EXHIBIT 10.1

 

CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED

AND FILED SEPARATELY WITH THE COMMISSION.

 

Amendment to Subscriber Unit License Agreement

and DMSS Software Agreements (the “Amendment”)

 

QUALCOMM Incorporated (“QUALCOMM”), a Delaware corporation, and Axesstel, Inc.
(“Axesstel” or “LICENSEE”), a California corporation, hereby agree to amend the
following agreements between the Parties (i) that certain Subscriber Unit
License Agreement dated November 14, 2000, as amended (collectively, the
“License Agreement”); (ii) that certain DMSS5100 Software Agreement dated
December 5, 2002, as amended (the “DMSS5100 Agreement”); and (ii) that certain
DMSS5010 Software Agreement dated November 26, 2003 (the “DMSS5010 Agreement”)
as follows:

 

1. Headings And Definitions.

 

Unless otherwise specified herein, capitalized terms used herein shall have the
meanings specified in the License Agreement. Effective as of November 14, 2000,
the following additional or modified terms shall have the meanings specified
below:

 

“CDMA Modem Card” means a complete CDMA modem card or module which (i)
incorporates all or any part of QUALCOMM’s Intellectual Property, (ii) is
capable of transmitting and receiving CDMA Wireless communications when attached
to a Communications Device, and (iii) is for use with a “Communications Device,”
meaning either a telephone, personal computer, personal digital assistant,
facsimile machine, monitoring device, multi-media terminal, data entry terminal,
or point of sale terminal. The CDMA Modem Card must contain at a minimum a
printed circuit board, multiple individually packaged integrated circuit
devices, and all of the circuitry necessary for the Communications Device to
perform all of the CDMA reverse link modulation and CDMA forward link
demodulation, baseband processing, RF filtering, upconversion, downconversion,
and protocol stack messaging; provided that a CDMA Modem Card shall not be
capable of initiating and receiving Wireless communications without being
attached to the Communications Device. A CDMA Modem Card for use with a
Communications Device includes a complete modem card or module and all
attachments necessary to enable the Communications Device to transmit and
receive Wireless communications when such CDMA Modem Card is attached to such
Communications Device. For purposes of clarification, a Communications Device
Sold with a CDMA Modem Card embedded within such Communications Device and that
is capable of transmitting and receiving Wireless communications without any
additional equipment or components being attached thereto is a Complete CDMA
Telephone, not a CDMA Modem Card.

 

“Complete CDMA Telephone” means a complete CDMA telephone, including but not
limited to fixed, mobile, transportable and portable telephones, which
incorporates all or any part of QUALCOMM’s Intellectual Property and can be
used, without any additional equipment or components being attached thereto, to
initiate and/or receive Wireless telecommunications transmissions in accordance
with the CAI.

 

The definition of “Components” is hereby deleted and replaced with the
following:

 

“Components” means application specific integrated circuits (ASICs), electronic
devices, integrated circuits, including firmware thereon and accompanying or
associated software, and/or families of devices for use in wireless
telecommunications equipment.

 

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CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED

AND FILED SEPARATELY WITH THE COMMISSION.

 

“Licensed Customer” means a person or entity that is licensed by QUALCOMM under
any or all of QUALCOMM’s Intellectual Property to make and sell Subscriber Units
that comply with or implement one or more of the air interface standards
included in the CAI (each such license agreement between QUALCOMM and a Licensed
Customer shall hereinafter be referred to as an “LC License Agreement”).

 

The definition of “Subscriber Unit” in the License Agreement is hereby deleted
and replaced with the following:

 

“Subscriber Unit” means a Complete CDMA Telephone or a CDMA Modem Card, and
“Subscriber Units” means Complete CDMA Telephones and/or CDMA Modem Cards.

 

“Unlicensed Customer” means a person or entity that is not a Licensed Customer.

 

2. Wireless Applications. Effective as of November 14, 2000, the definitions of
“Wireless Local Loop” and “Wireless Local Loop Applications” in the License
Agreement shall be deemed deleted and all references to such terms shall be
replaced with the term “Wireless” or “Wireless Applications,” as the case may
be.

 

3. Up-Front License Fees. In partial consideration of the rights granted to
LICENSEE in this Amendment, LICENSEE shall pay to QUALCOMM a non-refundable
up-front license fee in the amount of [***] U.S. Dollars (US$[***]) (the
“Amendment Fee”) in accordance with the following: (1) LICENSEE shall pay [***]
US Dollars (US$[***]) of the Amendment Fee no later than [***] (the “First
Payment Date”); and (2) LICENSEE shall pay [***] no later than [***] after the
First Payment Date.

