to Airspan's Key
Accounts. In event of such sale, Motorola shall pay Airspan the Referral Fee as
defined above. In the event that Airspan becomes aware of a sale to any of the
Key Accounts, Airspan shall notify Motorola and Motorola shall utilize the Key
Account Sale Form attached hereto as Exhibit L-2 (or such other writing
reasonably acceptable to the Parties) to evidence the occurrence of a Key
Account Sale.
4. PAYMENT OF REFERRAL FEE. Motorola agrees to pay Airspan the Referral Fee
upon Motorola's sale of Airspan Products or Services to a Key Account by
Motorola or any of its distributors, resellers or Affiliates. The Parties agree
that the completion of a Key Account Sales Form shall be conclusive evidence of
the occurrence of a Key Account Sale. Fees shall be payable in U.S. dollars to
Airspan within forty-five (45) days after Motorola receives payment for Products
and/or Services sold to the Key Accounts. Motorola shall be responsible for
filling out the Key Account Sale Form after Motorola makes the initial sale.
<PAGE>
EXHIBIT L-1
KEY ACCOUNTS
* Telia and affiliates (Telia A/S Denmark, Telia Norway AS, Telia Finland OY,
Estonian Telephone Company, Telia Latvia, Netia Telecom Poland, Eircom
Ireland)
* Aliatel (Czech R)
* TPSA (Poland)
* Smart/PLDT (Philippines)
* AZCom (Philippines)
<PAGE>
EXHIBIT L-2
KEY ACCOUNT SALE FORM
To: Airspan Communications, Ltd.
From: Motorola, Inc.
Date:
Subject: Key Account Sale
Motorola, Inc. has sold Products or Services to the Key Account
identified below. Please sign this form and return it to the fax number set
forth below within two weeks of the date hereof.
Key Account :
Market:
Country:
This acknowledges that the opportunity listed below is
defined as an Key Account Sale.
Motorola, Inc. Network Solutions Sector By Name Title
----- -------- ---------
Airspan Communications, Ltd. By Name Title
----- -------- ---------
<PAGE>
Exhibit 10.10
Note: Portions of this exhibit indicated by "[*]" are subject to a confidential
treatment request, and have been omitted from this exhibit. Complete,
unredacted copies of this exhibit have been filed with the Securities and
Exchange Commission as part of this Company's confidential treatment request.
SECTION 1
---------
RESPONSE TO COMMERCIAL SECTION
------------------------------
TENDER FORM
NOTICES TO PERSONS TENDERING
CONDITIONS OF CONTRACT
1
<PAGE>
Invitation to Tender
--------------------
- --------------------------------------------------------------------------------
TO:
.............................................................................
.............................................................................
.............................................................................
.............................................................................
.............................................................................
.............................................................................
DATE : 18TH DECEMBER, 1998
- --------------------------------------------------------------------------------
- -------------------------------------------------
REFERENCE NO C/369/MULTIPOINT
- -------------------------------------------------
You are invited to tender for carrying out, on behalf of Eircom
PlC, (hereinafter referred to as Eircom), the work described in the
Schedule to the subjoined Form of Tender.
Tenders are to be delivered, by return post or otherwise not later than
Wednesday the 20th of January 1999.
- --------------------------------------------------------------------------------
Issued on Behalf of Eircom C. MAHER Executive Director
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TENDER OPENED
DATE ................................ TIME.................................
(1) ....................... (2) ............................ (3)...............
- --------------------------------------------------------------------------------
2
<PAGE>
Notice to persons tendering
- ---------------------------
1. This Form is to be returned intact. A completed copy will be sent in case
of acceptance of the Tender.
NOTED AND COMPLIANT.
2. A tender shall hold good for ten calendar months from the closing date
specified for delivery of the
Tender, and thereafter until withdrawn by formal notice in writing given by
the person tendering, received before acceptance of the Tender by eircom.
If the person tendering desires that the Tender shall hold good for a
shorter time than ten calendar months he must signify, at the foot of the
Tender, the period for which it will hold good.
COMPLIANT.
3. Eircom does not bind itself to accept the lowest or any Tender, and
reserves the right of accepting any part of the Tender, unless the person
tendering expressly stipulates to the contrary.
NOTED.
4. The rates and prices inserted in this Schedule must be "net" in all cases.
COMPLIANT.
NOTE: IT IS ASSUMED THAT "NET" IS INCLUSIVE OF ALL DUTIES BUT EXCLUDES
SALES TAX OR VAT AS REQUIRED IN PARAGRAPH 31.1.
5. Where it is specified in the Schedule that any article is to be to pattern
or sample, such pattern or sample may be seen on request to the Director.
The official brand and the accompanying initials stamped upon the pattern
are, however, not to be copied.
NOTED
6. Any modification which the person tendering may desire to make in the
"Conditions of Contract" or in the specification, must be made by means of
a letter, with drawings if necessary, accompanying and enclosed with the
Tender. If a modification in the Specification be suggested which will
result in any difference in rates and prices, alternative rates and prices
must be furnished with the Tender.
NOTED. MODIFICATIONS AND COMMENTS, WHERE SUGGESTED, HAVE BEEN INSERTED
DIRECTLY BELOW THE PARAGRAPH IN QUESTION.
IMPORTANT
(a) Notwithstanding any modification proposed by the person tendering it
is essential that a tender fully in accordance with the "Conditions of
Contract" and Specification be furnished.
NOTED
(b) Where modifications are proposed either in the "Conditions of
Contract" or in the Specification which will result in any difference
in rates and prices, an alternative tender with revised prices must be
furnished, (in addition to the tender in (a)).
NOTED
7. For further information or clarification the following people are the
contact points :
TECHNICAL
---------
NAME: Richard Poff
3
<PAGE>
ADDRESS: Room 1.76C,
Eircom,
St Stephen's Green West
Dublin 2
TELEPHONE +353-1-701 5557
FAX : +353-1-679 5339
NOTED
Commercial
----------
NAME: Joe Ryan
ADDRESS: Room 3.69
Eircom,
St Stephens Green West
Dublin 2
TELEPHONE +353-1-701 5472
FAX: +353-1-679 4708
NOTED
8. TAX CLEARANCE
-------------
The Contractor should note that it will be a condition for the award of a
contract that the person tendering must also be able to produce promptly a
current Tax Clearance Certificate (unless he has a current sub-contractor's
C2 certificate).
NOTED
9. PAYMENT OF PRSI
---------------
The Contractor should note that he will be required to make the appropriate
remittances in respect of PAYE and PRSI to the Revenue Commissioners.
Evidence of participation in the CIF Pension /Sick Pay Scheme must be
produced.
NOTED
10. LEGALLY BINDING AGREEMENT
-------------------------
The Contractor should note that he will be required to comply with legally
binding agreements appropriate to the grades of workers employed, such as
the registered Agreements for the Construction Industry, and to afford
Trade Unions reasonable facilities to ensure such compliance.
NOTED
11. QUALIFIED PERSONS
-----------------
The Contractor should note that he will be required to assign suitably
qualified persons to perform work which demands a particular skill.
4
<PAGE>
NOTED.
12. TENDER DOCUMENTATION
--------------------
Tenderers shall submit the Original copy of the Tender, and an additional
two copies.
COMPLIANT.
13. COMPLIANCE
----------
For each Clause in the Conditions of Contract, and the Specification, the
Tenderer shall state clearly whether or not he is compliant. In respect of
Clauses with which he is not fully compliant, the Tenderer shall submit an
explanatory comment.
COMPLIANT.
14. CURRENCY OF TENDER
------------------
Tenderers shall price their bid in fixed Irish Pounds or Euros.
Exceptionally a contract in the currency of the country of origin of the
equipment and services will be considered.
COMPLIANT. PRICES QUOTED IN THIS TENDER ARE IN EUROS.
15. COPYRIGHT
---------
The copyright of this specification is vested in eircom. No part of the
specification, or any part therein, may be reproduced or transmitted to any
third party save with Eircom's prior written permission.
NOTED
16. CRITERIA FOR AWARD OF CONTRACT
------------------------------
. Compliance with the Technical Specification
. Equipment Performance, Features and Reliability
. Record of field proven equipment similar to that tendered
. After sales technical support
. Ease of installation, commissioning and maintenance
. Delivery/Completion timescales
. Price and commercial conditions
NOTED
5
<PAGE>
TENDER
- ------
"I" or "We"
the undersigned, do hereby offer in accordance with the foregoing invitation and
"Notice to Persons tendering," to carry out on behalf of Eircom the whole or any
part of the work described in the Schedule hereto, at the respective rates
and/or prices and within the times which have been entered in the said Schedule,
and in all respects subject to the several terms and stipulations contained in
the said Schedule , in the "Conditions of Contract" and in the Specification or
Specifications mentioned in the Schedule hereto. The particulars required under
clause 51 of the "Conditions of Contract" (Country of Manufacture) have been
shown on Page 6 of this Form of Tender.
Dated this.....19TH......................day of...JANUARY...... 19.99........
Signature
................................................................................
Postal Address 5, New Square,
Bedfont Lakes
Feltham,
Middlesex
TW14 8HA
The Schedule referred to in the above Tender
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Description Rates and/or Prices for
the work complete (net)
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Provision of Fixed Wireless Point to Multipoint Access Radio Systems. Please refer to Section 3 of this
proposal which provides Unit
price and configuration
information required.
- -----------------------------------------------------------------------------------------------------------------
Time required after date of Eircom's acceptance of this Tender To be agreed, depending upon
by issue of an Engineering Order scope of work
- -----------------------------------------------------------------------------------------------------------------
Days required (including Saturdays, Sundays and Public To be agreed, depending upon
Holidays) for completion of the work scope of work
- -----------------------------------------------------------------------------------------------------------------
Days required (including Saturdays, Sundays and Public To be agreed, depending upon
Holidays) before commencement of work on site scope of work
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Accepted on behalf of Eircom
Signature .............................. Date ......... 19.........
- --------------------------------------------------------------------------------
COUNTRY OF MANUFACTURE
- ----------------------
6
<PAGE>
The Tenderer shall state below the country in which the material has been, or
will be, made or produced. Any class of materials the total value of which is
less than (Pounds)1000 need not be shown.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Class of Material * Value Country of Manufacture
- -----------------------------------------------------------------------------------------
All equipment included in this
tender has individual is
manufactured in either the UK or
the Republic of Ireland.
The following specific items have
value of greater than (Pounds)1000
<S> <C> <C>
Rack Frameworks (various) (Pounds)5000 England
Power Amplifiers (Pounds)1800 England
Antennas (Pounds)1000 England/ Germany
DA AU Card (Pounds)1000 Ireland
DA TU Card (Pounds)1300 Ireland
DA SC Card (Pounds)1500 Ireland
CU Card (Pounds)3500 Ireland
D128 ST (Pounds)2040 Ireland
ISDN ST (Pounds)1500 Ireland
- -----------------------------------------------------------------------------------------
</TABLE>
* the amount shown should be included under "Rates and/or Prices for the work
complete" in the Schedule to the Form of Tender
- --------------------------------------------------------------------------------
The items shown above as being of Irish manufacture have been, or will
be, made or produced at the following address/addresses :-
Alcatel
Donore Industrial Estate
Drogheda
Ireland
- --------------------------------------------------------------------------------
7
<PAGE>
Section 1 - Table of Contents
-------------------------------
1. DEFINITIONS ............................................ 9
2. PERFORMANCE OF WORK .................................... 10
4. SAMPLES ................................................ 10
5. QUALITY AND FITNESS .................................... 10
6. CARE OF STORES ......................................... 10
7. PATENTED ARTICLES ...................................... 11
8. ASSIGNMENT AND SUB-CONTRACTORS ......................... 12
9. ACCESS TO CONTRACTOR'S WORK ............................ 12
10. LICENCES FOR MANUFACTURING ............................. 12
11. SUPERVISION AND INSPECTION OF WORK ..................... 12
12. PROGRESS REPORT ........................................ 12
13. TIMES OF WORK .......................................... 13
14. FAIR WAGES ............................................. 13
16. INFRINGEMENT OF CLAUSE 14 .............................. 13
18. SCHEDULE OF QUANTITIES ................................. 14
19. STORAGE ACCOMMODATION .................................. 14
20. BUILDINGS AND ACCOMMODATION ............................ 15
21. TOOLS, PLANT, APPLIANCES AND TEST EQUIPMENT ............ 15
22. REQUIREMENTS FOR PROJECT IMPLEMENTATION ................ 15
23. TEST SCHEDULE .......................................... 16
24. ACCEPTANCE TESTING AND ACCEPTANCE ...................... 16
25. IMPERFECT WORK ......................................... 16
26. RE-EXAMINATION OF CONDEMNED WORK ....................... 17
27. REMOVAL OF WASTE MATERIALS RUBBISH etc ................. 18
28. CARRIAGE, INSURANCE AND FREIGHT ........................ 18
29. CUSTOMS CLEARANCE ...................................... 18
30. PACKING CASES .......................................... 18
31. PRICE AND PRICE VARIATION .............................. 18
32. CONTRACTORS STATEMENTS ................................. 20
33. ACCOUNTS ............................................... 21
34. PAYMENT ................................................ 21
35. EFFECT OF VALUE ADDED TAX, CUSTOMS OR OTHER DUTIES...... 21
36. HINDRANCES ............................................. 22
37. SUSPENSION OF WORK ..................................... 22
38. INDEMNITY AND LIABILITY ................................ 22
39. NON - PERFORMANCE OF CONTRACT .......................... 23
40. INSURANCE .............................................. 24
41. TERMINATION ............................................ 25
42. ARBITRATION ............................................ 26
43. EXPENSES RECOVERABLE BY EIRCOM ......................... 26
44. SURETIES ............................................... 26
45. FORCE MAJEURE .......................................... 27
46. STATUTORY AND OTHER REGULATIONS ........................ 27
48. LANGUAGE AND LAW ....................................... 28
49. NOTICE TO CONTRACTOR ................................... 28
50. CORRESPONDENCE ......................................... 28
51. COUNTRY OF MANUFACTURE ................................. 28
52. SAFETY ................................................. 28
53. CONFIDENTIALITY ........................................ 28
54. YEAR 2000 .............................................. 29
55. SUFFICIENCY OF TENDER .................................. 30
APPENDIX 1 NON-PERFORMANCE OF CONTRACT ..................... 32
8
<PAGE>
1. DEFINITIONS.
In the Tender and Schedule thereto, unless the context otherwise requires: -
(i) The word "Ireland" does not include any area which is not within the area
and extent of application of the laws enacted by the Oireachtas.
(ii) The term "Eircom" means Eircom Plc.
(iii) The term "Tender" means the form of Tender as signed by the person
tendering, together with the Notice to Persons Tendering, the Conditions
of Contract, Specification, Schedule (duly filled in) and drawings,
including any letter submitted with the Tender and any relevant
correspondence subsequent to the date of tender and prior to the issue of
an order on foot of the Tender.
(iv) The term "Contract" means the Contract created by the Tender and the
acceptance thereof by Eircom.
