EXHIBIT 10.23
SPECTRUM OPTION AGREEMENT
By and Between
CLEARWIRE CORPORATION
And
HISPANIC INFORMATION AND TELECOMMUNICATIONS NETWORK, INC.
Dated as of March 29, 2004
[* * * Portions of this Exhibit have been omitted and filed separately
with the Securities and Exchange Commission as part of an application for
confidential treatment pursuant to the Securities Act of 1933, as amended]
TABLE OF CONTENTS
PAGE
Article 1. Acquisition of Spectrum Rights.........................................................................1
Section 1.01 Option.......................................................................................1
Section 1.02 Option Notice................................................................................2
Section 1.03 Exercise Notice..............................................................................2
Section 1.04 Expiration Time and Extension of Expiration Time.............................................3
Section 1.05 Refund of Option Consideration...............................................................3
Section 1.06 IUA Lease Rates..............................................................................3
Section 1.07 FCC Permitted Extensions.....................................................................4
Section 1.08 Right of First Refusal on IUAs...............................................................4
Article 2. Consideration..........................................................................................5
Section 2.01 Consideration................................................................................5
Section 2.02 Contingent Consideration.....................................................................6
Article 3. Closings...............................................................................................6
Section 3.01 Closings.....................................................................................6
Section 3.02 Closing Deliveries...........................................................................7
Section 3.03 Further Assurances...........................................................................7
Article 4. Representations and Warranties of HITN.................................................................7
Section 4.01 Organization and Good Standing...............................................................7
Section 4.02 Authorization of Agreement...................................................................7
Section 4.03 No Conflict..................................................................................8
Section 4.04 FCC Licenses.................................................................................8
Section 4.05 Tower Leases.................................................................................9
Section 4.06 Interference Coordination Agreements.........................................................9
Section 4.07 Litigation...................................................................................9
Section 4.08 Compliance with Laws; Permits................................................................9
Section 4.09 Offering Exemption; Securities Representations...............................................9
Section 4.10 Brokers.....................................................................................10
Section 4.11 Suitability.................................................................................10
Section 4.12 Disclosure..................................................................................11
Section 4.13 Knowledge...................................................................................11
Article 5. Representations and Warranties of Clearwire...........................................................11
Section 5.01 Organization and Good Standing..............................................................11
Section 5.02 Authorization of Agreement..................................................................11
Section 5.03 Capitalization..............................................................................12
Section 5.04 No Conflict.................................................................................13
Section 5.05 Litigation..................................................................................13
Section 5.06 Brokers.....................................................................................13
Article 6. Covenants.............................................................................................13
Section 6.01 Consents and Approvals......................................................................13
Section 6.02 Notice of Breach............................................................................13
Section 6.03 Access to Information.......................................................................13
Section 6.04 Maintenance of FCC Qualifications...........................................................14
i
Section 6.05 Assignment of FCC Licenses..................................................................14
Section 6.06 Legends.....................................................................................14
Section 6.07 Assistance in Obtaining FCC Licenses........................................................15
Article 7. Conditions............................................................................................16
Section 7.01 Conditions to Each party's Obligations......................................................16
Section 7.02 Conditions to the Obligations of Clearwire..................................................16
Section 7.03 Conditions to Obligations of HITN...........................................................17
Article 8. Indemnification.......................................................................................17
Section 8.01 Indemnification.............................................................................17
Section 8.02 Limitations on Indemnification for Breaches of Representations and Warranties...............18
Section 8.03 Indemnification Procedures..................................................................18
Section 8.04 Treatment for Tax Purposes..................................................................19
Article 9. Termination...........................................................................................19
Section 9.01 Expiration; Termination.....................................................................19
Article 10. General Provisions...................................................................................20
Section 10.01 Payment of Sales, Use or Similar Taxes...................................................20
Section 10.02 Survival of Representations and Warranties...............................................20
Section 10.03 Expenses.................................................................................20
Section 10.04 Entire Agreement; Amendments and Waivers.................................................20
Section 10.05 Governing Law............................................................................20
Section 10.06 Table of Contents and Headings...........................................................21
Section 10.07 Notices..................................................................................21
Section 10.08 Publicity................................................................................21
Section 10.09 Severability.............................................................................22
Section 10.10 Binding Effect; Assignment...............................................................22
Section 10.11 Remedies.................................................................................22
Section 10.12 Resolution of Certain Disputes...........................................................22
Section 10.13 Counterparts.............................................................................24
ii
LIST OF EXHIBITS
A. Definitions and Interpretation
B. Form of IUA
LIST OF ANNEXES
I. Option Spectrum Rights
iii
SPECTRUM OPTION AGREEMENT
SPECTRUM OPTION AGREEMENT, dated as March 29, 2004 (the
"Effective Date"), by and between Clearwire Corporation, a Delaware corporation
("Clearwire"), and Hispanic Information and Telecommunications Network, Inc., a
New York nonprofit corporation ("HITN").
RECITALS:
WHEREAS, Annex I hereto lists all Pending Applications (as
defined herein) for licenses ("FCC Licenses") for Instructional Television Fixed
Service ("ITFS") that have been made by HITN to the Federal Communications
Commission (the "FCC") as of the Effective Date (and such annex identifies, with
respect to each of the Pending Applications listed therein, the ITFS channels to
be licensed thereunder ("Channels"), the exclusive service area of such FCC
License under applicable FCC rules, regulations and policies ("Market"), the
number of total households within such Market ("Households"), and the product of
the number of Channels times the Households ("CPOPs"));
WHEREAS, subject to the Communications Act of 1934, as amended
(the "Communications Act"), and FCC rules, regulations and policies (the "FCC
Rules"), ITFS stations' excess capacity may be used for commercial purposes (the
"Commercial Spectrum Capacity");
WHEREAS, subject to obtaining FCC Licenses under the Pending
Applications, HITN desires to grant an option to Clearwire to lease from HITN,
some or all of the Commercial Spectrum Capacity for each of the Channels listed
in Annex I (the "Option Spectrum Rights"), consisting of 53,455,558 CPOPs in the
aggregate, free and clear of any Liens;
WHEREAS, certain defined terms used in this Agreement, and
rules of interpretation applicable to this Agreement, are contained in Exhibit A
hereto.
