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EXHIBIT 10.5
MASTER AGREEMENT REGARDING EQUIPMENT PROCUREMENT
This Master Agreement Regarding Equipment Procurement (the "Agreement")
is made effective as of the 23rd day of September, 1998 (the "Effective Date"),
between XXXXXXXX Xxxxxxxxxxxx, a Delaware corporation, having an office at 0000
Xxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 ("QUALCOMM"), and Leap Wireless
International, Inc., a Delaware corporation, having an office at 00000 Xxxxxxx
Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 ("Leap").
RECITALS
A. Pursuant to that certain Separation and Distribution Agreement, dated
as of September 23, 1998, between QUALCOMM and Leap (the "Spinoff Agreement"),
QUALCOMM is, among other things, contributing certain assets to Leap and, in
connection therewith, QUALCOMM is providing financing to Leap to enable Leap to
operate in accordance with Leap's approved business plan; and
B. Leap, directly or indirectly through entities in which Leap holds
(directly or indirectly) an Investment (as such term is defined below), intends
(i) to construct terrestrial-based cdmaOne(R) (as such term is defined below)
PCS, cellular, wireless local loop or other cdmaOne wireless terrestrial-based
telecommunications networks, (ii) to purchase and deploy corresponding wireless
infrastructure equipment, (iii) to purchase, distribute and sell corresponding
wireless subscriber equipment and (iv) to provide terrestrial-based cdmaOne PCS,
cellular, wireless local loop and other cdmaOne wireless terrestrial-based
communication services in the United States of America and outside the United
States of America; and
C. QUALCOMM is a supplier of cdmaOne infrastructure equipment and
provides related installation, engineering, support and other services related
to such equipment; and
D. QUALCOMM is a supplier of cdmaOne subscriber equipment; and
E. As a material inducement to QUALCOMM to enter into the Spinoff
Agreement and for QUALCOMM to provide to Leap the financing contemplated in
connection therewith, Leap is willing, subject to the terms and conditions of
this Agreement, to purchase from QUALCOMM, and to cause certain entities in
which Leap directly or indirectly holds an Investment to purchase from QUALCOMM,
certain cdmaOne infrastructure equipment, related services, and cdmaOne
subscriber equipment.
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AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree to the following
terms and conditions.
1. HEADINGS AND DEFINITIONS. All headings used in this Agreement are
inserted for convenience only and are not intended to affect the meaning or
interpretation of this Agreement or any section hereof. For purposes of this
Agreement, the following definitions will apply:
"ADVERTISING" means all advertising, sales promotion, press releases and
other publicity matters relating to performance under this Agreement.
"AFFILIATE" means any Person that, directly or indirectly, through one
or more intermediaries, controls, is controlled by or is under common control
with another Person, where "control" means to direct or cause the direction of
the management and policies of such Person, whether through ownership of voting
securities or by contract or otherwise, but any such Person shall be deemed to
be an Affiliate only so long as such control exists.
"AUDITOR" shall have the meaning ascribed thereto in Section 2.7 of this
Agreement.
"BSCs" shall have the meaning ascribed thereto in the definition of
"Product(s)."
"BTSs" shall have the meaning ascribed thereto in the definition of
"Product(s)."
"cdmaOne(R)" or "cdmaOne" shall mean those fixed or mobile wireless
telecommunications systems based on or derived from QUALCOMM's code division
multiple access technology which (i) have been adopted as an industry standard
by the Telecommunications Industry Association ("TIA") or other recognized
international standards bodies, and the adoption of such standard has been voted
in favor of by QUALCOMM ("QUALCOMM Approved Standards"), (ii) are compatible
with or employ the same physical layer as QUALCOMM Approved Standards ("QUALCOMM
Approved Systems"), or (iii) are compatible with the infrastructure and
subscriber equipment manufactured and sold by QUALCOMM. CdmaOne currently
includes, by way of example and not by limitation, the TIA's IS-95 digital
cellular standard and ANSI JSTD-008 digital PCS standard. If a terrestrial-based
wireless telecommunications system is considered a CdmaOne system in one
country, QUALCOMM and Leap agree
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that it would be considered a CdmaOne system in any other country, irrespective
of whether or not such system has been adopted (or approved by QUALCOMM) as a
standard in such other country.
"COMPETITIVE FACTORS" means those reasonably quantifiable factors and/or
reasonably objective factors associated with the sale and financing of wireless
telecommunications equipment and related services that are material to a
purchaser in considering the "all in" value and cost of the equipment and
services being purchased, including but not limited to price, payment terms,
financing amount, interest rates, repayment terms, penalties for delay, rewards
for timely performance, the issuance of warrants, features, functionality,
performance, warranty terms, service terms, spare parts allocations, costs of
ongoing hardware and software maintenance and upgrades and other such reasonably
quantifiable factors and/or reasonably objective factors.
"CONFIDENTIAL INFORMATION" has the meaning ascribed thereto in Section
6.5 of this Agreement.
"DISTRIBUTION DATE" means the date of the initial distribution of Leap
shares of common stock to the stockholders of QUALCOMM pursuant to the Spinoff
Agreement.
"DOMESTIC WIRELESS SYSTEM" means a Wireless System operated in the
United States of America.
"FORCE MAJEURE" means causes beyond a party's control, including but not
limited to fires, strikes, riots, embargoes, explosions, earthquakes, floods,
wars, the elements, labor disputes, civil or military authorities, acts of God
or by the public enemy, inability to secure raw materials or transportation
facilities, or acts or omissions of carriers or suppliers.
"INFRASTRUCTURE PURCHASE AGREEMENT" shall have the meaning ascribed
thereto in Section 2.6.1 of this Agreement.
"INVESTMENT" in any Person means any loan or advance to such Person, any
purchase or other acquisition of a material portion of the assets of such Person
or of a business unit of such Person, or any purchase or other acquisition of
any capital stock or other ownership or profit interest, warrants, rights,
options, obligations or other securities of such Person, any capital
contribution to such Person or any other investment in such Person, including,
without limitation, any arrangement pursuant to which the investor guarantees,
directly or indirectly in any manner, any indebtedness of such Person.
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"LOWEST COMPETING INFRASTRUCTURE BID" shall mean the lowest cost
proposal for comparable infrastructure equipment and related services, taking
into account, as a whole, all Competitive Factors associated with such proposal,
received in a bona fide written proposal from another third party vendor that
Leap (or any other subject procuring Person) has designated in writing to
QUALCOMM that Leap (or such Person) is willing and prepared to accept.
"LOWEST COMPETING SUBSCRIBER BID" shall mean the lowest cost proposal
for comparable Subscriber Units, taking into account, as a whole, all
Competitive Factors associated with such proposal, received in a bona fide
written proposal from another third party vendor that Leap (or any other subject
procuring Person) has designated in writing to QUALCOMM that Leap (or such
Person) is willing and prepared to accept.
"NON-DOMESTIC CUTOFF DATE" means that date which is the earlier to occur
of (i) the fourth anniversary of the Distribution Date and (ii) the date on
which Leap has received an aggregate $60 million of debt or equity financing
(from parties other than QUALCOMM and excluding the proceeds from the exercise
of stock options issued under any Leap stock option plan).
"NON-U.S. OPERATOR" means a Person operating or planning to operate a
Wireless System located outside of the United States of America in which Leap
does not already hold as of the date of the subject prospective Investment,
directly or indirectly (through one or more intermediaries), an Investment.
"PCS" means personal communications services.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
"POP" means one person living in a population area which is included in
the coverage area of a telecommunications service provider as determined through
any reasonably objective means of measurement.