(v) The term Contractor means the Tenderer whose Tender has been accepted by
Eircom. All references to the "Contractor" shall be deemed:
(a) In the case of a single Contractor to include his executors,
administrators and permitted assigns;
(b) In the case of several Contractors to include jointly and severally
the partnership firm (if any) and each of the Contractors and their
respective executors, administrators and permitted assigns; or
(c) In the case of a Company to include its successors and permitted
assigns;
(vi) The term "Sub Contractor" means any person to whom any part of the
contract has been sublet with the permission in writing of the Director.
(vii) The term "The Work" means all work to be carried out in pursuance of the
Contract.
(viii) The term "Director" means Executive Director or any of the authorised
officers of Eircom acting on his behalf.
(ix) The term "Supervising Officer" means the Officer for the time being
appointed by the Director for the purpose of superintending the work, or
where the context permits, the representative of such officer.
(x) The term "the site" means the actual place to which plant is to be
delivered or where "The Work" is to be carried out by the Contractor.
(xi) the term "Validity Period" means the period of six months from the latest
date for return of tenders as specified in the Invitation to Tender
herein.
(xii) the term "Commencement Date" means the date specified for the
commencement of work in the Schedule to the Tender herein.
(xiii) the term "Completion Date" means the date specified for the completion of
work in the Schedule to the Tender herein.
(xiv) the term "Equipment" means any equipment to be delivered and installed by
the Contractor as part of the work.
(xv) The term "Overtime" means Saturday work, that is work performed between
the hours of 12 midnight Friday and 12 midnight on the following
Saturday. Sunday work is work performed
9
<PAGE>
between the hours of 12 midnight Saturday and 12 midnight on the
following Sunday; Night work, that is work performed between the hours
of 20.00 and 08.00 hours excluding Saturday and Sunday work and all work
performed on a Public Holiday.
(xvi) Words importing persons shall include firms and corporations. Words
importing the masculine gender shall include the feminine gender and
vice versa. Words importing singular only shall also include the plural
and vice versa.
NOTED
(xvii) The term "Performance Bond" means the single bond that the Contractor
will raise to cover contract performance under the contract, having a
total value of EURO 4Million.
2. PERFORMANCE OF WORK.
The Work to be performed under the Contract shall, unless the Supervising
Officer orders otherwise in writing, be commenced on the Commencement Date.
NOTED.
3. STANDARD OF WORK.
All Work performed under the Contract shall be of the highest professional
standards and to the satisfaction of Eircom. All materials or articles
supplied by the Contractor, in connection therewith shall be equal in every
respect to the standard patterns or samples exhibited or described in connection
with the Tender, and in accordance with any Specification and Drawings
prescribed or approved by the Supervising Officer. The Contractor shall ensure
that the Site is maintained in a clean and tidy manner throughout the duration
of the Contract.
COMPLIANT
4. SAMPLES
Where it is specified in the Schedule that samples are to be submitted with the
Tender, such samples shall, in the event of the Tender being accepted, and
unless otherwise agreed in writing, be taken as the standard by which the supply
in bulk shall be governed.
COMPLIANT
5. QUALITY AND FITNESS
For the avoidance of doubt it is hereby declared that Section 14 of the Sale of
Goods Act 1893 and Section 39 of the Sale of Goods and Supply of Services Act
1980 shall apply to the Goods and Services supplied under this Specification.
NOTED
6. CARE OF STORES
6.1 All the materials and tools supplied by Eircom to the Contractor shall
remain the property of Eircom. The Contractor shall return them to
Eircom upon completion or termination of the Contract or earlier on
reasonable request by Eircom.
COMPLIANT
6.2 The Contractor shall be responsible for the safety of all materials
and tools deposited with him by eircom in connection with the
Contract, and shall be liable for any loss of, or damage to, such
materials and tools whilst they are in his custody. Also, the
Contractor shall keep such records of the materials and tools so
deposited as will enable the Supervising Officer from time to time to
check the quantities used and in hand against those delivered to the
Contractor's charge.
COMPLIANT
10
<PAGE>
6.3 The Contractor shall not, without the prior written consent of eircom,
use the Eircom supplied materials and tools for any purpose other than
is necessary for the performance of the Contract, or allow any other
party to use, take possession of, or have any other rights or lien
over Eircom supplied materials and tools or other property of Eircom.
COMPLIANT
6.3 In the event of any threatened seizures of any of the Eircom supplied
materials and tools or other property of eircom in the event of the
Contractor going into receivership, liquidation or examinership or
equivalent, the Contractor shall :
(i) notify Eircom immediately
(ii) draw the attention of the receiver, liquidator or
examiner or any other appointed official to the fact
that eircom supplied materials and tools do not form
part of the Contractor 's assets;
(iii) allow Eircom to enter into any premises where the
materials and tools are being kept for the purpose of
taking possession of such materials and tools that are
at that time the property of Eircom;
COMPLIANT
6.4 The provisions of this condition shall survive the expiry or
termination of the Contract.
COMPLIANT
7. PATENTED ARTICLES
7.1 Patented articles to include without limitation letters patent,
registered designs, copyright, trademark or trades name supplied under
the Contract shall be marked in accordance with the provisions of the
relevant legislation in force for the time being. The Contractor
shall indemnify eircom against any action, claim or demand for
infringement of any patent rights in respect of any articles or
combination of articles under the Contract, or for royalty or damage
in respect thereof.
COMPLIANT
ACL AGREES TO INDEMNIFY AND HOLD EIRCOM HARMLESS WITH RESPECT TO ANY SUIT,
CLAIM, OR PROCEEDING BROUGHT AGAINST EIRCOM BY A THIRD PARTY ALLEGING THAT
EIRCOM'S USE OF THE EQUIPMENT OR THE SOFTWARE, SEPARATELY OR IN
COMBINATION, AS A WHOLE OR IN PART, CONSTITUTES AN INFRINGEMENT OF ANY
PATENT OR COPYRIGHT OR MISUSE OF PROPRIETARY OR TRADE SECRET INFORMATION.
ACL AGREES TO DEFEND EIRCOM AGAINST ANY SUCH CLAIMS AND TO PAY ALL
LITIGATION COSTS, REASONABLE ATTORNEY'S FEES, SETTLEMENT PAYMENTS, AND ANY
DAMAGES AWARDED OR RESULTING FROM ANY SUCH CLAIM.
EIRCOM SHALL PROMPTLY ADVISE ACL OF ANY SUCH SUIT, CLAIM, OR PROCEEDING AND
SHALL CO-OPERATE WITH ACL IN THE DEFENCE OR SETTLEMENT THEREOF. ACL SHALL
HAVE SOLE CONTROL OF THE DEFENCE OF ANY ACTION INVOLVING SUCH A CLAIM AND
OF ALL NEGOTIATIONS FOR ITS SETTLEMENT OR COMPROMISE.
THIS INDEMNITY SHALL NOT APPLY TO CLAIMS ARISING IN RESPECT TO THE USE OF
THE EQUIPMENT OR SOFTWARE SUPPLIED BY ACL OR MANUFACTURED BY ITS SUPPLIERS
IF USED BY EIRCOM IN A MANNER OR FOR A PURPOSE NOT CONTEMPLATED BY THIS
AGREEMENT.
11
<PAGE>
7.2 In the event of any article mentioned in the Schedule being, to the
knowledge of the person tendering, covered by an existing patent or
the subject of an application for a patent, a declaration to that
effect (stating where possible the number and date of the patent or
application) must accompany the tender.
COMPLIANT.
8. ASSIGNMENT AND SUB-CONTRACTORS
The Contractor shall not without the permission in writing of eircom assign or
sub-contract the whole or any part of the Contract to any third party. Any such
permission, if given, shall not relieve the Contractor of any obligation or
liability under the Contract. The Contractor shall be responsible for the acts,
defaults and neglects of any sub-contractor, his servants or agents as fully as
if they were acts, defaults or neglects of the Contractor .
COMPLIANT.
9. ACCESS TO CONTRACTOR'S WORK
The Supervising Officer shall be entitled at all reasonable times during
manufacture to inspect, examine and test on the Contractor's premises the and
materials and workmanship performance of all plant to be supplied under Contract
and if part of the said plant is being manufactured on other premises the
Contractor shall obtain for the Supervising Officer permission to inspect,
examine and test as if the said plant was being manufacturing on the
Contractor's premises.
COMPLIANT.
10. LICENCES FOR MANUFACTURING
It is the responsibility of the Contractor to ensure that appropriate licences
have been granted to him for the manufacturing of all Equipment offered in
response to this specification.
COMPLIANT.
11. SUPERVISION AND INSPECTION OF WORK
The Supervising Officer may, during the progress of the work, inspect the
operations of the Contractor to satisfy himself that The Work is being carried
out in accordance with the Contract, provided always that the provisions of this
clause 11 or the preceding clause 10 shall not release the Contractor from any
obligation under the Contract.
COMPLIANT.
12. PROGRESS REPORT
The Contractor shall render such reports to eircom on the performance of the
Contract and attend such meetings as may be reasonably required.
12
<PAGE>
COMPLIANT.
13. TIMES OF WORK
(a) Weekdays - Tenderers shall state the times of Work envisaged in their
Tender. In general, overtime work shall not be permitted at eircom
premises. Where such overtime work is deemed necessary by the Director,
for example to minimise down-time of working systems, the Contractor shall
endeavour to give as much notice as possible to the Supervising Officer of
any overtime proposed and in the case of Weekend or Public Holiday Work at
least two working days notice shall be given. All overtime shall be subject
to the prior approval of the Director.
The Director shall be notified in writing of any proposed extended
stoppages in the Contract resulting from Annual Holidays, Public Holidays,
etc.
NOTED. DETAILS OF STANDARD WORKING TIMES ARE PROVIDED IN THE CUSTOMER
SERVICE SUPPORT PRINCIPLES OF AGREEMENT DOCUMENT INCLUDED WITH THIS
PROPOSAL
(b) Weekend or Night Work
When the Director instructs the Contractor to carry out overtime work, the
Contractor may charge in respect of such work the amount of the net actual
increase in wages paid to his staff employed on the work, over that paid
for Work performed Monday through to Friday. Tenderers shall state (in
their Tender) the increase in wages above the Basic Hourly Wage Rate for
the various grades of staff involved.
NOTED. DETAILS OF STANDARD WORKING TIMES ARE PROVIDED IN THE CUSTOMER
SERVICE SUPPORT PRINCIPLES OF AGREEMENT DOCUMENT INCLUDED WITH THIS
PROPOSAL
14. FAIR WAGES
The Contractor shall pay rates of wages and observe hours of labour not less
favourable than those commonly recognised by employers and trade societies (or
in the absence of such recognised wages and hours, those which in practice
prevail amongst good employers) in the trade in the district where the Work is
carried out. Where there are no such wages and hours recognised or prevailing
in the district, those recognised or prevailing in the nearest district in which
the general industrial circumstances are similar shall be adopted. Further, the
conditions of employment generally accepted in the district in the trade
concerned shall be taken into account in considering how far the terms of this
Clause are being observed, and for this purpose also regard shall be had to the
conditions of employment generally in the contracting firm. The Contractor
shall be responsible for the observance of this Clause by a Sub-Contractor to
whom the Work or any portion thereof has been assigned.
COMPLIANT.
15. EXHIBITION OF NOTICE.
The Contractor shall cause the preceding Clause to be prominently exhibited for
the information of his work-people, at every place, where any work is being
executed under the Contract. Cards for this purpose can be obtained on
application to the Director. In trade where it is the practice, the Contractor
shall also cause to be exhibited, or have available for inspection, a copy of
any signed agreement, determining the rates of wages and hours of labour
commonly recognised by employers and trade societies in the district.
COMPLIANT.
16. INFRINGEMENT OF CLAUSE 14.
13
<PAGE>
Any infringement of the Conditions specified in Clause 14, if proved to the
satisfaction of Eircom (whereof a certificate under the hand of a duly
authorised officer of Eircom shall be sufficient evidence), shall render the
Contractor liable to pay to Eircom by way of liquidated damages, and not as a
penalty, the sum of (Pounds)250, which may at any time be deducted from any sum
or sums which are then due or which at any time thereafter may become due to the
Contractor under any Contract between the Contractor and eircom or may be
demanded of him to be paid, and shall thereupon be paid within fourteen days.
In addition thereto, eircom may, upon any such infringement, whether of Clause
14 or of any corresponding Clause in any other Contract between the Contractor
and Eircom, forthwith terminate this Contract, and any other existing Contract
between Eircom and the Contractor, and may recover from the Contractor any loss
resulting from such termination.
COMPLIANT.
17. INSPECTION OF WAGES BOOKS etc
The Contractor shall keep proper wages books and time sheets, showing the wages
paid to and the time worked by the work- people in his employment and about the
execution of the Contract, and such wages books and time sheets shall be
produced whenever required for the inspection of any officer authorised by the
Director.
COMPLIANT.
18. SCHEDULE OF QUANTITIES
18.1 Prior to the commencement of the work, the Contractor shall supply to
the Director six copies of a Schedule in which shall be listed all
Materials and Equipment including test equipment, installation
materials, tools and spare items to be supplied on the work. This
schedule shall show the if any variation in quantity or disposition
becomes necessary, the Contractor shall furnish an amended Schedule.
COMPLIANT.
18.2 The Contractor shall not carry out any variations to the Contract
unless agreed in writing with Eircom.
COMPLIANT.
18.3 Eircom may, from time to time by notice in writing, amend the
specification, and from the date specified in the notice the relevant
part of the work shall be in accordance with the specification as
amended.
COMPLIANT.
18.4 Eircom may instruct the Contractor to carry out additional work or
omit any part of the work. Details of any additional work or any work
not required will be provided to the Contractor in writing.
COMPLIANT.
18.5 The Contractor shall act immediately upon Eircom's requests for
amendments under this condition. Any increases or decreases in price
and time-scale as a result of such changes shall be subject to pro-
rata amendment to be mutually agreed between the parties.
COMPLIANT.
19. STORAGE ACCOMMODATION
19.1 The Contractor shall be responsible for the delivery to the Site of
all equipment
14
<PAGE>
and materials in connection with the work. However, where it is not
possible to deliver Equipment directly to the Site the Contractor
shall provide suitable storage accommodation, at his own expense at a
convenient distance from the site.
COMPLIANT.
19.2 The Director shall at all reasonable times have free access to this
accommodation for the purpose of inspecting the storage of Equipment
and Materials.
COMPLIANT.
20. BUILDINGS AND ACCOMMODATION
20.1 Where it is envisaged that the Equipment to be provided under this
Contract shall be installed at existing Eircom premises, floor plans
indicating the proposed location for the Equipment to be installed and
identifying the location of existing Equipment may be arranged, by
visits to site prior appointment with the Director.
COMPLIANT.
20.2 The Contractor shall be deemed to have allowed in his Tender and
Tender Rates for the carrying out of Installation Works without
interference to the normal working of Eircom Equipment and for
protecting the Equipment and existing Equipment from interference or
damage arising from the Work including the provision of dust proof
screens and draught lobbies.
COMPLIANT.