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants, and agreements set forth in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, agree as follows:
Article 1.
ACQUISITION OF SPECTRUM RIGHTS
Section 1.01 Option. In consideration of the payment to HITN
of the Option Consideration, HITN hereby grants to Clearwire an option (the
"Option") for Clearwire (or its designee) to lease from HITN some or all of the
Option Spectrum Rights, as determined by Clearwire on a Market by Market basis,
free and clear of all Liens, pursuant to an individual use agreement in
substantially the form attached as Exhibit B hereto (an "IUA"). The Option may
be exercised by Clearwire (or its designee), at any time and from time to time,
as to one or more of the FCC Licenses granted pursuant to a Pending Application
during the period commencing on the date upon which Clearwire receives the
Option Notice from HITN and expiring on the one
PAGE 1 - SPECTRUM OPTION AGREEMENT
hundred eightieth (180th) day following the receipt by Clearwire of the Option
Notice ("Option Exercise Period"). Except as provided in Section 1.05 below, the
Option Consideration is non-refundable, regardless of whether Clearwire
exercises the Option, unless any representation or warranty of HITN made
pursuant to this Agreement or the IUA is not true and correct in all material
respects, or if HITN fails to perform in any material respect its covenants set
forth in this Agreement or in the IUA, and in either such case such breach of a
representation, warranty or covenant, if curable, is not cured within forty-five
(45) days after delivery of written notice of the breach.
Section 1.02 Option Consideration.
(a) Clearwire shall pay to HITN the sum of the amounts listed
beside each Market on Annex I hereto, totaling an aggregate of *** (the "Option
Consideration") of which (i) *** shall be advanced to HITN within twenty four
(24) hours following the execution of this Agreement by all of the Parties
hereto ("Cash Consideration"), and (ii) *** shares of Class A Common Stock
issued at an agreed upon value of $1.00 per share ("Equity Consideration") which
shall be issued upon being "earned". The Option Consideration for each Market
shall not be determined to be "earned" by HITN until the FCC grants the FCC
License for such Market to HITN pursuant to a Pending Application. If, however,
FCC Licenses have been granted to HITN covering fifty percent (50%) or more of
the CPOPs listed on Annex I ("50% Grant"), then Option Consideration for all of
the Markets shall be deemed "earned". To the extent the Option Consideration has
not been "earned", then such Option Consideration shall be subject to refund as
provided in Section 1.06.
(b) At the time that HITN provides the Option Notice, HITN
shall also provide Clearwire with a written notice of its election as to have
the Option Consideration for the applicable Market(s) to which the Option Notice
applies as set forth on Annex I be the Cash Consideration and/or the Equity
Consideration, or a combination of Cash Consideration and Equity Consideration.
If HITN elects to apply a portion of the Cash Consideration to the Option
Consideration for such Market, then such amount shall no longer be subject to
refund as provided in Section 1.06. If HITN elects to apply all or a portion of
the Equity Consideration to the Option Consideration for such Market, then
Clearwire shall issue that number of shares equal to that portion of the Option
Consideration for such Market as elected by HITN at a value of $1.00 per shares
(for example, if HITN elects to receive Equity Consideration for the Alamosa, CO
market, then Clearwire would issue 2,800 share of Class A Common Stock to HITN
for such Market). At such time as the 50% Grant shall have occurred, then
Clearwire shall issue the remaining Equity Consideration, if any, to HITN.
Section 1.03 Option Notice. HITN shall provide written notice
("Option Notice") to Clearwire of the grant of an FCC License by the FCC
pursuant to a Pending Application within thirty (30) days of such grant. HITN
shall provide Option Notices for any FCC Licenses granted prior to the
Expiration Time. If prior to the Expiration Time, the FCC has taken final,
binding and non-appealable action with respect to any of the Option Spectrum
Rights that (i) terminates or denies a Pending Application of HITN and any
rights HITN has to such spectrum, (ii) reallocates such spectrum to a party
other than HITN, or (iii) takes such other
PAGE 2 - SPECTRUM OPTION AGREEMENT
action as would render a Pending Application ineffective (each, an "FCC
Action"), then the Option shall terminate only as to the Pending Application
that is the subject of such FCC Action.
Section 1.04 Exercise Notice. In order to exercise the Option,
Clearwire (or its designee) shall deliver to HITN during the Option Exercise
Period a written notice of its election to exercise the Option as to a
particular FCC License which has been granted pursuant to a Pending Application
(the "Election Notice"). Upon delivery of an Election Notice, each Party shall
use its best commercially reasonable efforts to cause (i) the conditions to
Closing identified in Article 7 to be satisfied and (ii) the Closing to occur as
promptly as possible.
Section 1.05 Expiration Time. HITN shall provide the Option
Notices to Clearwire from the Effective Date through the second (2nd)
anniversary ("Second Anniversary) of the Effective Date (the "Expiration Time").
Notwithstanding the foregoing, (i) the Expiration Time in respect of any FCC
Licenses subject to an Option Exercise Period that has not lapsed on the Second
Anniversary shall be extended, but only with respect to the FCC Licenses that
are the subject of such Option Expiration Period, through the end of that Option
Expiration Period. It is understood that the Option shall terminate as to any
Market subject to an FCC License in the event that the Option Exercise Period
with respect to such Market expires without Clearwire having delivered an
Election Notice with respect thereto.
