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CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURUSANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.19
STRATEGIC SUPPLY
AND
DEVELOPMENT AGREEMENT
This Strategic Supply and Development Agreement ("Agreement") is entered into
effective as of October 29, 1996 ("Effective Date"), by and between NextWave
Telecom Inc. ("Nextwave") and Xxxxxx Network Systems, Inc. ("HNS") to provide
for the supply and financing by HNS of up to $1 billion of code division
multiple access infrastructure equipment manufactured by or on behalf of HNS
and supplied by HNS as prime contractor *___* meeting NextWave specifications,
together with associated ancillary services ("Equipment") to NextWave or to one
or more of NextWave's majority-owned subsidiaries (where NextWave may act
through such subsidiaries, the term NextWave refers to NextWave and such
subsidiaries).
WHEREAS, NextWave is the winning bidder for (and will secure) licenses, and
intends to establish facilities for the provision of Personal Communications
Services ("PCS Systems") in various markets (each comprising at least one BTA)
of the United States ("Markets");
WHEREAS, concurrently and in connection with this Agreement, HNS and NextWave
are entering into that certain Subscription Agreement (together with the Escrow
Agreement, Convertible Promissory Note and Registration Rights Agreement
executed in accordance therewith, the "Investment Documents") pursuant to which
HNS has committed, in accordance with the terms thereof, to acquire a
convertible promissory note for an aggregate purchase price of $50 million
("Initial Investment").
WHEREAS, pursuant to Section V -- Financing, HNS commits to provide a credit
facility in the amount of $245 million pursuant to that certain Vendor Credit
Facility -- Summary of Terms and Conditions attached hereto as Attachment 1
("Vendor Credit Facility" or "Initial Financing") for the purposes of financing
the provision by HNS of certain equipment ("Initial Equipment") for deployment
by NextWave in the *___*; and
WHEREAS, NextWave desires to purchase from HNS and HNS desires to sell to
NextWave additional Equipment with the support of additional financing
("Financing") to be used in PCS Systems;
NOW THEREFORE, the Parties agree as follows:
* CONFIDENTIAL TREATMENT REQUESTED
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I. EQUIPMENT SUPPLY AND RELATED FINANCING
A. Provided that the Initial Investment is released to NextWave
pursuant to the Escrow Agreement as contemplated in the Investment Documents,
and subject to the terms and conditions of this Agreement, NextWave will
purchase Equipment from HNS, and HNS will provide financing to NextWave, not to
exceed an aggregate total of $1 billion (inclusive of Initial Equipment). In the
event that the Initial Investment is not released from escrow to NextWave, then
the obligations of the Parties, including HNS obligation to provide the Vendor
Credit Facility, shall be null and void.
B. NextWave will take and purchase the Initial Equipment within
sixty (60) months of the first drawdown (start of commercial service for the
*___*) under the Initial Financing Facility. NextWave will take and purchase
other Equipment for which Financing is available within sixty (60) months of the
date of the first drawdown of Financing for such Equipment, provided that
NextWave will offer a Market to HNS which requires such first drawdown (start of
commercial service) not later than nine months after HNS notifies NextWave of
the availability of such Financing). *___*.
C. 1. *___*
2. HNS intends to enter into a subcontract agreement
("Qualcomm Subcontract") with Qualcomm pursuant to which HNS will supply
Initial Equipment to be delivered by Qualcomm to NextWave. The Supply
Percentage (as defined below) as it applies to Equipment manufactured and
delivered by HNS for *___*, will be a
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percentage reflecting the amount of Equipment HNS supplies pursuant to the
Qualcomm Subcontract.
D. If the intentions of the Parties expressed in Article I.C.1.,
preceding cannot be realized for the *___*, then:
1. If Qualcomm is not selected as the prime contractor for the
*___*, NextWave will offer HNS the opportunity, at its election,
either:
a. To be the prime contractor for that Market; or,
b. To provision one or more alternative Markets which
NextWave will promptly propose, for which HNS may supply NextWave with Initial
Equipment in amounts totaling $245 million, which proposal will include at
least one Top 20 Market,
2. If Qualcomm is selected as the prime contractor for the *___*
and HNS is not a subcontractor and/or is not providing financing for the Market,
NextWave will offer HNS the opportunity to provision one or more alternative
Markets which NextWave will promptly propose, for which HNS may supply NextWave
with Initial Equipment in amounts totaling $245 million, which proposal will
include at least one Top 20 Market.