21. TOOLS, PLANT, APPLIANCES AND TEST EQUIPMENT
The Contractor shall provide all tools, test equipment, appliances and
scaffolding required for the conveyance of the equipment on to the site and for
the performance of the whole of the work and shall remove the same on the
completion of the work. He shall take adequate precautions to prevent damage to
or staining of the floors, walls and ceilings during the progress of
installation.
Compliant.
22. REQUIREMENTS FOR PROJECT IMPLEMENTATION
22.1 Appointment of Project Manager
------------------------------
The Contractor, as part of the Contract Award, may be required to
nominate a Project Manager, who shall be responsible for the overall
Direction, Management and Supervision of the Contractor's Activities
on The Site. The Contractor shall provide full details on the
qualifications and experience of the nominated Project Manager for the
approval of Eircom. Field experience on similar Projects shall be a
primary requirement.
COMPLIANT.
22.2 Project Execution and Review
----------------------------
Within thirty days of Acceptance of his Tender, the Contractor shall
develop overall Project Execution and Review (PERT) type charts.
The Review will be in graphical form, and shall highlight all events
relating to the Project with an indication of time scale for each
event. "Critical Paths" shall be identified. The basic design to be
adopted in the layout of the presentation of the information shall be
subject to the approval of Eircom.
Within thirty days of Acceptance of his Tender, the Contractor shall
enter into Design Review discussions to finalise with eircom all
aspects of the Project.
COMPLIANT.
15
<PAGE>
23. TEST SCHEDULE
The Contractor shall, within 60 calendar days of acceptance of Tender, provide
the Director with a Schedule of the Tests he proposes to perform upon the
System, to demonstrate that it conforms to the Specification in all respects.
The Contractor shall be required to obtain the approval of eircom in respect of
the Test Schedule, before equipment installation shall commence. Eircom
reserves the right to require that further tests (additional to those listed in
the Test Schedule) be performed.
COMPLIANT.
24. ACCEPTANCE TESTING AND ACCEPTANCE
Acceptance Testing shall consist of the following elements:
(i) Factory Tests
(ii) Acceptance Testing
COMPLIANT.
24.1 Factory Tests
-------------
The various System Elements shall be tested by the Contractor at his
premises, before delivery to site. Test Reports incorporating the
results obtained shall be furnished by the Contractor. The Contractor
shall provide at least one months Advance Notice (of these tests), to
permit Eircom to exercise its right to be represented at these tests.
COMPLIANT.
24.2 Acceptance Testing
------------------
Upon completion of equipment commissioning, the Contractor and eircom
shall participate in joint acceptance testing. The test figures
obtained shall be equal to or better than the Guaranteed Test Figures
supplied by the Contractor. The contractor shall supply, at his own
expense, the necessary staff and any proprietary test equipment, to
enable the acceptance tests to be made.
COMPLIANT.
24.3 Acceptance
----------
If as a result of these tests the system is found to be in total
accordance with the specification, it shall be accepted. Such
acceptance shall be without prejudice to:
(i) any claim of Eircom in respect of any defects which may
subsequently develop in the installation or performance of the
system during the guarantee period of Maintenance as provided for
in clauses 25.2 and 25.4 hereof; or
(ii) any other claims which may arise under clause 25 hereof.
COMPLIANT
25. IMPERFECT WORK
25.1 The Director shall condemn any work which, in his opinion, has not
been performed in accordance with the terms of the Contract and the
Contractor shall, at his own cost and charge, rectify the same. The
Contractor shall take back any equipment, materials or articles that
shall be considered by the Supervising Officer to be unsound or
otherwise not
16
<PAGE>
conforming with the Specifications and he shall not again attempt to
use such equipment, materials or articles on any work for eircom. Any
Equipment, Materials or Articles which are condemned, shall be removed
from the site within 14 days. If the Contractor shall neglect to
rectify, reform or reconstruct any Work as aforesaid, within a Period
to be specified by the Director or shall omit to take back any
Equipment, Materials or Articles which shall be considered by the
Director to beunsound or otherwise not in conformity with the
Specification or shall fail to provide immediately suitable Equipment,
Materials or Articles in lieu of those condemned, then the Contractor
shall at once cause the Work to be stopped, if so instructed by the
Director, and the Director shall be at liberty forthwith to employ
another Contractor to perform the work and to supply the required
equipment and materials at the expense of the Contractor
COMPLIANT WITHIN THE AGREED WARRANTY PERIOD.
25.2 The Contractor shall at his own Cost, notwithstanding Payment by
Eircom replace or repair any Equipment, Materials or Articles which,
before completion and final acceptance of the whole work are found to
be defective from any cause whatsoever, (including the act, whether
wrongful or otherwise, of a Third Party) or, which within 24 Calendar
Months after shipment of the of the equipment are found to be
defective by reason of faulty design, workmanship or Materials or of
any act, neglect, omission or failure on the part of the Contractor,
his servants or agents.
COMPLIANT
25.3 The Director may, by notice in writing to the Contractor, require the
Contractor to repay any sum paid in respect of any defective
equipment, materials or articles, instead of replacing any effective
item and upon such repayment such defective equipment, materials or
articles shall become the property of the Contractor. The Contractor
shall in either case pay to eircom a sum equal to all expenses (if
any) incurred by Eircom in testing and examining for the propose of
making good, replacing or repairing any defective equipment, materials
or articles.
Compliant. Please refer to attached document Customer Services
Principles of Agreement and Repair and Return Procedure for details
of replacement of Defective Units within the warranty period.
25.4 If any part of the work is found to be defective by reason of faulty
design, workmanship or materials or any act, neglect, omission or
failure on the part of the Contractor, his servants or agents within
the period of six years after Completion and Final Acceptance the same
shall be made good by the Contractor at this own cost provided such
defect would not have been disclosed by a reasonable examination prior
to the expiry of the 12 month period in clause 25.2.
Compliant.
26 RE-EXAMINATION OF CONDEMNED WORK
If any work performed or article or material provided by the Contractor is
condemned by Eircom pursuant to clause 25 hereof during the progress of the work
and the Contractor considers himself aggrieved, a re-examination of such work or
article of material by an independent person, to be mutually agreed upon by the
Director and the Contractor, shall take place if the Contractor shall, by notice
in writing, addressed to the Director within three days from such condemnation,
so require. The decision of such person shall be final, and the party against
whom the decision is given shall pay the entire expense of the re-examination.
COMPLIANT
17
<PAGE>
27. REMOVAL OF WASTE MATERIALS RUBBISH etc
The Contractor shall remove from the site all Packing Crates, Surplus Cable, and
other Waste Materials, resulting from the work.
COMPLIANT
28. CARRIAGE, INSURANCE AND FREIGHT
All Materials, Articles and Equipment supplied by the Contractor as part of or
under the contract or under any agreed addition, alteration or modification
thereto shall be delivered to the site, by the Contractor at his own expense.
The Contractor shall bear all associated Carriage, Insurance and Freight Charges
and the rates quoted in the tender shall be inclusive of all such charges.
COMPLIANT. ALL PRICES ARE QUOTED AS DELIVERY, DUTY PAID TO EIRCOM SITE.
29. CUSTOMS CLEARANCE
The Contractor shall be responsible for customs clearance and charges, if any,
and all other such matters relating to the transport of the equipment to the
site.
COMPLIANT
30. PACKING CASES
Packing Cases containing Equipment shall be clearly marked on the outside to
indicate the type of equipment contained therein, and
(ii) the name of the site to which the equipment has been assigned
(iii) the relevant Eircom Engineering Order Number.
COMPLIANT
31. PRICE AND PRICE VARIATION
31.1 Tenders for this Project shall be fixed price, preferably in Irish
Pounds or ECUs or alternatively in the currency of the country of
origin of the equipment, for orders placed within 12 months of the
date of tender and shall be DDP but exclusive of V.A.T.
COMPLIANT. PRICES ARE QUOTED IN EUROS AND ARE INCLUSIVE OF DDP
(INCOTERMS.) AND ARE EXCLUSIVE OF VAT.
31.2 Any future variation in prices for orders placed more than 12 months
following the expiration of the Validity Period, shall be determined
with reference to a mutually agreed price-variation formula. Details
of such a formula or formulae to govern price adjustments in labour
and materials shall be submitted as part of the tender. The submission
of a price variation formula shall indicate the precise origin of the
relevant price indices and shall be governed by the conditions
hereunder. The adjusted price shall be valid from a date ten days
prior to the latest date set for the receipt of tenders and shall have
retrospective effect. The adjusted price for orders placed following
the expiration of the Validity Period shall be calculated in
accordance with the following criteria:
18
<PAGE>
(a) If the market price of any materials embodied in the works
shall be increased over the price current during the validity
period the Contractor shall be entitled to be paid such sum as
Eircom shall certify to be the amount of such increase;
COMPLIANT. FOR THE PURPOSES OF DETERMINING PRICE
INCREASE/DECREASE THE MECHANISM WILL BE AGREED AT THE ANNUAL
PRICE REVIEW(S). THE DATE OF THE FIRST PRICE REVIEW SHALL BE
MUTUALLY AGREED PRIOR TO CONTRACT PLACEMENT.
(b) If the market price embodied in the work shall fall below the
price current during the Validity Period, the total amount to be
paid on foot of the Contract shall be reduced by such sum as the
Eircom shall certify to be the amount of such decrease.
COMPLIANT. FOR THE PURPOSES OF DETERMINING PRICE
INCREASE/DECREASE THE MECHANISM WILL BE AGREED AT THE ANNUAL
PRICE REVIEW(S). THE DATE OF THE FIRST PRICE REVIEW SHALL BE
MUTUALLY AGREED PRIOR TO CONTRACT PLACEMENT.
(c) (i) Consequent on action initiated by workmen or workmen's
organisations an increase occurs in the rate of wages
current in the district over the rate current during the
Validity Period or if there were no such current rate
recognised or prevailing in that district, over the rate
current at such date in the nearest district in which the
general industrial conditions are similar, the Contractor
has to increase the rate of wages of any workman employed on
the works he shall, subject to the provisions hereunder, be
entitled to be paid such sum as the Director shall certify
to be the amount of such increase.
(ii) In the event that an increase claimed under this
section is in whole or in part not in accordance with the
terms of the relevant National Wage Agreement the amount of
such an increase shall, to the extent that is not in
accordance with the National Wage Agreement, not be
allowable to the Contractor. (In the absence of National
Wage Agreements, wage increases claimed under this Section
will not be allowable if they do not conform with Government
guidelines on wages). Any question as to whether or not a
particular increase is in accordance with the terms of the
relevant National Wage Agreement shall be resolved on the
basis of procedures provided for in that Agreement. Pending
the outcome of these procedures the increase sought,
provided it has been approved by the Joint Industrial
Council for the Construction Industry, shall be paid to the
contractor without prejudice to the right of eircom to
deduct the amount of the increase subsequently from monies
due to the contractor under this or any other Clause in the
event that the procedures referred to result in the increase
sought being judged not to be in accordance with the terms
of the relevant National Wage Agreement or to the extent
that it is so declared not to be in accordance with the
Agreement.
COMPLIANT. FOR THE PURPOSES OF DETERMINING PRICE
INCREASE/DECREASE THE MECHANISM WILL BE AGREED AT THE ANNUAL
PRICE REVIEW(S). THE DATE OF THE FIRST PRICE REVIEW SHALL BE
MUTUALLY AGREED PRIOR TO CONTRACT PLACEMENT.
(d) Consequent on a decrease in the rate of wages current in the
district below the ratecurrent during the Validity Period or
if there were no such current rate recognised or prevailing
in that district, below the rate current at such time in
the nearest district in which the general industrial
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conditions are similar, the rate of wages of any workman
employed on the works falls below the rate current during
the Validity Period, the total amount to be paid on foot of
the contract shall be reduced by such sum as the Director
shall certify to be the amount of such decrease.
COMPLIANT. FOR THE PURPOSES OF DETERMINING PRICE
INCREASE/DECREASE THE MECHANISM WILL BE AGREED AT THE ANNUAL
PRICE REVIEW(S). THE DATE OF THE FIRST PRICE REVIEW SHALL BE
MUTUALLY AGREED PRIOR TO CONTRACT PLACEMENT.
(e) Consequent on an increase in wages under (c) above, if the
Contractor shall pay an increased premium for insurance for
Employers' Liability cover, he shall be entitled to be paid
such sums as the Director shall certify to be the amount of
such increase in premium.
COMPLIANT.
(f) Consequent on a decrease in wages under (d) above, if the
Contractor pays a decreased amount for insurance premium for
Employer's Liability cover, the total amount to be paid on
foot of the Contract shall be reduced by such sum as the
Director shall certify to be the amount of such decrease in
premium. Provided always that, notwithstanding the
provisions of the foregoing Clause, the Contractor shall not
be entitled to payment for any increase or additions
provided for in (a) (c) and (e) thereof which may occur
after the completion date as defined in the conditions of
contract or such extended date as may be granted by the
Director in accordance with the conditions of the Contract.
COMPLIANT.
32. CONTRACTORS STATEMENTS
The Contractor shall on a monthly basis, supply the Director with the
statement of the value of the work carried out by him, during the preceding
month. This document shall also state;
. the amount invoiced by the Contractor up to the date of the Statement, and
. the value of the work still outstanding on the Contract and the period(s)
(monthly) in which it will be accrued.
COMPLIANT
33. ACCOUNTS.
The Contractor, on completion of the work or on completion of any portion of the
work for which payment is due, shall send a priced invoice for the same in
duplicate addressed to Eircom, Accounts Payable Section, PO Box 1507, South King
Street, Dublin 2, Ireland.
Each invoice shall specify the number of the order, the description and position
of the work executed to the date of the claim, the amount of the work completed,
the amount for retention, if any, and the amount claimed as due. All work for
which payment in excess of the contract price is claimed by the Contractor shall
be invoiced; and in respect of such claims the date and reference of the order
authorising the extra work shall be quoted.
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It is the preference of Eircom to trade electronically with its suppliers using
EDI. The format of any trading document shall be mutually agreed between the
parties in advance.
COMPLIANT
34. PAYMENT
Eircom shall pay to the Contractor in the following manner the Contract price
adjusted to give effect to such additions thereto and such deductions therefrom,
as are provided for in these conditions.
The Contractor shall be paid (as the work proceeds) in the following manner:
34.1 Within 45 days of receipt of invoice for equipment delivered in good
order to the site a sum equal to the total sum certified therein.
COMPLIANT
34.2 Within 45 days of receipt of an invoice for installation and
commissioning, following successful completion of acceptance testing a
sum equal to the total sum certified therein for such installation and
commissioning.
COMPLIANT. SEE 34.4.
34.3 Within 45 days of receipt of an invoice and successful completion of
Training Courses, a sum equal to the total sum certified on the said
invoice.
COMPLIANT. SEE 34.4.
34.4 A performance bond of Euro's 4 million shall be required for a 12
month period from receipt of invoice in lieu of retention
COMPLIANT. ACL PREFERS THE BOND OF EURO'S 4 MILLION.
34.5 No part of the money shall be payable at the time at which payment
ought otherwise to be made under the Contract, unless in the opinion
of the Director, all the supplied Equipment is in good repair and
condition, fair wear and tear, accidental injury or damage by persons
other than the Contractor's Staff (and not due to faulty workmanship
or materials) excepted.
COMPLIANT.
34.6 Should the completion of any portion of the work be deferred on the
instructions of the Director, the date for the payment of the monies
on the portion not so deferred shall be calculated from the date of
successful completion of Acceptance Testing of the portion not so
deferred.
COMPLIANT.
34.7 Payment for any item shall be due only when delivery acceptance
thereof has been certified by the Director.
COMPLIANT. SEE 34.4 ABOVE.
34.8 In all cases, payment as certified shall be made within 45 days from
the date of the invoice.
COMPLIANT.
34.9 Without prejudice to any other remedy which eircom may have, it shall
be entitled to deduct from any monies due or becoming due to the
Contractor under the Contract, all costs, damages or expenses for
which under the Contract the Contractor is liable to Eircom.
COMPLIANT.
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35. EFFECT OF VALUE ADDED TAX, CUSTOMS OR OTHER DUTIES
If subsequent to the expiration of the Validity Period any Customs or Excise
duty affecting the equipment or material or any part of the equipment or
material is increased, decreased, imposed or abolished, or any alteration is
made by the Government of Ireland in the practice of assessing the value of
goods for the purposes of Customs duty, and the amount of duty payable on the
equipment or material or any part of the material is thereby increased or
decreased, the amount to which the Contractor shall be entitled under the
Contract shall be increased or decreased, as the case may require, by a sum
equal to the difference between the amount of duty which would have been payable
on the expiration of the Validity Period of the Tender and the amount actually
paid by the Contractor on the equipment or material delivered by him under the
Contract.
If on the expiration of the Validity Period, the rate of Value Added Tax payable
by the Contractor on the monies received from the Director under the Contract is
increased or decreased, the amount to which the Contractor shall be entitled
under the Contract shall be increased or decreased, as the case may require, so
that the amount less value added tax at the revised rate equals the amount less
value added tax at the rate obtaining on the expiration of the Validity Period.
The Contractor shall, whenever so required by the Director, produce for
inspection all documents in his possession or under his control, which may, in
the opinion of the Director, be necessary to enable the precise extent of the
increase or decrease in the Contract price under this clause to be determined.
COMPLIANT.
36. HINDRANCES.
The Contractor shall have no claim for damage arising out of delay on the part
of the Director, either prior to commencement or during the progress of work, in
furnishing any article or in obtaining any consent for the work from any local
authority, or other body or person, or in giving or securing access to the site,
or owing to the necessity for removing, avoiding or changing the position of any
obstruction, or on account of the work being suspended by any local authority,
body or person, or by the Director, unless such suspension shall involve the
whole or the major portion of the work and shall be operative for a period
exceeding two days.
COMPLIANT.
37. SUSPENSION OF WORK
If the whole or the major portion of the work shall be suspended for a period
exceeding two days by order of the Director, or by order of any local
authority, body or person in whose order the Director is constrained to
acquiesce, provided that such suspension is not due to any default of the
Contractor and provided also that such suspension shall necessitate the
cessation of work of all or the greater part of the Contractor's workmen engaged
upon the work, then the Director shall pay to the Contractor such reasonable
expenses incident to the suspension of work as the Director in his sole
discretion may determine as proper to be allowed. Such allowance of expenses
shall be made only in respect of suspension authorised in writing by the
Director or the Supervising Officer (such authority not being unreasonably
withheld in cases not provided for in Clause 36) and the Contractor shall on his
part afford the Director all necessary facilities to enable him to determine the
amount of the expenses that should properly be granted under the terms of this
Clause. The provisions of this clause shall apply to any suspension of work due
to a public festival or other function which could not be foreseen prior to the
commencement of the work in any thoroughfare affected, the Contractor in such
case being allowed to charge for any resulting temporary work even if the
remainder of the work be not stopped.
COMPLIANT.
38. INDEMNITY AND LIABILITY
38.1 The Contractor shall indemnify and keep indemnified eircom in respect
of any and all damages, costs, proceedings, demands or other expense
or claim arising out of:
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(i) injury to (including death) or sickness of any employee of the
Contractor, its servants, subcontractors or agents, in connection with
his/her employment or contract of service;
(ii) injury to (including death) or sickness of any other person
(including any employee of Eircom) arising out or in connection with
any act or omission of the Contractor, its subcontractors, employees,
servants and agents;
(iii) loss or damage to the property of Eircom or any third party
arising out of or in connection with any act or omission of the
Contractor, its subcontractors, employees, servants and agents;
(iv) such other loss as may be caused by breach of Contract by, or the
wilful or negligent act of the Contractor, its subcontractors,
employees, servants and agents;
COMPLIANT.
38.2 The Contractor shall be liable to and shall compensate Eircom for the
loss, damage or destruction of the whole or any part of eircom
property. Such compensation shall be payable at the value of the goods
lost, damaged or destroyed at the time of such loss, damage or
destruction. In the event that any item is so damaged that though not
destroyed it is incapable of serving its intended function, the
Contractor shall pay compensation equivalent to the full replacement
cost of the item concerned, excepting only where Eircom agrees and
accepts that satisfactory repair of the item can be achieved at lesser
cost in which case compensation shall be equivalent to the cost of
repairs plus any ancillary cost incurred.
Eircom reserves the right to withhold payment of such a sum as in the
opinion of Eircom is sufficient to cover any payments or liabilities
that may become due as a result of the execution of the Contract. Any
payment so withheld may be used by Eircom to discharge any such
liability to any third party without the prior agreement of the
Contractor.
COMPLIANT. ACL'S MAXIMUM LIABILITY UNDER THIS AGREEMENT SHALL BE
LIMITED TO THE SUM OF EURO'S 4 MILLION IN RESPECT OF PHYSICAL DAMAGE
TO OR LOSS OF TANGIBLE PROPERTY, AND EURO'S 4 MILLION IN RESPECT OF
ALL OTHER EVENTS OR ANY ONE EVENT OR SERIES OF CONNECTED EVENTS, WHERE
ACL IS LEGALLY LIABLE.
38.4 Any instruction or information which may be given or provided by
Eircom shall in no way release the Contractor from his responsibility
under Clause 37.
COMPLIANT.
39. NON - PERFORMANCE OF CONTRACT
If the Contractor shall fail to commence "The Work" on or prior to the
commencement date, the Contractor shall (subject to sub-clause(3) of this
Clause) be liable in respect of the delay in commencement to pay to eircom a
sum calculated at the rate of one per cent of the total value of The Work for
each week or portion thereof which shall elapse from the commencement date until
the actual commencement of The Work.
COMPLIANT.
39.1 If the Contractor shall fail to complete The Work on or by the
completion date, the Contractor shall (subject to sub-clause (3) of
this clause) be liable in respect of the delay in completion to pay to
Eircom the sum of one - quarter of one percent of the value of the
uncompleted portion of the work for every day which shall elapse after
the completion date until the actual completion of the Work.
COMPLIANT.
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39.2 In the event of the Contractor failing to complete the Work on or by
the completion date and the said failure results in Eircom being
liable to pay a penalty or penalties to the Office of the Director of
Telecommunications Regulation (ODTR) in respect of such failure or
delay, the Contractor shall indemnify and keep Eircom effectively
indemnified against the payment of such penalty, in so far as the
imposition of the penalty arises directly from such failure or delay
of the Contractor. For the avoidance of doubt such liability shall be
in addition to the liability of the contractor specified in Clause
39.1 hereof Provided Always that the Contractors total liability
hereunder shall not exceed Euro's 4 million. Further failure to
complete the work in respect of new AS4000 features and products shall
mean failure to deliver the products and services set out in Appendix
I by the dates specified in Appendix I.
39.3 Eircom shall not be bound to prove that it has in fact sustained
damage by reason of any failure or delay in commencement or completion
as aforesaid, and the Contractor shall not be at liberty to adduce
evidence to prove that eircom has sustained no such damage, the
intention of the parties hereby declared being that the sum payable
under sub-clause (1) or sub-clause (2) of this Clause shall be paid as
liquidated damages, and not as a penalty.
COMPLIANT.
39.4 In case of failure or delay in commencement or completion as
aforesaid, Eircom shall be at liberty to execute or cause to be
executed by other persons the whole or the remaining portion of the
work (as the case may be), and the Contractor shall thereupon be
liable to pay to eircom in addition to any sum payable under sub-
clause (1) or sub-clause (2) of this Clause a sum equal to the excess
(if any) of the expenses incurred by eircom in or about such execution
over and above the expense that would have been incurred by the due
completion of the work by the Contractor.
COMPLIANT.
39.5 Eircom shall be at liberty to set off any sum or sums payable by the
Contractor underthis Clause against any sum or sums which may be or
may become payable to the Contractor under this or any other Contract
with Eircom.
COMPLIANT.
40. INSURANCE
The Contractor shall without limiting his responsibilities and obligations under
this contract insure the works for their replacement value against all loss or
damage for whatever cause arising. The Contractor shall also be responsible
for having adequate insurance cover in respect of his employer's liability
obligation, public liability obligation, product liability obligation and
insurance under the Road Traffic Acts in respect of machinery used in connection
with the work. The Contractor shall produce to eircom satisfactory evidence of
the existence of the above mentioned insurance cover against any risk with
respect to which such failure occurs. Any sums paid by eircom to effect such
insurance shall be recoverable from the Contractor as a simple debt.
COMPLIANT.
40.1 The contractor shall furnish satisfactory evidence that the
requirements of this clause has been compiled with prior to the
commencement of the work and shall notify the director no less that 30
days in advance of any material changes, cancellation or non-renewal
of the above coverage.
COMPLIANT.
40.2 The contractor shall ensure that all sub-contractors effect similar
insurances.
COMPLIANT.
40.3 Eircom reserves the right to affect any additional insurances which it
deems necessary in the event of the contractor's insurance cover being
inadequate. All sums paid by Eircom to effect such insurance shall be
recoverable from the contractor as a simple debt.
COMPLIANT.
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41. TERMINATION
41.1 If the Contractor commits a breach of this Contract (or any other
contract with Eircom related to the contract or the work) and in the
case of a breach which is capable of remedy, fails to remedy the
breach within seven days (or such longer period as eircom at its
option may agree in writing) of written notice from Eircom to do so,
then, without prejudice to any other rights or remedies eircom may
have, Eircom shall have the right:
(a) at any time to terminate the Contract forthwith as a whole or (at
Eircom's option) in respect of any part of the Work, performed or
to be performed under the Contract; and
(b) to recover from the Contractor all resulting losses and expenses
(including, without limitation, the cost of completion the work,
or having the Work completed by another contractor, to a similar
standard).
COMPLIANT.
41.2 Without prejudice to any other rights or remedies it may have, Eircom
shall have the right at any time to terminate the Contract forthwith
and to recovery from the Contractor of all resulting losses and
expenses (including, without limitation, the cost of completing the
work, or having the work completed by another contractor, to a similar
standard) if;
(a) the Contractor shall become insolvent or cease to trade or
compound with its creditors; or
(b) a bankruptcy petition or order is presented or made against the
Contractor; or where the Contractor is a partnership, against one
partner, or
(c) a receiver or examiner is appointed in respect of any of the
Contractor's assets; or
(d) a petition for the appointment of a receiver or an examiner is
presented or such an order is made in relation to the Contractor;
or
(e) where the contractor is a company, a resolution or petition or
order to wind-up the Contractor is passed or presented or made or
a liquidator is appointed in respect of the Contractor (otherwise
than for reconstruction or amalgamation); or
(f) without prejudice to any other rights or remedies it may have,
Eircom shall have the right at any time to terminate the Contract
forthwith if the management, ownership or control of the
Contractor is materially changed, and thereby causing conflict of
interest.
COMPLIANT.
41.3 Eircom may, at any time on written notice, without prejudice to any
other rights or remedies it may have, terminate the Contract
forthwith. Where Eircom terminates the Contract under paragraph 41.3
and does not have any other right to terminate that Contract, the
following shall apply:
(a) Eircom shall, subject to sub-clause 41.3 (b) below, pay the
Contractor such amounts as may be necessary to cover its
reasonable costs and outstanding and unavoidable commitments
necessarily and solely incurred in properly performing the
Contract in relation to the applicable work (as defined below)
prior to the termination
COMPLIANT.
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(b) Eircom shall not pay for any such costs or commitments that the
Contractor is able to mitigate and shall only pay costs and
commitments that Eircom has validated to its satisfaction. Eircom
shall not be liable to make any payment to the Contractor in
respect of any of the applicable work that at the date of
termination, eircom is entitled to reject or has already
rejected. Eircom's total liability under sub-clause (a) above
shall not in any circumstances exceed the price that would have
been payable by eircom for the applicable work if the contract
had not been terminated. In respect of this clause, the term
applicable work shall mean the Work in respect of which the
Contract has been terminated under this paragraph, which was
ordered by eircom under the Contract before the date of
termination and for which payment has not at that date become due
from Eircom.
COMPLIANT.
(c) Sub-clauses (a) and (b) above encompass the total liability of
Eircom for termination pursuant to this clause 41 and Eircom
shall be liable for no other costs, claims, damages or expenses
consequent upon such termination.
COMPLIANT.
41.4 Where notice of termination is given due to insufficient progress, the
Contractor may issue a counter notice in writing within 3 working days
giving its proposals for completion of the work within the time
allowed in the Contract. Eircom shall, within 5 working days, either
accept the Contractor's proposals or confirm that the termination
notice is to stand.
COMPLIANT.
42. ARBITRATION.
42.1 If at any time any question, dispute or difference shall arise between
the Contractor and Eircom in relation to the Contract or in any way
connected with the Work which cannot be settled amicably either party
shall as soon as reasonably practical give to the other notice of the
existence of such question, dispute or difference specifying its
nature and the point at issue and the same shall be referred to the
arbitration of a person to be mutually agreed upon. Failing agreement
upon such person within 30 days after the date of such notice, the
arbitration shall be conducted by some person appointed on the
application of either party by the President of the Institution of
Engineers in Ireland. Any reference to arbitration shall be conducted
in accordance with the Institution of Engineers in Ireland arbitration
procedures or any amendment or modification thereof being in force at
the time of appointment of an arbitrator and shall be deemed to be a
submission to arbitration within the meaning of the Arbitration Act,
1954 to 1980 as amended or re-enacted. The award of the arbitrator
shall be final and binding on the parties.
COMPLIANT.
42.2 The performance of the Contract shall continue with due diligence
during the arbitration proceedings unless Eircom shall order the
suspension thereof or the Contract has been abandoned or terminated.
No payment due or payable by Eircom or the Contractor shall be
withheld on account of a pending reference to arbitration.
COMPLIANT.