Section 1.06 Refund of Option Consideration. For (a) each
Pending Application still subject to the Option for which there has been an FCC
Action, and (b) each Pending Application for which no FCC License has been
granted at the Expiration Time, provided that in each case that the 50% Grant
has not occurred, HITN shall (i) in the event of an FCC Action, to the extent
that the shares of the Equity Consideration remains undelivered, HITN shall
provide written notice to Clearwire of HITN's election to cancel its right to
receive that number of shares of Equity Consideration equal to the Option
Consideration with respect to the Market covered by such Pending Application as
set forth in Annex I divided by $1.00 or reimburse Clearwire an amount equal to
the portion of the Cash Consideration advanced to HITN for the Option with
respect to the Market covered by such Pending Application as set forth on Annex
I; or (ii) at the Expiration Time, refund to Clearwire any Cash Consideration
which has not been "earned" as provided in this Agreement and no additional
Equity Consideration shall be issued. Any Cash Consideration refunded to
Clearwire pursuant to this Section 1.06 shall be payable in equal monthly
installments amortized equally over a period of sixty (60) months beginning no
later than sixty (60) days following HITN's notification of such FCC Action or
the Expiration Time, as the case may be, as a credit to the monthly royalty fee
payable by Clearwire (or one or more of its subsidiaries) pursuant to one or
more of the IUAs between HITN and Fixed Wireless Holdings, LLC dated November
13, 2003 and/or one or more of the IUAs entered into pursuant to this Agreement
until such amount refund has been paid back in full; provided, however, that if
there is no such IUA in force or effect at such time, then HITN will pay to
Clearwire an amount equal to the unpaid portion of the refund in cash or
immediately available funds; provided, further that if the 50% Grant occurs
after such time as there have been refunds payments of cash or cancellations of
rights to receive shares of Equity Consideration by HITN in favor of Clearwire
pursuant hereto, then HITN shall be entitled to receive prompt repayment of any
such amounts or reinstatement of any such rights, as the case may be.
PAGE 3 - SPECTRUM OPTION AGREEMENT
Section 1.07 IUA Lease Rates. Each IUA shall contain the same
tiered lease rates for all Spectrum Rights leased therein. The net present value
of the aggregate lease payments under each IUA (over a full term of thirty (30)
years, using a discount rate of ten percent (10%) per annum and a growth rate of
three percent (3%) per annum) shall equal Nine Cents ($0.09) per CPOP leased
therein, as reasonably determined by Clearwire.
Section 1.08 FCC Permitted Extensions. With respect to each
IUA for Option Spectrum Rights, if the FCC Rules should at any time not prohibit
(i) lease terms in excess of fifteen (15) years or (ii) the same parties from
entering into a new lease for a new fifteen (15) year term, the term (either the
initial term or any renewal term) of each IUA then in effect and any new IUAs
entered into after such date shall be automatically extended to the maximum term
then permitted, not to exceed a maximum term of thirty (30) years for each IUA.
No additional compensation (other than compensation set forth in the IUA) shall
be payable to HITN in connection with such extension of the term.
(a) Upon the expiration of an IUA, Clearwire and HITN shall
enter into a Renewal Agreement for an additional term equal to the remainder of
the thirty (30) year period from the date of the IUA unless (i) Clearwire or
HITN terminated the IUA prior to the expiration of the Term (as defined in the
IUA) in accordance with its terms or (ii) HITN enters into an agreement with the
original offering party after the satisfaction of its obligations with respect
to the right of first refusal set forth in Section 1.09. If Clearwire and HITN
enter into a Renewal Agreement, the only payments due HITN thereunder shall be
the monthly lease payments described therein; HITN shall not receive any other
payments in connection with entering into the Renewal Agreement.
(b) If the FCC at any time does not prohibit parties from
allowing additional renewal, first renewal, or other substantially similar
rights (an "Extension Right"), each IUA then in effect shall be deemed amended
to include the Extension Right to the extent, and only to the extent, necessary
to permit the extension of a Term to a total maximum term not to exceed thirty
(30) years, and no additional compensation (other than compensation set forth in
the IUA) shall be payable to HITN in connection with such amendment; provided
that in any case, the right of first refusal in Section 1.09 shall remain in
effect upon expiration of such thirty (30) year term.
Section 1.09 Right of First Refusal on IUAs. With respect to
each IUA, during the Term (as defined in the IUA) and for a period of
twenty-four (24) months thereafter ("ROFR Period"), Clearwire shall have a right
of first refusal to use the Commercial Spectrum Capacity as set forth in this
Section 1.09. Upon the receipt by HITN of any bona fide offer (an "ROFR Offer")
to use any of the Commercial Spectrum Capacity following the Term, which ROFR
Offer HITN desires to accept, HITN shall transmit a written notice of the ROFR
Offer to Clearwire (the "ROFR Offer Notice"). The ROFR Offer Notice (i) shall
contain the name and address of the Person making the ROFR Offer, the payment
structure therefore and a summary of all material terms of such ROFR Offer, and
(ii) shall offer to Clearwire the option to enter into a new agreement upon the
terms and subject to the conditions of the proposed third party use or lease
agreement as set forth in the ROFR Offer Notice. Clearwire shall then have the
right for thirty (30) days to accept such ROFR Offer. If Clearwire accepts such
ROFR Offer, Clearwire and HITN shall enter into a new agreement on such terms
and conditions. If after such thirty (30) day period Clearwire does not accept
such ROFR Offer, its rights hereunder as to such
PAGE 4 - SPECTRUM OPTION AGREEMENT
ROFR Offer shall terminate and HITN may for a period of sixty (60) days
following the Term enter into an agreement with the original offering party on
the same terms and conditions as were offered to Clearwire. If after such sixty
(60) day period, HITN does not enter such an agreement with the original
offering party, the Clearwire right of first refusal described in this Section
1.05 shall again apply for such timing remaining in the ROFR Period. If the ROFR
Offer Notice provides that any consideration is to be paid by the third person
in whole or in part in a form other than cash, Clearwire accepts the ROFR Offer,
and Clearwire is able to provide or procure comparable non-cash consideration
using commercially reasonable efforts, Clearwire will so provide or procure. In
the event Clearwire is unable to provide or procure comparable non-cash
consideration, Clearwire may substitute, in whole or in part, for non-cash
consideration an amount in cash fairly equivalent to the then fair market value
of the non-cash consideration payable by the third person. The ROFR Offer
acceptance must specify the amount of any such substitute cash consideration and
the non-cash consideration for which it is intended to substitute. If HITN
disputes that the substitute cash consideration specified by Clearwire is in an
amount fairly equivalent to the fair market value of the non-cash consideration
payable by the third person, HITN must within fifteen (15) days after the
receipt of the ROFR Offer acceptance provide Clearwire with written notice
specifying the amount HITN considers to be fairly equivalent to the fair market
value of the non-cash consideration payable by the third person (the "Counter
Offer"). The question of fair market value of the non-cash consideration will be
resolved pursuant to the Baseball Arbitration unless Clearwire gives HITN
written notice within fifteen (15) days after its receipt of the Counter-Offer
that Clearwire agrees to enter into an agreement containing the fair market
value set forth in the Counter-Offer.
