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Exhibit 10.1
STANDBY PURCHASE AGREEMENT
THIS STANDBY PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of this 13th day of May, 1998 by and between Iridium Operating
LLC, a Delaware limited liability company ("Iridium"), and Motorola, Inc., a
Delaware corporation ("Motorola").
In order to stimulate the manufacture and distribution of Iridium
hand-held and mobile phones (each, a "Transceiver") and belt-worn pagers (each,
a "Pager") to be used in the IRIDIUM System (Transceivers and Pagers are
collectively referred to herein as "Subscriber Devices"), Iridium and Motorola
have agreed as follows:
1. Subscriber Device Purchases. Subject to Section 3 of this
Agreement, and upon receipt of a Purchase Notice by Motorola, Iridium agrees to
purchase (I) the number of Transceivers up to a total of (x) 100,000 minus (y)
the aggregate amount of Transceivers Paid For by Gateway Operators and Service
Providers, (as defined in the Iridium LLC Limited Liability Company Agreement)
as specified in the Purchase Notice, at a purchase price per Transceiver of Two
Thousand Fifty ($2,050.00) Dollars, and (II) the number of Pagers up to a total
of (x) 40,000, minus (y) the aggregate amount of Pagers Paid For by Gateway
Operators, (as defined in the Iridium LLC Limited Liability Company Agreement)
as specified in the Purchase Notice, at a purchase price per Pager of Four
Hundred Forty Nine ($449.00) Dollars.
The calculations set forth in subparagraphs (I) and (II) above are
intended to cover a commitment from Iridium and the Gateway Operators that a
total of 100,000 Transceivers and 40,000 Pagers will be purchased from Motorola
prior to December 31, 1998. Purchase orders for delivery dates after December
31, 1998 are not part of the commitment or calculations. In this Agreement,
Transceivers will be deemed "Paid For" if (i) payment for such Transceivers has
been made by or on behalf of the relevant Gateway Operator or Service Provider
pursuant to the terms of the purchase order applicable to such Transceiver; (ii)
such Transceivers have been shipped pursuant to a standby letter of credit; or
(iii) such Transceivers have been shipped without a standby letter of credit and
Iridium has not agreed to such shipment without a standby letter of credit. If
Iridium agrees to shipment without a standby letter of credit, then such
Subscriber Device shall not be deemed "Paid For" until Motorola has actually
received payment for such Transceivers. In this Agreement, Pagers will be deemed
"Paid For" if (i) payment for such Pagers has been made by or on behalf of the
relevant Gateway Operator pursuant to the terms of the purchase order applicable
to such Pager; or (ii) such Pagers have been shipped pursuant to a standby
letter of credit; or (iii) such Pagers have been shipped without a standby
letter of credit; and Iridium has not agreed to such
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shipment without a standby letter of credit. If Iridium agrees to shipment of
any Subscriber Devices without a standby letter of credit, then such Subscriber
Device shall not be deemed "Paid For" until Motorola has actually received
payment for such Subscriber Devices. Iridium agrees that it will in good faith
consider agreeing to the shipment of Subscriber Devices without a standby letter
of credit should Motorola request such consideration by Iridium.
As used in this Agreement, the term "Purchase Notice" shall mean one
of a series of written notices dated no earlier than January 1, 1999, or the
first business day thereafter, which is sent by Motorola and received by
Iridium, in which the aggregate number of Transceivers Paid For by Gateway
Operators and Service Providers and the aggregate number of Pagers Paid For by
Gateway Operators, all as of the date of such Purchase Notice, shall be
specified. Sales of Subscriber Devices to the U.S. Government by Motorola are
outside the terms of this Agreement and will not be included in any calculations
to determine Iridium's purchase obligations herein.
2. Delivery and Payment Obligations. Upon the purchase of
Subscriber Devices by Iridium pursuant to Section 1 hereof, Motorola shall
promptly ship to Iridium or its designee the Subscriber Devices so purchased.
All deliveries are FOB Libertyville. Title to the Subscriber Devices will pass
to Iridium at the FOB point. If any Subscriber Device has been previously
shipped by Motorola to a Gateway Operator and such Subscriber Device has not
been Paid For, then Motorola may fulfill its shipment obligations pursuant to
this Section 2 with respect to such Subscriber Device by assigning to Iridium
all of Motorola's rights against the relevant Gateway Operator with respect to
such Subscriber Device pursuant to the purchase order and other documents with
respect to such Subscriber Device. Payment for Subscriber Devices delivered to
Iridium is due and payable within ten (10) business days from date of invoice.