"PRODUCT(S)" means, in each instance when used in a Wireless System, (i)
cdmaOne base station transceiver subsystems ("BTSs"), (ii) cdmaOne base station
controllers ("BSCs"), (iii) switching equipment, (iv) radio frequency repeaters,
microcells and Product software, and (v) such other items of infrastructure
equipment as the parties shall mutually agree to include as a Product for
purposes of this Agreement.
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"QUALCOMM'S INFRASTRUCTURE PRICES" shall mean the price for Products
charged by QUALCOMM to Leap or a subject U.S. Operator, taking into account, as
a whole, all Competitive Factors associated with QUALCOMM's proposal.
"QUALCOMM'S SUBSCRIBER PRICES" shall mean the price for Subscriber Units
charged by QUALCOMM to Leap or a subject U.S. Operator, taking into account, as
a whole, all Competitive Factors associated with QUALCOMM's proposal.
"RFP-INFRASTRUCTURE" means a request for proposals for Products issued
by Leap (or any other subject Person, as applicable).
"RFP-SUBSCRIBER" means a request for proposals for Subscriber Units
issued by Leap (or any other subject Person, as applicable).
"SERVICES" means the performance of work by QUALCOMM in connection with
the supply of Products, including, but not limited to engineering services,
installation services, maintenance and repair services, and other services
consistent with the provision of cdmaOne infrastructure equipment.
"SPINOFF AGREEMENT" shall have the meaning ascribed thereto in
Recital A.
"SUBSCRIBER UNIT" means a portable or fixed (such as a wireless local
loop terminal) end user device that provides voice and/or data service on a
Wireless System.
"SUBSCRIBER UNIT PURCHASE AGREEMENT" shall have the meaning ascribed
thereto in Section 3.5 of this Agreement.
"U.S. OPERATOR" means a Person operating or planning to operate a
Domestic Wireless System in which Leap does not already hold, directly or
indirectly (through one or more intermediaries), as of the date of the subject
prospective Investment, an Investment.
"WIRELESS SYSTEM" means a terrestrial-based PCS, cellular, wireless
local loop or other wireless terrestrial-based communication system within any
geographic area that utilizes cdmaOne technology.
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2. INFRASTRUCTURE PURCHASE COMMITMENT.
2.1 Purchase Commitment.
2.1.1 Leap; Domestic Operators; Domestic Wireless Systems.
(a) Subject to the terms and conditions of this Agreement, Leap
agrees to purchase from QUALCOMM not less than fifty percent (50%) of Leap's own
direct requirements for Products during the period beginning on the Distribution
Date and ending upon the expiration of the five year period following the date
of the first purchase by Leap of Products from QUALCOMM.
(b) Subject to the terms and conditions of this Agreement, with
respect to each and every U.S. Operator in which Leap, directly or indirectly
(through one or more intermediaries), makes an Investment at any time prior to
the fourth anniversary of the Distribution Date, Leap shall cause each such U.S.
Operator, as a condition of and prior to making such Investment, to enter into
an equipment requirements agreement with QUALCOMM on terms substantially as set
forth in this Agreement, which equipment requirements agreement shall include,
without limitation, that such U.S. Operator be required to purchase from
QUALCOMM not less than fifty percent (50%) of the subject U.S. Operator's
requirements for Products (for use in such U.S. Operator's Domestic Wireless
System(s)) in the five year period commencing on the date of such Investment.
The obligations of Leap under this Section, as they may apply to the making of
any Investment in a U.S. Operator by Chase Telecommunications, Inc. (but only so
long as Chase Telecommunications, Inc. is not an Affiliate of Leap), shall only
be to exercise commercially reasonable efforts to cause such U.S. Operator to
enter into such an equipment requirements agreement.
(c) Subject to the terms and conditions of this Agreement, with
respect to each and every U.S. Operator in which Leap, directly or indirectly
(through one or more intermediaries), makes an Investment after the fourth
anniversary of the Distribution Date, Leap shall (i) exercise its commercially
reasonable efforts to cause the subject U.S. Operator, as a condition of making
such Investment, to provide QUALCOMM with a reasonable opportunity to bid on
such U.S. Operator's requirements for Products, and (ii) encourage the subject
U.S. Operator to acquire Products from QUALCOMM.
(d) As set forth herein, the purchase obligations of Leap and all
such U.S. Operators shall be subject to QUALCOMM providing competitive terms and
conditions on the Competitive Factors (except to the extent of the one hundred
and ten percent pricing provision set forth in Section 2.4.1). All such
requirements obligations with respect to Product purchases shall expire, if not
sooner pursuant to their express
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terms, on the date nine years following the Distribution Date. Leap and such
U.S. Operators shall have the obligation set forth in this Section 2.1.1
regardless of whether or not the U.S. Operator is an Affiliate of Leap and
whether or not the Investment in such U.S. Operator is made by Leap or a Person
in which Leap holds, directly or indirectly, an Investment.
2.1.2 Non-Domestic.
(a) Subject to the terms and conditions of this Agreement, with
respect to each and every Non-U.S. Operator in which Leap, directly or
indirectly (through one or more intermediaries), makes an Investment at any time
prior to the Non-Domestic Cutoff Date, Leap shall cause each such Non-U.S.
Operator, as a condition of and prior to making such Investment, to enter into
an equipment requirements agreement with QUALCOMM on terms substantially as set
forth in this Agreement, which equipment requirements agreement shall include,
without limitation, that such Non-U.S. Operator be required to purchase from
QUALCOMM not less than fifty percent (50%) of the subject Non-U.S. Operator's
requirements for Products (for use in such Non-U.S. Operator's Wireless
System(s)) during a five year period commencing on the date of such Investment.
(b) Subject to the terms and conditions of this Agreement, with
respect to each and every Non-U.S. Operator in which Leap makes a direct or
indirect (through one or more intermediaries) Investment following the
Non-Domestic Cutoff Date, Leap shall (i) exercise its commercially reasonable
efforts to cause the subject Non-U.S. Operator, as a condition of making such
Investment, to provide QUALCOMM with a reasonable opportunity to bid on such
Non-U.S. Operator's requirements for Products, and (ii) encourage the subject
Non-U.S. Operator to acquire Products from QUALCOMM.
(c) As set forth herein, the purchase obligations of all such
Non-U.S. Operators shall be subject to QUALCOMM providing competitive terms and
conditions on the Competitive Factors. All such requirements obligations with
respect to Product purchases shall expire, if not sooner pursuant to their
express terms, on the date nine years following the Distribution Date. Leap and
such Non-U.S. Operators shall have the obligation set forth in this Section
2.1.2 regardless of whether or not the Non-U.S. Operator is an Affiliate of Leap
and whether or not the Investment in such Non-U.S. Operator is made by Leap or a
Person in which Leap holds, directly or indirectly, an Investment.
2.1.3 Right of First Refusal. QUALCOMM's right to supply Products
pursuant to Section 2.1 shall constitute a right of first refusal in favor of
QUALCOMM to supply such Products, and QUALCOMM shall have no obligation to
supply such
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Products unless and until QUALCOMM enters into a binding Infrastructure
Purchase Agreement or other binding agreement. QUALCOMM shall have the right to
elect not to bid on or otherwise respond to any RFP-Infrastructure. In the event
(a) QUALCOMM elects not to exercise its right of first refusal in response to a
RFP-Infrastructure or Leap, a subject U.S. Operator or a subject Non-U.S.
