Development And Purchase And Sale Agreement

Exhibit 10.6


Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.


Nortel Networks Agreement No. 011174


DEVELOPMENT AND PURCHASE AND SALE AGREEMENT
FOR
CDMA HIGH DATA RATE (1XEV-DO) PRODUCTS


This Agreement is made as of the 1st day of October, 2001 ("Effective Date") by and between


NORTEL NETWORKS INC., a Delaware corporation, having an office at 2221 Lakeside Blvd., Richardson, Texas 75082-4399, USA ("NNI");


and


AIRVANA INC., a Delaware corporation, having an office at 25 Industrial Avenue, Chelmsford, MA 01824 ("AIRVANA").


1. DEFINITIONS


"Affiliates" shall include Nortel Networks Corporation, the Subsidiaries
and the Contract Manufacturers.


"Agreement" shall mean this Development and Purchase and Sale Agreement
between NNI and AIRVANA for the supply of Services and Products, including
herein all documents to which reference may properly be made in order to
ascertain the rights and obligations of the parties.


"Backward Compatible" shall mean that one version or release of the
Hardware or Software, starting with Release 3.0, will be interoperable with
previous versions or releases of Hardware or Software, including backward
compatibility as between the Software and the DOM, Software and previous
versions or releases of Software, and between the Software of the DOM and
the Software of the ANC card portion of the Product. The degree of
backwards compatibility is to be mutually agreed by both parties.
Currently, AIRVANA supports the current release, and previous two major
releases, different "releases" being indicated by a change in the digit to
the left of the decimal in the identifying number.


"Blanket Order" shall mean an Order which does not set forth a Shipping
Date and/or specific quantities.


"Class A Changes" shall mean any changes required to rectify one of the
following conditions in respect to Product: (i) a hazardous electrical or
mechanical condition; (ii) a condition causing a loss of service to
end-users or inoperability; or (iii) a condition causing a degradation in
performance from Specification, including without limitation those changes
described in Telcordia GR-209 as "Class A" or "Class AC" changes.


"Clause" shall be the numbered paragraphs as described within a section.


"Contract Manufacturer" shall mean a third party which enters into an
agreement with a Nortel Networks Company to (1) manufacture in modified or
unmodified form, a NORTEL NETWORKS product incorporating the Product, and
(2) lease, sell, sublicense or otherwise distribute (directly or indirectly
through distributors) such NORTEL NETWORKS product under NORTEL NETWORKS'
or the third party's own brand name.


"Customer(s)" shall mean any direct or indirect customer of NORTEL
NETWORKS, including (1) distributors and (2) end-user customers for which
the Products and/or Services may ultimately be required.


"Delivery Location" shall mean the Nortel Networks Company or a Customer
location specified in an Order to which the Product shall be delivered.


"Development Agreement" shall mean the development terms agreed upon
between AIRVANA and NORTEL NETWORKS as described in Section 13 and as
further set forth in Appendix D and, for the first development project for
the 1xEV-DO DOM solution, either in the Statement of Work attached as
Appendix


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E hereto or which is executed separately hereunder, under which certain
product development activities may be carried out with respect to new or
enhanced products, as more specifically specified in the applicable
Statement of Work under such Development Agreement.


"EDI" shall mean electronic data interchange of information related to
Orders and Releases.


"ISO" shall mean the International Organization for Standardization.


"Forecast" shall mean the forecast provided by NORTEL NETWORKS as described
in Clause 5.1.


"Hardware" shall mean the hardware components of the Products and any set
of programs in machine-executable code, whether residing in fixed coded
instructions resident in read-only memory or equivalent devices forming
part of hardware and sometimes known as "firmware", or whether residing in
any other form of memory device, such as 'flash memory,' incorporated into
the hardware.


"Limited-Cancellation Period" shall mean the [**] day period, which shall
end on the Shipping Date.


"Limited-Rescheduling Period(s)" shall mean the [**] day period, which
shall end on the Shipping Date.


"Maximum Delivery Period" shall mean the [**] day period which shall
commence on the date that AIRVANA receives an Order or a Release.


"NORTEL NETWORKS" shall mean NNI and any Affiliate.


"Nortel Networks Company" shall mean NNI or any Affiliate issuing orders
under this Agreement.


"Nortel Networks Supplier" shall mean a supplier to any of the Nortel
Networks Companies, other than a Contract Manufacturer.


"Order" shall mean either the "hard copy" document or electronic
transmission ("EDI") used by a Nortel Networks Company to order Products or
Services under this Agreement.