Article 2.
CONSIDERATION
Section 2.01 Consideration. Upon the exercise of the Option as
to one or more FCC Licenses for Commercial Spectrum Capacity, the total
consideration payable for each such FCC License (the "Exercise Consideration"),
in addition to the lease payments set forth in the applicable IUA in accordance
with Section 1.05, shall equal the sum of the following:
(a) A sum of money (the "Exercise Cash Consideration") (i) in
the case of those CPOPs encompassed by Tier 1 FCC Licenses and listed on Part 1
of Annex I attached hereto, equal to the product of [***] times (B) the number
of CPOPs that HITN delivers to Clearwire at the applicable Option Closing, and
(ii) in the case of those CPOPs encompassed by Tier 2 FCC Licenses and listed on
Part 2 of Annex I attached hereto, equal to the product of (A) [***] times (B)
the number of CPOPs that HITN delivers to Clearwire at the applicable Option
Closing, in each such case pursuant to the IUAs duly executed and delivered in
accordance with this Agreement, rounded to the nearest whole cent.
(b) A stock certificate representing a whole number of shares
of Class A Common Stock (the "Exercise Equity Consideration") equal to the
result of (i) [***] times (ii) the number of CPOPs that HITN delivers to
Clearwire at the applicable Option Closing pursuant to the IUA(s) duly executed
and delivered in accordance with this Agreement
PAGE 5 - SPECTRUM OPTION AGREEMENT
upon the exercise of the Option divided by (iii) the Current Clearwire Stock
Price, rounded to the nearest number of whole shares, in effect on the
applicable Option Closing Date.
Section 2.02 Contingent Consideration.
(a) Within thirty (30) days following delivery of Clearwire'
unaudited financial statements ("Positive EBITDA Financial Statements") for the
first two consecutive fiscal quarters of Clearwire in which Clearwire has
achieved Positive EBITDA (the "Applicable Quarters"), as determined pursuant to
such financial statements prepared in the ordinary course of business, Clearwire
will provide HITN with written notice ("EBITDA Notice") that Clearwire has
achieved Positive EBITDA. The EBITDA Notice will include a copy of the Positive
EBITDA Financial Statements, a statement of Clearwire' Gross Operating Margin
and Clearwire' calculation of the Positive EBITDA for the Applicable Quarters.
Within thirty (30) days of delivery of the EBITDA Notice, Clearwire will issue
to HITN a number of additional shares of Class A Common Stock (rounded to the
nearest whole share) (the "Contingent Consideration") equal to a fraction in
which:
(i) The numerator is the lesser of (A) one percent (1%)
of the Gross Operating Margin of Clearwire in the Applicable
Quarters, as determined from the Positive EBITDA Financial
Statements or (B) [***] multiplied by the total number
of CPOPs leased to Clearwire pursuant to IUAs under this Agreement
at such time; and
(ii) The denominator is the Current Clearwire Stock
Price.
(b) For the purposes of this Section 2.02, "Positive EBITDA"
shall mean the earnings before net interest, income taxes, depreciation expense,
and amortization expense of Clearwire, but only if the result thereof is a
positive number.
(c) For the purposes of this Section 2.02, "Gross Operating
Margin" shall mean (i) gross revenues of all products and services (less all
sales, use or excise taxes; on- or off-invoice discounts, allowances, rebates,
grants, special purchase allowances, sale prices, or special offers provided by
Clearwire; and any returns of products) minus (ii) all cost of goods sold and
cost of services, including all payments under the IUAs and all employee
expenses, but excluding any allocation for overhead and general and
administrative costs.
(d) For clarity, the CPOPs attributable to the exercise of any
Option shall be counted as additional CPOPs for purposes of the Warrant
Agreement.
Article 3.
CLOSINGS
Section 3.01 Closings. With respect to the closing upon
each exercise of the Option as to the Option Spectrum Rights (each an "Option
Closing"), such Option Closing will occur at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at
10:00 a.m. Seattle time on the day that is as promptly as practical (but in no
event earlier than five (5) days following receipt by HITN of the Exercise
Notice) after
PAGE 6 - SPECTRUM OPTION AGREEMENT
satisfaction or waiver of the applicable conditions set forth in Article 7
hereof (each, an "Option Closing Date"). An Option Closing may occur after the
Expiration Time if Clearwire has duly delivers an Exercise Notice during the
applicable Option Exercise Period.
Section 3.02 Closing Deliveries. At each Option Closing, if
any, with respect to the Option Spectrum Rights set forth in the applicable
Exercise Notice:
(a) HITN shall deliver or cause to be delivered to Clearwire
an IUA with respect to such Option Spectrum Rights, duly executed by an
authorized representative of HITN.
(b) Clearwire shall deliver or caused to be delivered (i) the
applicable Exercise Cash Consideration by wire transfer in immediately available
funds to HITN, and (ii) a stock certificate representing the applicable Exercise
Equity Consideration.
Section 3.03 Further Assurances. Upon the terms and subject to
the conditions of this Agreement, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby.
Article 4.
REPRESENTATIONS AND WARRANTIES OF HITN
HITN hereby represents and warrants to Clearwire that:
Section 4.01 Organization and Good Standing. HITN is a
nonprofit corporation duly organized, validly existing and in good standing
under the laws of the State of New York and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now conducted and as proposed to be conducted. HITN is duly
qualified or authorized to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction in which it owns or leases real
property or FCC Licenses and each other jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization.