3. Terms of supply for HNS provisioning such alternative Market(s)
will be determined as provided in Article IV--Terms of Supply, below.
E. Notwithstanding any other provision of this Agreement, the
terms and conditions (other than financial terms) NextWave requires for the
supply of Initial Equipment will be no less favorable to Qualcomm in the *___*
or to HNS, as the case may be, (except that HNS will not enjoy the benefits of
those terms expressly granted to Qualcomm pursuant to the Qualcomm Agreement;
provided that HNS may enjoy the benefits of future agreements between NextWave
and Qualcomm with terms not expressly set forth in such Qualcomm Agreement) than
the terms and conditions, taken as a whole, granted to other Equipment vendors
within the twelve month period immediately following the date of execution of
the Q-LA Agreement.
F. Notwithstanding any other provision of this Agreement, if
NextWave rightfully terminates the Q-LA Agreement for default, HNS will have no
further right to supply Equipment pursuant to this Agreement.
G. In the event that the Initial Investment is released to
NextWave pursuant to the Escrow Agreement and HNS is not entitled in accordance
with the terms of the Convertible Promissory Note to convert such note into
Series B Common Stock of NextWave as contemplated therein, then, in the event
that HNS makes a demand for
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* CONFIDENTIAL TREATMENT REQUESTED
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payment under such Convertible Promissory Note, than at NextWave's option to be
exercised within thirty (30) days from the date of demand for payment by HNS,
this Agreement shall be null and void, except that HNS shall provide the
Initial Financing, and NextWave will acquire the Initial Equipment, as provided
herein.
II. FIRST HNS ELECTION
During the period from the Effective Date until the 181st day after the
closing of NextWave's initial public offering of stock ("First Election
Period"), HNS will have the right, at its own election, to supply Equipment to
NextWave for certain Markets as provided in this Article II ("First HNS
Election") in accordance with mutually agreed terms and conditions of
Equipment supply and to the extent of HNS supplied Financing. Upon HNS'
exercise of the First HNS Election as provided in this Agreement, NextWave will
purchase such Equipment from HNS for such Markets as provided herein.
A. FINANCING. During the First Election Period, HNS may (subject
to HE Board approval) offer NextWave an additional $245 million of Financing
(exclusive of the Initial Financing) for Equipment to be purchased pursuant to
the terms of this Agreement.
B. TRIGGER OF FIRST ELECTION. HNS' right of First HNS Election may
be triggered by NextWave, as contemplated in Article II.B.1., or by HNS itself,
as contemplated in Article II.B.2 below.
1. TRIGGER OF FIRST HNS ELECTION BY NEXTWAVE. During the First
Election Period, NextWave will notify HNS in any case that NextWave designates
a Market that it intends to offer HNS the opportunity to provision with
Equipment ("Notice of Intent to Provision").
1.1 The receipt by HNS of a Notice of Intent to Provision will be
deemed the Commencement Date. The Notice of Intent to Provision will specify,
at a minimum:
a. The name of the Market and of the BTA(s) or parts thereof
comprising the Market.
b. The estimated amount and type of Equipment to be purchased, the
schedule for delivery, and the amount of Financing required.
c. Information required pursuant to Article IV -- Terms of Supply.
1.2 Upon receipt of a Notice of Intent to Provision, HNS may, at
its sole option to be exercised within 10 business days of such Notice, elect
to provision any
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Market which is the subject of the Notice of Intent to Provision, such election
will be exercised in accordance with mutually agreed terms of supply.