"Price" shall mean the price set forth for each Product and/or Service set
forth in Appendix A, as may be amended by the parties from time to time.


"Product" shall mean the collective term given to Hardware and Software as
more fully described in Appendix A hereto.


"Product Documentation" shall mean the documentation for the Products,
prepared as set forth in Sections 13 and 14, for distribution to Customers
with each Product, which will comply with the Specifications and, if
applicable, NORTEL NETWORKS' then-current branding requirements.


"Reasonable Efforts" shall mean those good faith efforts that a reasonable
person would consider to be commercially reasonable given the circumstances
at the particular time.


"Release" shall mean either the "hard copy" document or electronic
transmission ("EDI") used by a Nortel Networks Company pursuant to a
Blanket Order to set the Shipping Date for specified quantities of Product.


"Services" shall mean the services to be provided by AIRVANA to NORTEL
NETWORKS or the Customers as detailed in any Order and in this Agreement or
its Appendices, including without limitation the development Services
described in Appendices D and E hereof.


"Section" shall be as described in the table of contents.


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"Shipping Date" shall mean the date when a Product shall be delivered to
the carrier at the Shipping Location for shipment to the Delivery Location.


"Shipping Location(s)" shall mean the U.S. manufacturing location(s) so
designated by AIRVANA, from which a Product shall be shipped by AIRVANA.


"Software" shall mean software programs (in machine-readable object code)
that provide basic logic, operating and user-related application
instructions and network management information for use with the Products
and shall included associated documentation, which Software may be
incorporated with Hardware in the Product, or which Software may be
separately described in Appendix A.


"Software License" shall mean the license granted by AIRVANA to NORTEL
NETWORKS and the Customers in accordance with Section 30 hereof.


"Specifications" shall mean, with respect to Products, those physical,
mechanical, electrical, and other characteristics intended to define the
performance, form, fit and function of Product and which are: (i) set forth
in the documents referenced in Appendix B and (ii) otherwise agreed to in
writing by the parties. "Specifications" shall mean, with respect to
development Services, those specifications for the services and
deliverables as set forth in Appendix D, and for the first development
project for the 1xEV-DO DOM solution, as set forth either in the Statement
of Work attached as Appendix E hereto or separately executed hereunder.


"Statement of Work" shall mean the development project description and
details agreed upon between the parties, containing substantially similar
subject matter and substantially in the form of the Statement of Work for
the first development project which is either attached to this Agreement as
Appendix E or separately executed hereunder, each of which Statement of
Work, whether attached hereto or executed separately hereunder, shall be
deemed to form a part hereof as an Appendix to this Agreement as if
attached hereto;


"Subsidiaries" shall mean a corporation or other legal entity in which
NNI's ultimate parent corporation, Nortel Networks Corporation, effectively
owns or controls, directly or indirectly, so long as Nortel Networks
Corporation continues to own or control, directly or indirectly, fifty
percent (50%) or more of the voting stock or shares, or other control
mechanism.


"TDI" shall mean technical data interchange by electronic means.


"Term" shall have the meaning set forth in Clause 12.1.


"Uneconomical To Repair" means that (a) a Product is beyond repair due to
physical damage; (b) a Product cannot be changed, modified, or upgraded
from the current release of the Product to the next release acceptable to
NORTEL NETWORKS; (c) in response to a requested Product repair AIRVANA
characterizes the request as "no fault found" for the third consecutive
time; or, (d) a Product has already been through the repair process three
(3) times; or, (e) a Product has exceeded the limit placed on the number of
repairs a Product may undergo, as mutually agreed in writing by the
parties.


"Warranty Period" shall mean for the Product, Hardware and Software the
[**] month period beginning on the date which is [**] days after the
Shipping Date of each Product, Hardware or Software from the Shipping
Location, unless extended warranties are negotiated between AIRVANA and
Customers upon request of NORTEL NETWORKS, in which event the Warranty
Period for the Products, Hardware and Software shall be extended by period
negotiated with the Customer.


"Warranty Repair Period" shall mean [**] days commencing on the date that
AIRVANA receives from a Nortel Networks Company either (i) a Product which
does not conform to the warranty set forth in Section 8, if the repair or
replacement is to be performed at a location of AIRVANA, or (ii) notice
that a Product does not conform to the warranty set forth in Section 8 if
the repair or replacement is to be performed at a location of a Nortel
Networks Company or Customer.