Section 4.02 Authorization of Agreement. HITN has all
requisite corporate power and authority (i) to enter into, deliver and carry out
the transactions contemplated by this Agreement and each other agreement,
document, or instrument or certificate contemplated by this Agreement, (ii) to
enter into and deliver all documents required or necessary to be executed by
HITN in connection with the consummation of the Contemplated Transactions
(collectively the "HITN Option Documents"), and (iii) to consummate the
transactions contemplated hereby and thereby. This Agreement has been and the
HITN Option Documents when delivered will be duly and validly executed and
delivered by HITN and (assuming the due authorization, execution and delivery by
the other parties hereto and thereto) this Agreement constitutes and the HITN
Option Documents will constitute when delivered the legal, valid and binding
obligations of HITN, enforceable against it in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
PAGE 7 - SPECTRUM OPTION AGREEMENT
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
Section 4.03 No Conflict. Except as set forth on Section 4.03
of the disclosure schedule attached hereto by HITN (the "HITN Schedule"):
(a) Neither the execution and delivery by HITN of this
Agreement or the HITN Option Documents, nor compliance by HITN with any of the
provisions hereof or thereof will (i) conflict with, or result in the breach of,
any provision of the Governing Documents of HITN, (ii) conflict with, violate,
result in the breach of, constitute (with or without due notice, lapse of time
or both) a default under, result in the acceleration of, create in any party the
rights to accelerate, terminate, modify or cancel, or require any notice,
consent or waiver under, any note, bond, mortgage, indenture, license, agreement
or other obligation to which HITN is a party or by which HITN or any of its
properties or assets is bound or (iii) violate any statute, rule, regulation,
order or decree of any Government Agency or authority by which HITN is bound.
(b) No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any Person
or Government Agency is required on the part of HITN in connection with the
execution and delivery of this Agreement or the HITN Option Documents or the
compliance by HITN with any of the provisions hereof or thereof.
Section 4.04 FCC Licenses. Throughout the term of this
Agreement and the term of each IUA that HITN and Clearwire (or its subsidiary)
enters into pursuant to this Agreement:
(a) For each Pending Applications, Annex I sets forth the name
of the applicant, the FCC identifier (e.g., call sign or file number), the
Channels, the Market, the number of Households, and the number of CPOPs. To the
best knowledge of HITN, all information set forth in such Annex is complete and
accurate in all respects. Neither HITN nor any of its Affiliates have modified
or sought to have modified any Pending Application.
(b) To the best knowledge of HITN, none of the Pending
Applications, or the FCC Licenses to be issued pursuant to the Pending
Applications are subject to any Liens, including without limitation any rights
of first refusal or purchase or lease options.
(c) Upon each applicable Option Closing Date, HITN shall be
authorized, by final order, to hold all of the FCC Licenses constituting the
Option Spectrum Rights under the applicable Exercise Notice and to lease them to
Clearwire pursuant to an IUA, in each case free and clear of all Liens.
(d) On each applicable Option Closing Date, (i) the grant,
renewal or assignment of the applicable FCC Licenses constituting the Option
Spectrum Rights under the applicable Exercise Notice to HITN shall have been
approved by the FCC by final order and such FCC Licenses will be validly issued
and in full force and effect; (ii) there shall be no Proceeding pending before
the FCC or threatened with respect to any of the applicable FCC Licenses; (iii)
HITN and its Affiliates shall have made on a timely basis all payments to any
applicable Government Agency with respect to such FCC Licenses, including all
payments due to the FCC and all required copyright royalty fee payments and all
required Statements of
PAGE 8 - SPECTRUM OPTION AGREEMENT
Account to the U.S. Copyright Office relating to retransmission of television
and radio broadcast signals; and (iv) HITN shall be otherwise in compliance with
the requirements of the compulsory copyright license described in Section 111 of
the Copyright Act and with all applicable rules and regulations of the Copyright
Office.
(e) To the best of HITN's knowledge, all Pending Applications
have been timely filed, and the FCC has not notified any of HITN that any of the
Pending Applications is subject to denial due to lack of timely filing or other
defect.
(f) On the applicable Option Closing Date, all FCC Reports and
fees required to be filed by each HITN with the FCC with respect to the
applicable FCC Licenses constituting Option Spectrum Rights under the applicable
Exercise Notice shall have been timely filed and paid. On the applicable Option
Closing Date, all FCC Reports filed by HITN shall be complete and correct in all
material respects.
Section 4.05 Tower Leases. HITN is not a party to any Tower
Lease in a Market which is subject of a Pending Application.
Section 4.06 Interference Coordination Agreements. On the
applicable Option Closing Date, to HITN's best knowledge, HITN shall not have
granted with respect to any of the applicable FCC Licenses constituting Option
Spectrum Rights under the applicable Exercise Notice any interference rights or
agreements that would have a material impact the use of the Channels.
Section 4.07 Litigation. There is no Proceeding now in
progress or pending or, to the best knowledge of HITN, threatened against HITN
or the assets (including the intellectual property rights) or the business of
HITN, nor to the best knowledge of HITN, does there exist any basis therefore,
except for immaterial claims brought against HITN in the ordinary course of
business. HITN is not subject to any Government Order.
Section 4.08 Compliance with Laws; Permits. HITN (a) has
complied in all respects with all federal, state, local and foreign laws, rules,
ordinances, codes, consents, authorizations, registrations, regulations,
decrees, directives, judgments and orders applicable to it and its business
other than where noncompliance would not, individually or in the aggregate,
reasonably be expected to have a HITN Material Adverse Effect and (b) has all
federal, state, local and foreign governmental Permits necessary in the conduct
of its business as currently conducted and to own and use its assets in the
manner in which such assets are currently owned and used other than where the
failure to possess such Permits would not, individually or in the aggregate,
reasonably be expected to have a HITN Material Adverse Effect, such Permits are
in full force and effect, and no violations have been recorded in respect of any
such Permit, and no proceeding is pending or, to the best knowledge of HITN,
threatened to revoke or limit any such Permit. Section 4.08 of the HITN Schedule
sets forth a list of all material licenses, permits and qualifications (other
than the FCC Licenses) and the expiration dates thereof.
Section 4.09 Offering Exemption; Securities Representations.
PAGE 9 - SPECTRUM OPTION AGREEMENT
(a) HITN is an "accredited investor" as this term is defined
in Rule 501(a) of Regulation D as promulgated by the U.S. Securities and
Exchange Commission under the Securities Act.
(b) HITN is acquiring the Exercise Equity Consideration for
its own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act)
thereof. HITN understands that the Exercise Equity Consideration has not been
registered under the Securities Act and cannot be sold unless subsequently
registered under the Securities Act or an exemption from such registration is
available.