Motorola will invoice for Subscriber Devices upon shipment. Payment for
Subscriber Devices not Paid For by Gateway Operators is due and payable within
ten (10) business days of receipt of Purchase Notice by Iridium from Motorola.
If after the date of the Purchase Notice Motorola receives any payment with
respect to a Subscriber Device specified or any return thereof, Motorola shall
immediately pay over to Iridium such payment or shall deliver to Iridium or its
designee such returned Subscriber Device. As more fully described in a
Memorandum of Understanding, Iridium agrees to use the funds available under a
new $175 million credit agreement, which Motorola has conditionally agreed to
guarantee, only to make payments to Motorola, Inc. for amounts that Iridium owes
under this Standby Purchase Agreement, as well as other agreements with
Motorola, Inc., to the extent those amounts are owed but have not been paid to
the extent that other funds are not available.
3. Limitation on Purchases. The parties acknowledge that
purchases of Subscriber Devices by Gateway Operators will be made pursuant to
written purchase
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agreements between Motorola and such Gateway Operators (such agreements, the
"Purchase Agreements"). Motorola has the right, without receiving the consent of
Iridium, to modify, amend, waive, extend or otherwise change the Purchase
Agreements, and the Gateway Operators' obligations thereunder, except that
Motorola agrees that it will not consent to modifications, deletions or
additions to paragraph 5.2 of the Purchase Agreements. To the extent that
Motorola has not filled firm orders placed by Gateway Operators for reasons
under Motorola's control and the Gateway Operators and Motorola have been unable
to work out a reasonable extension of time for delivery dates after good faith
attempts to do so, (as described in Paragraph 5.3 of the Purchase Agreements
with Gateway Operators), Iridium shall be entitled to reduce the number of
Subscriber Devices specified in clauses (I)(x) and (II)(x) of Section 1 of this
Agreement by the amount of any such production.
4. Other Terms of Purchase. All terms of any purchase of
Subscriber Devices by Iridium pursuant to the Agreement, other than purchase
price, payment and delivery terms, shall be subject to the terms set forth in
Attachment A.
5. Termination. This Agreement shall terminate on the date that
(i) an aggregate of 100,000 Transceivers shall have been Paid For by the Gateway
Operators, or Service Providers or Iridium or any combination of them and (ii)
an aggregate of 40,000 Pagers shall have been Paid For by either the Gateway
Operators or Iridium or both.
6. Party Relationship. Each party will be deemed to be an
independent contractor and not an agent, joint venturer, or representative of
the other, and neither party may create any obligations or responsibilities on
behalf of or in the name of the other. Under no circumstances may Iridium hold
itself out to be a partner, employee, franchisee, representative, servant or
agent of Motorola. Iridium will not impose or create any obligation or
responsibility, express or implied, or make any promises, representations or
warranties on behalf of Motorola, other than as expressly provided herein.
7. Dispute Resolution. The parties agree that any claims or disputes
arising from this Agreement will be submitted to non-binding mediation prior to
initiation of any formal legal process; provided, however, that this provision
shall not preclude either party from resorting to judicial proceedings if: (i)
good faith efforts to resolve the dispute under mediation are unsuccessful; or
(ii) the claim or dispute relates to intellectual property rights; or (iii)
interim relief from a court is necessary to prevent serious and irreparable
injury to the party or to third parties.
8. Representations. This Standby Purchase Agreement constitutes the
valid and legally binding obligation of Iridium and Motorola enforceable in
accordance with its
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terms. The parties each represent that they have the power to execute and
deliver this Agreement and to perform the obligations hereunder. Iridium agrees
that it will take all necessary steps to obtain any required approvals for
performance under this Agreement from its directors and its securities holders,
and from anyone else whose approval or consent is required for Iridium's
performance of this Agreement.
9. Notices. All notices and other communications hereunder will be in
writing. Any notice or other communication hereunder shall be deemed duly
given: (i) when delivered, if personally delivered; (ii) when receipt is
electronically confirmed, if faxed (with a hard copy to follow via first class
mail, postage prepaid); or (iii) one day after deposit with a reputable
overnight courier, in each case addressed to the intended recipient as set forth
below:
If to Iridium:
Iridium Operating LLC
0000 Xxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attention: Chief Financial Officer
Fax #: (000) 000-0000
If to Motorola:
Xxxx Xxxxxx
Director of Marketing and Business Development
Satellite Subscriber Products Division
Cellular Subscriber Sector
000 Xxxxx X.X. Xxxxxxx 00
Xxxxxxxxxxxx, Xxxxxxxx 00000
Fax #: (000) 000-0000
and
Xxx Xxxxx
Marketing Manager
Iridium Pager Operations
Messaging Systems Products Group
MS112 Xxxxxxx Xxxxx, XX 00000
Fax #: (000) 000-0000
10. Governing Law: This Agreement shall be governed
by the laws of the State of Illinois.
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11. General: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instruments. The failure of either
party to insist in any one or more instances upon the performance of any of the
terms or conditions herein or to exercise any right hereunder will not be
construed as a waiver or relinquishment of the future performance of any such
terms or conditions or the future exercise of such right but the obligation of
the other party with respect to such future performance will continue in full
force and effect. Except as otherwise expressly permitted hereunder, no
alterations or modifications of this Agreement will be binding upon either
Iridium or Motorola unless made in writing and signed by an authorized
representative of each party. If any term or condition of this Agreement will to
any extent be held by a court or other tribunal to be invalid, void or
unenforceable, then that term or condition will be inoperative and void insofar
as it is in conflict with law, but the remaining rights and obligations of the
parties will be construed and enforced as if this Agreement did not contain the
particular term or condition held to be invalid, void or unenforceable. Neither
party may disclose the terms of this Agreement to any party without the prior
written consent of the other party hereto; provided, however, that a party may
make such disclosure (I) upon order of a court of competent jurisdiction subject
to first providing the other party hereto with prompt written notice of such
court order to allow the other party to seek relief from such order, (ii) if so
required by law including but not limited to any federal or states securities
laws, or (iii) if requested in connection with any due diligence investigation
by such party's financial or legal advisors or by any lending institution or its
representatives. In the event that a party so discloses, other than in
accordance with the preceding sentence, the other party may immediately
terminate this Agreement.
IN WITNESS WHEREOF, the parties have hereunder signed their names in
the space provided below as of the date first above written.
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MOTOROLA, INC.
By: /s/
---------------------
Name: X.X. Xxxxxxx
Title:
IRIDIUM OPERATING, LLC
By: /s/
---------------------
Name: Xxx Xxxxx
Title: Vice President and Chief Financial Officer
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ATTACHMENT A
PURCHASE TERMS
The following terms apply to the Purchase of Subscriber Devices by
Iridium from Motorola to the extent that Iridium purchases Subscriber Devices
pursuant to the Standby Purchase Agreement:
1. WARRANTY
Subscriber Devices Warranty. Motorola will warrant each Subscriber Device
only to the original end user buyers or lessees in accordance with a limited one
year, parts and labor warranty which will be shipped with the Subscriber
Devices.
Accessory Warranty. Motorola will warrant each Accessory only to the
original end user buyers or lessees in accordance with a limited one year, parts
and labor warranty which will be shipped with the Accessories.
EXCEPT AS OTHERWISE PROVIDED IN THE LIMITED WARRANTIES, MOTOROLA
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. IF ANY PRODUCT IS DEFECTIVE AT TIME OF DELIVERY TO CUSTOMER,
CUSTOMER'S SOLE REMEDY WILL BE TO RETURN THE PRODUCT TO MOTOROLA FOR
REPLACEMENT, REPAIR, OR REFUND, AS DETERMINED BY MOTOROLA.
2. FORCE MAJEURE
Neither party shall be held liable for any delay or failure to perform due
to any cause beyond its reasonable control, including, without limitation, lack
of supplies due to a supplier's inability or failure to deliver materials,
except the obligation to pay money when due. The delivery schedule shall be
considered extended by a period of time equal to the time lost because of any
excusable delay.
3. EXPORT CONTROL
Iridium or Brightpoint shall be the exporter of record and shall be
responsible for obtaining all export licenses that may be required to export the
Subscriber Devices from the U.S. to Iridium's requested "ship to" location(s).
Iridium agrees to comply with all applicable export laws, regulations and
orders. Specifically, but without limitation, Iridium agrees that it will not
resell, re-export or ship, directly or indirectly, any
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Subscriber Device or technical data in any form without obtaining appropriate
export or re-export licenses from the United States Government.