43. EXPENSES RECOVERABLE BY EIRCOM
All expenses that may be incurred by eircom, or that the Director admits as
proper to be paid on account of damage to property, or accident, or of any act,
neglect, omission, or failure on the part of the Contractor or his workmen,
shall be deemed to be a debt due from the Contractor to eircom, and may be
deducted to from any sums due or that may become due to the Contractor under any
Contract between the Contractor and eircom, and may be recovered by eircom from
the Contractor by action or otherwise.
COMPLIANT SUBJECT TO THE LIMITATIONS SPECIFIED FOR CLAUSE 38.2.
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44. SURETIES
The Contractor shall (if required) produce two sufficient sureties or a
guarantor of an insurance or guarantee policy, the acceptance of whose security
has been authorised by eircom to enter into a bond for the due performance of
the Contract in amount not exceeding one-half of the total value of the work to
be performed.
COMPLIANT - ACL AGREES TO PROVIDE A BOND OF EURO'S 4 MILLION.
45. FORCE MAJEURE
Such extension of time as may appear to eircom to be reasonable shall be allowed
to the Contractor if the work is delayed owing to force majeure. For the
purpose of this agreement the terms "force majeure" shall mean but shall not
be limited to war, hostilities (whether war being declared or not) invasion, act
of foreign enemies, ionising radiation or contamination by radio activity from
any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel,
radioactive, toxic explosive of other hazardous properties of any explosives,
nuclear assembly or nuclear component thereof, pressure wave caused by aircraft
or other aerial device travelling at sonic supersonic speeds, rebellion,
revolution, insurrection, military or usurped power or civil riot, civil
commotion or disorder, strike, lock-out or labour unrest (including where solely
restricted to employees of the Contractor), weather conditions or any
circumstances beyond the reasonable control of either party.
If either party is prevented or delayed from or in performing any of their
obligations under the Contract by force majeure in spite of all reasonable
endeavours to continue to perform their obligations under the Contract then it
must notify the other party of the circumstances constituting the force majeure
and of the obligations, the performance of which, are thereby delayed or
prevented. The party giving notice shall thereupon be excused its performance
or punctual performance as the case may be of such obligation for so long as the
circumstances of prevention or delay may continue. Should force majeure
thereafter circumstances continue for a continuous period of 120 days then
either party may at any time and provided such performance or punctual
performance is still excused by 21 days notice in writing to the other terminate
the Contract. In the event of such termination then the provisions of Clause 41
hereof shall be invoked.
COMPLIANT.
46. STATUTORY AND OTHER REGULATIONS
46.1 The Contractor shall at its own expense, comply with all legislation
and Eircom's site regulations applicable to the performance of the
Contract and take and comply with such other measures as may be
reasonably necessary in respect of precautions for safeguarding all
persons and property as may be affected by the performance of the
Contract.
COMPLIANT.
46.2 Eircom will obtain all necessary consents for the work to be carried
out and will inform the Contractor of any conditions attaching to the
consent if it affects the execution of the work and the Contractor
shall comply with such conditions. The provision of clause 46.2 shall
survive the expiry or termination of the contract.
COMPLIANT.
47. CORRUPT GIFTS.
The Contractor shall not offer or give or agree to give to any person in the
Service of the Government of Ireland or, eircom any gift or consideration of any
kind as an inducement or reward in relation to obtaining or execution of this or
any other Contract for or with Eircom.
Any breach of this Clause by the Contractor or by anyone employed by him or
acting on his behalf (whether with or without the knowledge of the Contractor)
or the commission of any offences by the Contractor or by
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anyone employed by him or acting on his behalf under the Prevention of
Corruption Acts, 1889 to 1916, in relation to this or any other Contract for or
with Eircom shall render the Contractor liable to the cancellation of this
Contract and any other existing Contracts with Eircom and shall entitle eircom
to recover from the Contractor the amount of any loss resulting from such
cancellation.
COMPLIANT.
48. LANGUAGE AND LAW
(a) The language of the Contract is English.
COMPLIANT.
(b) The Contract is subject to the Laws of Ireland.
COMPLIANT.
49. NOTICE TO CONTRACTOR
Notices required under this Contract to be given in writing shall be delivered
by hand, post, e-mail, telex or facsimile transmission to the Contractor, at the
address specified in the tender. Notices shall be deemed to be given upon
receipt except notices sent by first class registered post in the correctly
addressed envelope shall be deemed to have been given within 48 hours (excluding
Sunday and Public Holidays) of posting and notices sent by telex (where a
correct answer back code is obtained by the sender upon transmission) shall be
deemed to be given upon transmission.
COMPLIANT.
50. CORRESPONDENCE
All Correspondence, Quotations, Packing Lists, Equipment Schedules, Test
Certificates, Schedules, etc., shall quote the relevant Eircom Contract
(Engineer's Order) Number.
COMPLIANT.
51. COUNTRY OF MANUFACTURE
The Tenderer shall state on the page following the Form of Tender the country of
manufacture or production of material offered.
COMPLIANT.
52. SAFETY
The Contractor shall be responsible for the safety of his operations on site and
shall ensure that his employees and agents are aware of and shall comply with
the safety rules which must be observed when engaged in Contract work for
eircom. The Contractor shall comply with all statutory requirements with regard
to safety.
COMPLIANT.
53. CONFIDENTIALITY
53.1 The Contractor shall keep confidential all information belonging to,
or held by, Eircom which may come into the Contractor's possession
during the Tender process or during the period of the Contract and
shall not without the prior written agreement of Telecom confidential
information for any purpose, other than is necessary for the
performance of his obligations under the Contract.
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The provision of clause 53.1 shall not apply to the extent that the
information is:
(i) published or comes into the public domain otherwise than
by a breach of this Contract; or
(ii) lawfully known before commencement of the tender process
of this Contract and is not subject to a previous obligation of
confidentiality or
(iii) lawfully obtained from a third party which is free to
divulge it.
COMPLIANT.
54. YEAR 2000
54.1 Definition of "Year 2000 Compliance"
"AD2000 Compliance" or "Year 2000 Compliance" or "Y2K Compliance" or
any other similar expression shall mean the ability to perform and
function in a manner unaffected by dates prior to, during and after
the year 2000 and, in particular, the ability to:
handle date information before, during and after 1st January 2000,
including, but not limited to, accepting date input, providing date
output, and performing calculations on dates or portions of dates;
function accurately and without interruption before, during and after
1st January 2000 without any changes in operation associated with the
advent of the new century;
respond to two digit year date input in a way that resolves the
ambiguity as to century in a defined and pre-determined manner;
store and provide output of date information in ways that are
unambiguous as to century; and
recognise leap years including that the year 2000 is a leap year and
that 29 February 2000 is a valid date.
And expressions such as "AD2000 Compliant" or "Year 2000 Compliant" or
"Y2K Compliant" or any other similar expression shall be interpreted
accordingly.
COMPLIANT. THE AS4000 PRODUCT DOES NOT CONTAIN ANY REAL TIME CLOCK AND
THEREFORE COMPLIANCE TO YEAR 2000 IS NOT APPLICABLE.
SITESPAN - THE AS8100 (PREVIOUSLY KNOWN AS SITESPAN) OPERATES USING
THE SYSTEM CLOCKS, WHICH ARE PROVIDED, VIA MICROSOFT(R) WINDOW NT(C).
IT IS A CONDITION THAT THE PC USED SHALL BE LOADED WITH EITHER WINDOW
NT(C) VERSION 4.0 WITH THE YEAR 2000 FIXES AS SUPPLIED BY MICROSOFT,
OR VERSION 5.0.
THUS AIRSPAN CAN CONFIRM THAT:
. There will be no interruption in operation prior to, during
or after the year 2000 due to the change in century.
. Date based functionality will behave consistently when
provided with an acceptable clock from the operating system
as detailed above.
. The date data is displayed explicitly as a four-digit year.
. As confirmed by Microsoft Windows NT, versions as detailed
above; recognise Year 2000 as a leap year.
29
<PAGE>
54.2 Warranty in relation to "Year 2000 Compliance"
[1.1] The [Contractor] warrants that both the [Equipment/Licensed
Programs] and any third party [equipment/licensed programs] supplied
by the Contractor hereunder are Year 2000 Compliant.
COMPLIANT. SEE COMMENT ABOVE
[1.2] If the Contractor receives written notice from Eircom of any
breach of the warranty set out in clause [1.1] above, it shall at its
own expense remedy the breach in question by repairing or replacing
the [Equipment/Licensed Programs] within either:-
. days after receiving such notice (in the case of
[Equipment/Licensed Programs] which are not regarded by Eircom as
critical to its business); or
. days after receiving such notice (in the case of
[Equipment/Licensed Programs] which are regarded by Eircom as
critical to its business).
COMPLIANT. SEE COMMENT ABOVE
[1.3] Eircom shall, when notifying the Contractor of said breach
specify whether the [Equipment/Licensed Programs] are critical to its
business. If the Contractor fails to remedy such breach within the
period specified under clause [1.2] then, without prejudice to any
other right or remedy which eircom may have, it shall be entitled to a
refund of the aggregate payment paid for the defective
[Equipment/Licensed Programs]. Such refund shall be payable on
demand.
COMPLIANT. SEE COMMENT ABOVE
[1.4] The Contractor shall indemnify Eircom against any loss, damage
or expense suffered by Eircom as a result of a breach of the warranty
set out in clause [1.1] and shall take out and maintain adequate
insurance cover in respect of its liability hereunder. The Contractor
shall produce to Eircom, if requested, satisfactory evidence of the
existence of such insurance cover.
COMPLIANT. SEE COMMENT ABOVE
55. SUFFICIENCY OF TENDER
The Contractor shall be deemed to have satisfied himself before tendering as to
the correctness and sufficiency of his Tender for the Work and of the Costs and
Rates stated in the Tender, which Tender Costs and Rates shall, except insofar
as it is otherwise provided in the Contract, cover all his obligations under the
Contract and all matters and things necessary for the proper execution and
maintenance of the Work.
COMPLIANT.
30
<PAGE>
Appendix I:
-----------
Non-performance of Contract:
In the case of failure or delay in commencement or completion of
planned products or services listed below, the Contractor shall be
liable to pay 25% of the Surety detailed under Clause 44;
(i) Native V 5.2 I/F will be available to Eircom in June 2000.
(ii) Airspan's PacketDrive product will be available in August 2000.
(iii) DA ISDN will be available in December 2000, provided the
Contractor receives an order to product with this feature no later
than March 2000, for commercial quantities (no less than 25,000
lines).
In the event of non-performance by the contractor under the Clause 44,
the Contractor will be permitted a remedy period of 3 months from the
date of notification of non-performance by Eircom, before the penalty
as provided by Clause 44 becomes effective.
31
<PAGE>
[EIRCOM PLC LETTERHEAD]
23 December 1999
EXTRA No. 2 on EO 7856: NARROW BAND FIXED WIRELESS ACCESS;
PROVISION OF ADDITIONAL EQUIPMENT AND INSTALLATION.
Dear Sir,
We wish to place an order with you for the supply and installation of 60 central
terminals and associated exchange equipment, plus the delivery of 1,050
subscriber terminals, as detailed in the attached Ordering Schedule (annex 1),
in accordance with your tender ref: 98052 dated 19th January 1999, as amplified
and revised by the attached Schedule of Correspondence (annex 2).
This transaction, for an additional sum of * , exclusive of VAT, is being
regarded as Extra No. 2 on Engineering Order No. EO 7856, and is subject to the
terms and conditions of that order.
Yours Faithfully,
/s/ A. Kane
- ----------------------------
A. Kane
Chief Executive,
Eircom Plc.
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EIRCOM DETAILED ORDER SCHEDULE
- ------------------------------------
Supplier AIRSPAN
Quote ref 98052
Date 10 Dec. 99
Page 2/2
- ------------------------------------
Freq selected 3.4-3.6 GHz Plan 1
- ------------------------------------
- ------------------------------------------------------------------------------
Item Qty Price() Extended Price()
- ------------------------------------------------------------------------------
ST
R1 1-line 64k & 32k POTS
internal plastic Subs
Terminal, Ext Antenna,
PSU, batteries and cable * * *
B1 ISDN 2B+D internal Subs
Terminal, Ext Antenna,
PSU, batteries and cable * * *
Total ST *
- ------------------------------------------------------------------------------
CT & AC Racks
CT Rack with combiner &
2 DA shelves * * *
Basic RF plug in set for
CT (PA+MON+2PSU+DIPLNA) * * *
Full redundant DA Card
set for 1 rf channel
(rf+AU+TU+SC+2PSU+6Modem) * * *
AC Rack with alarm &
1 AC shelf * * *
Basic AC Card Set
(64kbit/s)(2PSU+SC+CTU+XTU) * * *
AC XTU card * * *
AC CTU card * * *
Total CT & AC Racks *
- ------------------------------------------------------------------------------
Test Equipment
Level control unit, cables
and splitters-Commissioning
Equipment * * *
Total test equipment *
- ------------------------------------------------------------------------------
Antenna Modules
Omni Antenna System, including
feeder and install kit * * *
Directional Antenna System,
including feeder and install kit * * *
Total Antenna Modules *
- ------------------------------------------------------------------------------
Software
Sitespan hardware * * *
Sitespan main Licence * * *
Sitespan Shelf Licence * * *
Sitespan Starter Licence
(s/w licence for up to
qty 4 CT shelves) * * *
V5.1 licence per 1000 subs * * *
Total Software *
- ------------------------------------------------------------------------------
Installation, Commissioning &
Documentation * * *
Documentation set (Paper) * * *
Documentation set (CD ROM) * * *
CT Rack Installation &
Commissioning (Includes
Site Survey and Drawings)-
1 Shelf * * *
CT Rack Installation &
Commissioning (Includes
Site Survey and Drawings)-
2 Shelves * * *
AC Rack Installation (Includes
Site Survey and Drawings)-
1 Shelf * * *
CT Antenna Installation &
Commissioning-Omni Site * * *
CT Antenna Installation &
Commissioning-Directional,
2 or 3 Sectors * * *
Total-Installation,
Commissioning &
Documentation *
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Total *
- ------------------------------------------------------------------------------
Notes
Please note that prices are DDP (Delivery, Duty Paid) to site.
References Ref
Airspan Proposal 98052
Order Number nnnn
Commercial Terms & Conditions-
See document Ref: xxxxxx
Airspan Contact:
Simon J Crouch, Phone +44 1895 467156
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.11
AIRSPAN COMMUNICATIONS CORPORATION
1998 STOCK OPTION AND RESTRICTED STOCK PLAN
(as amended by the board and shareholders May 24, 2000)
Section 1. Purpose. The purpose of the Airspan Communications Corporation
-------
1998 Stock Option and Restricted Stock Plan (the "Plan") is to promote the
interests of Airspan Communications Corporation, a Delaware corporation (the
"Company"), and any Subsidiary thereof and the interests of the Company's
stockholders by providing an opportunity to selected employees, officers and
directors of the Company or any Subsidiary thereof as of the date of the
adoption of the Plan or at any time thereafter to purchase Common Stock of the
Company. By encouraging such stock ownership, the Company seeks to attract,
retain and motivate such employees and persons and to encourage such employees
and persons to devote their best efforts to the business and financial success
of the Company. It is intended that this purpose will be effected by the
granting of "non-qualified stock options" and/or "incentive stock options" to
acquire the Common Stock of the Company and/or by the granting of Common Stock
or rights to purchase the Common Stock of the Company on a "restricted stock"
basis. Under the Plan, the Committee shall have the authority (in its sole
discretion) to grant "incentive stock options" within the meaning of Section
422(b) of the Code, "non-qualified stock options" as described in Treasury
Regulation Section 1.83--7 or any successor regulation thereto, or "restricted
stock" awards.