(c) HITN is knowledgeable and experienced in the
telecommunications industry and is capable of evaluating the risks and merits of
the Contemplated Transactions, including the acquisition of shares of Class A
Common Stock, and making an informed decision with respect thereto. HITN, its
officers, and directors have had sufficient opportunity to ask questions of and
receive answers from Clearwire concerning the business of Clearwire, its
operations, assets and liabilities. HITN and its representatives have had an
opportunity to review all documents and records concerning Clearwire and its
business that Clearwire has requested. HITN has conducted its own independent
assessment, analysis and investigation with respect to Clearwire and its
business at the time of entering into this Agreement and has agreed to enter
into this Agreement based solely on this assessment, analysis and investigation,
and the representations and warranties of Clearwire set forth in Article 5
hereof.
(d) HITN is aware that Clearwire is a speculative enterprise,
that certain of the information disclosed to HITN contains forward looking
statements which involve risks and uncertainties, and that Clearwire' actual
results may differ significantly from the results discussed in these forward
looking statements. HITN further acknowledges that the value of Clearwire'
respective assets is inherently uncertain and is dependent upon market,
technological, and regulatory developments concerning feasible and allowable
uses. HITN represents and warrants to Clearwire that it has assessed these
factors independently and has agreed to enter into this Agreement without
reliance upon or expectation of any representations, warranties, or disclosures
of any kind from Clearwire, except as specifically set forth in Article 5
hereof.
(e) For purposes of application of state securities law, HITN
is a resident of the State of New York.
Section 4.10 Brokers. Neither HITN nor any of its directors,
officers, employees, or representatives has employed any broker or finder in
connection with the Contemplated Transactions.
Section 4.11 Suitability. To the knowledge of HITN, after due
inquiry, none of the following events has occurred during the last five years
with respect to any of its directors or officers: (a) a petition under federal
bankruptcy or insolvency Laws was filed by or against, or a receiver, fiscal
agent or similar officer was appointed for the business or property of such
person; (b) such person was indicted for any crime, or was convicted in a
criminal proceeding or is a named subject of a pending criminal proceeding; (c)
such person is subject to an Order enjoining him from engaging in any kind of
business practice, or any other activity in connection with the
PAGE 10 - SPECTRUM OPTION AGREEMENT
purchase or sale of securities, or to be associated with persons engaging in
such activities; (d) such person has ever been denied any permit affecting HITN
or such person's ability to conduct any activity conducted by HITN; or (e) such
person was found by a court of competent jurisdiction in a civil action or by a
government agency to have violated any securities laws.
Section 4.12 Disclosure. Neither this Agreement (including all
exhibits, annexes, schedules or attachments hereto) nor any certificate
furnished or made to Clearwire or pursuant to or in connection with this
Agreement (including all exhibits, annexes, schedules or attachments hereto)
contains any untrue statement of a material fact or, to the best knowledge of
HITN, omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading.
Section 4.13 Knowledge. Any representation, warranty,
covenant, obligation, or part thereof that states that it is made to the best
knowledge of HITN is made to its best knowledge after commercially reasonable
investigation and includes all facts which it knew or should have known as a
result of such investigation, including the best knowledge of HITN's executive
officers and legal counsel after commercially reasonable investigation.
Article 5.
REPRESENTATIONS AND WARRANTIES OF CLEARWIRE
Clearwire hereby represents and warrants to HITN that:
Section 5.01 Organization and Good Standing. Clearwire is a
corporation duly formed, validly existing and in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted. Clearwire is duly qualified or authorized to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in which
it owns or leases real property and each other jurisdiction in which the conduct
of its business or the ownership of its properties requires such qualification
or authorization, except where the failure to be so qualified, authorized or in
good standing does not have and would not reasonably be expected to have a
Clearwire Material Adverse Effect.
Section 5.02 Authorization of Agreement. Clearwire has all
requisite corporate power and authority to execute and deliver this Agreement
and each other agreement, document, or instrument or certificate contemplated by
this Agreement or to be executed by Clearwire in connection with the
consummation of the Contemplated Transactions (the "Clearwire Option
Documents"), and to consummate the transactions contemplated hereby and thereby.
This Agreement have been and the Clearwire Option Documents will be when
delivered duly and validly executed and delivered by Clearwire and (assuming the
due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes and the Clearwire Option Documents will
constitute when delivered the legal, valid and binding obligations of Clearwire,
enforceable against it in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity,
PAGE 11 - SPECTRUM OPTION AGREEMENT
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
Section 5.03 Capitalization.
(a) As of the Effective Date, immediately prior to the
occurrence of the First Closing, and without giving effect to the transactions
contemplated by the Stock Purchase Agreement and Undertaking, (i) the authorized
capital stock of Clearwire consists of 175,000,000 shares of Class A Common
Stock, $0.0001 par value per share (the "Class A Common Stock"), 100,000,000
shares of Class B Common Stock, $0.0001 par value per share ("Class B Common
Stock"), and 5,000,000 shares of Preferred Stock, par value $0.0001 per share
("Preferred Stock"), (ii) there are 14,007,625 shares of Class A Common Stock,
41,459,840 shares of Class B Common Stock and no shares of Preferred Stock
issued and outstanding and (iii) zero shares of Class A Common Stock, Class B
Common Stock or Preferred Stock are held by Clearwire as treasury stock. All of
the issued and outstanding shares of Class B Common Stock were duly authorized
for issuance and are validly issued, fully paid and non-assessable.
(b) As of the Effective Date, there are options, warrants,
calls, rights, commitments or other agreements of any character to which
Clearwire is a party for the issuance of 5,525,000 shares of Class A Common
Stock and zero shares of Class B Common Stock, and there are no securities of
Clearwire outstanding which upon conversion or exchange would require, the
issuance, sale or transfer of any additional shares of Class A Common Stock or
other equity securities of Clearwire or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase shares of
Class A Common Stock or other equity securities of Clearwire. Pursuant to the
Agreement and Plan of Merger between Clearwire, NextNet Wireless, Inc. and NN
Acquisition Sub, Inc., Clearwire is obligated to issue up to 13,869,540 shares
of Class A Common Stock and 3,070,320 warrants to purchase shares of Class A
Common Stock upon the closing of the merger contemplated in such agreement,
which merger became effective on March 16, 2004. Except for the Stockholders
Agreement dated November 13, 2003 between HITN, Clearwire and Clearwire
Holdings, Inc. (the "Stockholders Agreement"), as amended and restated on March
16, 2004, and the Registration Rights Agreement dated November 13, 2003 between
HITN and Clearwire (the "Registration Rights Agreement"), as of the Effective
Date, Clearwire is not a party to any voting trust or other voting agreement
with respect to any of the shares of Class A Common Stock.