Operator is not, in accordance with this Agreement, obligated to accept
QUALCOMM's offer in response to a RFP-Infrastructure, and (b) Leap, the subject
U.S. Operator or the subject Non-U.S. Operator subsequently issues a new
RFP-Infrastructure within the pertinent respective time periods set forth in
Sections 2.1.1 and 2.1.2 above, then QUALCOMM shall be entitled to a right of
first refusal as to such subsequent procurement.
2.2 Prime Contractor. With respect to each Wireless System in which
QUALCOMM is or intends to be a supplier of Products, QUALCOMM shall have the
option to be the "prime contractor" or to select someone else to be "prime
contractor." As used herein, the term "prime contractor" shall mean the company
that is responsible for coordinating installation, integration and maintenance
of the Wireless System in the subject geographic location. QUALCOMM's
responsibility as prime shall be dependent on a mutually acceptable agreement
being entered into between the subject parties.
2.3 Advance Notice. Leap shall keep QUALCOMM informed on a regular basis
concerning the status of procurements for Wireless Systems that may be covered
by Section 2.1 of this Agreement. In connection with any proposed procurement
subject to Section 2.1, Leap shall provide to QUALCOMM reasonable advance
written notice (which in any event shall be provided no later than when Leap
provides any such notice to any prospective competing bidder) which shall
specify, at a minimum: (a) the name(s) of the subject buyer, together with the
geographic location; (b) the total estimated number of POPs for such Wireless
System; (c) the estimated amount and type of Products and Services to be
purchased, the schedule for delivery, and the amount of financing required; and
(d) any other information provided to any other prospective competing bidder.
2.4 Prices; Competitiveness.
2.4.1 Until such time as QUALCOMM has been awarded contracts for
$250 million of Products and associated Services pursuant to Section 2.1.1 with
respect to Domestic Wireless Systems, QUALCOMM's Infrastructure Prices for
Products and such associated Services to be deployed and performed, as
applicable, in such Domestic Wireless Systems shall not be higher than one
hundred ten percent (110%) of the Lowest Competing Infrastructure Bid, otherwise
there shall be no obligation to award the subject procurement to QUALCOMM.
QUALCOMM's Infrastructure Prices in all other circumstances (for example, if the
subject Wireless System is not a Domestic Wireless System) shall not be higher
than the Lowest Competing Infrastructure Bid, otherwise
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Leap can award QUALCOMM's share of that subject procurement to the Person
submitting the Lowest Competing Infrastructure Bid and there shall be no
obligation to award the subject procurement to QUALCOMM.
2.4.2 Leap shall use commercially reasonable efforts to ensure that
any determination of QUALCOMM's Infrastructure Prices versus the Lowest
Competing Infrastructure Bid is based on an "apples-to-apples" comparison
(taking into consideration not only the pricing of Products and Services, but
the pricing for any vendor financing provided under Section 2.5 and the terms
and conditions of any other material consideration proposed to be given or
received by any competing bidder, including each of the Competitive Factors).
Leap has performed extensive due diligence concerning the existing and planned
features, functionality and performance of QUALCOMM's Products and shall issue,
or cause to be issued, a RFP-Infrastructure(s) that provides for a pricing
comparison with competing bids on a fair and reasonable basis. Leap (and every
other subject Person) shall issue each RFP-Infrastructure such that the
specifications contained therein are not biased against QUALCOMM or biased in
favor of other Persons that are competitors of QUALCOMM; provided, however,
nothing in this sentence shall otherwise restrict Leap (and every other subject
Person) from issuing an RFP-Infrastructure that contains a prescribed feature or
specification (which the Products do not have or provide) that is reasonably
necessary for the commercial viability of the subject Wireless System, so long
as QUALCOMM is given a reasonable opportunity to provide a reasonably equivalent
alternative solution or work-around for such desired feature or specification.
The "apples-to-apples" comparison shall consider the total price of QUALCOMM's
turn-key solution to the total price of the turn-key solution offered by any
competing bidder. To the maximum extent reasonably possible, Leap shall endeavor
to purchase (and cause the subject U.S. Operator or Non-U.S. Operator to
purchase) turn-key systems, including BTSs and BSCs from QUALCOMM, to meet the
purchase commitment under Section 2.1 hereof. As such, Leap shall endeavor to
issue each RFP-Infrastructure (and cause each subject U.S. Operator or Non-U.S.
Operator to issue each RFP-Infrastructure) for the purchase of Products on a
turn-key basis.
2.4.3 In determining whether QUALCOMM's Infrastructure Prices are
within or less than the requisite percent of the Lowest Competing Infrastructure
Bid and/or whether Competitive Factors are competitive, a fair and reasonable
comparison of the responses to the subject RFP-Infrastructure shall be made. If
Leap reasonably determines (i) that the QUALCOMM Infrastructure Prices are not
within or less than the requisite percent of the Lowest Competing Infrastructure
Bid and/or (ii) that the Competitive Factors, taken as a whole, of QUALCOMM's
offer are not competitive with the Competitive Factors of the offer from the
Person submitting the Lowest Competing Infrastructure Bid, then Leap shall
immediately notify QUALCOMM by letter signed by a responsible executive officer
and inform QUALCOMM (a) by how much
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QUALCOMM must reduce QUALCOMM's Infrastructure Prices in order for QUALCOMM's
Infrastructure Prices to be equal to or 110% of, as applicable, the Lowest
Competing Infrastructure Bid and/or (b) to what extent QUALCOMM's Competitive
Factors, taken as a whole, are not competitive, as applicable. QUALCOMM may, in
its sole discretion, within ten (10) business days after its receipt of such
notice and receipt of any requested confirmation from the Auditor as set forth
in Section 2.7, reduce QUALCOMM's Infrastructure Prices to be equal to or 110%
of, as applicable, the Lowest Competing Infrastructure Bid and otherwise revise
QUALCOMM's offer to make it competitive with respect to the Competitive Factors.
The Person issuing the subject RFP-Infrastructure shall not be entitled to
accept the Lowest Competing Infrastructure Bid (to the extent it would cover
more than fifty percent (50%) of the subject procurement) until such time as the
ten (10) business day period referred to in the prior sentence has expired.
2.4.4 In the event QUALCOMM's offer in response to a
RFP-Infrastructure is not of such a nature as to obligate Leap to accept such
offer in accordance with the terms and conditions of this Agreement (and
QUALCOMM does not modify its offer, following written notice from Leap, to such
an extent as is necessary to obligate Leap to accept such modified offer), Leap
shall be entitled to accept the offer only from the Person submitting the Lowest
Competing Infrastructure Bid. If (i) Leap does not accept the offer from the
Person submitting the Lowest Competing Infrastructure Bid, or (ii) the terms and
conditions of the proposed definitive agreements with the Person submitting the
Lowest Competing Infrastructure Bid are less favorable to Leap or the other
Person in any material respect from the terms and conditions that QUALCOMM had
the opportunity to match, then QUALCOMM shall have a right of first refusal as
to such procurement in accordance with the provisions of this Agreement.
2.5 Financing of Infrastructure Equipment.
2.5.1 Subject to the negotiation of commercially reasonable terms
and conditions, QUALCOMM would finance one hundred percent (100%) (or a greater
or a lesser amount as may be offered by the Person submitting the Lowest
Competing Infrastructure Bid) of the purchase price of Products, third party
products and Services purchased by Leap (or the subject U.S. Operator or
Non-U.S. Operator) from QUALCOMM pursuant to Section 2.1, provided that the
submitter of the Lowest Competing Infrastructure Bid also commits to provide
such financing on a competitive basis. The terms and conditions of any such
financing by QUALCOMM shall be commercially reasonable, taking into
consideration, among other things, the interest rate payable, the term of the
financing and the security pledged to ensure repayment, and shall in any event
be competitive, taken as a whole in light of all the Competitive
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Factors, with those offered by the Person submitting the Lowest Competing
Infrastructure Bid (otherwise there shall be no obligation to accept QUALCOMM's
offer).
