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CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.35
EQUIPMENT REQUIREMENTS AGREEMENT
This Agreement is entered into as of the 30th day of November, 1995 by
and between NextWave Personal Communications Inc., a Delaware corporation
("NextWave"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, a Delaware corporation ("QUALCOMM").
WHEREAS, NextWave intends to acquire broadband C-Block personal
communications services ("PCS") licenses from the United States Federal
Communications Commission (the "FCC") and to construct facilities, deploy PCS
infrastructure equipment, distribute and sell PCS subscriber equipment and
provide PCS and other wireless communication services in the U.S. and abroad,
by itself and/or as part of various consortia and affiliations with other
communications companies and industry participants;
WHEREAS, the FCC has previously issued broadbased PCS licenses to 30
MHz spectrum blocks, the A-blocks and B-blocks, in the 1850-1990 MHz band;
WHEREAS, QUALCOMM has developed its code division multiple access
("CDMA") technology for use in PCS and other wireless applications;
WHEREAS, concurrently with this Agreement, QUALCOMM and NextWave are
entering into certain agreements providing for, among other things, a $5
million equity investment by QUALCOMM in NextWave (the "Equity Agreement") and
a $25 million loan commitment by QUALCOMM (the "Loan Agreement"), subject to
the conditions specified therein (the Equity Agreement and the Loan Agreement
are collectively hereinafter referred to as the "Investment Agreements"); and
WHEREAS, QUALCOMM and NextWave are entering into this Agreement in
part as an inducement to QUALCOMM to enter into the Investment Agreements.
NOW THEREFOR, in consideration of the foregoing premises and the
mutual covenants and conditions set forth below, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties to this Agreement agree as follows:
1. IMPLEMENTATION OF CDMA TECHNOLOGY.
*__________________________________________________________.
___________________________________________________________.
__________________________________________________________*.
2. PURCHASE OF CDMA EQUIPMENT.
* CONFIDENTIAL TREATMENT REQUESTED
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A. PURCHASE OF INFRASTRUCTURE EQUIPMENT FOR MARKET TRIAL.
NextWave hereby orders and agrees to purchase from QUALCOMM, and QUALCOMM hereby
accepts and agrees to sell to NextWave, subject to the terms of this Agreement
and, subject to negotiations in good faith, the terms of the Infrastructure and
Purchase and Supply Agreement in form of Exhibit A attached hereto (the
"Infrastructure Agreement"), two hundred (200) Base Station Transceivers (BTSs)
and up to *_______* Base Station Controllers (BSCs) (collectively, the "Market
Trial Equipment") for delivery *_________________________________________*. The
purchase price for the Market Trial Equipment will be calculated based on the
formula set forth below in paragraph b. The above order for Market Trial
Equipment is conditioned upon (a) NextWave being awarded C-Block PCS licenses as
a result of the FCC auctions covering at least 20M POPs; provided that if
NextWave receives licenses for less than 50M POPs, the parties negotiate in good
faith to agree to reasonably reschedule the delivery requirements and to scale
back the amount of Market Trial Equipment ordered hereunder by NextWave, and (b)
NextWave receiving equity or debt financing of at least $70 million. Unless
QUALCOMM has implemented and makes available an IS-651 interface in time for the
market trial, QUALCOMM and NextWave agree that the Market Trial Equipment will
be provided as a turn-key network solution (i.e., the BSC shall contain the
NIS).
B. PURCHASE OF INFRASTRUCTURE EQUIPMENT FOR AWARDED MARKETS.
BTSs and BSCs are collectively hereinafter referred to as "Infrastructure
Equipment." Infrastructure Equipment shall be capable of providing for
commercial features, functionality and performance as reasonably required to
provide for a commercially viable system.
Any PCS license for any basic trading area ("BTA") which is awarded to
NextWave and/or its existing Affiliates as a result of the C-Block FCC auctions
shall hereinafter be referred to as a "NextWave Market". Immediately after the
conclusion of the C-Block auctions,
*_______________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_________________*. If, in accordance with this Agreement, NextWave does not
award QUALCOMM's Share of the NextWave Markets to QUALCOMM, then NextWave shall
award such NextWave Markets to the Competing Bidder at or less than the prices
contained in the Competing Bid.
In exchange for NextWave's obligation to award QUALCOMM the QUALCOMM's
Share of NextWave Markets for the competitive bidding process and pricing
arrangements described above, QUALCOMM agrees to treat NextWave as a preferred
customer for delivery allocation purposes, meaning that purchase orders received
and accepted by QUALCOMM from NextWave for Infrastructure Equipment in
accordance with the Infrastructure Equipment Agreement (e.g., consistent with
lead time and forecast requirements) before orders received by QUALCOMM from any
other U.S.