(c) The authorization, offer, issuance, sale and delivery of
the Exercise Equity Consideration pursuant to this Agreement has been duly
authorized by all requisite corporate action on the part of Clearwire, and the
Exercise Equity Consideration, when issued, sold and delivered in accordance
with this Agreement, will be validly issued and outstanding, fully paid and
nonassessable, free of any Liens and not subject to preemptive or similar rights
of the other shareholders of Clearwire or others (other than as set forth in the
Stockholders Agreement or Clearwire' Certificate of Incorporation, as amended).
The terms, designations, powers, preferences and relative participating,
optional and other special rights, and the qualifications, limitations and
restrictions, of the Class A Common Stock are as stated in the Clearwire'
Certificate of Incorporation, as amended.
PAGE 12 - SPECTRUM OPTION AGREEMENT
Section 5.04 No Conflict.
(a) Except as set forth on Section 5.04 of the Clearwire
Schedule hereto, neither of the execution and delivery by Clearwire of this
Agreement and of the Clearwire Option Documents, nor the compliance by Clearwire
with any of the provisions hereof or thereof will (i) conflict with, or result
in the breach of, any provision of the Governing Documents of Clearwire, (ii)
conflict with, violate, result in the breach of, or constitute a default under
any note, bond, mortgage, indenture, license, agreement or other obligation to
which Clearwire is a party or by which Clearwire or any of its properties or
assets are bound or (iii) violate any statute, rule, regulation, order or decree
of any Government Agency by which Clearwire is bound, except, in the case of
clauses (ii) and (iii), for such violations, breaches or defaults as would not,
individually or in the aggregate, have a Clearwire Material Adverse Effect.
(b) No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any Person
or Government Agency is required on the part of Clearwire in connection with the
execution and delivery of this Agreement or the Clearwire Option Documents or
the compliance by Clearwire with any of the provisions hereof or thereof.
Section 5.05 Litigation. Except as would not reasonably be
expected to have a materially adverse effect on the ability of Clearwire to
close hereunder or as set forth on Section 5.05 of the Clearwire Schedule, (a)
there is no Proceeding now in progress or pending or, to the knowledge of
Clearwire, threatened against Clearwire or the assets or the business of
Clearwire and (b) Clearwire is not subject to any order, writ, injunction or
decree of any court or other Government Agency.
Section 5.06 Brokers. Neither Clearwire nor any of its
directors, officers, employees or representatives has employed any broker or
finder in connection with the Contemplated Transactions.
Article 6.
COVENANTS
Section 6.01 Consents and Approvals. Clearwire and HITN will
use their respective commercially reasonable efforts to obtain, and each shall
cooperate with and assist the other in obtaining, all consents, waivers,
amendments, modifications, approvals, authorizations, permits and licenses which
are required to be obtained by such party to effectuate this Agreement.
Section 6.02 Notice of Breach. HITN shall promptly give
Clearwire written notice with particularity upon HITN or its directors,
officers, agents or employers having knowledge of any matter that is reasonably
likely to constitute a breach of any representation, warranty, agreement or
covenant by HITN contained in this Agreement.
Section 6.03 Access to Information. HITN shall afford
Clearwire and its representatives reasonable access to all of HITN's properties,
books, contracts, commitments and records, all other information concerning its
business and properties (subject to restrictions
PAGE 13 - SPECTRUM OPTION AGREEMENT
imposed by applicable law) as Clearwire may reasonably request (including copies
of FCC Licenses, Pending Applications, interference coordination agreements and
consents, and all documents filed in any Proceeding pending at the FCC relating
thereto).
Section 6.04 Maintenance of FCC Qualifications. Except as such
qualifications may be affected by this Agreement or one or more IUAs entered
into pursuant to this Agreement, HITN hereby covenants and agrees that it shall
maintain all necessary qualifications to hold and to obtain renewal in the
ordinary course of any FCC License, as such qualifications may be amended or
modified from time to time (individually an "FCC Qualification" and collectively
referred to as the "FCC Qualifications"), and further covenants that it shall
not knowingly or negligently take any action, or fail to take any action, which
action or failure to act creates a material risk that HITN shall lose any FCC
Qualification; provided, that in the event that the FCC or any other legal
authority shall at any time specify new or different qualifications or
conditions for the maintenance of any FCC Qualification or shall issue a
pronouncement offering a new interpretation of an FCC Qualification, HITN shall
only be obligated to maintain such FCC Qualification in accordance with this
sentence so long as to do so would not have a material adverse effect on its
business or operations, taken as a whole; provided, further, that it shall not
be deemed a breach of this sentence if HITN loses an FCC Qualification as a
result, in whole or in part, of an act or omission of Clearwire or any failure
of Clearwire to perform its obligations under this Agreement, any IUA or Renewal
Agreement. If, at any time, HITN fails, or it appears to HITN more likely than
not that it will fail, to maintain any one or more of its FCC Qualifications
with respect to any of its FCC Licenses or its operations pursuant thereto, HITN
shall give written notice to Clearwire within five (5) days after HITN becomes
actually aware that (i) it no longer maintains such FCC Qualifications or (ii)
with the passage of time or upon the occurrence of a future event it will no
longer maintain such FCC Qualifications (referred to as a "Disqualification
Event"). HITN shall cooperate with reasonable requests of Clearwire made from
time to time for the purpose of verifying, at Clearwire' expense, that HITN
maintains its FCC Qualifications. If, once a FCC License has been issued
pursuant to a pending application, a Disqualification Event occurs, HITN shall,
at its expense, promptly undertake all reasonable actions to obtain, to the
extent permitted by applicable law, a waiver from the FCC regarding the
circumstances giving rise to such Disqualification Event or to cure the
circumstances giving rise to such Disqualification Event. If HITN does not
obtain a waiver from the FCC, or otherwise cure the circumstances giving rise
to, such Disqualification Event, HITN aggress to assist Clearwire, as reasonably
requested by Clearwire, in identifying one or more entities possessing such FCC
Qualifications, and to take such actions, as are reasonable and appropriate in
order to effectuate the transfer or assignment of any FCC License affected by
such Disqualification Event to one or more entities possessing all necessary FCC
Qualifications.