 

Notwithstanding the foregoing, in the event that LICENSEE begins to Market its
Subscriber Units as mobile (as opposed to fixed, limited-mobility, wireless
local loop or terms of similar meaning) Subscriber Units, LICENSEE shall pay, at
QUALCOMM’s sole option, the unpaid balance of the Amendment Fee to QUALCOMM in
accordance with one of the following payment schedules: (i) in accordance with
the payment schedule set forth in the previous paragraph, or (ii) in [***]
installments due no later than [***] (beginning with the calendar quarter in
which LICENSEE first Markets its Subscriber Units as mobile Subscriber Units)
until the Amendment Fee is paid in full. The foregoing up-front license fees
shall be in addition to all other up-front license fees previously paid by
LICENSEE under the License Agreement. For purposes of this Section 3, “Market”
shall mean for LICENSEE to advertise or otherwise identify on its website,
written marketing materials or product literature.

 

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CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED

AND FILED SEPARATELY WITH THE COMMISSION.

 

4. QUALCOMM License. Effective as of November 14, 2000, Section 5.1 of the
License Agreement is hereby deleted and replaced with the following new Section
5.1. The following new Sections 5.1.2 and 5.1.3 are also hereby added to the
License Agreement:

 

5.1 Grant of License From QUALCOMM. Subject to the terms and conditions of the
License Agreement and this Amendment, including but not limited to timely
payment of the license fees and royalties set forth herein, QUALCOMM hereby
grants to LICENSEE a personal, nontransferable (except as may otherwise be
provided under Section 15 of the License Agreement), worldwide and nonexclusive
license under QUALCOMM’s Intellectual Property solely for Wireless Applications
to (a) make (and have made), import, use, sell, lease and otherwise dispose of
Subscriber Units, and (b) to make (and have made) Components (provided such
Components have been designed exclusively by LICENSEE and which design is owned
and used exclusively by LICENSEE) and import, use and sell, lease and otherwise
dispose of such Components but only if such Components are included as part of
and within complete Subscriber Units Sold by LICENSEE in accordance with this
Section 5.1.2 (or as replacement parts for such Subscriber Units previously sold
by LICENSEE). No other, further or different license is hereby granted or
implied. Notwithstanding anything in the foregoing, LICENSEE’s Sale of CDMA
Modem Cards shall not convey to LICENSEE’s customers any right or license
(express or implied) to any of QUALCOMM’s Intellectual Property that is not
incorporated or implemented entirely within LICENSEE’s CDMA Modem Cards,
including with respect to any claim in any QUALCOMM patent covering the use of
LICENSEE’s CDMA Modem Cards in combination with any other product or apparatus.

 

5.1.2 Sales to Licensed Customers. Notwithstanding anything to the contrary in
this Amendment or the License Agreement, the license granted by QUALCOMM to
LICENSEE to sell, lease or otherwise dispose of Subscriber Units shall be
limited to the Sale of such Subscriber Units solely to Unlicensed Customers;
provided that nothing herein shall be construed to prohibit LICENSEE from making
for or Selling Subscriber Units to a Licensed Customer solely in accordance with
the “have made” rights of such Licensed Customer as set forth in such Licensed
Customer’s LC License Agreement and no royalty shall be payable by LICENSEE
under the License Agreement for such Sales to a Licensed Customer.
Notwithstanding anything in the foregoing, nothing herein is (a) intended to
modify or amend the terms and conditions of any LC License Agreement, including
but not limited to the scope of such Licensed Customer’s “have made” rights or
the royalties payable thereunder or (b) imply that such Licensed Customer may
deduct the price or cost of any CDMA Modem Cards acquired by such Licensed
Customer from the price upon which such Licensed Customer is obligated to
compute and pay royalties to QUALCOMM under its LC License Agreement. LICENSEE
hereby represents and warrants that LICENSEE will not engage in any
transaction(s) that facilitate the Sale, whether directly or indirectly, of any
Subscriber Units to a Licensed Customer, except as expressly provided for in
this Section 5.1.2.