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"1xEV-DO Productization Date" shall mean the date on which NORTEL NETWORKS
either: (a) first delivers, generally offers to its Customers for sale or
otherwise generally makes available to its Customers the Release 2.0
Software in conjunction with the 0D hardware deliverable for use beyond
verification office testing; or (b) has developed and is aggressively
implementing its bona fide plan to achieve channel readiness with respect
to the Release 3.0 Software with the 0D hardware deliverable.


2. PURPOSE


The purpose of this Agreement is to describe the terms and conditions under
which NORTEL NETWORKS shall have the right to purchase Products and
Services, including without limitation design and development Services,
from AIRVANA, including the right of Affiliates to place Orders subject to
and under this Agreement, and under which AIRVANA grants NORTEL NETWORKS
the right to resell the Products and/or certain Services, directly or
indirectly, to Customers,


3. SUPPLY COMMITMENT


3.1 NORTEL NETWORKS may, but shall not be obligated to except as set forth in
Clauses 5.3 and 5.4 hereof, issue Orders or Releases to AIRVANA and AIRVANA
shall fulfill such Orders or Releases in accordance with the provisions of
this Agreement. Each Order or Release issued to AIRVANA shall create rights
and obligations solely between AIRVANA and the particular Nortel Networks
Company which issues the Order or Release. For the purposes of giving
effect to the above, where a Nortel Networks Company purchases product
and/or Products pursuant to this Agreement, where the context so admits,
references to NORTEL NETWORKS shall be deemed to be to the relevant Nortel
Networks Company which is ordering and/or purchasing product and/or
Products in accordance with the terms of this Agreement.


3.2 Intentionally Omitted.


3.3 Unless otherwise agreed to in writing, AIRVANA shall notify NORTEL NETWORKS
at least [**] days prior to the discontinuation of production or sale of
any Product listed within Appendix A. Unless otherwise agreed to in
writing, AIRVANA shall notify NORTEL NETWORKS at least [**] days prior to
implementing any manufacturing, engineering or other changes which will
affect the form, fit or function of any Product which may be subject to
NORTEL NETWORKS approval in accordance with Appendix C. AIRVANA shall, at
NORTEL NETWORKS' request, extend the period of manufacture for any
discontinued products, provided NORTEL NETWORKS commits to a minimum
purchase quantity reasonably acceptable to AIRVANA. A delivery schedule for
such extended period of manufacture beyond the notice period shall be
mutually agreed to between AIRVANA and NORTEL NETWORKS. AIRVANA shall
accept all Orders and Releases submitted by NORTEL NETWORKS within the
applicable notice period for any such affected Products, regardless of
quantity subject to Section 5 below. All such notices shall be sent to the
affected Nortel Networks Companies and to the attention of the Manager,
Strategic Supply Management, at the applicable purchasing locations


3.4 AIRVANA shall provide out-of-warranty repair parts and services, at
AIRVANA's then current prices for each Product, for a minimum of [**] years
after the earlier of:


(a) the effective date of discontinuance of a Product, or


(b) the date of termination or expiration of this Agreement.


3.5 In the event that AIRVANA, having fulfilled AIRVANA's obligations detailed
in Clause 3.4, discontinues out-of-warranty repair services, AIRVANA shall,
if reasonably requested, provide to NORTEL NETWORKS or a mutually
acceptable third party a limited, non-exclusive, non-transferable no cost
royalty free license allowing them to repair and service the Products sold
to NORTEL NETWORKS under this Agreement, including the following items if
they are reasonably available to AIRVANA: (i) documentation in sufficient
detail to provide all of the information required to repair and test the
Product, including but not limited to stock lists, schematics, engineering
change history and assembly drawings; (ii) access to proprietary components
and software source code; (iii) repair history data; and (iv) technical
assistance Services as may


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be reasonably required. NORTEL NETWORKS and any third party performing
under this Clause 3.5 shall execute to the reasonable satisfaction of
AIRVANA, confidentiality agreements covering the non-disclosure of
AIRVANA's Confidential Information. Services to assist NORTEL NETWORKS or
such third party which are provided by AIRVANA under this Clause 3.5 shall
be invoiced to the appropriate party at AIRVANA's then current charges for
such services.


3.6 If NORTEL NETWORKS arranges for AIRVANA to be allowed to purchase goods
and/or services from a Nortel Networks Supplier at (a) the prices offered
to NORTEL NETWORKS or (b) the prices offered to other Nortel Networks
Suppliers, then AIRVANA may, to the extent legally and contractually
permissible, purchase those goods and/or services for the manufacture of
Products from such Nortel Networks Supplier. AIRVANA shall use all such
goods and/or services purchased from that Nortel Networks Supplier at those
prices exclusively for the satisfaction of any obligation it may have to
provide goods and/or services, directly or indirectly, to NORTEL NETWORKS.