2.6 Infrastructure Purchase Agreements.
2.6.1 Leap and/or the subject U.S. Operator or Non-U.S. Operator
shall purchase Products and/or Services from QUALCOMM by execution of one or
more written purchase agreements (each, an "Infrastructure Purchase Agreement").
All Infrastructure Purchase Agreements entered into between Leap and/or the
subject U.S. Operator or Non-U.S. Operator and QUALCOMM shall, to the extent
applicable, be consistent with the terms and conditions of this Agreement,
unless otherwise agreed in writing, and shall be negotiated in good faith.
2.6.2 The Products delivered by QUALCOMM in accordance with each
Infrastructure Purchase Agreement will comply in all material respects with
commercially reasonable specifications prescribed by Leap and/or the subject
U.S. Operator or Non-U.S. Operator, but only to the extent that (i)
infrastructure equipment supplied or to be supplied by all other actual or
proposed suppliers of Leap and/or the subject U.S. Operator or Non-U.S. Operator
is required to comply with such specifications and (ii) such specifications are
not biased against QUALCOMM or biased in favor of other Persons that are
competitors of QUALCOMM; provided, however, nothing in this sentence shall
otherwise restrict Leap (and every other subject Person) from prescribing a
feature or specification (which the Products do not have or provide) that is
reasonably necessary for the commercial viability of the subject Wireless
System, so long as QUALCOMM is given a reasonable opportunity to provide a
reasonably equivalent alternative solution or work-around for such desired
feature or specification.
2.7 Independent Auditor. At the request of QUALCOMM, Leap shall appoint
a third party independent auditor reasonably acceptable to QUALCOMM (an
"Auditor") who shall confirm to QUALCOMM the price determinations and the
competitive determinations with respect to the Competitive Factors under Section
2. Leap shall provide or cause to be provided to the Auditor all information
reasonably required by the Auditor to perform the Auditor's task, provided that
the Auditor agrees in writing not to disclose such information to any Person
(including without limitation, QUALCOMM). In the event the Auditor confirms the
price determinations and the competitive determinations as represented by Leap
(or other subject Person) to QUALCOMM, then the expenses of the Auditor in
conducting such analysis shall be for the account of QUALCOMM; otherwise, such
expenses shall be for the account of Leap (or other subject Person).
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2.8 Non-Competitive Bid Situations; Most Favored Pricing Exception. If,
with respect to any procurement of Products otherwise subject to Section 2.1,
Leap (or any other subject Person) does not attempt, directly or indirectly, to
procure such Products on a competitive basis from any prospective vendor other
than QUALCOMM, such that QUALCOMM has the exclusive right to negotiate and enter
into an agreement to supply such Products, then QUALCOMM agrees to offer and
sell (and license, in the case of Product software) Products to Leap (or such
other subject Person) at prices that do not exceed the most favored price for
such Products and Product software sold or licensed, as applicable, by QUALCOMM
during the corresponding time period to other customers based on similar terms
and conditions (including but not limited to included warranties, rebates,
discounts, market development and special promotional funds, or any additional
costs necessarily to be incurred as a result of the location of the subject
customer, or special freight, payment, financing or delivery terms, the
provision of field replaceable unit stocks and any other applicable material
monetary consideration, quantity commitments and expected volumes, percentage
commitments, quantities ordered and lead times). Any such purchases or licenses
shall be contingent on the subject Person and QUALCOMM agreeing on mutually
acceptable financing terms for such purchases or licenses (or QUALCOMM otherwise
receiving from such Person adequate assurance that such Person shall be capable
of paying the applicable purchase price or license fees). The provisions of this
Section 2.8 shall apply to the prices for Products procured in non-competitive
bid situations (as described above in this Section 2.8), notwithstanding the
provisions of Section 2.4.1 to the contrary. Any Products and Services purchased
at prices determined pursuant to this Section 2.8 shall not be included for
purposes of determining whether QUALCOMM has been awarded contracts for $250
million of Products and associated Services with respect to Domestic Wireless
Systems, as described in Section 2.4.1. The provisions of this Section 2.8 do
not apply to any Person that, as of the Distribution Date, already has or is
already subject to (other than pursuant to the obligation imposed by Section
2.1), directly or indirectly, a binding obligation to purchase Products from
QUALCOMM (or from any Affiliate of QUALCOMM).
3. SUBSCRIBER UNIT PURCHASE COMMITMENT.
3.1 Purchase Commitment.
3.1.1 Leap; Domestic Operators; Domestic Wireless Systems.
(a) Subject to the terms and conditions of this Agreement, Leap
agrees to purchase from QUALCOMM not less than fifty percent (50%) of Leap's own
direct requirements for Subscriber Units during the period beginning on the
Distribution Date
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and ending upon the expiration of the five year period following the date of the
first purchase by Leap of Subscriber Units from QUALCOMM.
(b) Subject to the terms and conditions of this Agreement, with
respect to each and every U.S. Operator in which Leap, directly or indirectly
(through one or more intermediaries), makes an Investment at any time prior to
the fourth anniversary of the Distribution Date, Leap shall cause each such U.S.
Operator, as a condition of and prior to making such Investment, to enter into
an equipment requirements agreement with QUALCOMM on terms and conditions
substantially as set forth in this Agreement, which equipment requirements
agreement shall include, without limitation, that such U.S. Operator be required
to purchase from QUALCOMM not less than fifty percent (50%) of the subject U.S.
Operator's requirements for Subscriber Units (for use on such U.S. Operator's
Domestic Wireless System(s)) in the five year period commencing on the date of
such Investment. The obligations of Leap under this Section, as they may apply
to the making of any Investment in a U.S. Operator by Chase Telecommunications,
Inc. (but only so long as Chase Telecommunications, Inc. is not an Affiliate of
Leap), shall only be to exercise commercially reasonable efforts to cause such
U.S. Operator to enter into such an equipment requirements agreement.
(c) Subject to the terms and conditions of this Agreement, with
respect to each and every U.S. Operator in which Leap, directly or indirectly
(through one or more intermediaries), makes an Investment after the fourth
anniversary of the Distribution Date, Leap shall (i) exercise its commercially
reasonable efforts to cause the subject U.S. Operator, as a condition of making
such Investment, to provide QUALCOMM with a reasonable opportunity to bid on
such U.S. Operator's requirements for Subscriber Units, and (ii) encourage the
subject U.S. Operator to acquire Subscriber Units from QUALCOMM.
(d) As set forth herein, the purchase obligations of Leap and all
such U.S. Operators shall be subject to QUALCOMM providing competitive terms and
conditions on the Competitive Factors (except to the extent of the one hundred
and ten percent pricing provision set forth in Section 3.3.1). All such
requirements obligations with respect to Subscriber Units purchases shall
expire, if not sooner pursuant to their express terms, on the date nine years
following the Distribution Date. Leap and such U.S. Operators shall have the
obligation set forth in this Section 3.1.1 regardless of whether or not the U.S.
Operator is an Affiliate of Leap and whether or not the Investment in such U.S.
Operator is made by Leap or a Person in which Leap holds, directly or
indirectly, an Investment.
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3.1.2 Non-Domestic.
(a) Subject to the terms and conditions of this Agreement, with
respect to each and every Non-U.S. Operator in which Leap, directly or
indirectly (through one or more intermediaries), makes an Investment at any time
prior to the Non-Domestic Cutoff Date, Leap shall cause each such Non-U.S.