Section 2. Definitions. For purposes of the Plan, the following terms
-----------
used herein shall have the following meanings, unless a different meaning is
clearly required by the context.
2.1. "Award" shall mean an award of Common Stock or the right to purchase
-----
Common Stock granted under the provisions of Section 7 of the Plan.
2.2. "Board of Directors" shall mean the Board of Directors of the
------------------
Company.
2.3. "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
2.4. "Committee" shall mean the committee of the Board of Directors
---------
referred to in Section 5 hereof.
2.5. "Common Stock" shall mean the Common Stock, $.01 par value, of the
------------
Company.
2.6. "Employee" shall mean (i) with respect to an ISO, any person,
--------
including an officer or director of the Company, who, at the time an ISO is
granted to such person hereunder, is employed on a full-time basis by the
Company or any Subsidiary of the Company, and (ii) with respect to a Non-
Qualified Option and/or an Award, any person employed by, or performing services
for, the Company or any Subsidiary of the Company, including, without
limitation, directors and officers.
<PAGE>
2.7. "ISO" shall mean an Option granted to a Participant pursuant to the
---
Plan that constitutes and shall be treated as an "incentive stock option" as
defined in Section 422(b) of the Code.
2.8. "Non-Qualified Option" shall mean an Option granted to a Participant
--------------------
pursuant to the Plan that is intended to be, and qualifies as, a "non--qualified
stock option" as described in Treasury Regulation Section 1.83--7 or any
successor regulation thereto and that shall not constitute nor be treated as an
ISO.
2.9. "Option" shall mean any ISO or Non--Qualified Option granted to an
------
Employee pursuant to the Plan.
2.10. "Participant" shall mean any Employee to whom an Award and/or an
-----------
Option is granted under the Plan.
2.11. "Parent of the Company" shall have the meaning set forth in Section
---------------------
424(e) of the Code.
2.12. "Subsidiary of the Company" shall have the meaning set forth in
-------------------------
Section 424(f) of the Code.
Section 3. Eligibility. Awards and/or Options may be granted to any
-----------
Employee. The Committee shall have the sole authority to select the persons to
whom Awards and/or Options are to be granted hereunder, and to determine whether
a person is to be granted a Non-Qualified Option, an ISO or an Award or any
combination thereof. No person shall have any right to participate in the Plan.
Any person selected by the Committee for participation during any one period
will not by virtue of such participation have the right to be selected as a
Participant for any other period. On and after the time that the Company
becomes subject to Code Section 162(m), no Participant shall be granted Options
and/or Awards under the Plan with respect to more than 1,000,000 shares of
Common Stock in any calendar year (subject to adjustment as provided in Section
8 hereof).
Section 4. Common Stock Subject to the Plan.
--------------------------------
4.1. Number of Shares. The total number of shares of Common Stock for
----------------
which Options and/or Awards may be granted under the Plan (as well as the total
number of ISOs that may be granted hereunder) shall not exceed in the aggregate
four million five hundred ninety-one thousand six hundred sixty-six (4,591,666)
shares of Common Stock (subject to adjustment as provided in Section 8 hereof).
4.2. Reissuance. The shares of Common Stock that may be subject to
----------
Options and/or Awards granted under the Plan may be either authorized and
unissued shares or shares reacquired at any time and now or hereafter held as
treasury stock as the Board of Directors may determine. In the event that any
outstanding Option expires or is terminated for any reason, the shares allocable
to the unexercised portion of such Option may again be subject to an Option
and/or Award granted under the Plan. If any shares of Common Stock acquired
pursuant to an Award or the exercise of an Option shall be forfeited or
repurchased by the Company, then such shares shall again become available for
issuance pursuant to the Plan.
2
<PAGE>
4.3. Special ISO Limitations.
-----------------------
(a) To the extent that the aggregate fair market value (determined as of
the date an ISO is granted) of the shares of Common Stock with respect to which
ISOs are exercisable for the first time by an Employee during any calendar year
(under all Incentive Stock Option Plans of the Company or any Parent or
Subsidiary of the Company) exceeds $100,000, then the excess thereof shall be
treated as a Non-Qualified Option and not as an ISO. This rule shall be applied
by taking Options into account in the order in which they are granted.
(b) No ISO shall be granted to an Employee who, at the time the ISO is
granted, owns (actually or constructively under the provisions of Section 424(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any Parent or Subsidiary of the
Company, unless the option price is at least 110% of the fair market value
(determined as of the time the ISO is granted) of the shares of Common Stock
subject to the ISO and the ISO by its terms is not exercisable more than five
years from the date it is granted.
4.4. Limitations Not Applicable to Non-Qualified Options or Awards.
-------------------------------------------------------------
Notwithstanding any other provision of the Plan, the provisions of Sections
4.3(a) and (b) shall not apply, nor shall be construed to apply, to any Non-
Qualified Option or Award granted under the Plan.
Section 5. Administration of the Plan.
--------------------------
5.1. Administration. The Plan shall be administered by a committee of the
--------------
Board of Directors (the "Committee") established by the Board of Directors and
consisting of no less than two persons. From and after the time that any equity
securities of the Company become registered or required to be registered under
Section 12 of the Securities Exchange Act of 1934 ("Exchange Act"), all members
of the Committee shall be both "non-employee directors" within the meaning of
Rule 16b-3 promulgated under the Exchange Act and "outside directors" within the
meaning of Code Section 162(m). The Committee shall be appointed from time to
time by, and shall serve at the pleasure of, the Board of Directors.
5.2. Grant of Options/Awards.
-----------------------
(a) Options. The Committee shall have the sole authority and discretion
-------
under the Plan (i) to select the Employees who are to be granted Options
hereunder; (ii) to designate whether any Option to be granted hereunder is to be
an ISO or a Non-Qualified Option; (iii) to establish the number of shares of
Common Stock that may be issued under each Option; (iv) to determine the time
and the conditions subject to which Options may be exercised in whole or in
part; (v) to determine the form of the consideration that may be used to
purchase shares of Common Stock upon exercise of any Option (including the
circumstances under which the Employee may pay all or part of the exercise price
by entering into a promissory note with the Company, or circumstances under
which the Company's issued and outstanding shares of Common Stock may be used by
a Participant to exercise an Option); (vi) to impose restrictions and/or
conditions with respect to shares of Common Stock acquired upon exercise of an
Option; (vii) to determine the circumstances under which shares of Common Stock
acquired upon exercise of any Option may be subject to repurchase by the
Company; (viii) to determine the circumstances and conditions subject to which
shares acquired upon exercise of an Option may be sold or otherwise transferred,
including, without limitation, the
3
<PAGE>
circumstances and conditions subject to which a proposed sale of shares of
Common Stock acquired upon exercise of an Option may be subject to the Company's
right of first refusal (as well as the terms and conditions of any such right of
first refusal); (ix) to establish a vesting provision for any Option relating to
the time when (or the circumstances under which) the Option may be exercised by
a Participant, including, without limitation, vesting provisions that may be
contingent upon (A) the Company meeting specified financial goals, (B) a change
of control of the Company or (C) the occurrence of other specified events; (x)
to accelerate the time when outstanding Options may be exercised; and (xi) to
establish any other terms, restrictions and/or conditions applicable to any
Option not inconsistent with the provisions of the Plan.
(b) Awards. The Committee shall have the sole authority and discretion
------
under the Plan (i) to select the Employees who are to be granted Awards
hereunder; (ii) to determine the amount, if any, to be paid by a Participant to
acquire shares of Common Stock pursuant to an Award; (iii) to determine the time
or times and the conditions subject to which Awards may be made; (iv) to
determine the time or times and the conditions subject to which the shares of
Common Stock subject to an Award are to become vested and no longer subject to
forfeiture to and/or repurchase by the Company; (v) to establish transfer
restrictions and the terms and conditions on which any such transfer
restrictions with respect to shares of Common Stock acquired pursuant to an
Award shall lapse; (vi) to establish vesting provisions with respect to any
shares of Common Stock subject to an Award, including, without limitation,
vesting provisions which may be contingent upon (A) the Company meeting
specified financial goals, (B) a change of control of the Company or (C) the
occurrence of other specified events; (vii) to determine the circumstances under
which shares of Common Stock acquired pursuant to an Award may be subject to
repurchase by the Company; (viii) to determine the circumstances and conditions
subject to which any shares of Common Stock acquired pursuant to an Award may be
sold or otherwise transferred, including, without limitation, the circumstances
and conditions subject to which a proposed sale of shares of Common Stock
acquired pursuant to an Award may be subject to the Company's right of first
refusal (as well as the terms and conditions of any such right of first
refusal); (ix) to determine the form of consideration that may be used to
purchase shares of Common Stock pursuant to an Award (including the
circumstances under which the Company's issued and outstanding shares of Common
Stock may be used by a Participant to purchase the Common Stock subject to an
Award); (x) to accelerate time at which any or all restrictions imposed with
respect to any shares of Common Stock subject to an Award will lapse; and (xi)
to establish any other terms, restrictions and/or conditions applicable to any
Award not inconsistent with the provisions of the Plan.
5.3. Interpretation. The Committee shall be authorized to interpret the
--------------
Plan and may, from time to time, adopt such rules and regulations, not
inconsistent with the provisions of the Plan, as it may deem advisable to carry
out the purposes of the Plan.
5.4. Finality. The interpretation and construction by the Committee of
--------
any provision of the Plan, any Option and/or Award granted hereunder or any
agreement evidencing any such Option and/or Award shall be final and conclusive
upon all parties.
5.5. Voting. Members of the Committee may vote on any matter affecting
------
the administration of the Plan or the granting of Options and/or Awards under
the Plan.
5.6. Expenses, Etc. All expenses and liabilities incurred by the
-------------
Committee in the administration of the Plan shall be borne by the Company. The
Committee may employ
4
<PAGE>
attorneys, consultants, accountants or other persons in connection with the
administration of the Plan. The Company, and its officers and directors, shall
be entitled to rely upon the advice, opinions or valuations of any such persons.
5.7. Indemnification. Neither the members of the Board of Directors nor
---------------
any member of the Committee shall be liable for any act, omission, or
determination taken or made in good faith with respect to the Plan or any
Options or Awards granted under it, and members of the Board of Directors and
the Committee shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage, or expense (including attorneys'
fees, the costs of settling any suit, provided such settlement is approved by
independent legal counsel selected by the Company, and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad faith)
arising therefrom to the full extent permitted by law.
Section 6. Terms and Conditions of Options.
------------------------------
6.1. ISOs. The terms and conditions of each ISO granted under the Plan
----
shall be specified by the Committee and shall be set forth in an ISO agreement
between the Company and the Participant in such form as the Committee shall
approve. The terms and conditions of each ISO shall be such that each ISO issued
hereunder shall constitute and shall be treated as an "incentive stock option"
as defined in Section 422(b) of the Code. The terms and conditions of any ISO
granted hereunder need not be identical to those of any other ISO granted
hereunder.
The terms and conditions of each ISO shall include the following:
(a) The option price shall be fixed by the Committee but shall in no
event be less than 100% (or 110% in the case of an Employee referred to in
Section 4.3(b) hereof) of the fair market value of the shares of Common Stock
subject to the ISO on the date the ISO is granted. For purposes of the Plan, the
fair market value per share of Common Stock as of any day shall mean the average
of the closing prices of sales of shares of Common Stock on all national
securities exchanges on which the Common Stock may at the time be listed or, if
there shall have been no sales on any such day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day the Common Stock shall not be so listed, the average of the
representative bid and asked prices quoted in the NASDAQ system as of 3:30 p.m.,
New York time, on such day, or, if on any day the Common Stock shall not be
quoted in the NASDAQ system, the average of the high and low bid and asked
prices on such day in the over-the-counter market as reported by National
Quotation Bureau Incorporated, or any similar successor organization. If at any
time the Common Stock is not listed on any national securities exchange or
quoted in the NASDAQ system or the over-the-counter market, the fair market
value of the shares of Common Stock subject to an Option on the date the ISO is
granted shall be the fair market value thereof determined in good faith by the
Board of Directors. The fair market value of Common Stock subject to an ISO
shall be determined without regard to any restriction other than a restriction
which, by its terms, will never lapse.
(b) ISOs, by their terms, shall not be transferable otherwise than by
will or the laws of descent and distribution, and, during an Optionee's
lifetime, an ISO shall be exercisable only by the Optionee.
5
<PAGE>
(c) All ISOs must be granted within 10 years of the earlier of the date
the Plan is adopted or the date the Plan is approved by the shareholders of the
Company. The Committee shall fix the term of all ISOs granted pursuant to the
Plan (including the date on which such ISO shall expire and terminate),
provided, however, that such term shall in no event exceed ten years from the
- -------- -------
date on which such ISO is granted (or, in the case of an ISO granted to an
Employee referred to in Section 4.3(b) hereof, such term shall in no event
exceed five years from the date on which such ISO is granted). Each ISO shall be
exercisable in such amount or amounts, under such conditions and at such times
or intervals or in such installments as shall be determined by the Committee in
its sole discretion.
(d) To the extent that the Company or any Parent or Subsidiary of the
Company is required to withhold any Federal, state or local taxes in respect of
any compensation income realized by any Participant as a result of any
"disqualifying disposition" of any shares of Common Stock acquired upon exercise
of an ISO granted hereunder, the Company shall deduct from any payments of any
kind otherwise due to such Participant the aggregate amount of such Federal,
state or local taxes required to be so withheld or, if such payments are
insufficient to satisfy such Federal, state or local taxes, such Participant
will be required to pay to the Company, or make other arrangements satisfactory
to the Company regarding payment to the Company of, the aggregate amount of any
such taxes. All matters with respect to the total amount of taxes to be withheld
in respect of any such compensation income shall be determined by the Board of
Directors in its sole discretion.
(e) In the sole discretion of the Committee the terms and conditions of
any ISO may (but need not) include any of the following provisions:
(i) In the event a Participant shall cease to be employed by the
Company or any Parent or Subsidiary of the Company on a full-time basis for
any reason other than as a result of his death or "disability" (within the
meaning of Section 22(e)(3) of the Code), the unexercised portion of any
ISO held by such Participant at that time may only be exercised within
three (3) months after the date on which the Participant ceased to be so
employed, and only to the extent that the Participant could have otherwise
exercised such ISO as of the date on which he ceased to be so employed.