4. REVIEWS, ACCESS AND ISO COMPLIANCE


4.1 Representatives of AIRVANA and NORTEL NETWORKS, at their own expense, shall
meet alternately at AIRVANA's and NORTEL NETWORKS' facilities [**] each
quarter, or more frequently if deemed necessary by either party but no more
than [**], to review in detail AIRVANA 's progress on the development of
the Products, identify issues and attempt to reach mutual agreement on
courses of action, as appropriate. NORTEL NETWORKS may evaluate, test and
propose what it believes are desirable or necessary modifications to the
Products including recommendations regarding the manufacturability of the
Products. AIRVANA will receive and review such proposals in good faith and,
at AIRVANA's discretion, consider incorporating such proposals in the
Products if they reasonably appear to have the potential for enhancing
successful and widespread deployment of the Products in the earliest
possible time frame or significantly improve the reliability of the
Products. Subject to these obligations of good faith, NORTEL NETWORKS
acknowledges that AIRVANA shall have the ultimate right to decide the
design direction for the Products. If, in NORTEL NETWORKS opinion, AIRVANA
unreasonably refuses to consider incorporating any such proposals, the
parties agree to use the management escalation process set forth in Section
28 to resolve such disagreement. NORTEL NETWORKS further acknowledges that
proposals may not be accepted by AIRVANA if such proposals (i) would have
an adverse impact on the ability to implement or deploy the Products in a
timely fashion or (ii) are considered by NORTEL NETWORKS to be NORTEL
NETWORKS' proprietary (or proprietary to Nortel's suppliers or licensors)
not to be freely shared with third parties. Any proposals relating to
Products or Software deemed to be "Exclusive" as set forth in Appendix A
shall automatically be deemed to be proprietary to NORTEL NETWORKS for
purposes of this Clause 4.1 unless otherwise agreed in writing by NORTEL
NETWORKS. Any such proprietary proposals can only be shared with third
parties under mutually acceptable terms and conditions protecting the
confidentiality thereof.


4.2 Unless NORTEL NETWORKS specifically notifies AIRVANA in writing prior to
incorporation of any proposal for modification or change in the Products,
that such proposal is considered by NORTEL NETWORKS to be its proprietary
information not to be freely shared with any third party, or unless any
such proposal in writing is marked 'confidential', 'proprietary' or like
designation, NORTEL NETWORKS acknowledges and agrees, subject to any third
party's right therein, that any such proposals made by NORTEL NETWORKS
which are incorporated by AIRVANA in the Products may be used without
restriction or accounting by AIRVANA unless otherwise agreed in writing
between the parties and may be shared with and used without restriction by
other licensees and system operators without accounting to NORTEL NETWORKS.


4.3 NORTEL NETWORKS, and if required its Customer, shall be permitted to enter
AIRVANA's premises, at any reasonable time, to confirm that AIRVANA is
complying with its obligations under this Agreement, provided that NORTEL
NETWORKS gives AIRVANA at least [**] working days prior written notice,
including notification via email.


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4.4 AIRVANA will use Reasonable Efforts to cause any subcontractors retained by
AIRVANA and relating to this Agreement to permit similar access as
described in Clause 4.3 above to the subcontractor's premises for NORTEL
NETWORKS and, if required, its Customer's personnel.


4.5 AIRVANA agrees that all third party facilities involved in manufacturing
and/or supplying Product to NORTEL NETWORKS shall be compliant with ISO
9001:2000 as of the date Product is shipped from such facilities. In
addition, AIRVANA agrees that its own facilities involved in manufacturing
and/or supplying Product to NORTEL NETWORKS shall be compliant with ISO
9001:2000 by December 31, 2002. AIRVANA further agrees to conduct regular
meetings with NORTEL NETWORKS on the status of such compliance.


4.6 AIRVANA shall comply with NORTEL NETWORKS quality standards as set forth in
Appendix H and such quality standards shall also apply to the Services and
Deliverables set forth in the Statement of Work for the 1xEV-DO Project.