2. TRIGGER OF FIRST HNS ELECTION BY HNS. During the First Election
Period, HNS may, at its sole option, elect to provision NextWave Market(s), such
election to be made by notice to NextWave by HNS ("Notice of Availability of
Financing") stating that HNS is ready, willing and able to provide Financing in
amounts requested by NextWave, not to exceed $245M. If HNS delivers such Notice
of Availability of Financing, HNS will be entitled to provision Equipment to be
purchased and deployed by NextWave in the *___* within two (2) years from the
date of such Notice, to the extent that such additional Financing completes the
build-out of the *___*. That portion of the Financing in excess of that which
can be deployed in the *___* within such two (2) years, will be made available,
at HNS option, for the following:
2.1 If HNS delivers the Notice of Availability of Financing within
60 days following the close of NextWave's initial public offering, HNS may
elect to build-out a top 20 Market, designated by NextWave (with the *___*
designated as the priority Market) per NextWave's build-out requirements.
2.2 If HNS delivers the Notice of Availability of Financing within
90 days following the close of NextWave's initial public offering, HNS may
elect to build-out a mutually agreeable Top 50 Market, per NextWave's
build-out requirements.
2.3 If HNS delivers the Notice of Availability of Financing during
the last 90 days of the First Election Period, HNS may elect:
a. To build-out a previously unprovisioned Market
designated by NextWave and agreed upon by HNS, which may be a Market acquired
by NextWave in the D, E and F block auctions; or,
b. To build-out any previously provisioned Market
designated by NextWave and agreed upon by HNS.
2.4 Upon receipt of a Notice of Intent to Provision, HNS may, at
its sole option to be exercised within 10 business days of such Notice, elect
to provision any Market which is the subject of the Notice of Intent to
Provision, such election will be exercised in accordance with mutually agreed
terms of supply.
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* CONFIDENTIAL TREATMENT REQUESTED
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III. SECOND HNS ELECTION
Commencing on June 1, 1998 and continuing until December 31, 2002 (the
"Second Election Period"), NextWave will offer to purchase from HNS, and HNS
will have the right, at its own election, to supply to NextWave, Equipment
(with associated Financing as provided in this Agreement) ("Second HNS
Election"). Upon exercise by HNS of this Second HNS Election, NextWave will
take and purchase Equipment from HNS as provided herein.
A. TOTAL AMOUNT. NextWave will offer to purchase from HNS $1
billion ("Total Amount") of Equipment, and, upon acceptance by HNS in
accordance with the terms of this Agreement, NextWave will purchase the Total
Amount of Equipment from HNS (subject to a material reduction in NextWave's
total capital budget or population coverage) which Total Amount is inclusive of
Initial Equipment and of Equipment supplied pursuant to any First HNS
Election. The Total Amount will be reduced dollar-for-dollar for each dollar of
Equipment sales offered and refused by HNS in this Second Election Period.
B. NOTICE OF INTENT TO PROVISION. During the Second Election
Period, NextWave will provide HNS with a Notice of Intent to Provision any
Market designated by NextWave that NextWave intends to offer HNS the
opportunity to provision with Equipment. NextWave will so designate and offer
HNS the opportunity to provision two of the Top 50 Markets available as of
June 1, 1998 (for purposes of this sentence a Market will be "available" if:
(i) it is previously unprovisioned; or (ii) it has been previously provisioned
but an additional vendor is to be added to the Market). The receipt by HNS of a
Notice of Intent to Provision will be deemed the Commencement Date pursuant to
Article IV -- Terms of Supply as provided in this Agreement. The Notice of
Intent to Provision will specify, at a minimum:
1. The name of the Market and of the BTA(s) or parts thereof
comprising the Market.
2. The estimated amount and type of Equipment to be purchased and
the amount of Financing required.
3. Information available as to the Terms of Supply, as contemplated
in Article IV, below.
C. SECOND HNS ELECTION. Upon receipt of a Notice of Intent to
Provision, HNS may, at its sole option, elect to provision any Market which is
the subject of the Notice of Intent to Provision, such election will be
exercised in accordance with Article IV -- Terms of Supply.
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IV. TERMS OF SUPPLY
Upon exercise of the Second HNS Election, the Parties will enter into a
purchase agreement covering Equipment to be purchased hereunder ("Purchase
Agreement") in accordance with the terms of supply specified in this Article
("Terms of Supply").