Operator, as a condition of and prior to making such Investment, to enter into
an equipment requirements agreement with QUALCOMM on terms substantially as set
forth in this Agreement, which equipment requirements agreement shall include,
without limitation, that such Non-U.S. Operator be required to purchase from
QUALCOMM not less than fifty percent (50%) of the subject Non-U.S. Operator's
requirements for Subscriber Units (for use on such Non-U.S. Operator's Wireless
System(s)) during a five year period commencing on the date of such Investment.
(b) Subject to the terms and conditions of this Agreement, with
respect to each and every Non-U.S. Operator in which Leap makes a direct or
indirect (through one or more intermediaries) Investment following the
Non-Domestic Cutoff Date, Leap shall (i) exercise its commercially reasonable
efforts to cause the subject Non-U.S. Operator, as a condition of making such
Investment, to provide QUALCOMM with a reasonable opportunity to bid on such
Non-U.S. Operator's requirements for Subscriber Units, and (ii) encourage the
subject Non-U.S. Operator to acquire Subscriber Units from QUALCOMM.
(c) As set forth herein, the purchase obligations of all such
Non-U.S. Operators shall be subject to QUALCOMM providing competitive terms and
conditions on the Competitive Factors. All such requirements obligations with
respect to Subscriber Units purchases shall expire, if not sooner pursuant to
their express terms, on the date nine years following the Distribution Date.
Leap and such Non-U.S. Operators shall have the obligation set forth in this
Section 3.1.2 regardless of whether or not the Non-U.S. Operator is an Affiliate
of Leap and whether or not the Investment in such Non-U.S. Operator is made by
Leap or a Person in which Leap holds, directly or indirectly, an Investment.
3.1.3 Right of First Refusal. QUALCOMM's right to supply Subscriber
Units pursuant to Section 3.1 shall constitute a right of first refusal in favor
of QUALCOMM to supply such Subscriber Units, and QUALCOMM shall have no
obligation to supply such Subscriber Units unless and until QUALCOMM enters into
a binding Subscriber Unit Purchase Agreement or other binding agreement.
QUALCOMM shall have the right to elect not to bid on or otherwise respond to any
RFP-Subscriber. Any sales by QUALCOMM of Subscriber Units shall be subject to
financing arrangements or assurances (such as the issuance of an irrevocable
letter of credit) acceptable to QUALCOMM. In the event (a) QUALCOMM elects not
to exercise
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its right of first refusal in response to a RFP-Subscriber or Leap, a subject
U.S. Operator or a subject Non-U.S. Operator is not, in accordance with this
Agreement, obligated to accept QUALCOMM's offer in response to a RFP-Subscriber,
and (b) Leap, the subject U.S. Operator or the subject Non-U.S. Operator
subsequently issues a new RFP-Subscriber within the pertinent respective time
periods set forth in Section 3.1.1 and 3.1.2 above, then QUALCOMM shall be
entitled to a right of first refusal as to such subsequent procurement.
3.2 Advance Notice. Leap shall keep QUALCOMM informed on a regular basis
concerning the status of prospective procurements that may be covered by Section
3.1. In connection with any proposed procurement subject to Section 3.1 , Leap
shall provide to QUALCOMM reasonable advance written notice (which in any event
shall be provided no later than when Leap provides any such notice to any
prospective competing bidder) which shall specify, at a minimum: (a) the name(s)
of the subject buyer, together with the geographic location; (b) the estimated
amount and type of Subscriber Units to be purchased and the schedule for
delivery; and (c) any other information provided to any other prospective
competing bidder.
3.3 Prices; Competitiveness.
3.3.1 Until such time as QUALCOMM has been awarded contracts
pursuant to Section 3.1.1 for $250 million of Subscriber Units for use on
Domestic Wireless Systems, QUALCOMM's Subscriber Prices for Subscriber Units to
be used on such Domestic Wireless Systems shall not be higher than one hundred
ten percent (110%) of the Lowest Competing Subscriber Bid, otherwise there shall
be no obligation to award the subject procurement to QUALCOMM. QUALCOMM's
Subscriber Prices in all other circumstances (for example, if the subject
Wireless System is not a Domestic Wireless System) shall not be higher than the
Lowest Competing Subscriber Bid, otherwise Leap can award QUALCOMM's share of
that subject procurement to the Person submitting the Lowest Competing
Subscriber Bid and there shall be no obligation to award the subject procurement
to QUALCOMM.
3.3.2 Leap shall use commercially reasonable efforts to ensure that
any determination of QUALCOMM's Subscriber Prices versus the Lowest Competing
Subscriber Bid is based on an "apples-to-apples" comparison. Leap (and every
other subject Person) shall issue each RFP-Subscriber such that the
specifications contained therein are not biased against QUALCOMM or biased in
favor of other Persons that are competitors of QUALCOMM; provided, however,
nothing in this sentence shall otherwise restrict Leap (and every other subject
Person) from issuing an RFP-Subscriber that contains a prescribed feature or
specification (which the subject Subscriber Unit does not have or provide) that
is reasonably necessary for the commercial viability of the subject Wireless
System on which such feature or specification is to be utilized, so
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long as QUALCOMM is given a reasonable opportunity to provide a reasonably
equivalent alternative solution or work-around for such desired feature or
specification.
3.3.3 In determining whether QUALCOMM's Subscriber Prices are within
or less than the requisite percent of the Lowest Competing Subscriber Bid and/or
whether Competitive Factors are competitive, a fair and reasonable comparison of
the responses shall be made. If Leap reasonably determines (i) that QUALCOMM's
Subscriber Prices are not within or less than the requisite percent of the
Lowest Competing Subscriber Bid and/or (ii) that Competitive Factors, taken as a
whole, of QUALCOMM's offer are not competitive with the Competitive Factors of
the offer from the Person submitting the Lowest Competing Subscriber Bid, then
Leap shall immediately notify QUALCOMM by letter signed by a responsible
executive officer and inform QUALCOMM (a) by how much QUALCOMM must reduce
QUALCOMM's Subscriber Prices in order for QUALCOMM's Subscriber Prices to be
equal to or 110% of, as applicable, the Lowest Competing Subscriber Bid and/or
(b) to what extent QUALCOMM's Competitive Factors, taken as a whole, are not
competitive, as applicable. QUALCOMM may, in its sole discretion, within ten
(10) business days after its receipt of such notice and receipt of any requested
confirmation from the Auditor as set forth in Section 3.6, reduce QUALCOMM's
Subscriber Prices to be equal to or 110% of, as applicable, the Lowest Competing
Subscriber Bid and otherwise revise QUALCOMM's offer to make it as competitive
with respect to the Competitive Factors. The Person issuing the subject RFP-
Subscriber shall not be entitled to accept the Lowest Competing Subscriber (to
the extent it would cover more than fifty percent (50%) of the subject
procurement) until such time as the ten (10) business day period referred to in
the prior sentence has expired.
3.3.4 In the event QUALCOMM's offer in response to a RFP-Subscriber
is not of such a nature as to obligate Leap to accept such offer in accordance
with the terms and conditions of this Agreement (and QUALCOMM does not modify
its offer, following written notice from Leap, to such an extent as is necessary
to obligate Leap to accept such modified offer), Leap shall be entitled to
accept the offer only from the Person submitting the Lowest Competing Subscriber
Bid. If (i) Leap does not accept the offer from the Person submitting the Lowest
Competing Subscriber Bid, or (ii) the terms and conditions of the proposed
definitive agreements with the Person submitting the Lowest Competing Subscriber
Bid are less favorable to Leap or the other Person in any material respect from
the terms and conditions that QUALCOMM had the opportunity to match, then
QUALCOMM shall have a right of first refusal as to such procurement in
accordance with the provisions of this Agreement.
3.4 Financing of Subscriber Units. The obligation of Leap and/or any
subject U.S. Operator or Non-U.S. Operator to purchase Subscriber Units shall be
subject to QUALCOMM providing competitive financing, but only in the event the
Person
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submitting the Lowest Competing Subscriber Bid is also offering to provide such
financing on a competitive basis. The terms and conditions of any such financing
by QUALCOMM shall be commercially reasonable, taking into consideration, among
other things, the interest rate payable, the term of the financing and the
security pledged to ensure repayment, and shall in any event be competitive,
taken as a whole in light of all the Competitive Factors, with those offered by
the Person submitting the Lowest Competing Subscriber Bid (otherwise there shall
be no obligation to accept QUALCOMM's offer).
3.5 Subscriber Unit Purchase Agreements. Leap and/or the subject U.S.
Operator or Non-U.S. Operator shall purchase Subscriber Units from QUALCOMM by
execution of one or more written purchase agreements (each, a "Subscriber Unit
Purchase Agreement"). Each Subscriber Unit Purchase Agreement entered into
between Leap and/or the subject U.S. Operator or Non-U.S. Operator and QUALCOMM
shall, to the extent applicable, be consistent with the terms and conditions of
this Agreement, unless otherwise agreed in writing, and shall be negotiated in
good faith. The form of the Subscriber Purchase Agreement shall be in
substantially the form of agreement as is currently being negotiated by QUALCOMM
with third party customers, which form Leap is familiar with. The Subscriber
Units delivered by QUALCOMM in accordance with each Subscriber Purchase
Agreement will comply in all material respects with commercially reasonable
specifications prescribed by Leap and/or the subject U.S. Operator or Non-U.S.
Operator, but only to the extent that (i) subscriber units supplied or to be
supplied by all other actual or proposed suppliers of Leap and/or the subject
U.S. Operator or Non-U.S. Operator are required to comply with such
specifications and (ii) such specifications are not biased against QUALCOMM or
biased in favor of other Persons that are competitors of QUALCOMM; provided,
however, nothing in this sentence shall otherwise restrict Leap (and every other
subject Person) from prescribing a feature or specification (which the subject
Subscriber Unit does not have or provide) that is reasonably necessary for the
commercial viability of the subject Wireless System on which such feature or
specification is to be utilized, so long as QUALCOMM is given a reasonable
opportunity to provide a reasonably equivalent alternative solution or
work-around for such desired feature or specification.
3.6 Independent Auditor. At the request of QUALCOMM, Leap shall promptly
appoint an Auditor who shall confirm to QUALCOMM the price determinations and
the competitive determinations with respect to the Competitive Factors under
Section 3. Leap shall provide or cause to be provided to the Auditor all
information reasonably required by the Auditor to perform its task, provided
that the Auditor agrees in writing not to disclose such information to any
Person (including without limitation, QUALCOMM). In the event the Auditor
confirms the price determinations and the competitive determinations as
represented by Leap (or other
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subject Person) to QUALCOMM, then the expenses of the Auditor in conducting such
analysis shall be for the account of QUALCOMM; otherwise, such expenses shall be
for the account of Leap (or other subject Person).
3.7 Non-Competitive Bid Situations; Most Favored Pricing Exception. If,
with respect to any procurement of Subscriber Units otherwise subject to Section
3.1, Leap (or any other subject Person) does not attempt, directly or
indirectly, to procure such Subscriber Units on a competitive basis from any
prospective vendor other than QUALCOMM, such that QUALCOMM has the exclusive
right to negotiate and enter into an agreement to supply such Subscriber Units,
then QUALCOMM agrees to offer and sell Subscriber Units to Leap (or such other
subject Person) at prices that do not exceed the most favored price for such
Subscriber Units sold by QUALCOMM during the corresponding time period to other
customers located in the same sovereign jurisdiction based on similar terms and
conditions (including but not limited to included warranties, rebates,
discounts, market development and special promotional funds, or any additional
costs necessarily to be incurred as a result of the location of the subject
customer, or special freight, payment, financing or delivery terms, the
provision of field replaceable unit stocks and any other applicable material
monetary consideration, quantity commitments and expected volumes, percentage
commitments, quantities ordered and lead times). Any such purchases shall be
contingent on the subject Person and QUALCOMM agreeing on mutually acceptable
financing terms for such purchases (or QUALCOMM otherwise receiving adequate
assurance that such Person shall be capable of paying the applicable purchase
price). The provisions of this Section 3.7 shall apply to the prices for
Subscriber Units procured in non-competitive bid situations (as described above
in this Section 3.7), notwithstanding the provisions of Section 3.3.1 to the
contrary. Any Subscriber Units purchased at prices determined pursuant to this
Section 3.7 shall not be included for purposes of determining whether QUALCOMM
has been awarded contracts for $250 million of Subscriber Units for use on
Domestic Wireless Systems, as described in Section 3.3.1. The provisions of this
Section 3.7 do not apply to any Person that, as of the Distribution Date,
already has or is already subject to (other than pursuant to the obligation
imposed by Section 3.1), directly or indirectly, a binding obligation to
purchase Subscriber Units from QUALCOMM (or from any Affiliate of QUALCOMM).
4. BUNDLED PROCUREMENTS.
4.1 Right to Respond Separately. In the event Leap (or any subject U.S.
Operator or Non-U.S. Operator) issues a RFP-Infrastructure and RFP-Subscriber on
a "bundled" basis (that is, the prospective buyer is seeking to enter into a
contract for the purchase of infrastructure equipment and subscriber equipment
from the same vendor on a concurrent basis) and QUALCOMM does not manufacture or
sell both Products and
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Subscriber Units in the infrastructure equipment or subscriber equipment product
categories described in such "bundled" procurement, QUALCOMM shall be entitled
to separately respond (and shall have a separate right of first refusal,
pursuant to Sections 2 and 3, respectively) to each portion of the "bundled"
request for proposal (that is, the infrastructure equipment portion and the
subscriber equipment portion, respectively). To avoid any ambiguity, (i) the
provisions of Section 2 of this Agreement and the provisions of Section 3 of
this Agreement shall independently apply to each respective portion of any such
"bundled" request for proposal if at the time of the issuance of the subject
"bundled" procurement QUALCOMM does not manufacture or sell both Products and
Subscriber Units in the infrastructure equipment or subscriber equipment product
categories described in such "bundled" procurement, and (ii) the fact that
QUALCOMM may elect to not bid on providing infrastructure equipment (or vice
versa) shall not relieve the prospective buyer of its obligations to purchase
Subscriber Units (or vice versa) from QUALCOMM pursuant to the terms of this
Agreement in the event QUALCOMM does elect to exercise its right of first
refusal and make an offer with respect to supplying Subscriber Units (or vice
versa).
4.2 Exception For Limited Subscriber Unit Sales. The provisions of
Section 4.1 shall not apply to any "bundled" request for proposal that consists
of a RFP-Infrastructure and a RFP-Subscriber in which both of the following two
conditions are met: (i) the contract value (as determined in any reasonable
manner) of the subject subscriber equipment does not exceed fifteen percent of
the value of the infrastructure equipment (specifically excluding the value of
any related services) which is the subject of the "bundled" request for
proposal; and (ii) the number of "bundled" subscriber units does not exceed five
thousand (5,000). As to any such "bundled" request for proposal in which (X) the
contract value of the subject subscriber equipment is less than the percentage
specified in clause "(i)" of the immediately preceding sentence, and (Y) the
number of "bundled" subscriber units does not exceed five thousand (5,000),
QUALCOMM shall not be entitled, as provided in Section 4.1, to separately
respond to each portion of the "bundled" request for proposal. In such cases,
QUALCOMM shall be entitled to exercise its rights of first refusal for such
infrastructure equipment and subscriber equipment only on a "bundled" basis.