5. FORECASTING, ORDERING, PURCHASE COMMITMENT AND DELIVERY


5.1 NORTEL NETWORKS shall provide to AIRVANA, beginning on a date to be
mutually agreed upon between the parties, with updates provided in the [**]
week of NORTEL NETWORKS' monthly fiscal calendar for each [**] thereafter,
a rolling [**] forecast setting forth the unit quantities of the Products
that it expects to Order ("Forecast"). Within [**] working days of
AIRVANA's receipt of the Forecast, AIRVANA shall either confirm the
delivery schedule set forth in the first [**] of the Forecast or propose an
alternate delivery schedule for those [**]. If AIRVANA fails to do so, it
shall be deemed to have agreed to the Forecast for those first [**] and
delivery schedule set forth for such [**] by NORTEL NETWORKS. If AIRVANA
proposes an alternate delivery schedule for the first [**] of the Forecast,
then NORTEL NETWORKS shall within [**] days of its receipt of notice of
such alternative delivery schedule notify AIRVANA that either such
alternate forecast delivery schedule is acceptable or such scheduled
delivery is canceled. If NORTEL NETWORKS fails to give such notice, it
shall be deemed to have agreed to the alternate delivery schedule for the
first [**] of the Forecast. For the sake of clarification, the [**] through
[**] of a Forecast are for planning purposes only and are not binding on
either NORTEL NETWORKS nor AIRVANA.


5.2 NORTEL NETWORKS shall make Reasonable Efforts to ensure that the
adjustments to the Forecasts shall be no greater than the adjustments
NORTEL NETWORKS must bear in the operation of NORTEL NETWORKS' factories.
Notwithstanding the foregoing, however, AIRVANA shall have and maintain, at
no additional charge, the capability of increasing production capacity
required to meet the then-current Forecast, as well as to meet quantities
ordered which exceed the forecast quantities ("Excess Quantity"), in
accordance with this Clause 5.2. When an Excess Quantity is ordered or
forecasted, either in a new Order or by means of an amendment to an
existing Order or update to the Forecast, the following shall apply:


(a) If the Order or such an amendment or update for such Excess Quantity
is submitted [**] days or less prior to the NORTEL NETWORKS' requested
Shipping Date, then AIRVANA shall use Reasonable Efforts to supply as
much of such Excess Quantity as reasonably possible.


(b) If the Order or such an amendment or update for such Excess Quantity
is submitted more than [**]days but less than (or equal to) [**] days
prior to the NORTEL NETWORKS' requested Shipping Date, then AIRVANA
shall be obligated to supply [**] percent ([**]%) of the forecasted
quantity in the Forecast (prior to any update to such Forecast) by the
requested Shipping Date.


(c) If the Order or such an amendment or update for such Excess Quantity
is submitted more than [**] days but less than (or equal to) [**] days
prior to the NORTEL NETWORKS' requested Shipping Date, then AIRVANA
shall be obligated to supply [**] percent ([**]%) of the forecasted
quantity in the Forecast (prior to any update to such Forecast) by the
requested Shipping Date.


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For the sake of clarification, (i) once NORTEL NETWORKS submits a Forecast
for the first [**] (on a rolling basis), it may not change such Forecast,
except that the Nortel Networks Companies may submit Orders for the Excess
Quantities or amend an existing Order or update the Forecast as set forth
in this Clause 5.2; and (ii) AIRVANA's obligation to supply under this
Clause 5.2 shall be rounded up to the next whole unit. For the purposes of
this Section 5, NORTEL NETWORKS shall act on behalf of all the Nortel
Networks Companies with respect to forecasting quantities expected to be
ordered, and the Nortel Networks Companies shall in the normal course place
Orders.


5.3 NORTEL NETWORKS shall ensure that there are Orders placed with AIRVANA to
provide for the quantities forecasted for delivery during the first [**] of
the Forecast on a rolling [**] basis. NORTEL NETWORKS also commits to
purchase the quantities forecasted for delivery during the [**] of such
Forecast on a rolling [**] basis, but reserves the right to reschedule
Product deliveries in accordance with Clause 5.12. Except as set forth in
the foregoing, NORTEL NETWORKS shall not be obligated to issue Orders based
on the Forecast, and such forecast shall be otherwise completely
non-binding. NORTEL NETWORKS shall have the right to cancel an Order for
Products in accordance with Clause 5.13 below. Any purchase made under the
commitments to order Products pursuant to the Forecast described in this
Clause 5.3 shall serve to fulfill, and not be in addition to, the
commitment to purchase Products by the Commitment Fulfillment Date as set
forth in Clause 5.4 below.


5.4 Provided that AIRVANA fulfills its obligations under the development terms
set forth in Section 13 and Appendix D hereof along with related Statements
of Work, and further provided that AIRVANA fulfills its obligations with
respect to shipment of the Products by the requested Shipping Dat ...