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* CONFIDENTIAL TREATMENT REQUESTED
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PCS carrier shall, subject to the exceptions set forth below, be fulfilled by
QUALCOMM before QUALCOMM fulfills such other U.S. PCS carrier's later order.
Notwithstanding the foregoing, nothing herein shall be deemed to limit
QUALCOMM's rights to fulfill Infrastructure Equipment purchase orders received
from any U.S. PCS carrier earlier than those received from NextWave nor shall
anything in this Agreement be deemed to limit QUALCOMM's rights to fulfill
Infrastructure Equipment purchase orders received from any U.S. PCS carrier
later than those received from NextWave where QUALCOMM can fulfill such later
order without materially impacting its obligation to also fulfill any NextWave
earlier Infrastructure Equipment purchase order. If QUALCOMM chooses to fulfill
an order for Infrastructure Equipment received from a U.S. PCS carrier later
than a NextWave purchase order and, solely as a result thereof, QUALCOMM's
ability to materially fulfill NextWave's earlier purchaser order is
significantly delayed, QUALCOMM will reduce QUALCOMM's Prices for that portion
of the Infrastructure Equipment so delayed to equal the prices contained in the
Competing Bid and shall provide such other remedies which are to be agreed upon
pursuant to section 3 a. below.
NextWave shall use its best efforts to ensure that RFQ and
determination of QUALCOMM's Prices versus the Competing Bid is based on an
"apples-to-apples" comparison. NextWave has performed extensive due diligence
concerning the existing and planned features, functionality and performance of
QUALCOMM's Infrastructure Equipment and shall issue an RFQ that provides for a
pricing comparison with the Competing Bid on a fair and reasonable basis. Until
QUALCOMM has implemented an IS-651 interface (or interface similar thereto), 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 the
Competing Bidder. As used herein, the term "QUALCOMM's Share" means that
percentage of NextWave's Markets which become Awarded Markets (in which NextWave
shall purchase all of its requirements for Infrastructure Equipment from
QUALCOMM), which percentage is to be calculated as follows: (a)
*_____________________________* (calculated on a Per POP basis) (the "Minimum
QUALCOMM Share") if QUALCOMM does not elect to convert at least fifteen million
dollars ($15,000,000) of the funds loaned to NextWave under the Loan Agreement
into Series B Stock of NextWave as permitted under the Loan Agreement and (b)
*___________________________* (calculated on a Per POP basis) (the "Maximum
QUALCOMM Share") if QUALCOMM does elect to convert at least fifteen million
dollars ($15,000,000) of the funds loaned to NextWave under the Loan Agreement
into Series B Stock of NextWave as permitted under the Loan Agreement. QUALCOMM
will use its best efforts to provide for an IS-651 interface (or similar type of
interface) *_______________________*, but this depends upon, among other things,
adoption of standard and whether it has then been implemented by the switch
vendor. Prior to completion of such interface by QUALCOMM, NextWave will
purchase turn-key systems, including BTSs and BSCs (with NIS) from QUALCOMM to
meet its purchase commitment and if QUALCOMM has not, due to its own fault,
implemented the IS-651 interface (or a similar interface) *__________________*,
the parties will then negotiate in good faith to agree upon a plan whereby
QUALCOMM would purchase back (at the
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* CONFIDENTIAL TREATMENT REQUESTED
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original price charged by QUALCOMM) those NISs which were delivered after the
date IS-651 should have been implemented and made available by QUALCOMM.
i. In determining whether QUALCOMM's Prices are *_______________*
of the Competing Bid, a fair and reasonable comparison of the responses shall be
made. If NextWave reasonably determines that the QUALCOMM Prices are not
*______________* of the Competing Bid for any NextWave Market, NextWave shall
immediately notify QUALCOMM by letter signed by a responsible executive officer
and inform QUALCOMM by how much QUALCOMM must reduce QUALCOMM's Prices in order
that QUALCOMM's Prices are equal to *________* of the Competing Bid. QUALCOMM
may, in its sole discretion, within ten business (10) days after its receipt of
such notice, reduce the QUALCOMM Prices to *_________________* of the Competing
Bid. If requested by QUALCOMM, NextWave agrees that QUALCOMM may designate a
third party independent auditor acceptable to NextWave (which acceptance shall
not be unreasonably withheld) whom shall be permitted by NextWave to review the
response to the RFQ by the Competing Bidder as compared to QUALCOMM's response
to verify whether the QUALCOMM Prices are *____________________________* of the
Competing Bid. After NextWave has purchased from QUALCOMM (a) at least
*_______________________* of Infrastructure Equipment if the Minimum QUALCOMM
Share applies and (b) *___________________________________* of Infrastructure
Equipment if the Maximum QUALCOMM Share applies, NextWave's obligation to
continue to purchase Infrastructure Equipment from QUALCOMM under this Agreement
shall be conditioned upon QUALCOMM's Prices being
*__________________________________________*.
