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EXHIBIT 10.4
MASTER AGREEMENT REGARDING EQUIPMENT PROCUREMENT
This Master Agreement Regarding Equipment Procurement (the "Agreement") is made
effective as of the ____ day of _______, 1998 (the "Effective Date"), between
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, a Delaware corporation, having an office at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("QUALCOMM"), and Leap Wireless
International, Inc., a Delaware corporation, having an office at ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Leap").
RECITALS
A. Pursuant to that certain Separation and Distribution Agreement, dated as of
______, 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( (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.
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)."
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"BTSs" shall have the meaning ascribed thereto in the definition of
"Product(s)."
"cdmaOne(" 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 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.
"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.
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"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.
"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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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 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.
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(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
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 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
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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 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 Factors, with those offered by the Person
submitting the Lowest Competing Infrastructure Bid (otherwise there shall be no
obligation to accept QUALCOMM's offer).
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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).
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).
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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 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.
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.
9
(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 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 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
10
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 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 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).
11
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 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.
12
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 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.
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.
13
QUALCOMM: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Leap: Leap Wireless International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Facsimile: (619) _______________
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.
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;
14
(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. seq ▇▇▇▇▇▇ \▇ \▇▇ ▇▇▇▇▇▇▇ 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 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
15
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
▇▇▇▇ of the other party or its Affiliates is mentioned; and neither party shall
publish or use such 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 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.
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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., ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,
a Delaware corporation a Delaware corporation
By: By:
Print Name: Print Name:
Title: Title:
