Strategic Alliance Agreement - Sophia Wireless Inc. and GigaBeam Corp.
STRATEGIC ALLIANCE AGREEMENT
This Strategic Alliance Agreement (the "Agreement") is entered into as
of the 6th day of February, 2004 ("Effective Date"), by and between Sophia
Wireless Inc., a Delaware C-corporation ("Sophia"), and Gigabeam Corporation, a
Delaware limited liability company ("Gigabeam").
RECITALS
WHEREAS, Gigabeam and Sophia wish to enter into a strategic alliance
and agree to reciprocal exclusivity to enable Gigabeam to market and distribute
a wireless communications system utilizing a frequency range of 57 GHz through
100 GHz and incorporating components procured from Sophia;
WHEREAS, in consideration of certain non-refundable advance payments,
Sophia will perform research and development related to component parts that are
to be built utilizing Sophia's proprietary know-how and intellectual properties,
which component parts meet certain technical and business requirements to be
identified through the collaborative efforts of both Sophia and Gigabeam; and
WHEREAS, the parties desire to enter into an arrangement whereby
Gigabeam may purchase such components from Sophia for purposes of integrating
the same into Gigabeam's digital radios within an exclusive field of business to
be identified by the parties.
AGREEMENT
NOW, THEREFORE, in consideration for the parties' mutual covenants set
forth below, and for other good and valuable consideration, the parties agree as
follows:
DEFINITIONS
"Product" means any digital radio incorporating an RF Module System,
which product provides XXXXX data links operating in the frequency range of 57
to 100 GHz, and which product adds substantial value beyond the value of the RF
Module System incorporated therein. The term "Product" does not include any
products that include or perform XXXXX.
"RF Module System" or "RF Module" or "Module" means any devices which
perform a frequency conversion operation to or from any frequency in the range
57 to 100 GHz, by means of mixing, frequency multiplying, or other processes,
from or to a baseband signal or a signal at some other intermediate frequency.
This term "RF Module System" or "RF module" or "Module" includes devices with
integrated modems so that the input or output is a baseband data stream.
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"Field of Exclusivity" means the sale and distribution of Products (as
defined herein) for use with XXXXX data links. The term "Field of Exclusivity"
will include sales and distribution of Products to commercial entities and
government agencies, but does not include sales or distribution of products that
are not within the scope of the term "Product," as defined herein. The term
"Field of Exclusivity" does not include sales or distribution of any products
that include or perform XXXXX.
"Intellectual Property Rights" means all past, present, and future
rights of the following types, which may exist or be created under the laws of
any jurisdiction in the world: (i) rights associated with works of authorship,
including exclusive exploitation rights, copyrights, moral rights, and mask work
rights; (ii) trademark and trade name rights and similar rights; (iii) trade
secret rights; (iv) patent and industrial property rights; (v) other proprietary
rights in Inventions of every kind and nature; and (vi) rights in or relating to
registrations, renewals, extensions, combinations, divisions, and reissues of,
and applications for, any of the rights referred to in clauses (i) through (v)
of this sentence.
"Inventions" means any and all useful ideas, concepts, methods,
procedures, processes, improvements, inventions and discoveries, whether or not
patentable, that are (i) in the case of patentable inventions, conceived in the
course of the performance of activities conducted in connection with the
development and manufacture of RF Modules or Products and reduced to practice
either actually or constructively and (ii) in the case of unpatentable
inventions, conceived and made or used in the course of the performance of
activities conducted in connection with the development and manufacture of RF
Modules or Products, in each case under this Agreement.
"Joint Invention" means any Invention that (i) is jointly reduced to
practice (under the patent laws of the United States) by Sophia and Gigabeam
during any collaborative meetings or conferences between the Parties regarding
development or improvement of RF Modules, (ii) is necessary to use any RF
Module, and (iii) relates to any process, procedure, or equipment for
manufacturing any RF Module.
"Joint Technology" means the Joint Inventions and any Intellectual
Property Rights related thereto.
"Pre-Existing Technology" means any and all useful ideas, concepts,
methods, procedures, processes, improvements, inventions and discoveries,
whether or not patentable, and any Intellectual Property Rights thereto, that
are owned or controlled by Sophia or by Gigabeam or Gigabeam's other Alliance
Partners as of the Effective Date.
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1. Responsibilities of Parties
1.1 Initial Collaboration; Development and Prototyping
1.1.1 From time to time during the term of this Agreement,
the parties may set forth in writing a description of
the general functional and technical requirements of
RF Modules that Gigabeam desires for Sophia to
develop under the terms of this Agreement. For
purposes of this Agreement, any such document
executed specifically indicating that it is subject
to this Agreement and which is executed by authorized
representatives of both parties shall be referred to
as a "Functional Requirements Statement" or "FRS"
with respect to the relevant RF Modules described
therein. The Parties agree that the initial
Functional Requirements Statement under this
Agreement is set forth in Exhibit A (the "Initial
Functional Requirements Statement").
In consideration for payment by Gigabeam to Sophia of
the Non-Recurring Engineering Fees as contemplated in
Section 3.1, during the initial XXXXX of the Term,
Sophia will exercise reasonable efforts to develop
prototype RF Modules meeting the general technical
requirements set forth in the Initial Functional
Requirements Statement.
In addition, Sophia agrees to exercise commercially
reasonable efforts to develop prototype RF Modules
meeting the general technical requirements set forth
in Functional Requirements Statements (i.e. other
than the Initial Functional Requirements Statement)
that may be subsequently executed by the parties, for
such period(s) of time as the parties set forth
therein.
1.1.2 Upon completion of any prototypes as contemplated in
the preceding Section 1.1.1, Sophia will so notify
Gigabeam (the date of such notice, the "Testing
Commencement") and make a number of units of such
prototype available (in such quantity as required by
the applicable FRS) for mutual testing by the parties
for purposes of confirming that such prototype(s)
conform to the requirements of the applicable FRS in
all material respects. In the event that any such
prototypes fails to conform in all material respects
to such requirements, Gigabeam will provide written
notice to Sophia identifying with specificity the
relevant non-conformity, and Sophia will thereafter
undertake commercially reasonable efforts to correct
such non-conformity within a reasonable time, and the
parties will repeat such process as appropriate. If,
despite such commercially reasonable efforts, Sophia
is unable or fails to cause such prototype to conform
to the requirements of the applicable FRS in all
material respects within the time period identified
in such FRS, the parties will consult with one
another in good faith regarding how to proceed.
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1.1.3 Upon mutual confirmation in writing that any such
prototype RF Modules (developed as contemplated
above) conform to the requirements of the applicable
Functional Requirements Statement in all material
respects (the date of such written confirmation, such
prototype's "Prototype Completion Date"), the parties
will in good faith attempt to agree upon pricing
pursuant to which RF Modules based upon such
prototypes may be purchased by Gigabeam from Sophia
subject to the terms of this Agreement including
Section 10 which provides for fair and equitable
pricing consistent with industry standards for
similar components at similar volumes sold to
commercial enterprises. Sophia's price per RF Module
System ("Agreed Price") for the initial pricing of RF
Modules shall not exceed the following price (the
"Not To Exceed Price"): XXXXX X (XXXXX times) its
cost of direct materials and labor (plus overhead) in
the case of RF Module Systems assembled in house or,
alternatively, in the case of RF Module Systems
purchased from a third party manufacturer, XXXXX X
(XXXXX times) the price paid to the third party
manufacturer plus XXXXX X (XXXXX times) direct labor
(plus overhead) and materials for any improvements,
upgrades or testing of the RF Module Systems
performed at Sophia's facility prior to shipment to
Gigabeam. At the time that the parties are able to
reach agreement upon such pricing, they shall
memorialize such pricing in writing ("Agreed Prices"
and the date of such written agreement, the
"Manufacturing Commencement Date" with respect to
such particular prototype). In the event of a failure
to agree on price, either party may choose to set the
price at the Not To Exceed Price. All prices are
understood to include a range of discounts versus
quantity ordered, and quantity will subsequently
be specified by GigaBeam as described below.
1.2 Manufacture and Purchase of RF Modules.
1.2.1 The parties desire that Sophia be Gigabeam's
exclusive supplier of RF Modules (and similar
component products), and that Gigabeam be Sophia's
exclusive purchaser as an "OEM" (i.e., an original
equipment manufacturer) of RF Modules for purposes
within the Field of Exclusivity. Subject to the terms
and conditions of this Agreement, Sophia hereby
appoints Gigabeam, and Gigabeam hereby accepts such
appointment, as Sophia's exclusive purchaser (i.e.,
as an OEM) of RF Modules within the Field of
Exclusivity for the Term of this Agreement.
Notwithstanding the foregoing, Gigabeam acknowledges
and agrees that it is not authorized to, and that it
may not, (i) sell, rent, lease, grant access to, or
otherwise distribute any RF Modules outside the scope
of the Field of Exclusivity; or (ii) distribute any
RF Modules except as incorporated into a Product, or
for purposes of maintaining a Product. Any violation
of the foregoing restrictions shall be deemed a
material breach of this Agreement.
1.2.1 From and after the Manufacturing Commencement Date
and throughout the remainder of the Term of this
Agreement, subject to the terms and conditions of
this Agreement and in consideration for the Agreed
Prices, Sophia agrees to sell to Gigabeam, and
Gigabeam agrees to purchase from Sophia solely for
purposes of resale as incorporated into Products, RF
Modules for which a written purchase order has been
submitted by Gigabeam and accepted by Sophia.
Provided that Gigabeam is not in breach hereunder at
the time of the relevant order, Sophia will accept
such purchase orders subject to available inventory
and its then-current lead time requirements. Gigabeam
acknowledges that no provision of any purchase order
or other similar documentation will be deemed to
modify, add to, or supercede any provision of this
Agreement.
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1.2.2 Upon acceptance of any purchase order submitted by
Gigabeam for purchase of RF Modules, Sophia will
establish a shipping date for the relevant RF Module
as close as practicable to Gigabeam's requested date,
subject to Sophia's available inventory and then-
current lead time requirements, and provided that
Sophia shall be permitted to allocate its then-
current inventory and other resources in its
discretion. Sophia shall not be liable for any damage
or penalty arising from delay in delivery or from
failure to give notice of any delay. Sophia's
delivery obligations with respect to such RF Module
will be deemed complete upon tender to a commercial
carrier for shipment. Risk of loss or damage to any
RF Module shall pass to Gigabeam upon passage of
title or upon shipment if title does not pass to
Gigabeam upon shipment.
1.3 Gigabeam
Gigabeam shall perform the following duties during the term of
this Agreement:
1.3.1 Gigabeam will Designate a Chief Technical Officer
("CTO") and Vice President or Director of Engineering
to provide consultation regarding all design and
development work Gigabeam will be responsible for
overall decisions with respect to final design and
production of the Product.
1.3.2 As between the parties, Gigabeam will bear all
responsibility for assembly and testing of any
Product, including the contracting and management of
any outsourcing or supply channels of any Product or
components thereof, except for the RF Module System,
and the manufacturing and repair of any Product,
except for the RF Module System provided by Sophia.
1.3.3 As between the parties, Gigabeam will bear all
responsibility for any and all sales, marketing,
installation and after-sales service of any Product
including, but not limited to, entering into
arrangements with value added resellers,
distributors, agents, installers and providers of
after-sales service.
1.3.4 During each Purchase Period (defined below), Gigabeam
will purchase RF Modules from Sophia meeting or
exceeding the Minimum Purchase Commitment (defined
below) specified in Exhibit D hereto with respect to
such Purchase Period. For purposes of this Agreement,
the term "Purchase Period" shall mean any particular
time period identified in Exhibit D to which a
Minimum Purchase Commitment applies, as indicated in
Exhibit D. For purposes of this Agreement, the term
"Minimum Purchase Commitment" shall mean the minimum
number of RF Modules which Gigabeam hereby agrees to
purchase during any particular Purchase Period
identified in Exhibit D.
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1.3.5 In the event that Gigabeam fails to purchase RF
Modules meeting or exceeding any particular Minimum
Purchase Commitment specified in Exhibit D for the
relevant Purchase Period, then Gigabeam will be in
material breach of the Agreement except that, if, at
Gigabeam's option, within XXXXX following the end of
the relevant Purchase Period, Gigabeam purchases from
Sophia the number of RF Modules required to satisfy
the relevant Minimum Purchase Commitment, and pays
for the same in full (the "Shortfall Purchase"),
further provided that the Shortfall Purchase shall be
applied toward the Minimum Purchase Commitment for
the then-preceding Purchase Period and shall in no
event be applied toward satisfaction of the Minimum
Purchase Commitment, if any, for the then-current
Purchase Period.
Notwithstanding the foregoing, if during any Purchase
Period, the numbers of GigaBeams Product sales
containing Sophia-made RF modules sold constitute
greater than XXXXX percent market share within the
field of exclusivity, then GigaBeam will be
considered to have met its minimum purchase
requirements, even if the actual number of RF modules
bought is less than the quantities indicated in
Exhibit D.
1.4 Sophia
Sophia will designate a program manager to interface with
Gigabeam's representatives. The two counterparts will meet and
develop detailed implementation plans with the following
objectives in mind:
1.4.1 As between the parties, Sophia will bear
responsibility for all research and development and
manufacturing associated with RF Modules.
1.4.2 Sophia will exercise reasonable efforts to consult in
good faith with third party companies identified by
Gigabeam to improve the design, performance,
manufacturability and reduce the cost of the RF
Module System.
1.4.3 For purposes of conducting the testing of prototype
RF Modules and for purposes related to technical
support of Gigabeam in the design and assembly of
Products, Sophia will provide up to 50 hours of
consulting support in testing and debugging as
necessary of Product.
1.4.4 Sophia will provide appropriate reports, outline
drawings, reviews, and updates of the project
schedule, actual costs incurred and budget through
completion of the program plan on a biweekly basis
through the first six months of research and
development. Future reporting after the first six
months will be determined by mutual agreement.
2. [This section reserved.]
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3. Payment
3.1 In consideration for Sophia's performance of certain
research and development related to RF Modules,
Gigabeam will pay to Sophia all fees identified as
"Non Recurring Expenses" in the applicable Functional
Requirements Statement or otherwise required herein,
which fees will be due and payable in accordance with
such Functional Requirements Statement, unless
otherwise agreed between the parties in writing and
supported by a purchase order from Gigabeam, provided
that if the relevant Functional Requirements
Statement or purchase order fails to state when such
payments are due and no separate written agreement
has been signed with respect thereto, all such
amounts under any particular Functional Requirements
Statement shall be due and payable within XXXXX of
the date of Sophia's invoice. Without limiting the
foregoing, in consideration for Sophia's performance
of its obligations under Section 1.1 with respect to
the Initial Functional Requirements Statement, in
accordance with the payment schedule set forth in
Exhibit B and provided Sophia performs the work as
stipulated, Gigabeam shall pay Sophia $750,000 in Non
-Recurring Engineering Fees as set forth in such
Exhibit B.
If, as of the relevant due dates for payments under
Exhibit B applicable to each of the 4th, 5th or 6th
month of this Agreement, GigaBeam has not received
commitments from investors or other funding sources
to provide at least $2,000,000 in total cumulative
funding to Gigabeam, GigaBeam may elect not to make
payments due for such month as indicated in Exhibit
B, and may exercise such election by sending written
notice to Sophia of Gigabeam's failure to raise such
funding. Such notice must be received before the
applicable due date for such month. If GigaBeam gives
such notice for any of the 4th, 5th and/or 6th months
hereunder, Sophia may, at its option, take any or
several of the following actions: (1) suspend work on
research and development or other performance under
this Agreement, (2) agree to an extension of time to
allow GigaBeam to raise the required funding, (3)
terminate this Agreement. If GigaBeam does not give
such written notice before the due date for the
relevant month, then GigaBeam will continue to be
obligated to make payments for months 4, 5, and 6 to
Sophia, as applicable.
3.2 In consideration for the sale of RF Modules
hereunder, Gigabeam shall pay to Sophia the Agreed
Prices applicable to such RF Modules, which amounts
shall be due and payable within XXXXX following the
date of invoice.
3.3 AS COLLATERAL SECURITY FOR ALL OF GIGABEAM'S
OBLIGATIONS TO THE AGREED PRICES FOR THE PURCHASE OF
RF MODULES UNDER THIS AGREEMENT, GIGABEAM HEREBY
GRANTS SOPHIA A FIRST PRIORITY SECURITY INTEREST IN
ALL RF MODULES TO BE PURCHASED HEREUNDER TO THE
MAXIMUM EXTENT PERMITTED BY LAW. GIGABEAM SHALL, AT
SOPHIA'S EXPENSE, TAKE ALL COMMERCIALLY REASONABLE
ACTION REQUIRED BY SOPHIA TO FURTHER EVIDENCE AND/OR
PERFECT SUCH SECURITY INTEREST, INCLUDING WITHOUT
LIMITATION EXECUTING AND DELIVERING A SEPARATE
SECURITY AGREEMENT AND UCC-1 FINANCING STATEMENT.
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4. Term and Termination.
This Agreement shall be effective as of the Effective Date and shall
continue for a minimum seven year term from the date hereof and will
automatically extend on a year by year basis thereafter provided
Gigabeam satisfies its minimum purchase commitments as set forth in
Sections 1.3.4 and Exhibit D with minimum purchase commitments for each
year of extension of the Agreement beyond the time periods given in
Exhibit D to be the same as the minimum purchase commitment for the
preceding year; provided, however, that the Agreement may be terminated
for any of the following reasons:
a.) Upon the occurrence of any material breach by either party of the
terms and conditions of this Agreement and failure to cure such
material breach within 30 days after receipt of written notice
from the other party the non-breaching party may, at its option,
terminate this Agreement upon written notice; provided however
that the cure period shall be only 10 days after receipt of notice
if the material breach arises from failure by Gigabeam to pay
amounts due according to Section 3. After six months from the
Effective Date, the payment cure period will go to 30 days.
b.) In the event that Gigabeam fails actually to receive $1.5 million
in financing within 120 days from the Effective Date hereof,
Sophia may, at its option, terminate this Agreement upon written
notice; or
c.) Upon the occurrence of bankruptcy or reorganization under
bankruptcy laws, cessation of operations, or assignment for the
benefit of creditors of either party, the other party may
terminate this Agreement upon written notice.
d.) This Agreement may be terminated by mutual written agreement of
both parties to terminate.
Notwithstanding the foregoing, upon the occurrence of a material breach
by either Party (the "Breaching Party"), which is not cured within
the appropriate cure period, or other event giving rise to a right
for either Party to terminate this Agreement, without limiting any
other rights or remedies available, the Party which is not in
material breach (the "Non-Breaching Party"), which has the right
to terminate this Agreement may, at its option, terminate its own
obligations of exclusivity under Section 8, such that Section 8
remains binding against the Breaching Party for the remainder of
the term but shall thereafter no longer be binding against the
Non-Breaching Party
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5. Ownership of Technology and Intellectual Property
5.1 Ownership of Gigabeam Technology. Without limiting the
obligations of Section 8, Gigabeam will own and hold all
right, title and interest in and to (i) all Inventions and
Intellectual Property Rights, other than Joint Technology or
Sophia Technology (as defined below), embodied in or practiced
by any Product developed and/or sold under this Agreement or
embodied in or practiced by any process or machine in
connection with the manufacture of any such Product, and (ii)
all Inventions and Intellectual Property Rights therein (other
than Joint Technology or Sophia Technology) that are derived
from Confidential Information of Gigabeam (all of the
foregoing, collectively, "Gigabeam Technology"). In the event
that, by operation of law or otherwise, Gigabeam may not be
deemed the owner of any Gigabeam Technology, Sophia agrees to
assign and does hereby assign to Gigabeam all rights or
interests, if any, that Sophia may have therein, and Sophia
agrees to undertake such measures as Gigabeam may reasonably
request to evidence or give effect to the foregoing provisions
of this Section 5.1, including, by way of example, by
executing further registrations or documentation for such
purposes.
5.2 Ownership of Joint Technology.
(a) All Joint Technology will be owned jointly by
Gigabeam and Sophia, and each party will retain full ownership
under any patents and any trade secret rights therein, with
full ownership rights in any field and, subject to the
licenses granted in Section 5.4 below, the right to sublicense
without the consent of the other party, without obligation to
account to the other party. The laws of the United States with
respect to joint ownership of inventions will apply in all
jurisdictions giving force and effect to this Agreement.
(b) Sophia will keep written records describing each
collaborative meeting between the parties and identifying any
Joint Inventions resulting therefrom. Sophia will distribute
such records to Gigabeam at the end of each meeting but in any
event no later than one month following the meeting, for
review by Gigabeam. Each such record will be final and binding
on the parties unless Gigabeam provides written notice to
Sophia of its good faith dispute with such written record
within 30 days of receipt. In the event of any such good faith
dispute that the parties are unable to resolve, such record
will reflect such unresolved dispute. All reports created
under this Section 5.2(b) shall be clearly marked as
"Confidential" and shall be subject to the confidentiality
provisions of this Agreement.
5.3 Ownership of Sophia Technology. Without limiting the
obligations of Section 8, Sophia will own and hold all right,
title and interest in and to (i) all Inventions and
Intellectual Property Rights (other than Joint Technology)
embodied in or practiced by any RF Module System developed
and/or sold under this Agreement or embodied in or practiced
by any process or machine in connection with the manufacture
of any such RF Module System, (ii) all Inventions and
Intellectual Property Rights therein that are derived from
Confidential Information of Sophia, and (iii) all Pre-Existing
Technology and derivatives or improvements thereof (all of the
foregoing, collectively, "Sophia Technology"). In the event
that, by operation of law or otherwise, Sophia may not be
deemed the owner of any Sophia Technology, Gigabeam agrees to
assign and does hereby assign to Sophia all rights or
interests, if any, that Gigabeam may have therein, and
Gigabeam agrees to undertake such measures as Sophia may
reasonably request to evidence or give effect to the foregoing
provisions of this Section 5.3, including, by way of example,
by executing further registrations or documentation for such
purposes.
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5.4 Licenses to Joint Inventions.
(a) Sophia hereby grants to Gigabeam, and Gigabeam
hereby accepts, an exclusive (even as to Sophia) and
perpetual, worldwide, royalty-free right and license, with the
right to sublicense, under Sophia's interest in the Joint
Technology to exploit the Joint Inventions for any purpose in
the Field of Exclusivity during and after the term of this
Agreement. Sophia reserves all rights in the Joint Technology
as necessary to perform its obligations under this Agreement.
Notwithstanding the foregoing, if GigaBeam is in material
breach of this agreement, then this license will be
non-exclusive.
(b) Gigabeam hereby grants to Sophia, and Sophia
hereby accepts, an exclusive (even as to Gigabeam) and
perpetual, worldwide, royalty-free right and license, with the
right to sublicense, under Gigabeam's interest in the Joint
Technology to exploit the Joint Inventions for any purpose
outside the Field of Exclusivity during and after the term of
this Agreement. Notwithstanding the foregoing, if Sophia is in
material breach of this agreement, then this license will be
non-exclusive.
5.5 Filing and Enforcement Relating to Joint Inventions.
(a) XXXXX responsible for the preparation, filing,
prosecution and maintenance of any patent claiming a Joint
Invention. The parties will mutually agree on suitable patent
counsel to prepare and file patents. The parties will XXXXX in
the costs and expenses incurred by XXXXX in connection with
any such preparation, filing, prosecution or maintenance. If
XXXXX elects not to prepare or file a patent claiming a
particular Joint Invention, then Sophia and Gigabeam will each
treat such Joint Invention as a trade secret and will
safeguard such Joint Invention in accordance with Sophia's and
Gigabeam's standard practices and procedures relating to trade
secrets (but in no event using less than reasonable care).
(b) If Sophia or Gigabeam learns of any
misappropriation or any infringement or threatened
infringement of any Joint Technology, then each party will
promptly notify the other party in writing and provide all
available evidence of such misappropriation or infringement.
The parties will mutually agree to institute, prosecute and
control, XXXXX, any action or proceeding with respect to
infringement or misappropriation of Joint Technology, by
counsel of its own choice. The parties will share equally in
the costs and expenses incurred in connection with any such
action or proceeding. If either party brings any action or
proceeding under this Section 5.5(b), each party agrees, at
the request of the other party, to be joined as a party
plaintiff to the extent necessary to prosecute the action or
proceeding and to give the other party reasonable assistance
and authority to file and prosecute the action or proceeding.
Any damage or other award resulting from any such action or
proceeding, after reimbursement of each party's expenses,
XXXXX.
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5.6 Technology Escrow.
(a) Sophia agrees during the term of this Agreement
to create and maintain current copies of any technical
drawings or other technical documents relating to the design
and specifications of the RF Module Systems developed under
this Agreement (such copies the "IP Materials"). Within 90
days after the Effective Date, Sophia will enter into binding
contractual arrangement with a commercial escrow agent
mutually agreeable to the Parties (the "Escrow Agent")
according to which the Escrow Agent will agree (i) to hold and
safeguard the escrowed IP Materials during the term of this
Agreement, and (ii) to release a copy of such escrowed IP
Materials to Gigabeam if and when Sophia files for bankruptcy,
liquidates or winds up its business during the term of this
Agreement. Gigabeam acknowledges that the Escrow Agent will
not be authorized to deliver or otherwise provide access to
the escrowed IP Materials other than as described above.
(b) Subject to the delivery to Gigabeam of the
escrowed IP Materials in accordance with this Section 5.6,
Sophia hereby grants to Gigabeam an exclusive (within the
Field of Exclusivity), worldwide, royalty-bearing right and
license under any Intellectual Property Rights of Sophia to
use such escrowed IP Materials for any purpose in the Field of
Exclusivity if provided to Gigabeam as contemplated in Section
5.6(a). Such license will continue, notwithstanding any
termination of this Agreement, until the date upon which the
then-current five year initial term or one year renewal terms
under Section 4, as the case may be, would have expired. In
consideration for the foregoing license grant, Gigabeam agrees
to pay to Sophia, for each RF Module manufactured by or on
behalf of Gigabeam under the foregoing license, a royalty
equal to XXXXX by GigaBeam to maintain continued supply of RF
Modules, whereby "Prior Average Margin" shall equal XXXXX, as
such average profit margin is reasonably determined by Sophia
by reference to its documented financial records. GigaBeam
shall pay such royalties XXXXX basis in arrears, which
payments shall each be due within XXXXX following the end of
the XXXXX.
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6. Confidentiality.
6.1 Obligation. Each party agrees to treat all non-public written
and oral information communicated to it by the other party in
connection with the activities contemplated by this Agreement
("Confidential Information"), including the existence or
nature of their discussions, as confidential, and neither
party will use or disclose such Confidential Information for
purposes other than the activities contemplated by this
Agreement; provided however that Gigabeam and Sophia may
disclose such Confidential Information to accountants and
lawyers who are under a processional duty of confidentiality
and, for the purposes of obtaining financing, to entities that
the disclosing party reasonably believes to be a potential
source of such financing, provided that such entity has
entered into a binding written agreement pursuant to which
such entity agrees not disclose such Confidential Information
and not to use the same for any purposes other than
consideration of such potential financing. For sake of
clarity, all non-public information embodying related to the
design, features, components, development and manufacture of
Gigabeam's Products, exclusive of any RF Modules therein,
shall be considered Gigabeam's Confidential Information, and
all non-public information embodying related to the design,
features, components, development and manufacture of RF
Modules, including the same as developed hereunder, shall be
deemed Sophia's Confidential Information.
6.2 Exceptions. Confidential Information will not include
information that (i) the receiving party independently
developed (as shown by documentary evidence) or obtained from
a source not under an obligation of confidentiality to the
disclosing party, (ii) is or becomes publicly available
through no act or omission of the receiving party, or (iii)
the receiving party receives the prior written consent of the
disclosing party to disclose. Notwithstanding the foregoing,
either Party may disclose Confidential Information of the
other Party to the limited extent required in order to comply
with applicable law or the order of a court or governmental
agency; provided the receiving party promptly notifies the
disclosing party and cooperates with the disclosing party to
protect the confidentiality of the Confidential Information
before any tribunal or governmental agency; provided that only
the specific Confidential Information that meets the exclusion
shall be excluded and not any other Confidential Information
that happens to appear in proximity to such excluded portion
(for example, a portion of a document may be excluded without
affecting the confidential nature of those portions that do
not themselves qualify for exclusion). The burden of proving
these exceptions shall rest with the receiving party.
6.3 Termination of Agreement. Upon termination of this Agreement,
the receiving party will return all copies of the other
party's Confidential Information, or, at the disclosing
Party's option, certify to the other party in writing that all
copies of the other party's Confidential Information have been
destroyed. The parties agree that any breach or threatened
breach of this Section 6 by a receiving party may cause
irreparable harm to the disclosing party and that money
damages may not provide an adequate remedy. In the event of a
breach or threatened breach of this Section 6 by a receiving
party, the disclosing party shall, in addition to any other
rights and remedies it may have, be entitled to seek
injunctive relief (without the necessity of posting any bond
or surety) restraining the receiving party from breaching the
obligations of this Section 6.
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7. Limitation of Liability; Indemnification
7.1 LIMITATION OF LIABILITY. EXCEPT WITH RESPECT TO RIGHTS OR
OBLIGATIONS ARISING OR RECOGNIZED UNDER SECTIONS 5, 6 AND/OR
8, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR
ANY LOSS OF PROFITS OR ANY INCIDENTAL, INDIRECT, SPECIAL,
EXEMPLARY, OR CONSEQUENTIAL DAMAGES, EVEN IF SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT WITH
RESPECT TO RIGHTS OR OBLIGATIONS ARISING OR RECOGNIZED UNDER
SECTIONS 5, 6 AND/OR 8, IN NO EVENT SHALL THE AGGREGATE
LIABILITY OF EITHER PARTY, CUMULATIVELY FOR ALL CLAIMS ARISING
UNDER THIS AGREEMENT, EXCEED, IN THE CASE OF GIGABEAM'S
LIABILITY, THE SUM TOTAL AMOUNTS TO BE PAID WHICH SHALL BE FOR
FEES AND ACCRUALS EVIDENCED BY PURCHASE ORDERS AND INVOICES
FOR NON RECURRING ENGINNERING FEES AND RF ENGINEERING MODULES
DELIVERED AND OUTSTANDING (WHICH HAVE BEEN COMMITTED TO IN
WRITING BY A PURCHASE ORDER ISSUED BY GIGABEAM), OR, IN THE
CASE OF SOPHIA'S LIABILITY, THE SUM TOTAL AMOUNT OF ALL FEES
FOR WHICH WORK IS TO BE PERFORMED OR THE TOTAL AMOUNT OF RF
ENGINEERING MODULES HEREUNDER TO BE DELIVERED FOR WHICH SOPHIA
HAS RECEIVED A PURCHASE ORDER FROM GIGABEAM.
7.2 Indemnification by Sophia.
(a) Sophia shall defend, indemnify, and hold Gigabeam
harmless against all costs and reasonable expenses (including
reasonable attorneys' fees), damages, and liabilities arising
out of any claim by a third party that an RF Module, as
provided by Sophia and used in accordance with this Agreement,
infringes any U.S. patent issued as of the Effective Date or
misappropriates any trade secrets under U.S. law, provided
that Gigabeam gives Sophia (i) prompt written notice of such
claim; (ii) control over the defense and settlement of such
claim; and (iii) proper and full information and assistance to
settle and/or defend such claim. Notwithstanding the
foregoing, Sophia shall have no obligation or liability to the
extent that the alleged infringement arises from (1) the
combination, operation, or use of the RF Module with products
not furnished by Sophia; (2) alterations to the RF Module,
which alterations are not made by Sophia; or (3) use of the RF
Module in a manner for which it was not designed, as evidenced
by any accompanying specifications or documentation (the
foregoing exclusions, "Gigabeam Responsibilities").
13
<PAGE>
(b) In the event of an infringement action against
Sophia with respect to any subject matter provided by Sophia
hereunder, or in the event that Sophia believes that such an
action is likely, Sophia may, at its option (i) substitute
functionally equivalent materials; (ii) obtain a license to
the applicable third-party intellectual property rights; or
(iii) terminate this Agreement on written notice to Gigabeam.
The obligations set forth in this Section 7.2 shall constitute
Sophia's entire liability and Gigabeam's sole remedy for any
actual or alleged infringement or misappropriation.
7.3 Indemnification by Gigabeam. Gigabeam shall defend, indemnify,
and hold Sophia harmless against all costs and reasonable
expenses (including reasonable attorneys' fees), damages, and
liabilities arising out of any Gigabeam Responsibilities;
provided that Sophia gives Gigabeam (i) prompt written notice
of such claim; (ii) control over the defense and settlement of
such claim; and (iii) proper and full information and
assistance to settle and/or defend such claim. In any action
for which Gigabeam provides defense on behalf of Sophia,
Sophia may participate in such defense at its own expense by
counsel of its choice.
8. Exclusivity.
8.1 Sophia. Provided that Gigabeam has not materially breached
this Agreement, Sophia agrees that during the term of this
Agreement it will not, nor will any subsidiary of Sophia, nor
will its or their respective directors, officers, or other
representatives license Sophia's technology to a third party
to enable that third party to make products that directly
compete with a "Product" or authorize a third party to
distribute RF Modules within the Field of Exclusivity, nor
will Sophia build or sell a digital radio which competes in
the Field of Exclusivity. Notwithstanding the foregoing,
nothing in this Agreement shall limit Sophia's right or
ability to sell or distribute RF Modules or any other product
outside the scope of the Field of Exclusivity. For any
products sold by Sophia with an operating frequency in the
range 57 through 100 GHz, Sophia shall exercise reasonable
efforts to procure agreement from the purchasers of such
products that the intended end use is not in violation of this
exclusivity requirement. If, despite such reasonable efforts,
a product sold by Sophia is found to have been used without
Sophia's knowledge in violation of this exclusivity
requirement, Sophia shall not be considered in breach of this
covenant. Sale of any product by Sophia which does not have an
operating frequency in the range 57 to 100 GHz shall not be
considered violation of this exclusivity requirement..
8.2 Gigabeam. Gigabeam agrees that during the term of this
Agreement that it will not, nor will any affiliate of
Gigabeam, nor will its or their respective directors, officers
or other representatives negotiate or pursue any other
transaction or arrangement that contemplates a relationship
with any third party pursuant to which Gigabeam would procure
RF Module Systems or substantially similar products for sale
or distribution within the Field of Exclusivity, or would
procure design, development or manufacturing services relating
to the same and GigaBeam further agrees not to manufacture RF
modules during the term of this Agreement.
14
<PAGE>
9. Performance Incentives
The parties have established performance incentives whereby each party
will issue to the other certain one or more warrants to purchase common
stock in the amounts and upon the successful completion of the
milestones identified on Exhibit C. Each warrant issued pursuant to
this Section shall be in substantially in the form attached as Exhibit
C-1.
10. Cost Reduction and Pricing of Modules Sold to Gigabeam
Sophia shall use commercially reasonable efforts to continue to
minimize the cost of its RF module systems and therefore allow Sophia
to sell RF module systems to Gigabeam at an accordingly better price
after adding Sophia's reasonable profit margin. Where and when
appropriate, Sophia shall jointly work with GigaBeam towards such price
reductions including but not limited to expenditure on tooling and by
other means which shall include payment of non recurring expenditures
by GigaBeam. Pricing of RF module systems to GigaBeam shall be fair and
equitable and consistent with industry standards for similar components
at similar volumes sold to commercial enterprises. Gigabeam shall own
any tooling, dies, molds, other manufacturing equipment or test
equipment purchased by it for the purposes of manufacturing or testing
the RF Module Systems or components.
11. Miscellaneous
11.1 Entire Agreement. This Agreement represents the entire
Agreement between the parties with respect to the subject
matter herein, and supersedes any previous understandings,
whether written or oral, with respect to such subject matter,
and may not be amended except pursuant to a written agreement
duly executed by the parties.
11.2 Trademarks, Trade Names and Copyright. Except as expressly
provided herein, this Agreement does not give either party any
ownership rights or interest in the other party's trade name,
trademarks or copyrights.
11.3 Waiver. No failure or delay by either party in exercising any
of its rights or remedies hereunder will operate as a waiver
thereof, nor will any single or partial exercise of any such
right or remedy preclude any other or further exercise thereof
or the exercise of any other right or remedy. The rights and
remedies of the party's provided in this Agreement are
cumulative and not exclusive of any rights or remedies
provided under this Agreement, by law, in equity or otherwise.
11.4 Assignment. Neither party may assign or otherwise transfer any
of its rights, duties or obligations under this Agreement
without the prior written consent of the other party, except
either party may, upon prior written notice to the other party
(but without any obligation to obtain the consent of such
other party), assign this Agreement or any of its rights
hereunder to any person or entity who succeeds (by purchase,
merger, operation of law or otherwise) to all or substantially
all of the capital stock, assets or business of such party,
provided such person or entity agrees in writing to assume and
be bound by all of the obligations of such party under this
Agreement. Any attempted assignment or transfer in
contravention of this Section 11.4 shall be void and of no
force and effect. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective legal
representatives, successors and permitted assigns.
15
<PAGE>
11.5 Independent Contractors. This Agreement shall not be construed
to establish any form of partnership, agency, or joint venture
of any kind between the parties; nor to constitute either
party as an agent, employee, or legal representative of the
other; and nothing in this Agreement shall create any
relationship between The parties other than that of an
independent contractor. Neither party shall have any
responsibility or liability for the actions of the other
party, except as specifically provided herein. Neither party
shall have any right or authority to bind or obligate the
other in any manner or make any representation or warranty on
behalf of the other. No profits, losses or costs will be
shared under any provision of this Agreement or as a result of
either party's efforts in connection with any joint
opportunity and securing an award of any customer contract.
There are no third-party beneficiaries of this Agreement.
11.6 Further Assurances. Without limiting the generality of any
provision of this Agreement, each party agrees that upon
request of the other party, it shall, from time to time, do
any and all other acts and things as may reasonably be
required to carry out its obligations hereunder, to consummate
the transactions contemplated hereby, and to effectuate the
purposes hereof.
11.7 Publicity. Neither party shall issue any press release, public
announcement or advertise or promote this Agreement without
the prior consent of the other party, which consent will not
be unreasonably withheld, conditioned or delayed.
11.8 Expenses. Each party will pay its own expenses and costs
incidental to the negotiation of the transactions contemplated
by this Agreement, including legal and accounting fees.
11.9 Notices. Any notices contemplated hereunder or provided for in
this Agreement shall be made to the following in writing or by
facsimile with confirmation by Express Mail or Federal
Express:
Gigabeam:
L. Slaughter
CEO
Gigabeam Corporation
101 Ash Street
Weston, MA 02493
FAX: 888-460-3200
16
<PAGE>
With copy to:
Gregory L. White, Esq.
Seyfarth Shaw
World Trade Center East
Two Seaport Lane, Suite 300
Boston, MA 02210
Sophia:
Philip Koh
President and CEO
Sophia Wireless Inc.
14225-C Sullyfiled Circle
Chantilly, VA 20151
Fax: 703-961-9576
With copy to:
Cooley Godward LLP
One Freedom Square, Reston Town Center
11951 Freedom Drive
Reston, Virginia 20190
Attention: Ken. J. Krisko, Esq. / Todd W. Harris, Esq.
11.10 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms
or provisions hereof in any other jurisdiction.
11.11 Headings and Interpretation. The headings used in this
Agreement are for convenience of reference only and shall not
affect the meaning or construction of this Agreement.
11.12 Survival. The provisions of Sections 5.4, 5.5, 5.6(b), 6, 7,
and 11, together with any definitions used therein, shall
survive any termination of this Agreement.
11.13 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the substantive laws (other than
the conflicts of laws provisions) of Virginia.
11.14 Counterparts. This Agreement may be signed in counterparts,
each of which shall constitute an original but all of which
shall constitute one and the same instrument.
11.15 Exhibits. The exhibits and appendices attached hereto are made
a part of this Agreement as if fully set forth herein.
17
<PAGE>
IN WITNESS WHEREOF, the parties, by their duly authorized
representatives, have caused this Agreement to be executed as of the date first
written above.
Sophia Wireless Inc. Gigabeam Corporation
By: /s/ Philip J. Koh By: /s/ Lou Slaughter
----------------- -----------------
Name: Philip J. Koh Name: Lou Slaughter
------------- -------------
Title: President Title: CEO
--------- ---
18
<PAGE>
EXHIBIT A
INITIAL FUNCTIONAL REQUIREMENTS STATEMENT
Period of Research and Development: XXXXX, commencing upon the Effective Date of
the Agreement
XXXXX
Timeframe: XXXXX
Non-Recurring Engineering Fees: XXXXX
XXXXX
Timeframe: XXXXX
Non-Recurring Engineering Fees: XXXXX
19
<PAGE>
Exhibit 1A.
Possible Future FRS
The parties may set forth the following requirements/specs in the next
Functional Requirements Statement.
XXXXX
Timeframe: XXXXX
Budgetary: XXXXX
20
<PAGE>
EXHIBIT B
PAYMENT SCHEDULE FOR NON RECURRING ENGINEERING
Initial payment upon funding of Gigabeam $150,000
Month 1 thereafter 100,000
Month 2 100,000
Month 3 100,000
Month 4 100,000
Month 5 100,000
Month 6 100,000
21
<PAGE>
EXHIBIT C
PERFORMANCE INCENTIVES
"GigaBeam Initial Investment" means the investment by a third party investor in
Gigabeam of at least $1 million which triggered the signing of this agreement.
"GigaBeam Warrant Exercise Price" means the price per share paid by a third
party investor in the GigaBeam Initial Investment. "Warrant Exercise Price"
shall not include any warrants issued to investors as an incentive to invest or
to investment advisors or to venture capital investors.
"GigaBeam Total Warrant Shares" means five percent on a fully diluted basis of
GigaBeam's stock outstanding immediately preceding the GigaBeam Initial
Investment.
Whereas, Sophia's last issue of stock to a 3rd party investor was in July 1,
2002 at a price of $2.20 per share, and there are currently 2,730,246 common
plus preferred shares of Sophia held by stockholders including stock options on
a fully diluted basis,
"Sophia Total Warrant shares" means 136,512 shares.
"Sophia Warrant Exercise Price" means $2.20 per share.
Each company shall issue Stock Warrants to the other company at completion of
milestones as described in the following tables. GigaBeam will issue warrants at
the GigaBeam Warrant Exercise Price, and Sophia will issue warrants at the
Sophia Warrant Exercise Price.
Table of Sophia Milestones:
Sophia Milestone A. Successful completion of design, build and test of
the XXXXX: GigaBeam will issue Sophia warrants for shares equal to
XXXXX% of "GigaBeam Total Warrant Shares".
Sophia Milestone B. Successful completion of design, build and test of
the XXXXX: GigaBeam will issue Sophia warrants for shares equal to
XXXXX% of "GigaBeam Total Warrant Shares".
Sophia Milestone C. Successful completion of design, build and test of
the XXXXX: GigaBeam will issue Sophia warrants for shares equal to
XXXXX% of "GigaBeam Total Warrant Shares".
Sophia Milestone D. Successful completion of design, build and test of
XXXXX: GigaBeam will issue Sophia warrants for shares equal to XXXXX%
of "GigaBeam Total Warrant Shares".
22
<PAGE>
Table of GigaBeam Milestones:
GigaBeam Milestone A. Full payment of $750,000 of non recurring
engineering, as specified in Exhibit B: Sophia will issue GigaBeam
warrants for shares equal to XXXXX% of "Sophia Total Warrant Shares".
GigaBeam Milestone B. Purchase of XXXXX RF Module Systems from Sophia
for XXXXX links: Sophia will issue GigaBeam warrants for shares equal
to XXXXX% of "Sophia Total Warrant Shares".
GigaBeam Milestone C. Purchase of XXXXX RF Module Systems from Sophia
for XXXXX links: Sophia will issue GigaBeam warrants for shares equal
to XXXXX% of "Sophia Total Warrant Shares".
GigaBeam Milestone D. Purchase of XXXXX RF Module Systems from Sophia
for XXXXX links: Sophia will issue GigaBeam warrants for shares equal
to XXXXX% of "Sophia Total Warrant Shares".
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<PAGE>
EXHIBIT D
MINIMUM PURCHASE OF RF MODULES
The minimum purchase of RF Module Systems are for the following number of links
(ie. A link is two ends so for each link, two RF Module Systems will be
required):
<CAPTION>
Product Volume Q1 Q2 Q3 Q4
2003 2004 2004 2004 2004 2004 2005 2006 2007 2008
GigE Unit Volume XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX
OC48 Unit Volume XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX
10GigE or OC192 Unit Volume XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX
24
<PAGE>
THIS FIRST AMENDMENT TO THE STRATEGIC ALLIANCE AGREEMENT (this
"Amendment") made as of April 22, 2004, between GIGABEAM CORPORATION, a Delaware
corporation (the "Company"), having its principal executive office at 14225-C
Sullyfield Circle, Chantilly, Virginia 20151, and SOPHIA WIRELESS, INC., a
Delaware corporation ("Sophia"), having its principal executive offices at
14225-C Sullyfield Circle, Chantilly, Virginia 20151.
W I T N E S S E T H
WHEREAS, upon the Company's formation on January 5, 2004, the Company
and Sophia entered into a binding agreement dated as of that date (the "Binder")
whereby each was committed to execute the form of Strategic Alliance Agreement
attached as a schedule to the Binder if a third party invested at least
$1,000,000 in the Company within 120 days thereafter (the "Triggering
Investment");
WHEREAS, the form of Strategic Alliance Agreement attached to the
Binder contemplated, among other things, that Sophia would be entitled to
receive warrants from the Company in four installments upon Sophia's completion
of four performance milestones set forth in such agreement (the "Sophia
Warrants"); and
WHEREAS, the form of Strategic Alliance Agreement attached to the
Binder contemplated that the Sophia Warrants would (a) in the aggregate, be
exercisable for a number of shares equal to 5% of the Company's outstanding
common stock, on a fully diluted basis, calculated immediately prior to the
Triggering Investment referred to in the Binder, and (b) have an exercise price
equal to the price per share paid in the Triggering Investment, not including
any incentive warrants granted in connection with the Triggering Investment; and
WHEREAS, the Triggering Investment was completed on January 26, 2004,
and on February 6, 2004, pursuant to the terms of the Binder, the Company and
Sophia then executed the Strategic Alliance Agreement attached to the Binder (as
executed, the "Alliance Agreement"); and
WHEREAS, immediately prior to the completion of the Triggering
Investment, 5% of the Company's outstanding stock on a fully diluted basis was
equal to 90.567 shares; and
WHEREAS, it was always the intent of Sophia and the Company that the
number of shares underlying the Sophia Warrants be at least equal to the number
of shares to be issued to ThinKom Solutions, Inc., another of the Company's
strategic alliances, pursuant to its strategic alliance agreement with the
Company dated January 5, 2004 (the "ThinKom Agreement"); and
WHEREAS, the ThinKom Agreement provided for it to receive a number of
shares of the Company equal to 5% of the Company's outstanding stock on a fully
diluted basis, but in the language referring thereto specified that the 5% was
to be determined after giving pro forma effect to the 5% to be issued to
ThinKom; and
WHEREAS, on January 18, 2004, the Company in satisfaction of its
obligation under the ThinKom Agreement issued 95.333 shares to ThinKom and, as a
result, also authorized the setting of the number of shares that would be
issuable to Sophia in the event all of the Sophia Warrants were ultimately
issued to Sophia and subsequently exercised, at 95.333 shares (and reserved such
number of shares in its books for such purpose); and
A-1
<PAGE>
WHEREAS, following the execution of the Alliance Agreement, the Company
and Sophia realized that because there had been no shares purchased in
connection with the Triggering Investment, it being instead structured as a note
with a warrant incentive, there was strictly speaking no way to actually
calculate the exercise price to be attached to the Sophia Warrants; and
WHEREAS, on February 18, 2004, the Company and Sophia agreed to set
$1,500 per share as the exercise price of the Sophia Warrants, that being the
exercise price of the employee stock options issued by the Company on such date
and representing what the Company and Sophia believed to be a fair price (based
on the Company's estimate of its value as being somewhere around $2,500,000 to
$2,750,000); and
WHEREAS, the Company and Sophia now wish to memorialize what was
previously agreed to by them in order to clarify in writing the terms of the
Alliance Agreement relating to the Sophia Warrants; and
WHEREAS, in connection with this memorialization of their prior
agreement, the parties realized that the number of fully diluted shares of
Sophia referenced in the Alliance Agreement for purposes of determining the
number of warrants to be issued to the Company upon its completion of designated
performance milestones was incorrect in that it represented the actual number of
Sophia shares then outstanding (2,730,246), rather than the fully diluted number
(3,236,690) that was called for, and thus the number of warrant shares was also
incorrect and should have been 161,834 shares rather than 136,512 shares; and
WHEREAS, the Company and Sophia now wish to correct the inaccuracy in
the numbers relating to the Sophia shares.
NOW, THEREFORE, in consideration of the mutual covenants made herein
and other good and valuable consideration, receipt of which is hereby
acknowledged, the Company and Sophia hereby agree as follows:
SECTION 1. Exhibit C to the Alliance Agreement. Effective as of
February 18, 2003, Exhibit C to the Alliance Agreement ("Exhibit C") shall be
amended as follows:
(a) The second and third sentences of Exhibit C, which currently read
as follow:
"GigaBeam Warrant Exercise Price" means the price per share
paid by a third party investor in the GigaBeam Initial
Investment. "Warrant Exercise Price" shall not include any
warrants issued to investors as an incentive to invest or to
investment advisors or to venture capital investors.
shall be deleted in their entirety and replaced with the following
sentence:
"GigaBeam Warrant Exercise Price" means $1,500.00 per share.";
and
A-2
<PAGE>
(b) The fourth sentence of Exhibit C, which currently reads as follows:
"GigaBeam Total Warrant Shares" means five percent on a fully
diluted basis of GigaBeam's stock outstanding immediately
preceding the Giga Beam Initial Investment.
shall be deleted in its entirety and replaced with the following
sentence:
"GigaBeam Total Warrant Shares" means 95.333 shares of the
common stock of GigaBeam; and
(c) The number "2,730,246" in the fifth sentence of Exhibit C shall be
replaced with the number "3,236,690," and the number "136,512" in
the sixth sentence of Exhibit C shall be replaced with the number
"161,834."
SECTION 2. Representation and Warranties. The Company and Sophia hereby
represent and warrant as follows (with the effectiveness of this Amendment being
further conditioned upon all such representations and warranties being true and
correct in all material respects on the date of this Amendment):
(a) The execution, delivery and performance by the Company and
Sophia of this Amendment have been duly authorized by all
necessary corporate action;
(b) This Amendment to which the Company and Sophia are parties
constitutes the legal, valid and binding obligation of each of
the Company and Sophia, enforceable against it in accordance
with its terms, except to the extent that such enforcement may
be limited by applicable bankruptcy, insolvency, equitable
remedies and other similar laws affecting creditors' rights
generally, and except that the availability of equitable
remedies is subject to the discretion of the court before
which such remedies are sought;
(c) No event has occurred and is continuing which has not been
waived which constitutes a breach of the Alliance Agreement.
SECTION 3. Effect on the Alliance Agreement. Except as specifically
amended hereby, the Alliance Agreement shall continue to be in full force and
effect and is hereby in all respects ratified and confirmed.
SECTION 4. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier or facsimile shall be effective as delivery of a
manually executed counterpart of this Amendment.
A-3
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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed on their behalf in their respective corporate names by their duly
authorized officers all as of the date first above written.
GIGABEAM CORPORATION
By: /s/Louis S. Slaughter
-------------------------------
Name: Louis S. Slaughter
Title: Chief Executive Officer
SOPHIA WIRELESS, INC.
By: /s/ Philip J. Koh
-------------------------------
Name: Philip J. Koh
Title: President and
Chief Executive Officer
A-4