A. COMPETITIVE PROCESS FOR ESTABLISHING TERMS OF SUPPLY. With
respect to any Market which is the subject of a Notice of Intent to Provision a
Market:
1. As NextWave issues an open tender process, request for proposal
or similar open procurement process (an "RFP(s)") or otherwise commences
negotiation with other vendors, NextWave will promptly submit such RFP to HNS or
otherwise commence negotiations with HNS with respect to such Market(s).
NextWave will deliver all information, including build-out schedule, technical
specifications, etc. reasonably necessary or requested by HNS in order to permit
HNS to evaluate the opportunity to provision Equipment in such Market. The date
of delivery of substantially all such information to HNS will be the
"Commencement Date".
2. Prior to consummating any Equipment supply agreement with
respect to such Market(s), NextWave will present to HNS the terms and conditions
which HNS must meet in order to consummate a Purchase Agreement (the "Final
Terms"). The Final Terms will be in accordance with this Article IV--Terms of
Supply, and in all other respects will be no less favorable than the terms of:
a. If NextWave is conducting an RFP process, the executable
proposals submitted by other vendors in response to such RFP; or,
b. If NextWave is not conducting an open RFP process, the then
current arrangements consummated with other vendors within 12 months prior to
presentation by NextWave of the Final Terms.
3. HNS will deliver a firm commitment to meet the Final Terms by
the later of 10 business days after delivery by NextWave of the Final Terms or
60 days after the Commencement Date (provided that if NextWave has not issued an
RFP with respect to any Market tendered to HNS in connection with the First HNS
Election, HNS must respond to NextWave's tender of Final Terms with respect to
such Market no later than 10 business days after receiving them.) In the event
that HNS elects not to commit to meet the Final Terms, NextWave will be free to
complete the transaction with any other vendor on terms no less favorable to HNS
than the Final Terms within 60 days of receipt of HNS' notice of election not to
commit to meet such Final Terms.
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B. NEGOTIATED TERMS OF SUPPLY. In the event NextWave does not use
an RFP or negotiate with other vendors for a Market, the Terms of Supply for
such Market will be determined by negotiation between the Parties as provided
herein and subject to the other terms of this Agreement. Any resultant
Purchase Agreement will be no less favorable to HNS than the terms and
conditions, taken as a whole, granted to other equipment vendors, and the Final
Terms presented by NextWave will be no less favorable to HNS than the then
current arrangements consummated within 12 months prior to presentation by
NextWave of such Final Terms.
C. DETERMINATION OF QUANTITIES OF EQUIPMENT TO BE SUPPLIED. It is
understood that in connection with each Purchase Agreement to be entered into
in accordance with this Agreement, HNS and NextWave will define the percentage
of the Equipment deployed in such Market to be purchased from HNS (the "Supply
Percentage"), which Supply Percentage HNS will continue to supply during the
term of the applicable Purchase Agreement. For a period of three years after
the term of any such Purchase Agreements, if NextWave chooses to purchase
additional Equipment for deployment in such Market, NextWave will deliver to
HNS a Notice of Intent to Provision a Market in accordance with Section III.B,
and HNS will have the right to provision Equipment in accordance with the terms
of this Article IV in order to ensure that HNS will continue to supply NextWave
such Supply Percentage of Equipment.
D. DETERMINATION OF PRICE OF SUPPLY. The price for Equipment
pursuant to any Purchase Agreements entered into in accordance with this
Agreement will be established as follows:
1. In the event that HNS is responding to an RFP, the price will
be the average best and final price of all other vendors (excluding HNS, alone
or jointly with Qualcomm) also submitting a proposal in response to such RFP,
or
2. In the event that HNS and NextWave are otherwise negotiating the
terms of such Purchase Agreement, the price will be the average price of all
other (excluding HNS, alone or jointly with Q) existing supply arrangements in
effect at such time. NextWave will ensure that the prices of the other vendors
used to calculate the price under the applicable Purchase Agreement will be
based on an "apples-to-apples" comparison.
E. DETERMINATION OF EQUIPMENT SPECIFICATIONS.
1. In connection with the execution of each Purchase Agreement,
NextWave and HNS will work together to develop an infrastructure deployment
strategy that will take into account the respective company's requirements.