4. TAXES
The prices set forth in the Standby Purchase Agreement are exclusive of
any amount for federal, state, provincial and/or local excise, sales, use,
property, retailer's, occupation or any other assessment in the nature of taxes
however designated, on the Subscriber Devices and/or services provided under
this Agreement. Iridium shall pay all applicable fees, custom duties,
assessments or taxes which may be assessed or levied by the government of any
applicable jurisdiction and any departments and subdivision thereof, as a result
of Iridium's performance under this Agreement or against any of the Subscriber
Devices purchased hereunder by Iridium.
5. PATENT AND COPYRIGHT INDEMNIFICATION
Motorola agrees to defend, at its expense, any suits against Iridium based
upon a claim that any Subscriber Device furnished hereunder directly infringe a
patent or copyright in the Gateway Operator's Marketing Area where Iridium sells
the Subscriber Device and to pay costs, fines, and damages finally awarded in
any such suit, provided that Motorola is notified promptly in writing of the
suit and at Motorola's request and at its expense is given control of said suit
and all requested assistance for defense of same. If the use or sale of any
Subscriber Devices furnished hereunder is enjoined as a result of such suit,
Motorola at its option and at no expense to Iridium, will obtain for Iridium the
right to use or sell said Subscriber Device or will substitute an equivalent
Device reasonably acceptable to Iridium and extend this indemnity thereto or
will accept the return of the Subscriber Device and reimburse Iridium the
purchase price therefor, less a reasonable charge for reasonable wear and tear.
This indemnity does not extend to any suit based upon any infringement or
alleged infringement of any patent or copyright by the alteration of any
Subscriber Devices furnished by Motorola or by the combination of any Subscriber
Devices furnished by Motorola and other elements nor does it extend to any
Subscriber Devices of Iridium's design or formula. The foregoing states the
entire liability of Motorola for patent or copyright infringement.
IN NO EVENT WILL MOTOROLA BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES TO
IRIDIUM ARISING FROM INFRINGEMENT OR ALLEGED INFRINGEMENT OF PATENTS,
COPYRIGHTS, OR OTHER INTELLECTUAL PROPERTY RIGHTS.
6. LIMITATION OF LIABILITY
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EXCEPT FOR PERSONAL INJURY, AND EXCEPT FOR PARAGRAPH 16 (PATENT AND
COPYRIGHT INDEMNIFICATION) ABOVE, MOTOROLA'S TOTAL LIABILITY, WHETHER FOR BREACH
OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY IN TORT OR OTHERWISE, IS
LIMITED TO THE PRICE OF THE PARTICULAR PRODUCTS SOLD HEREUNDER WITH RESPECT TO
WHICH LOSSES OR DAMAGES ARE CLAIMED. CUSTOMER'S SOLE REMEDY IS TO REQUEST
MOTOROLA, AT MOTOROLA'S OPTION, TO EITHER REFUND THE PURCHASE PRICE OR REPAIR OR
REPLACE PRODUCT(S) THAT ARE NOT AS WARRANTED. IN NO EVENT WILL MOTOROLA BE
LIABLE FOR ANY LOSS OF USE, LOSS OF TIME, INCONVENIENCE, COMMERCIAL LOSS, LOST
PROFITS OR SAVINGS OR OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES TO THE FULL
EXTENT SUCH MAY BE DISCLAIMED BY LAW. MOTOROLA EXPRESSLY DISCLAIMS ANY LIABILITY
FOR FAILURE TO OBTAIN EQUIPMENT CERTIFICATION IN TIME FOR CUSTOMER'S SERVICE
LAUNCH; FOR ANY FAILURE OF THE IRIDIUM SYSTEM WHATSOEVER; AND FOR RANGE,
COVERAGE, AVAILABILITY OR OPERATION OF ANY COMMUNICATIONS SYSTEM.
7. LOGOS AND TRADEMARKS
All use of Motorola's trademarks, service marks, tradenames, slogan, and
logos by Iridium shall be in accordance with the terms specified in the
"Motorola Subscriber Devices Marketing Guidelines" incorporated herein by
reference. Iridium shall not deviate from the Motorola Subscriber Devices
Marketing Guidelines without Motorola's written approval, which shall not be
unreasonably withheld. Any goodwill deriving from such use by Iridium shall
inure to Motorola's benefit.
8. GOVERNMENT SALES
In the event that Iridium elects to sell Subscriber Devices to a
government entity, directly or indirectly, Motorola makes no representations
with respect to the ability of the Subscriber Devices or any of its other
products, services or prices, to satisfy any statutes, regulations or provisions
relating to such governmental sales.
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