(ii) In the event a Participant shall cease to be employed by the
Company or any Parent or Subsidiary of the Company on a full--time basis by
reason of his "disability" (within the meaning of Section 22(e)(3) of the
Code), the unexercised portion of any ISO held by such Participant at that
time may only be exercised within one year after the date on which the
Participant ceased to be so employed, and only to the extent that the
Participant could have otherwise exercised such ISO as of the date on which
he ceased to be so employed.
(iii) In the event a Participant shall die while in the full-time
employ of the Company or a Parent or Subsidiary of the Company (or within a
period of three (3) months after ceasing to be an Employee for any reason
other than his "disability" or within a period of one year after ceasing to
be an Employee by reason of such "disability"), the unexercised portion of
any ISO held by such Participant at the time of his death may only be
exercised within one year after the date of such Participant's death, and
only to the extent that the Participant could have otherwise exercised such
ISO at the time of his death. In such event, such ISO may be exercised by
the executor
6
<PAGE>
or administrator of the Participant's estate or by any person amish persons
who shall have acquired the ISO directly from the Participant by bequest or
inheritance.
(f) No Option granted hereunder shall qualify as an ISO unless the Plan
is approved by the shareholders of the Company within 12 months before or after
the date the Plan is adopted by the Board of Directors.
6.2. Non-Qualified Options. The terms and conditions of each Non-
---------------------
Qualified Option granted under the Plan shall be specified by the Committee, in
its sole discretion, and shall be set forth in a written option agreement
between the Company and the Participant in such form as the Committee shall
approve. The terms and conditions of each Non-Qualified Option will be such (and
each Non-Qualified Option Agreement shall expressly so state) that each Non-
Qualified Option issued hereunder shall not constitute nor be treated as an
"incentive stock option" as defined in Section 422(b) of the Code but will be a
"non-qualified stock option" for Federal, state and local income tax purposes.
The terms and conditions of any Non-Qualified Option granted hereunder need not
be identical to those of any other Non-Qualified Option granted hereunder.
The terms and conditions of each Non-Qualified Option Agreement shall
include the following:
(a) The option (exercise) price shall be fixed by the Committee and may
be equal to, more than or less than 100% of the fair market value of the shares
of Common Stock subject to the Non-Qualified Option on the date such Non-
Qualified Option is granted, provided, however, that the option (exercise) price
-------- -------
shall not be less than the par value of such shares of Common Stock.
(b) The Committee shall fix the term of all Non-Qualified Options granted
pursuant to the Plan (including the date on which such Non--Qualified Option
shall expire and terminate). Each Non-Qualified Option shall be exercisable in
such amount or amounts, under such conditions (including provisions governing
the rights to exercise such Non--Qualified Option), and at such times or
intervals or in such installments as shall be determined by the Committee in its
sole discretion.
(c) Except as otherwise provided in an individual Option Agreement, Non-
Qualified Options shall not be transferable otherwise than by will or the laws
of descent and distribution, or a domestic relations order, and during a
Participant's lifetime a Non-Qualified Option shall be exercisable only by the
Participant or an alternate payee under a domestic relations order.
(d) To the extent that the Company is required to withhold any Federal,
state or local taxes in respect of any compensation income realized by any
Participant in respect of a Non-Qualified Option granted hereunder or in respect
of any shares of Common Stock acquired upon exercise of a Non-Qualified Option,
the Company shall deduct from any payments of any kind otherwise due to such
Participant the aggregate amount of such Federal, state or local taxes required
to be so withheld or, if such payments are insufficient to satisfy such Federal,
state or local taxes, or if no such payments are due or to become due to such
Participant, then, such Participant will be required to pay to the Company, or
make other arrangements satisfactory to the Company (including, with prior
Committee approval, use of a promissory note in favor of the Company) regarding
payment to the Company of, the
7
<PAGE>
aggregate amount of any such taxes. All matters with respect to the total amount
of taxes to be withheld in respect of any such compensation income shall be
determined by the Board of Directors in its sole discretion.
Section 7. Terms and Conditions of Awards. The terms and conditions of
------------------------------
each Award granted under the Plan shall be specified by the Committee, in its
sole discretion, and shall be set forth in a written agreement between the
Participant and the Company, in such form as the Committee shall approve. The
terms and provisions of any Award granted hereunder need not be identical to
those of any other Award granted hereunder.
The terms and conditions of each Award shall include the following:
(a) The amount, if any, to be paid by a Participant to acquire the shares
of Common Stock pursuant to an Award shall be fixed by the Board of Directors
(or the Committee).
(b) Each Award shall contain such vesting provisions, such transfer
restrictions and such other restrictions and conditions as the Committee, in its
sole discretion, may determine, including, without limitation, the circumstances
under which the Company shall have the right and option to repurchase shares of
Common Stock acquired pursuant to an Award.
(c) Stock certificates representing Common Stock acquired pursuant to an
Award shall bear a legend referring to the restrictions imposed on such Stock
and such other matters as the Committee may determine.
(d) To the extent that the Company is required to withhold any Federal,
state or local taxes in respect of any compensation income realized by the
Participant in respect of an Award granted hereunder, or in respect of any
shares acquired pursuant to an Award, or in respect of the vesting of any such
shares of Common Stock, then the Company shall deduct from any payments of any
kind otherwise due to such Participant the aggregate amount of such Federal,
state or local taxes required to be so withheld or, if such payments are
insufficient to satisfy such Federal, state or local taxes, or if no such
payments are due or to become due to such Participant, then, such Participant
will be required to pay to the Company, or make other arrangements satisfactory
to the Company regarding payment to the Company of, the aggregate amount of any
such taxes. All matters with respect to the total amount of taxes to be withheld
in respect of any such compensation income shall be determined by the Committee
in its sole discretion.
Section 8. Adjustments. In the event that, after the adoption of the Plan
-----------
by the Board of Directors, the outstanding shares of the Company's Common Stock
shall be increased or decreased or changed into or exchanged for a different
number or kind of shares of stock or other securities of the Company or of
another corporation through reorganization, merger or consolidation,
recapitalization, reclassification, stock split, split-up, combination or
exchange of shares or declaration of any dividends payable in Common Stock, the
Board of Directors shall appropriately adjust (i) the number of shares of Common
Stock (and the option price per share) subject to the unexercised portion of any
outstanding Option (to the nearest possible full share), provided, however, that
-------- -------
the limitations of Section 424 of the Code shall apply with respect to
adjustments made to ISOs; (ii) the number of shares of Common Stock to be
acquired pursuant to an Award which have not become vested, and (iii) the number
of shares
8
<PAGE>
of Common Stock for which Options and/or Awards may be granted under
the Plan, as set forth in Section 4.1 hereof, and such adjustments shall be
effective and binding for all purposes of the Plan. The number of shares
authorized in Section 4.1 reflects the three-for-one reverse split of the common
stock effected in May 2000.
Section 9. Effect of the Plan on Employment Relationship. Neither the
---------------------------------------------
Plan nor any Option and/or Award granted hereunder to a Participant shall be
construed as conferring upon such Participant any right to continue in the
employ of (or otherwise provide services to) the Company or any Subsidiary or
Parent thereof, or limit in any respect the right of the Company or any
Subsidiary or Parent thereof to terminate such Participant's employment or other
relationship with the Company or any Subsidiary or Parent, as the case may be,
at any time.
Section 10. Amendment of the Plan. The Committee or Board of Directors
---------------------
may amend or suspend the Plan or any portion thereof at any time, provided such
amendment is made with stockholder approval if such approval is necessary to
comply with any tax or regulatory requirement, including for these purposes any
approval which is a requirement for ISO treatment or, if applicable once any
equity securities of the Company become registered under Section 12 of the
Exchange Act, for exemptive relief under Section 16(b) of the Exchange Act or
which is a requirement for the performance-based compensation exception under
Code Section 162(m). The Committee in its sole discretion may amend the Plan so
as to conform with local rules and regulations subject to any provisions to the
contrary specified herein.
Section 11. Amendment of an Option or Award Agreement. In its sole and
-----------------------------------------
complete discretion, the Committee may at any time amend any Option or Award
Agreement for the following reasons: (i) additions and/or changes to the Code,
any federal or state securities law, or other law or regulations applicable to
the Option or Award, are made, and such additions and/or changes have some
effect on the Option or Award; or (ii) any other event not described in clause
(i) occurs and the Participant gives his or her consent to such amendment,
provided however, except for capital adjustments described in Section 8, the
Committee may not reduce the exercise price of an Option or Award.
Section 12. Exemption from Computation of Compensation for Other Purposes.
-------------------------------------------------------------
By acceptance of an applicable Option or Award, subject to the conditions of
such Option or Award, each Participant shall be considered in agreement that all
shares sold or awarded and all Options granted under this Plan shall be
considered special incentive compensation and will be exempt from inclusion as
"wages" or "salary" in pension, retirement, life insurance, and other employee
benefits arrangements of the Company, except as determined otherwise by the
Company. In addition, each beneficiary of a deceased Participant shall be in
agreement that all such Options and Awards will be exempt from inclusion in
"wages" or "salary" for purposes of calculating benefits of any life insurance
coverage sponsored by the Company.
Section 13. Listing, Registration and Other Legal Compliance. No Options,
------------------------------------------------
Awards or shares of the Common Stock shall be required to be issued or granted
under the Plan unless legal counsel to the Company shall be satisfied that such
issuance or grant will be in compliance with all applicable federal and state
securities laws and regulations and any other applicable laws or regulations.
The Committee may require, as a condition of any payment or share issuance, that
certain agreements, undertakings, representations, certificates, and/or
information, as the Committee may deem necessary or advisable, be executed or
provided to the Company to assure compliance with all such applicable laws or
regulations. Any
9
<PAGE>
certificates for shares of Common Stock delivered under the Plan may be subject
to such stock-transfer orders and such other restrictions as the Committee may
deem advisable under the rules, regulations, or other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed, and any applicable federal or state securities law. In
addition, if, at any time specified herein (or in any Agreement or otherwise)
for (a) the making of any Option or Award, or the making of any determination,
(b) the issuance or other distribution of Common Stock, or (c) the payment of
amounts to or through a Participant with respect to any Option or Award, any
law, rule, regulation, or other requirement of any governmental authority or
agency shall require the Company, any affiliate, or any Participant (or any
estate, designated beneficiary, or other legal representative thereof) to take
any action in connection with any such determination, any such shares to be
issued or distributed, any such payment, or the making of any such
determination, as the case may be, shall be deferred until such required action
is taken.
Section 14. Rights as Stockholder. Subject to the Award provisions, no
---------------------
Participant or beneficiary shall be deemed a stockholder of the Company nor have
any rights as such with respect to any shares to be provided under the Plan
until he or she has become the holder of such shares. Notwithstanding the
aforementioned, with respect to restricted stock Awards under this Plan, the
Participant or beneficiary of such Award shall be deemed the owner of such
shares provided herein. As such, unless contrary to the provisions herein or in
any such related Agreement, such stockholder shall be entitled to full voting,
dividend and distribution rights as provided any other Company stockholder for
as long as the Participant continues to be deemed the owner of such stock.
Section 15. Construction of the Plan. The Plan, and its rules, rights,
------------------------
agreements and regulations, shall be governed, construed, interpreted and
administered solely in accordance with the laws of the state of Delaware. In the
event any provision of the Plan shall be held invalid, illegal or unenforceable,
in whole or in part, for any reason, such determination shall not affect the
validity, legality or enforceability of any remaining provision, portion of
provision or the Plan overall, which shall remain in full force and effect as if
the Plan had been absent the invalid, illegal or unenforceable provision or
portion thereof
Section 16. Termination of the Plan. The Board of Directors may terminate
-----------------------
the Plan at any time. Unless the Plan shall theretofore have been terminated by
the Board of Directors, the Plan shall terminate ten years after the date of its
initial adoption by the Board of Directors. No Option and/or Award may be
granted hereunder after termination of the Plan. The termination or amendment of
the Plan shall not alter or impair any rights or obligations under any Option
and/or Award theretofore granted under the Plan.
Section 17. Effective Date of the Plan. The Plan shall be effective as of
--------------------------
1st February, 1998, the date on which the Plan was adopted by the Board of
Directors of the Company.
* * * *
10
<PAGE>
Note: Portions of this exhibit indicated by "[*]" are subject to a confidential
treatment request, and have been omitted from this exhibit. Complete,
unredacted copies of this exhibit have been filed with the Securities and
Exchange Commission as part of this Company's confidential treatment request.
[EIRCOM PLC LETTERHEAD]
Date: 23 December 1999
ENGINEERING ORDER NO EO 8022
(To be quoted on each Invoice)
TO: Airspan Communications Ltd.,
Cambridge House, Oxford Road,
Uxbridge, Middlesex UB8 1UN, U.K.
I hereby accept, on behalf of Eircom plc, your Tender
Dated the 19th day of January 1999
For the work hereunder mention, to be proceeded with AS AGREED
And completed WITH ENGINEER
- -----------------------------------------------------------------------------
On the completion of any portion of the work, or on payment becoming due under
the terms of the tender or specification, a PRICED INVOICE (in the name of
Eircom plc) shall be sent IN DUPLICATE to Eircom plc at the following address
Eircom plc,
Engineering Contracts Section,
Room 3.69, Block C,
St. Stephen's Green West, Dublin 2.
- ------------------------------------------------------------------------------
Description of work
NARROW BAND FIXED WIRELESS ACCESS.
Supply, install and commission FWA equipment for 39 base stations, as detailed
in the attached Ordering Schedule, in accordance with your Tender dated 19th
January 1999, for a total amount of EURO * , fixed price, delivered DDP to site,
exclusive of duties and VAT, and subject to the general terms and conditions of
Engineering Order No EO 7856.
/s/ A. Kane
- ----------------------------
A. Kane
Chief Executive,
Eircom Plc.
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EIRCOM DETAILED ORDER SCHEDULE
- ------------------------------------
Supplier AIRSPAN
Quote ref 98052
Date 10 Dec. 99
Page 2/2
- ------------------------------------
Freq selected 3.4-3.6 GHz Plan 1
- ------------------------------------
- ------------------------------------------------------------------------------
Item Qty Price() Extended Price()
- ------------------------------------------------------------------------------
ST
R1 1-line 64k & 32k POTS
internal plastic Subs
Terminal, Ext Antenna,
PSU, batteries and cable * * *
B1 ISDN 2B+D internal Subs
Terminal, Ext Antenna,
PSU, batteries and cable * * *
Total ST *
- ------------------------------------------------------------------------------
CT & AC Racks
CT Rack with combiner &
2 DA shelves * * *
Basic RF plug in set for
CT (PA+MON+2PSU+DIPLNA) * * *
Full redundant DA Card
set for 1 rf channel
(rf+AU+TU+SC+2PSU+6Modem) * * *
AC Rack with alarm &
1 AC shelf * * *
Basic AC Card Set
(64kbit/s)(2PSU+SC+CTU+XTU) * * *
AC XTU card * * *
AC CTU card * * *
Total CT & AC Racks *
- ------------------------------------------------------------------------------
Test Equipment
Level control unit, cables
and splitters-Commissioning
Equipment * * *
Total test equipment *
- ------------------------------------------------------------------------------
Antenna Modules
Omni Antenna System, including
feeder and install kit * * *
Directional Antenna System,
including feeder and install kit * * *
Total Antenna Modules *
- ------------------------------------------------------------------------------
Software
Sitespan hardware * * *
Sitespan main Licence * * *
Sitespan Shelf Licence * * *
Sitespan Starter Licence
(s/w licence for up to
qty 4 CT shelves) * * *
V5.1 licence per 1000 subs * * *
Total Software *
- ------------------------------------------------------------------------------
Installation, Commissioning &
Documentation * * *
Documentation set (Paper) * * *
Documentation set (CD ROM) * * *
CT Rack Installation &
Commissioning (Includes
Site Survey and Drawings)-
1 Shelf * * *
CT Rack Installation &
Commissioning (Includes
Site Survey and Drawings)-
2 Shelves * * *
AC Rack Installation (Includes
Site Survey and Drawings)-
1 Shelf * * *
CT Antenna Installation &
Commissioning-Omni Site * * *
CT Antenna Installation &
Commissioning-Directional,
2 or 3 Sectors * * *
Total-Installation,
Commissioning &
Documentation *
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Total *
- ------------------------------------------------------------------------------
Notes
Please note that prices are DDP (Delivery, Duty Paid) to site.