 

5.1.3 Termination of License. The license granted by QUALCOMM to LICENSEE under
Section 5.1 above to Sell Subscriber Units to Unlicensed Customers shall
continue with respect to any Unlicensed Customer only so long as such Unlicensed
Customer and its Affiliates (as such term would be applied if such Unlicensed
Customer were a Party) do not assert (by way of

 

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CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED

AND FILED SEPARATELY WITH THE COMMISSION.

 

litigation or a similar legal proceeding) any of their patents against QUALCOMM
or its Affiliates for manufacturing, having manufactured, using, importing,
Selling, leasing or otherwise disposing of Subscriber Units or Components or
against QUALCOMM’s and its Affiliates’ foundries or suppliers for manufacturing
Subscriber Units or Components for, or selling Subscriber Units or Components
to, QUALCOMM or its Affiliates; provided, however, in the event of any such
assertion by an Unlicensed Customer or its Affiliate, QUALCOMM shall provide
written notice to such Unlicensed Customer and to LICENSEE (the “Notice”) of its
intent to terminate the license with respect to such Unlicensed Customer and
shall not terminate such license with respect to such Unlicensed Customer in the
event such Unlicensed Customer or its Affiliate withdraws its assertion in
writing to QUALCOMM within sixty (60) days of such Notice. In the event such
Unlicensed Customer or its Affiliate does not withdraw such assertion within
such sixty (60) days, then the license to Sell Subscriber Units to such
Unlicensed Customer shall terminate as of the date of the Notice and, to the
extent such Unlicensed Customer’s or its Affiliate’s assertion seeks damages for
infringement allegedly occurring prior to the date of the Notice, retroactively
to the date of the first allegedly infringing act.

 

5. Royalties. Effective as of November 14, 2000, Section 5.2 of the License
Agreement is hereby deleted and replaced with the following new Sections 5.2 and
5.2.1.

 

5.2 Royalties. In partial consideration for such license from QUALCOMM, LICENSEE
shall pay to QUALCOMM, within [***] days after the end of each calendar quarter,
an amount equal to the percentage set forth below of the Net Selling Price of
each Subscriber Unit that is Sold during such calendar quarter by LICENSEE. The
percentage of the Net Selling Price payable to QUALCOMM for each Subscriber Unit
Sold shall be determined each calendar quarter using the following schedule:

 

  [***] % If not more than [***] Subscriber Units are Sold in the applicable
calendar quarter.

 

  [***] % If less than [***] but more than [***] Subscriber Units are Sold in
the applicable calendar quarter.

 

  [***] % If less than [***] but more than [***] Subscriber Units are Sold in
the applicable calendar quarter.

 

  [***] % If more than [***] Subscriber Units are Sold in the applicable
calendar quarter.

 

Royalties shall be payable on Subscriber Units Sold by LICENSEE regardless of
whether the use or incorporation of QUALCOMM’s Intellectual Property arises from
the use of one or more Components from whomsoever purchased by LICENSEE.

 

QUALCOMM will credit to LICENSEE the amount of any overpayment of royalties made
hereunder in error provided that such overpayment is identified

 

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CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED

AND FILED SEPARATELY WITH THE COMMISSION.

 

and fully explained in a written notice from LICENSEE to QUALCOMM delivered no
later than six (6) months after the due date of the payment which included such
alleged overpayment, provided further that QUALCOMM is able to verify to its own
satisfaction the existence and extent of such overpayment. The foregoing
procedure shall constitute the sole basis for LICENSEE to claim overpayments
under this Agreement and shall not be affected by any statement appearing on any
check, royalty report, cover letter, or other document, except to the extent
agreed upon by QUALCOMM in a writing signed by an authorized representative of
QUALCOMM.

 

5.2.1. Minimum Royalty on CDMA Modem Cards. Notwithstanding the applicable
royalty for the Sale of any Subscriber Units that are CDMA Modem Cards applying
the royalty rate under Section 5.2 above, in no event shall the actual royalty
payable for each CDMA Modem Card Sold by LICENSEE or its sublicensed Affiliates
to an Unlicensed Customer be an amount that is less than (i) if LICENSEE has
Sold at least [***] Complete CDMA Telephones in either the same calendar quarter
or in any one of the [***] calendar quarters, the applicable royalty rate for
such CDMA Modem Cards as determined by Section 5.2 above multiplied by the
average Net Selling Price of all Complete CDMA Telephones Sold by LICENSEE
and/or its sublicensed Affiliates in the latest calendar quarter in which
LICENSEE and/or its sublicensed Affiliates have Sold at least [***] Complete
CDMA Telephones in such calendar quarter, or (ii) if LICENSEE and/or its
sublicensed Affiliates have not Sold at least [***] Complete CDMA Telephones in
the same calendar quarter or in [***] calendar quarters, the “Minimum Royalty”
described in the following table:

 

Year of Sale

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   Minimum Royalty

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2005

   $[***]

2006

   $[***]

2007 and thereafter

   $[***]

 

6. [***]

 

7. LICENSEE Representation. Effective as of October 2, 2002, Section 2 of that
certain Representation Amendment to Subscriber Unit License Agreement dated
October 2, 2002 between the Parties (which added a new Section 5.11 to the
License Agreement) is hereby deleted.