4.3 Exception For Certain Wireless Local Loop Sales. The provisions of
Section 4.1 shall not apply to any "bundled" request for proposal that consists
of a RFP-Infrastructure and a RFP-Subscriber for a wireless local loop Wireless
System to the extent (i) that any such "bundled" procurement only seeks to
acquire from the subject vendor not more than fifty percent of the Subscriber
Units that are expected to be procured for use on the subject Wireless System
during the initial deployment phase of such Wireless System, and (ii) QUALCOMM
is entitled to exercise a separate right of first refusal with respect to all
(and not just fifty percent) of the remaining Subscriber Unit requirements of
the subject Person in connection with the initial deployment phase of such
Wireless
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System. As to any such "bundled" request for proposal, QUALCOMM shall not be
entitled, as provided in Section 4.1, to separately respond to each portion of
the "bundled" request for proposal. In such cases, as to that portion of the
subject procurement that is "bundled," QUALCOMM shall be entitled to exercise
its rights of first refusal for such infrastructure equipment and subscriber
equipment only on a "bundled" basis, and QUALCOMM shall have a separate right of
first refusal to all of the remaining subject requirements for Subscriber Units.
5. TERM.
5.1 Term of Agreement. This Agreement shall become effective as of the
Effective Date and, unless earlier terminated, shall terminate upon completion
of the parties' obligations required to be performed hereunder (the "Term").
5.2 Cancellation for Breach. In the event QUALCOMM or Leap is in
material breach or material default of this Agreement and such breach or default
continues uncured for a period of thirty (30) days after the receipt by the
defaulting or breaching party of written notice from the non-defaulting or
non-breaching party, then the non-defaulting or non-breaching party shall have
the right to pursue whatever rights and remedies the non-defaulting or
non-breaching party may have at law or in equity.
5.3 Limited Right to Cancel. In the event QUALCOMM repeatedly breaches
Infrastructure Purchase Agreements and/or Subscriber Unit Purchase Agreements
entered into pursuant to and with Persons subject to the provisions of Section
2.1 and Section 3.1, as applicable, and as a result of such breaches such
Persons are rightfully entitled to cancel, for default, the subject
Infrastructure Purchase Agreements and/or Subscriber Unit Purchase Agreements,
then as to that category of Product or Subscriber Unit, as the case may be, that
QUALCOMM has so repeatedly failed to deliver and deploy, as the case may be,
QUALCOMM shall no longer have a right of first refusal to supply such Products
or Subscriber Units to any such Person if, but only if, the Investment, direct
or indirect, of Leap in such Person was made from the proceeds of funds or other
assets provided by a Person other than QUALCOMM (or other than an Affiliate of
QUALCOMM). Any Person seeking to claim that it no longer is subject to
QUALCOMM's right of first refusal with respect to any category of Product or
Subscriber Unit shall notify QUALCOMM in writing of such claim and specify the
basis for such claim. To the extent QUALCOMM loses a right of first refusal as a
result of the operation of the immediately preceding sentence, it shall be
considered a partial cancellation of the pertinent provision of this Agreement
as to the subject Person with respect to the affected category of Product or
Subscriber Unit.
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6. GENERAL.
6.1 Scope. The terms and conditions of this Agreement shall apply only
to the transactions which are contemplated by this Agreement. To the extent that
any terms and conditions in any Infrastructure Purchase Agreement or Subscriber
Unit Purchase Agreement conflict with the provisions of this Agreement, such
terms and conditions shall supersede such conflicting provisions of this
Agreement.
6.2 Compliance with Laws. Performance under this Agreement shall be
subject to all applicable laws, orders and regulations of federal, state, and
local governmental entities in the appropriate jurisdictions.
6.3 Notices. All notices under this Agreement shall be in writing
(except where otherwise stated) and shall be addressed to the addresses set
forth below or to such other address as either party may designate by notice
pursuant hereto. Such notices shall be sent by confirmed telecopy or nationally
recognized overnight courier or delivered by hand and shall be deemed to have
been given when received.
QUALCOMM: XXXXXXXX Xxxxxxxxxxxx
0000 Xxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
Leap: Leap Wireless International, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to: General Counsel, at the same address
6.4 Right of Access. Subject to each party's security and
confidentiality requirements, each party shall provide the other reasonable
access to its facilities to the extent required in connection with the
performance of their respective obligations under this Agreement. No charge
shall be made for such access. Reasonable prior notification will be given when
access is required and the parties shall mutually agree upon a mutually
acceptable time and location. Subject to QUALCOMM's security and confidentiality
requirements, during normal business hours and upon reasonable prior notice and
agreement on a mutually acceptable time and location, Leap shall have the right
(i) to visit the facilities where the Products and Subscriber Units are being
manufactured, and (ii) to observe the manufacturing and testing process.
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6.5 Use of Information.
6.5.1 Confidential Information. All information, including without
limitation all oral and written information (including, but not limited to, all
technical documentation delivered to Leap by QUALCOMM hereunder, and all other
information relating to the pricing for, financing of, design, development,
configuration, use, installation, operation and maintenance of any system),
disclosed to the other party is deemed to be confidential, restricted and
proprietary to the disclosing party (hereinafter referred to as "Confidential
Information"). Each party agrees to use the Confidential Information received
from the other party only for the purpose of this Agreement. Except as specified
in this Agreement, no other rights, and particularly licenses, to trademarks,
inventions, copyrights, patents, or any other intellectual property rights are
implied or granted under this Agreement or by the conveying of Confidential
Information between the parties. Confidential Information supplied is not to be
reproduced in any form except as required to accomplish the intent of, and in
accordance with the terms of, this Agreement. The receiving party must provide
the same care to avoid disclosure or unauthorized use of Confidential
Information as it provides to protect its own similar proprietary information
but in no event will the receiving party fail to use reasonable care under the
circumstances to avoid disclosure or unauthorized use of Confidential
Information. All Confidential Information must be retained by the receiving
party in a secure place with access limited to only such of the receiving
party's employees who need to know such information for purposes of this
Agreement and to such third parties as the disclosing party has consented to by
prior written approval. All Confidential Information, unless otherwise specified
in writing (i) remains the property of the disclosing party, (ii) must be used
by the receiving party only for the purpose for which it was intended, and (iii)
such Confidential Information, including all copies of such information, must be
returned to the disclosing party or destroyed after the receiving party's need
for it has expired or upon request of the disclosing party, and, in any event,
upon termination of this Agreement. At the request of the disclosing party, the
receiving party will furnish a certificate of an officer of the receiving party
certifying that Confidential Information not returned to the disclosing party
has been destroyed. For the purposes hereof, Confidential Information does not
include information that:
(a) is published or is otherwise in the public domain through no
fault of the receiving party at the time of any claimed disclosure or
unauthorized use by the receiving party;
(b) prior to disclosure pursuant to this Agreement is properly
within the legitimate possession of the receiving party as evidenced by
reasonable documentation to the extent applicable;
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(c) subsequent to disclosure pursuant to this Agreement is lawfully
received from a third party having rights in the information without restriction
of the third party's right to disseminate the information and without notice of
any restriction against its further disclosure;
(d) is independently developed by the receiving party or is
otherwise received through parties who have not had, either directly or
indirectly, access to or knowledge of such Confidential Information;
(e) is transmitted to the receiving party after the disclosing party
has received written notice from the receiving party, after termination or
expiration of this Agreement, that it does not desire to receive further
Confidential Information;
(f) is obligated to be produced under applicable law (including U.S.
securities laws) or order of a court of competent jurisdiction or other similar
requirement of a governmental entity, so long as the party required to disclose
the information provides the other party with prior notice of such order or
requirement and its cooperation to the extent reasonable in preserving its
confidentiality; or
(g) the disclosing party agrees in writing is free of such
restrictions.