HNS will have the option to supply BTS infrastructure product, or
alternatively, BSS infrastructure product, in all cases compliant to the
NextWave interface standard in effect on the date of the relevant
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Purchase Agreement. So long as HNS is a supplier in good standing of Equipment
for NextWave, NextWave will keep HNS informed of development of the
Infrastructure Equipment Requirements Document.
2. The Equipment delivered by HNS in accordance with this
Agreement will comply in all material respects with the NextWave Infrastructure
Equipment Requirements Document in effect on the date of such Purchase
Agreement and will also include ancillary services to be provided by HNS under
the applicable Purchase Agreement; provided that if NextWave amends such
Requirements Document or otherwise waives or delays any deliverable thereunder
in order to reduce the requirements upon any other vendor, the Requirements
Document, as it applies to HNS, will be deemed similarly amended.
F. RESOLUTION OF DISPUTES RELATING TO TERMS OF SUPPLY
To ensure speedy and amicable resolution of disputes relating to Terms
of Supply, the Parties will negotiate Terms of Supply in all cases diligently
and in good faith, it being understood that HNS' right to supply hereunder is
absolute provided that HNS is prepared to supply Equipment on competitive terms
and conditions, including price and financing and provided that HNS offers to
supply Equipment compliant with the Infrastructure Requirements Document current
at the time of execution of the Purchase Agreement and with NextWave's schedule
requirements (assuming other vendors offer to satisfy such Requirements Document
and schedule) ("Competitive Terms"). NextWave will in no event cease such
negotiations unless and until it has provided HNS with Final Terms. In the
event that HNS believes such Final Terms contain terms which are less favorable
to HNS than Competitive Terms, then HNS may, at its sole option (after notifying
NextWave of the discrepancies between the Final Terms proposed by HNS and terms
which HNS considers Competitive Terms), elect to enter into a Purchase Agreement
on the Final Terms proposed by NextWave and submit any such discrepancies as
disputes for final and binding settlement by arbitration by a single arbitrator
appointed by the American Arbitration Association ("AAA") in arbitration to be
conducted according to the Commercial Arbitration Rules of the AAA, it being
agreed that the Parties will use best reasonable efforts to cause the arbitrator
to resolve the dispute within ninety days of its submission by HNS and that the
arbitrator will select, with respect to each Purchase Agreement term or
condition submitted by HNS, either the Final Terms or the proposed HNS terms as
more closely approximating "Competitive Terms."
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V. FINANCING
A. HNS has agreed to supply Initial Financing subject to the terms
of the Vendor Credit Facility attached hereto as Attachment 1, and the terms of
this Agreement.
B. NextWave has provided to HNS projections (the "Projections")
and other information (financial or otherwise) other than Projections
("Information") in respect to NextWave and its proposed financing, business and
operations, including the Information and Projections provided to HNS in
connection with the Investment Documents. NextWave hereby represents and
covenants that (a) all Information that has been or will be made available to
HNS by NextWave or any of NextWave's representatives is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which
such statements are made and (b) the Projections that have been or will be made
available to HNS by NextWave or any of NextWave's representatives have been or
will be prepared in good faith based upon reasonable assumptions.
C. HNS commitment to provide the Credit Facility described in the
Term Sheet is subject to (a) there not occurring or becoming known to HNS any
material adverse condition or material adverse change in or affecting the
business, operations, property condition (financial or otherwise) or prospects
of NextWave and its subsidiaries, taken as a whole, (b) HNS not becoming aware
after the date hereof of any information or other matter affecting NextWave or
the transactions contemplated by the Term Sheet which is inconsistent in a
material and adverse manner with any such information or other matter disclosed
to us prior to the date hereof, (c) the negotiation, execution and delivery on
or before January 31, 1997 of definitive documentation with respect to the
Credit Facility satisfactory to HNS and its counsel and (d) the other
conditions set forth or referred to in the Term Sheet. The terms and conditions
set forth in the Term Sheet may be modified or supplemented if further
information becomes available to HNS in accordance with clause (b) above. Those
matters that are not covered by the provisions of the Term Sheet are subject to
the approval and agreement of HNS and NextWave.