During the *________________* period immediately following the
Effective Date of this Agreement (the "*____________* Supply Period"), NextWave
and its Affiliates shall purchase from QUALCOMM, and QUALCOMM agrees to sell to
NextWave and its Affiliates, subject to the terms of this Agreement and the
terms of the Infrastructure Agreement, all of NextWave's and its Affiliates'
requirements for BTSs and BSCs in the Awarded Markets.
3. TERMS OF EQUIPMENT PURCHASES.
The parties acknowledge that Exhibit A does not cover all of the terms
and conditions concerning the purchase and sale of the Market Trial Equipment
and Infrastructure Equipment, nor have all of the terms and conditions
contained in Exhibit A been fully agreed upon, and the parties agree to
negotiate in good faith and agree upon the final terms and conditions
consistent with this Agreement. With respect to the purchase and sale of
Infrastructure Equipment of the Awarded Markets, the parties agree to
negotiate the following additional terms to be incorporated into the
Infrastructure Agreement.
i. Orders shall be made in accordance with forecast procedures to
be agreed upon by the parties, with provisions for factory reservations,
cancellation,
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* CONFIDENTIAL TREATMENT REQUESTED
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rescheduling and lead times. Such provisions and procedures shall be based
upon the final terms of the attached Infrastructure Agreement.
ii.The parties shall establish Acceptance Test Procedures that
provide tests which demonstrate that installed BTS and BSC equipment operate
substantially in accordance with agreed-upon performance requirements and
specifications. The Acceptance Test Procedures will also establish parameters
for the results of tests necessary for Product Acceptance. The acceptance
parameters will be divided into items which are required for system operation
and must be verified prior to Product Acceptance and other items that may be
corrected within reasonable amount of time (to be agreed upon).
iii.With respect to each Awarded Market, the parties will
establish a System Acceptance Date by which time the Acceptance Test Procedures
shall have been successfully completed with respect to BTS and BSC equipment
first ordered by NextWave for installation in that BTA.
iv.The Infrastructure Agreement shall provide for reasonable
incentives and penalties in the case of early or late delivery of equipment.
If QUALCOMM demonstrates ATP equipment by a date that is at least 90 days
earlier than the system acceptance date for that market, NextWave will provide
an early delivery bonus payment to QUALCOMM. In the event that QUALCOMM
delivers ATP equipment by a date that is between 90 days and 180 days after the
date specified in the order for that equipment, NextWave will be entitled to a
late penalty in a form and in an amount to be negotiated. In the event that
QUALCOMM delivers equipment by a date that is more than 180 days after the date
specified in the order for that equipment, NextWave may thereafter terminate,
at any time within 30 days after such 180 day period, its supply relationship
with QUALCOMM in the Awarded Market for which the equipment was ordered and
late by more than 180 days.
v.QUALCOMM would provide NextWave most favored pricing and
other terms and conditions as compared to those provided by QUALCOMM to
similarly situated customers based on similar terms and conditions, including
but not limited to quantities, lead times, warranty, etc.
B. PRODUCT FINANCING. Subject to the negotiation of commercially
reasonable terms and conditions, QUALCOMM would finance one hundred percent
(100%) (or a lesser amount as may be covered below) of the purchase price of
equipment purchased by NextWave from QUALCOMM. The terms and conditions of any
such financing by QUALCOMM would be commercially reasonable, taking into
consideration, among other things, the interest rate payable by NextWave, the
term of the financing, the security pledged by NextWave to ensure repayment.
NextWave understands that for commercial reasons the terms of any financing to
be provided by QUALCOMM must be of a nature, given the financial condition and
risks associated with NextWave's business, that would permit QUALCOMM to
syndicate or assign such financing on commercially acceptable terms to
reputable credit and lending institutions.
5.
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To the extent that NextWave uses equity or third party debt financing
(excluding vendor product financing provided by the Competing Bidder) to pay
any portion of the purchase price of equipment ordered from the Competing
Bidder, it will apply a proportionate amount of such equity or debt financing
to purchases of QUALCOMM equipment.
c.CONFIDENTIALITY. NextWave agrees to keep confidential all pricing
information and other terms relating to Equipment to be supplied by QUALCOMM in
accordance with the terms and conditions of the Non-Disclosure Agreement
currently in existence between QUALCOMM and NextWave. 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
shall 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 QUALCOMM agreeing to
keep such information in the strictest of confidence and provided further that
any such shareholder provides QUALCOMM a copy of any agreement it has with
NextWave concerning the supply of CDMA equipment.