References Ref
Airspan Proposal 98052
Order Number nnnn
Commercial Terms & Conditions-
See document Ref: xxxxxx
Airspan Contact:
Simon J Crouch, Phone +44 1895 467156
[*] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.12
AIRSPAN NETWORKS INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
As approved by the Board of Directors
on May 17, 2000 and Airspan's
Shareholders on May 24, 2000
Airspan Networks Inc. (the "Company") does hereby establish its 2000
Employee Stock Purchase Plan as follows:
1. Purpose of the Plan. The purpose of this Plan is to provide eligible
employees who wish to become shareholders in the Company a convenient method of
doing so. It is believed that employee participation in the ownership of the
business will be to the mutual benefit of both the employees and the Company.
2. Definitions.
2.1 "Base pay" means regular straight time earnings, plus review
cycle bonuses, payments for incentive compensation, and other special payments
except to the extent that any such item is specifically excluded by the Board of
Directors of the Company (the "Board").
2.2 "Account" shall mean the funds accumulated with respect to an
individual employee as a result of deductions from his paycheck for the purpose
of purchasing stock under this Plan. The funds allocated to an employee's
account shall remain the property of the respective employee at all times but
may be commingled with the general funds of the Company.
3. Employees Eligible to Participate. Any employee of the Company or any
of its subsidiaries who is in the employ of the Company or subsidiary on an
Offering commencement date is eligible to participate in that Offering, except
(a) employees whose customary employment is less than 20 hours per week, and (b)
employees whose customary employment is for not more than five months in any
calendar year.
4. Offerings. There will be six separate consecutive offerings (each an
"Offering") pursuant to the Plan. The first Offering shall commence on the date
on which the Company's registration statement for the registration under the
Securities Act of 1933, as amended, of shares of the common stock of the Company
becomes effective (the "IPO Date"), and shall continue through July 31 , 2001.
Thereafter, Offerings shall commence on each subsequent August 1 and shall last
for a period of one year, and the final Offering under this Plan shall commence
on August 1, 2005 and terminate on July 31, 2006. In order to become eligible
to purchase shares, an employee must sign an Enrollment Agreement, and any other
necessary papers on or before the commencement date (the IPO Date or August 1,
as applicable) of the particular Offering in which he wishes to participate.
Participation in one Offering under the Plan shall neither limit, nor require,
participation in any other Offering.
5. Price.
<PAGE>
5.1 The first Offering
The purchase price per share shall be the lesser of (1) 85% of the
fair market value of the stock on the IPO Date; or (2) 85% of the fair
market value of the stock on the last business day of the first
Offering. Fair market value shall mean the closing bid price as
reported on the National Association of Securities Dealers Automated
Quotation System or, if the stock is traded on a stock exchange, the
closing price for the stock on the principal such exchange.
5.2 Subsequent Offerings
The purchase price per share shall be the lesser of (1) 85% of the
fair market value of the stock on the Offering date; or (2) 85% of the
fair market value of the stock on the last business day of the
Offering. Fair market value shall mean the closing bid price as
reported on the National Association of Securities Dealers Automated
Quotation System or, if the stock is traded on a stock exchange, the
closing price for the stock on the principal such exchange.
6. Offering Date. The "offering date" as used in this Plan shall be
the commencement date of the Offering, if such date is a regular business day,
or the first regular business day following such commencement date. A different
date may be set by resolution of the Board.
7. Number of Shares to be Offered. The maximum number of shares that
will be offered under the Plan is 500,000 shares. The shares to be sold to
participants under the Plan will be common stock of the Company. If the total
number of shares for which options are to be granted on any date in accordance
with Section 10 exceeds the number of shares then available under the Plan
(after deduction of all shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the shares
remaining available in as nearly a uniform manner as shall be practicable and as
it shall determine to be equitable. In such event, the payroll deductions to be
made pursuant to the authorizations therefor shall be reduced accordingly and
the Company shall give written notice of such reduction to each employee
affected thereby.
8. Participation.
8.1 An eligible employee may become a participant by completing an
Enrollment Agreement provided by the Company and filing it with Shareholder
Services prior to the Commencement of the Offering to which it relates.
8.2 Payroll deductions for a participant shall commence on the
offering date, and shall end on the termination date of such Offering unless
earlier terminated by the employee as provided in Paragraph 14.
9. Payroll Deductions.
9.1 At the time a participant files his authorization for a payroll
deduction, he shall elect to have deductions made from his pay on each payday
during the time he is a participant in an Offering at the rate of 2%, 4%, 6%,
8%, or 10% of his base pay.
<PAGE>
9.2 All payroll deductions made for a participant shall be credited
to his account under the Plan. A participant may not make any separate cash
payment into such account nor may payment for shares be made other than by
payroll deduction.
9.3 A participant may discontinue his participation in the Plan as
provided in Section 14, but no other change can be made during an Offering and,
specifically, a participant may not alter the rate of his payroll deductions for
that Offering.
10. Granting of Option. On the offering date, this Plan shall be deemed to
have granted to the participant an option for as many shares as he will be able
to purchase with the payroll deductions credited to his account during his
participation in that Offering.
11. Exercise of Option. Each employee who continues to be a participant in
an Offering on the last business day of that Offering shall be deemed to have
exercised his option on such date and shall be deemed to have purchased from the
Company such number of shares of common stock reserved for the purpose of the
Plan as his accumulated payroll deductions on such date will pay for at the
option price.
12. Employee's Rights as a Shareholder. No participating employee shall
have any right as a shareholder with respect to any shares until the shares have
been purchased in accordance with Section 11 above and the stock has been issued
by the Company.
13. Evidence of Stock Ownership.
13.1 Promptly following the end of each Offering, the number of
shares of common stock purchased by each participant shall be deposited into an
account established in the participant's name at a stock brokerage or other
financial services firm designated by the Company (the "ESPP Broker").
13.2 The participant may direct, by written notice to the Company at
the time of his enrollment in the Plan, that his ESPP Broker account be
established in the names of the participant and one other person designated by
the participant, as joint tenants with right of survivorship, tenants in common,
or community property, to the extent and in the manner permitted by applicable
law.
13.3 A participant shall be free to undertake a disposition (as that
term is defined in Section 424(c) of the Code) of the shares in his account at
any time, whether by sale, exchange, gift, or other transfer of legal title, but
in the absence of such a disposition of the shares, the shares must remain in
the participant's account at the ESPP Broker until the holding period set forth
in Section 423(a) of the Code has been satisfied. With respect to shares for
which the Section 423(a) holding period has been satisfied, the participant may
move those shares to another brokerage account of participant's choosing or
request that a stock certificate be issued and delivered to him.
13.4 A participant who is not subject to payment of U.S. income taxes
may move his shares to another brokerage account of his choosing or request that
a stock certificate be issued and delivered to him at any time, without regard
to the satisfaction of the Section 423(a) holding period.
<PAGE>
14. Withdrawal.
14.1 An employee may withdraw from an Offering, in whole but not in
part, at any time prior to the last business day of such Offering by delivering
a Withdrawal Notice to the Company, in which event the Company will refund the
entire balance of his deductions as soon as practicable thereafter.
14.2 To re-enter the Plan, an employee who has previously withdrawn
must file a new Enrollment Agreement in accordance with Section 8.1. The
employee's re-entry into the Plan will not become effective before the beginning
of the next Offering following his withdrawal, and if the withdrawing employee
is an officer of the Company within the meaning of Section 16 of the Securities
Exchange Act of 1934 he may not re-enter the Plan before the beginning of the
second Offering following his withdrawal.
15. Carryover of Account. At the termination of each Offering the Company
shall automatically re-enroll the employee in the next Offering, and the balance
in the employee's account shall be used for option exercises in the new
Offering, unless the employee has advised the Company otherwise. Upon
termination of the Plan, the balance of each employee's account shall be
refunded to him.
16. Interest. No interest will be paid or allowed on any money in the
accounts of participating employees.
17. Rights Not Transferable. No employee shall be permitted to sell,
assign, transfer, pledge, or otherwise dispose of or encumber either the payroll
deductions credited to his account or any rights with regard to the exercise of
an option or to receive shares under the Plan other than by will or the laws of
descent and distribution, and such right and interest shall not be liable for,
or subject to, the debts, contracts, or liabilities of the employee. If any such
action is taken by the employee, or any claim is asserted by any other party in
respect of such right and interest whether by garnishment, levy, attachment or
otherwise, such action or claim will be treated as an election to withdraw funds
in accordance with Section 14.
18. Termination of Employment. Upon termination of employment for any
reason whatsoever, including but not limited to death or retirement, the balance
in the account of a participating employee shall be paid to the employee or his
estate.
19. Amendment or Discontinuance of the Plan. The Board shall have the
right to amend, modify, or terminate the Plan at any time without notice,
provided that no employee's existing rights under any Offering already made
under Section 4 hereof may be adversely affected thereby, and provided further
that no such amendment of the Plan shall, except as provided in Section 20,
increase above 750,000 shares the total number of shares to be offered unless
shareholder approval is obtained therefor.
20. Changes in Capitalization. In the event of reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, offerings of rights, or any other change in the structure of the
common shares of the Company, the Board may make such adjustment, if any, as it
may deem appropriate in the number, kind, and the price of shares available for
purchase under the Plan, and in the number of shares which an employee is
entitled to purchase.
<PAGE>
21. Share Ownership. Notwithstanding anything herein to the contrary, no
employee shall be permitted to subscribe for any shares under the Plan if such
employee, immediately after such subscription, owns shares (including all shares
which may be purchased under outstanding subscriptions under the Plan)
possessing 5% or more of the total combined voting power or value of all classes
of shares of the Company or of its parent or subsidiary corporations. For the
foregoing purposes the rules of Section 425(d) of the Internal Revenue Code of
1986 shall apply in determining share ownership. In addition, no employee shall
be allowed to subscribe for any shares under the Plan which permits his rights
to purchase shares under all "employee stock purchase plans" of the Company and
its subsidiary corporations to accrue at a rate which exceeds $25,000 of the
fair market value of such shares (determined at the time such right to subscribe
is granted) for each calendar year in which such right to subscribe is
outstanding at any time.
22. Administration. The Plan shall be administered by the Board. The Board
may delegate any or all of its authority hereunder to such committee of the
Board or officer of the Company as it may designate. The administrator shall be
vested with full authority to make, administer, and interpret such rules and
regulations as it deems necessary to administer the Plan, and any determination,
decision, or action of the administrator in connection with the construction,
interpretation, administration, or application of the Plan shall be final,
conclusive, and binding upon all participants and any and all persons claiming
under or through any participant.
23. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received by Shareholder Services of the Company or when received in
the form specified by the Company at the location, or by the person, designated
by the Company for the receipt thereof.
24. Termination of the Plan. This Plan shall terminate at the earliest of
the following:
24.1 July 31, 2006.
24.2 The date of the filing of a Statement of Intent to Dissolve by
the Company or the effective date of a merger or consolidation wherein the
Company is not to be the surviving corporation, which merger or consolidation is
not between or among corporations related to the Company. Prior to the
occurrence of either of such events, on such date as the Company may determine,
the Company may permit a participating employee to exercise the option to
purchase shares for as many shares as the balance of his account will allow at
the price set forth in accordance with Section 5. If the employee elects to
purchase shares, the remaining balance of his account will be refunded to him
after such purchase.
24.3 The date the Board acts to terminate the Plan in accordance
with Section 19 above.
24.4 The date when all shares reserved under the Plan have been
purchased.
25. Limitations on Sale of Stock Purchased Under the Plan. The Plan
is intended to provide common stock for investment and not for resale. The
Company does not, however, intend to restrict or influence any employee in the
conduct of his own affairs. An employee, therefore, may sell stock purchased
under the Plan at any time he chooses, subject to compliance
<PAGE>
with any applicable Federal or state securities laws. THE EMPLOYEE ASSUMES THE
RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE STOCK.
26. Governmental Regulation. The Company's obligation to sell and deliver
shares of the Company's common stock under this Plan is subject to the approval
of any governmental authority required in connection with the authorization,
issuance, or sale of such shares.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our reports dated February 9, 2000 and except for Note 16--
Subsequent Events as to which the date is May 26, 2000, in Amendment No. 1 to
the Registration Statement (Form S-1 No. 333-34514) and related Prospectus of
Airspan Networks Inc for the registration of 5,000,000 shares of its common
stock.
/s/ Ernst & Young
Ernst & Young
London, England
May 26, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-2000
<PERIOD-START> JAN-01-1999 JAN-01-2000
<PERIOD-END> DEC-31-1999 APR-02-2000
<CASH> 58,828 55,906
<SECURITIES> 0 0
<RECEIVABLES> 7,672 7,606
<ALLOWANCES> 1,130 1,371
<INVENTORY> 7,127 7,639
<CURRENT-ASSETS> 79,665 76,956
<PP&E> 6,751 6,944
<DEPRECIATION> 2,345 700
<TOTAL-ASSETS> 88,220 85,428
<CURRENT-LIABILITIES> (10,870) (10,809)
<BONDS> 0 0
0 0
785 801
<COMMON> 40 41
<OTHER-SE> 56,387 53,337
<TOTAL-LIABILITY-AND-EQUITY> 88,220 85,428
<SALES> 12,480 5,661
<TOTAL-REVENUES> 12,480 5,661
<CGS> (8,086) (3,530)
<TOTAL-COSTS> (8,086) (3,530)
<OTHER-EXPENSES> (33,890) (9,817)
<LOSS-PROVISION> (1,130) (1,371)
<INTEREST-EXPENSE> (1,434) (473)
<INCOME-PRETAX> (29,349) (7,048)
<INCOME-TAX> (100) (16)
<INCOME-CONTINUING> (29,349) (7,048)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (29,449) (7,064)
<EPS-BASIC> (33.84) (6.50)
<EPS-DILUTED> (33.84) (6.50)
</TABLE>