D. The Term Sheet is intended to be solely for the benefit of the
Parties hereto and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the Parties hereto.
E. MOST FAVORED LENDER. The terms and conditions of any Financing
will be no less favorable to HNS, as lender, taken as a whole, as compared to
other NextWave vendor financing of comparable infrastructure equipment during
the 12 months immediately preceding the comparable Financing Agreement, taking
into consideration,
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among other things, the amount, accrued interest, interest only payments,
amortization, the term of the financing, the security pledged by NextWave, etc.
The terms of the Financing are set forth on Attachment 2 to this Agreement. To
the extent that NextWave commits, within twelve (12) months before or after HNS
executes any commitment regarding any Financing (including, without limitation,
the Initial Financing), to use equity or third party debt financing (excluding,
without limitation, the Initial Financing), to use equity or third party debt
financing (excluding vendor financing provided (or procured) by other vendors)
to pay any portion of the purchase price of any Equipment then being supplied
by HNS and purchased by NextWave, it will apply a proportionate amount of such
equity or debt financing to purchases of HNS Equipment; provided, however, that
in the event that NextWave has offered to pay any portion of the purchase price
of any Equipment, and HNS does not accept such offer, NextWave will be free to
enter into a similar agreement with another vendor and NextWave will have no
obligation in accordance with the terms of this Agreement.
F. MOST FAVORED BORROWER. The terms and conditions of any
Financing will be no less favorable to NextWave, as borrower, (taken as a whole
in connection with the overall transaction, taking into consideration, among
other things, price of Equipment, the amount of Financing, accrued interest,
interest only payments, amortization, the term of the Financing, the security
pledged by NextWave, etc.) as compared to other vendor financing by HNS to
comparable PCS licensees, taking into consideration, among other things, the
interest rate payable, the term of the financing, the security pledged and
other elements of the credit exposure to HNS.
G. RESOLUTION OF DISPUTES RELATING TO TERMS OF FINANCING
To ensure speedy and amicable resolution of disputes relating to Terms
of Financing, the Parties will negotiate Terms of Financing in all cases
diligently and in good faith, it being understood that Financing will be on
competitive terms and conditions, (with the understanding that the Parties
intend Terms of Financing to include terms specified in Appendix 1 hereto)
("Competitive Finance Terms"). NextWave will in no event cease such
negotiations unless and until it has provided HNS with final Finance terms
("Final Finance Terms") which NextWave believes are Competitive Finance Terms.
In the event that HNS believes such Final Finance Terms contain terms which are
less favorable to HNS than Competitive Finance Terms, then HNS may, at its sole
option (after notifying NextWave of the discrepancies between the Final Finance
Terms proposed by NextWave and terms which HNS considers Competitive
Finance Terms), elect to enter into a Financing agreement on the Final
Financing Terms proposed by NextWave and submit any such discrepancies as
disputes for final and binding settlement by arbitration by a single arbitrator
appointed by the American Arbitration Association ("AAA") in arbitration to be
conducted according to the Commercial Arbitration Rules of the AAA, it being
agreed that the Parties will use best reasonable efforts to cause the
arbitrator to resolve the dispute within ninety days of its submission by HNS
and that the arbitrator will select, with respect to each Purchase Agreement
term or condition
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submitted by HNS, either the Final Terms or the proposed HNS terms as more
closely approximating "Competitive Financing Terms."
VI. PREFERRED SUPPLY ARRANGEMENTS
A. AREA BASED PRODUCTS. HNS will jointly work with NextWave in the
development of products specifically for use by NextWave in its
local-loop-bypass/area-based services (such products which are cooperatively
developed are "Area-Based Services Products"). NextWave will purchase at least
*___* of all of its requirements for such jointly developed Area-Based Services
Products in support of such services (including any equipment purchases by
NextWave on behalf of third Parties such as MCI, etc.) for the first five years
of deployment from HNS, provided that HNS offers such Area-Based Services
Products on competitive terms, conditions, features, financing etc. Area
Based Products developed as contemplated in Article VI.A. will not be
considered either: (i) Initial Equipment; or, (ii) Equipment which is the
subject of HNS First or Second HNS Election.