4. MISCELLANEOUS.
a.TERM OF AGREEMENT. NextWave's obligation to purchase Equipment
pursuant to this Agreement and the Infrastructure Agreement shall remain in
effect for a period of five (5) years from the date hereof. This Agreement
becomes null and void if QUALCOMM has not invested at least five million dollars
($5,000,000) of equity in NextWave as provided for in the escrow agreement and
subscription agreement entered into concurrently herewith.
▇.▇▇ SOLICITATION. Unless there is a change of control in QUALCOMM,
NextWave (on behalf of itself and its Affiliates, including but not limited to
CodeWorks) agrees that for a period of two (2) years following the date hereof,
it will not solicit or induce any employee or independent contractor of
QUALCOMM to terminate or breach an employment, contractual or other
relationship with QUALCOMM nor will NextWave (on behalf of itself and its
Affiliates, including but not limited to CodeWorks) hire or otherwise employ
any employee or independent contractor of QUALCOMM or any individual that was
employed by QUALCOMM within the six-month period prior to being employed by
NextWave (or any affiliate of NextWave, including but not limited to
CodeWorks), unless such person has approached NextWave independently without
solicitation by NextWave and NextWave first consults with QUALCOMM and obtains
QUALCOMM's prior written approval, which approval shall not be unreasonably
withheld. Unless there is a change of control in NextWave, QUALCOMM agrees
that for a period of two (2) years following the date hereof, it will not
solicit or induce any employee or independent contractor of NextWave to
terminate or breach an employment, contractual or other relationship with
NextWave nor will QUALCOMM hire or otherwise employ any employee or independent
contractor of NextWave or any individual that was employed by NextWave within
the six-month period prior to being employed by QUALCOMM, unless such person
has approached QUALCOMM
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independently without solicitation by QUALCOMM and QUALCOMM first consults with
NextWave and obtains NextWave's prior written approval, which approval shall
not be unreasonably withheld.
c.ASSIGNMENT; SUCCESSORS AND ASSIGNS. NextWave shall not transfer or
assign this Agreement or any right or interest under this Agreement, nor
delegate any obligation under this Agreement (an "assignment"), without
QUALCOMM's prior written consent, which consent shall not be unreasonably
withheld. Any attempted assignment in contravention of this Section shall be
void and ineffective. This Agreement shall be binding on any and all of
NextWave's successors, assigns and licensees. If NextWave transfers any or all
of its PCS licenses to any third party, the provisions of Section 2 of this
Agreement shall be binding upon such third party with respect to any such
transferred PCS license.
d.PUBLICITY. Subject to any applicable requirements of applicable
federal, state or local laws or regulations of the United States, no party
hereto will make or cause to be made, whether orally, in writing or otherwise,
any public announcement or statement to the news media or the investment or
business communities with respect to the transactions contemplated by this
Agreement or any of the provisions hereof without the prior written consent of
the other party.
e.SEVERABILITY. If any provision or term of this Agreement shall be
held to be invalid or unenforceable, the remaining provisions and terms of this
Agreement shall remain in full force and effect.
f.NOTICES. All notices, requests, demands, consents and other
communications required or permitted under this Agreement shall be in writing
and shall be delivered to the party to whom notice is to be given, by personal
delivery, by facsimile transmission or by first class mail, postage prepaid, to
the addresses (and shall be deemed to have been duly delivered on the date
received by such party):
If to QUALCOMM: If to NextWave:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ NextWave Telecom Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ , ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: General Counsel Attn.: ▇▇ ▇▇▇▇▇
g.GOVERNING LAW. This Agreement is made and entered into in the State
of California and shall be governed by the laws of the State of California as
applied to contracts entered into in and performed entirely in California by
California residents. Any dispute, claim or controversy which may arise
between the parties hereto out of or
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in relation to this Agreement, or breach or validity thereof ("Dispute"), shall
first be settled amicably by mutual consultation between senior management of
the parties within sixty (60) days of the written notice by one of the parties.
If the parties fail to settle the Dispute amicably within sixty (60) days from
such written notice, it shall be settled only by a court of competent
jurisdiction in the County of San Diego, State of California.
h.ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof.
i.Neither party shall be liable to the other for any consequential
damages as a result of any breach of this Agreement
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed on their behalf by their respective duly authorized
agents as of the date first written above:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ NEXTWAVE TELECOM INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ ----------------------------------
Title: VP, General Counsel Title: CEO & President
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