6.5.2 Relief. Because damages may be difficult to ascertain, the parties
agree that, without limiting any other rights and remedies specified herein, an
injunction may be sought against the party who has breached or threatened to
breach this Section 6.5. Each party represents and warrants that it has the
right to disclose all Confidential Information which it has disclosed to the
other party pursuant to this Agreement, and each party agrees to indemnify and
hold harmless the other from all claims by a third party related to the wrongful
disclosure of such third party's proprietary information. Otherwise, neither
party makes any representation or warranty, express or implied, with respect to
any Confidential Information.
6.6 Independent Contractor. All work performed by one party under this
Agreement shall be performed as an independent contractor and not as an agent of
the other and no persons furnished by the performing party shall be considered
the employees or agents of the other. The performing party shall be responsible
for its employees' compliance with all laws, rules, and regulations while
performing work under this Agreement.
6.7 EXCEPT AS SET FORTH ELSEWHERE IN THIS AGREEMENT OR IN ANY PURCHASE
AGREEMENT OR ORDER, NEITHER QUALCOMM NOR LEAP (AND THEIR RESPECTIVE AFFILIATES,
EMPLOYEES AND AGENTS) SHALL BE
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LIABLE FOR INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR LOST PROFITS,
REVENUES OR SAVINGS ARISING OUT OF THIS AGREEMENT OR THE USE OR PERFORMANCE OF
ANY PRODUCTS OR SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF BREACH OF
CONTRACT, TORT, INCLUDING NEGLIGENCE, OR STRICT LIABILITY. THIS SECTION 6.7
SHALL SURVIVE FAILURE OF AN EXCLUSIVE OR LIMITED REMEDY.
6.8 Force Majeure. Neither party shall be held responsible for any delay
or failure in performance to the extent that such delay or failure is caused by
Force Majeure. Notwithstanding the foregoing, if QUALCOMM or Leap is unable to
perform its obligations hereunder due to Force Majeure for a continuous period
of ninety days, the other party to this Agreement may terminate this Agreement
upon giving notice to the other.
6.9 Assignment. QUALCOMM may not assign this Agreement or any right or
interest under this Agreement without Leap's prior written consent, which
consent shall not be unreasonably withheld; provided, however, in the event that
QUALCOMM sells, transfers or otherwise disposes of all or substantially all of
its assets relating to the manufacture and sale of Products and/or Subscriber
Units, respectively, then QUALCOMM shall be entitled, without obtaining Leap's
prior written consent, to assign that portion of this Agreement and any related
rights or interests under this Agreement which pertain to the assets so sold,
transferred or otherwise disposed of (that is, the assets relating to Products
and/or Subscriber Units, respectively) to any such successor-in-interest(s) to
such assets, respectively. Leap shall not assign this Agreement or any right or
interest under this Agreement without QUALCOMM's prior written consent;
provided, however, (X) nothing in this sentence shall be construed as
prohibiting an assignment of this Agreement, as a whole, by operation of law as
a result of a merger by Leap into another entity (in which merger Leap is not
the surviving entity), and (Y) Leap may assign its rights under this Agreement,
as a whole, to a successor in interest of Leap that (i) acquires substantially
all of the assets of Leap, which assets shall include all of Leap's direct or
indirect Investments in Persons operating Domestic Wireless Systems if Leap,
directly or indirectly, holds at least ten percent of the equity interests of
such Person, and (ii) assumes in writing the obligations of Leap under this
Agreement. Any attempted assignment in contravention of this Section 6.9 shall
be void and ineffective. Nothing shall preclude QUALCOMM from employing a
subcontractor in carrying out its obligations under this Agreement. QUALCOMM's
use of such subcontractor shall not release QUALCOMM from its obligations under
this Agreement.
6.10 Publicity. Each party shall submit to the other party a proposed
copy of all Advertising wherein the name, trademark, code, specification or
service xxxx of the other party or its Affiliates is mentioned; and neither
party shall publish or use such
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Advertising without the other's prior written approval. Such approval shall be
granted as promptly as possible, and may be withheld only for good cause.
6.11 Applicable Law. The construction and interpretation of, and the
rights and obligations of the parties pursuant to this Agreement, shall be
governed by the laws of the State of California (without giving effect to
principles of conflicts of laws).
6.12 Survival of Obligations. The parties' rights and obligations which,
by their nature, would continue beyond the termination, cancellation or
expiration of this Agreement (such as, but not limited to, the provisions of
Section 6.5), shall survive such termination, cancellation or expiration.
6.13 Severability. If any provision in this Agreement shall be held to
be invalid or unenforceable, the remaining portions shall remain in effect. In
the event such invalid or unenforceable provision is considered an essential
element of this Agreement, the parties shall promptly negotiate a replacement
provision.
6.14 Non-Waiver. No waiver of the terms and conditions of this
Agreement, or the failure of either party strictly to enforce any such term or
condition on one or more occasions, shall be construed as a waiver of the same
or of any other term or condition of this Agreement on any other occasion.
6.15 Publication of Agreement. The parties shall keep the provisions of
this Agreement confidential, except as reasonably necessary for performance
hereunder and except to the extent disclosure may be required by applicable laws
or regulations, in which latter case, the party required to make such disclosure
shall promptly inform the other prior to such disclosure in sufficient time to
enable such other party to make known any objections it may have to such
disclosure. The disclosing party shall take all reasonable steps to secure a
protective order or otherwise assure that this Agreement or such Purchase
Agreement will be withheld from the public record. Notwithstanding the
foregoing, (a) the parties may disclose this Agreement to their respective
attorneys, auditors, financial advisors and other agents, to the extent such
persons agree to keep this Agreement confidential and (b) the parties may
disclose the provisions of this Agreement to the extent, in the opinion of
counsel to such party, required (i) by the Securities and Exchange Commission or
any applicable securities laws, rules or regulations in connection with any
offering of securities of such party, or any of its respective Affiliates, or
(ii) by any other governmental authority to comply with applicable securities or
similar laws, rules or regulations.
6.16 Dispute Resolution. Except as provided in Section 6.5.2 herein, if
a dispute arises out of or relates to this Agreement, or its alleged breach,
then such
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dispute shall be settled pursuant to the procedures set forth in Article 9 of
the Spinoff Agreement.
6.17. Entire Agreement. The terms and conditions contained in this
Agreement shall supersede all prior oral or written understandings between the
parties with respect to the subject matter hereof and constitute the entire
agreement of the parties with respect to such subject matter. Such terms and
conditions shall not be modified or amended except by a writing signed by
authorized representatives of both parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the Effective Date.
Leap Wireless International, Inc., XXXXXXXX Xxxxxxxxxxxx,
a Delaware corporation a Delaware corporation
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------- --------------------------------
Print Name: Xxxxxx X. Xxxxx Print Name: Xxxxxxx X. Xxxxxxxx
------------------------ ------------------------
Title: President & Chief Executive Title: Executive Vice President &
----------------------------- -----------------------------
Officer Chief Financial Officer
----------------------------- -----------------------------
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