B. DATA PRODUCTS. HNS will jointly work with NextWave in the
development of products specifically for use by NextWave in its data services
(such products which are cooperatively developed are "Data Products"). NextWave
will purchase at least *___* of all its requirements for such jointly developed
Data Products requirements in support of such services (including any equipment
purchases by NextWave on behalf of third parties such as MCI, etc.) for the
first five years of deployment from HNS, provided that HNS offers such Data
Products on competitive terms, conditions, features, financing etc. Data
Products developed as contemplated in this Article VI.A. will not be considered
either: (i) Initial Equipment; or, (ii) Equipment which is the subject of HNS
First or Second HNS Election.
C. RESEARCH AND DEVELOPMENT FUNDING. In connection with the
Initial Investment, NextWave will make the following research and development
payments to HNS:
1. NextWave will deliver to HNS a payment of $8 million dollars on
April 1, 1997; provided, however, if the Net Share Price (as defined below) of
the initial public offering is equal to or greater than $8 per share, such $8
million will be payable in two equal installments on the twelfth and
twenty-fourth month from the date of consummation of the Initial Investment.
2. a. If the Net Share Price of the initial public offering
is less than $7.00 per share, NextWave will deliver to HNS a payment equal to
the product of $7.00 less the Net Share Price and the number of shares acquired
by HNS in the Initial
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Investment, up to a maximum of $12 million (the "Contingent Credit"). The
Contingent Credit will be payable in three equal installments on December 31,
of each of 1997, 1998 and 1999; provided, however, that commencing on the
effective date of a registration statement for the shares purchased by HNS with
the Initial Investment, in the event that the closing price (or, if no closing
price is available, the average of the bid and asked prices for the trading
day) for shares of Series B Common Stock (trading separately from CVR, as
defined below) of NextWave will have exceeded the Minimum Share Price for such
year for at least twenty trading days, then NextWave will not be obligated to
pay the annual installment of the Contingent Credit, provided that satisfaction
of the Minimum Share Price during any one year will in no event affect the
annual installment of the Contingent Credit due in any other year.
b. (i) That portion of the additional payment, if any,
which is payable to HNS on December 31, 1997 will be paid by NextWave under the
agreed to terms herein except that, in the event that HNS does not on that date
retain all of the Initial Investment Shares, the payment due will be reduced by
a proportion equal to the proportion: *___*
3. The following definitions will apply for purposes of this
Article VI.C.3.
3.1 "Net Share Price" will mean the initial public offering price
per unit offered by NextWave in connection with such public offering, less the
value of any
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Contingent value right ("CVR") or other valuable ancillary consideration not
given to HNS in the Initial Investment attached to the Series B Common Stock of
NextWave distributed in connection with such public offer. *___* References
in this Article to shares and to share prices will be adjusted equitably in
the event of any stock split, recapitalization or the like.
3.2 "Minimum Share Price" will have the following meaning:
YEAR MINIMUM SHARE PRICE
------ -------------------
1997 *___*
1998 *___*
1999 *___*
3.3 "HNS Shares" will mean that number of Initial Investment Shares held
by HNS on the applicable measurement date.
3.4 "Initial Investment Shares" will mean those shares of Series B Common
Stock purchased by HNS with the Initial Investment. The terms of this Section
VI.C assume that the Initial Investment Shares will be 10,000,000 shares.
D. SPECTRUM. NextWave will permit HNS to use its PCS spectrum in the
Washington/Baltimore BTA for experimental purposes which are not competitive
with NextWave and which do not interfere with NextWave operations; provided that
NextWave may request HNS to discontinue use of and vacate such spectrum at any
time for any reason, provided that NextWave will use reasonable efforts to give
HNS reasonable notice prior to demanding that HNS vacate such spectrum. NextWave
will coordinate with HNS, at HNS expense, to fill any application or other
documentation that may be required by the FCC to authorize the use of such
spectrum.