 

8. Software Agreements. Effective as of December 5, 2002 for the DMSS5100
Agreement and November 26, 2003 for the DMSS5010 Agreement, all references to
the term “CDMA Modem Card” in the DMSS5100 Agreement and DMSS5010 Agreement
shall be deemed deleted and replaced with the term Subscriber Unit (as defined
in this Amendment).

 

9. Exhibit D. Exhibit D to the License Agreement is hereby deleted and replaced
with the new Exhibit D attached hereto.

 

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CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED

AND FILED SEPARATELY WITH THE COMMISSION.

 

10. No Other Amendment or Modification. Except as expressly set forth in this
Amendment, the License Agreement, DMSS5100 Agreement and DMSS5010 Agreement
remain in full force and effect without modification. The terms and conditions
of this Amendment, the License Agreement, DMSS5100 Agreement and DMSS5010
Agreement shall not be modified or amended except by a writing signed by
authorized representatives of both Parties.

 

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed
as of February 8, 2005 (the “Amendment Effective Date”).

 

QUALCOMM Incorporated   Axesstel, Inc. By:   

/s/ Marvin Blecker

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  By:  

/s/ Lixin Cheng

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Printed Name:    Marvin Blecker   Printed Name:   Lixin Cheng Title:    Sr. VP &
GM, Tech Licensing   Title:   President, Axesstel Wireless Date:    February 8,
2005   Date:   February 8, 2005

 

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CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED

AND FILED SEPARATELY WITH THE COMMISSION.

 

EXHIBIT D — CERTIFICATE

 

The undersigned official of Axesstel, Inc. (“LICENSEE”) is providing information
to QUALCOMM pursuant to that certain Subscriber Unit License Agreement entered
into between LICENSEE and QUALCOMM (the “Agreement”). All capital terms used in
this Certificate have the definitions ascribed to them in the Agreement. This
Certificate reflects the Royalties payable by LICENSEE for the calendar quarter
ended:                     , 20    .

 

(Note: List Quarterly Sales to Purchaser aggregated only by model of Subscriber
Unit)

 

GENERAL INFORMATION REGARDING “SALE”

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   DETERMINATION OF
SELLING PRICE

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   DEDUCTIBLE

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   CALCULATION OF ROYALTIES

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                                   Complete these columns only for sales to
Unlicensed Customers

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Country of Sale by LICENSEE and Affiliates (e.g., if sold for use in the United
States, state “sold for use in U.S.”)    Purchaser,
or if Sold
to Related
Buyer,
name of
Related
Buyer.    Type of
Customer
(i.e., either
Licensed or
Unlicensed)   Type of
Subscriber
Unit Sold (i.e.,
Complete
CDMA
Telephone or
CDMA
Modem Card,
and product
model)   Identify the
Subscriber
Unit as either
Voice Only,
Data Only,
or Voice +
Data    Common
Air
Interface
used by
Subscriber
Unit (e.g.,
IS-95,
cdma2000,
IS-856)   Number of
Subscriber
Units Sold    Selling Price paid by
Purchaser or charged
by final vendee
Related Buyer or, if
Subscriber Unit is
used by LICENSEE,
Selling Price that
would be realized in
a sale to a Purchaser    Type of
Deductible
Item    Amount of
Deduction    Applicable
Net Selling
Price    Applicable
Royalty
Percentage    Minimum
Royalty
(CDMA
Modem
Cards
only)   Amount
of
Royalty Example Data for Certificate Completion Example Data for Certificate
Completion

 

TOTAL ROYALTIES            

    DUE AND PAYABLE $            

 

The undersigned hereby certifies that the foregoing represents an accurate and
complete record of all royalties due and payable by LICENSEE for the calendar
quarter specified above.

 

    Signature:  

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             Title:  

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   Date:   __________

 

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