E. NEXTWAVE SERVICE. NextWave will provide HNS (its parent HE, GM and other
majority owned affiliates thereof) preferential wholesale rates for all of
NextWave's offered services (voice, data, multi-media, etc.) including any
mutually agreed to proprietary services such as data communication back-links
for DirecTV and internet access via DirecPC, mobile communication services for
automotive businesses, etc. Such preferential rates are subject to volume
commitments and other terms and conditions but should provide discounts, service
by service, in the range of *___* off of the then current retail prices.
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* CONFIDENTIAL TREATMENT REQUESTED
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F. WIRELESS CARRIER.
1. In the event that HNS elects to deploy certain wireless
services for which any of NextWave's generally available network capabilities
would be appropriate (e.g. DirecPC and vehicle communications management
systems), HNS will offer such capabilities as part of its offering, provided
that NextWave's service offering enable HNS to offer such service on
competitive terms, conditions, features, financing, etc., as compared to other
competitive wireless offerings.
2. In the event that HNS makes generally available any wireless
services incorporating NextWave network facilities or services, as contemplated
in Article VI.F.1., above, HNS will offer such wireless services to NextWave on
the terms on which it otherwise makes such wireless services generally
available.
VII. GENERAL
A. Neither Party will be liable to the other for any incidental,
consequential or punitive damages arising in connection with this Agreement.
B. Neither Party to this Agreement will make a public announcement
of the matters described in this Agreement without the prior written consent of
the other Parties.
C. This Agreement will be governed by and construed in accordance
with the laws of the State of New York, without regard to conflict of law
provisions. As used herein, the term "Parties" will refer to NextWave (together
with its subsidiaries) and HNS; each individually, a "Party."
D. All notices by one Party to the other hereunder will be in
writing and will be deemed to be duly given if sent by (a) same day courier and
(b) facsimile, confirmed by telephone at the address set forth below:
If to HNS:
Xxxxxx Network Systems, Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, Director of Business Development -- DCN
Facsimile: (000) 000-0000
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If to NextWave:
NextWave Telecom Inc.
0000 Xxx Xxxx Xxxxxx, XX, Xxxxx 000X
Xxxxxxxxxx, XX 00000
Attn: Legal Department
Facsimile: (000) 000-0000
E. NextWave agrees to keep confidential all pricing information and other
terms relating to PCS Systems to be supplied by in accordance with the terms and
conditions of this Agreement. Either Party may disclose the terms of this
Agreement, and its existence, to the extent required by law, subject to such
Party first notifying the other Party. In addition, NextWave will have the right
to disclose the terms of this Agreement to its shareholders and investment
bankers; provided that each such shareholder or investment banker signs a
non-disclosure agreement with NextWave and with HNS agreeing to keep such
information in the strictest of confidence and provided further that any such
shareholder provides HNS a copy of any agreement it has with NextWave concerning
the supply of Equipment. Neither Party to this Agreement will make a public
announcement of the matters described in this Agreement without the prior
written consent of the other Party.
F. This Agreement may be amended, supplemented or otherwise modified only
by a written instrument executed by the Parties hereto. No waiver by either
Party of any of the provisions hereof will be effective unless explicitly set
forth in writing and executed by the Party so waiving. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any Party, will be
deemed to constitute a waiver by the Party taking such action of compliance with
any representations, warranties, covenants, or agreements contained herein, and
in any documents delivered or to be delivered pursuant to this Agreement. The
waiver by any Party hereto of a breach of any provision of this Agreement will
not operate or be construed as a waiver of any subsequent breach.
G. This Agreement will not be assignable by HNS without the prior written
consent of NextWave or by NextWave without the prior written consent of HNS
(such consents of either Party not to be unreasonably withheld).
H. The Section headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement.
I. If any provision of this Agreement will be declared by any court of
competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement will not be affected and will remain in full force
and effect.
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J. This Agreement may be executed in any number of counterparts, each of
which will be deemed to be an original and all of which together will be deemed
to be one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have executed and delivered this
Agreement as of the date first above written.
AGREED AND ACCEPTED:
Xxxxxx Network Systems, Inc. NextWave Telecom Inc.
By: /s/ Xxxxxxx Xxxx By: /s/ Xxxxx Xxxxxxx
----------------------------------- -----------------------------------
Title: President & COO Date: 10/29/96 Title: President & CEO Date: 10/29/96
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