Section 6.05 Assignment of FCC Licenses. HITN shall not sell,
exchange, deliver ownership of, assign, encumber, or transfer, or permit the
sale, exchange, delivery, assignment, encumbrance, or transfer of, any Pending
Application or FCC License relating to any Market listed on Annex I except as
permitted in the IUA applicable to such FCC License.
Section 6.06 Legends. HITN hereby consents to the placement of
the following legends on all certificates representing capital stock of
Clearwire received by HITN pursuant to this Agreement:
PAGE 14 - SPECTRUM OPTION AGREEMENT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT, OR APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE ISSUER'S
COUNSEL, THAT REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.
THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR IN ANY MANNER
DISPOSED OF EXCEPT IN CONFORMITY WITH THE TERMS OF A WRITTEN
STOCKHOLDERS AGREEMENT AMONG CLEARWIRE CORPORATION AND THE
REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR INTEREST
TO THE SHARES). SUCH AGREEMENT CONTAINS CERTAIN RIGHTS AND
OBLIGATIONS REGARDING CORPORATE GOVERNANCE AND REGARDING THE
VOTING, SALE, ASSIGNMENT, TRANSFER, ENCUMBRANCE OR OTHER
DISPOSITION OF SUCH CORPORATION'S SHARES. THE CORPORATION WILL
UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE
HOLDER HEREOF WITHOUT CHARGE.
Section 6.07 Assistance in Obtaining FCC Licenses. Clearwire
shall cooperate with, and assist HITN in obtaining the grant of the FCC Licenses
pursuant to the Pending Applications as Clearwire determines reasonable. In
addition, Clearwire will reimburse up to One Hundred Thousand dollars ($100,000)
in the aggregate, for reasonable expenses actually incurred by HITN (net of any
credits, refunds or retainers previously paid by Clearwire to HITN or its
counsel for such expenses) after the Effective Date, for legal fees (including
FCC filing fees) incurred in HITN's efforts to obtain the FCC Licenses for the
Option Spectrum Rights or HITN's counsels' efforts to evaluate, prepare and
advise with respect to Pending Applications to the FCC filed by Licensee or to
renew any Pending Application; (collectively referred to as "Licensee's Legal
Expenses"). All other expenses in connection therewith (including, by way of
example, engineering consultant fees, travel and reasonable out of pocket
expenses) shall be reimbursed by Clearwire; provided, however, any such expense
for which Licensee seeks reimbursement which is in excess of One Thousand
Dollars ($1,000) shall have been approved by Clearwire prior to the time such
expense was incurred, which approval shall not be unreasonably withheld.
PAGE 15 - SPECTRUM OPTION AGREEMENT
Article 7.
CONDITIONS
Section 7.01 Conditions to Each party's Obligations. The
respective obligations of each party to effect any and all of the Closings
hereunder shall be subject to the satisfaction on or prior to the applicable
Option Closing Date of the following conditions:
(a) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court or
other Government Agency of competent jurisdiction preventing the consummation of
the Contemplated Transactions shall be pending or in effect; provided, however,
that prior to invoking this condition, each party hereto shall use all
commercially reasonable efforts to have any such injunction or other order
vacated.
(b) Statutes. No Law shall have been enacted, promulgated, or
otherwise issued by any Government Agency with authority to enforce such Law,
which would make consummation of the applicable Closing illegal.
Section 7.02 Conditions to the Obligations of Clearwire. The
obligations of Clearwire to effect any and all of the Option Closings hereunder
shall be subject to the satisfaction at or prior to the applicable Option
Closing Date of each of the following conditions, any of which may be waived,
solely in writing, and exclusively by Clearwire:
(a) Representations and Warranties. The representations and
warranties of HITN contained in Article 4 hereof (i) shall have been true and
correct when made and (ii) except to the extent that such representations and
warranties relate to a particular date, shall be true and correct as of each of
the applicable Closing Date as though made on that date.
(b) Covenants. HITN shall have performed and complied in all
material respects with all covenants and obligations under this Agreement
required to be performed and complied with by HITN as of such Closing.
(c) Closing Certificate of HITN. Clearwire shall have received
a certificate executed on behalf of HITN by a duly authorized officer of HITN
and dated as of the applicable Closing Date to the effect, as of the applicable
Closing, of Section 7.02(a) and Section 7.02(b) (unless otherwise waived in
accordance with the terms thereof).
(d) No HITN Material Adverse Effect. During the period from
the Effective Date to the applicable Option Closing Date, there shall not have
occurred any event which has had or is reasonably likely to have an HITN
Material Adverse Effect.
(e) Officer Certificates. Clearwire shall have received
copies, in each case certified as of the applicable closing date by an
authorized officer of HITN, of (i) the resolutions of the board of directors of
HITN authorizing the execution, delivery and performance of this Agreement and
the HITN Option Documents and (ii) the signature and incumbency of the officers
of HITN authorized to execute and deliver this Agreement and the HITN Option
Documents.
PAGE 16 - SPECTRUM OPTION AGREEMENT
(f) No Liens on Option Spectrum Rights. With respect to each
Option Closing, Clearwire shall have received written documentation satisfactory
to Clearwire in all respects, reflecting the ownership of such Option Spectrum
rights by HITN, free and clear of all Liens; provided that the conditions set
forth in this Section 7.02(f) shall be determined on a Market by Market basis
such that the parties will proceed with entering into the IUAs that satisfy this
condition at the applicable Option Closing notwithstanding the status of other
Markets.
Section 7.03 Conditions to Obligations of HITN. The
obligations of HITN to consummate and effect any and all of the Closings
hereunder shall be subject to the satisfaction at or prior to the applicable
Closing Date of each of the following conditions, any of which may be waived,
solely in writing, and exclusively by HITN:
(a) Representation and Warranties. The representations and
warranties contained in Article 5 hereof (i) shall have been true and correct
when made and (ii) except for changes contemplated by this Agreement and except
to the extent that such representations and warranties relate to a particular
date, shall be true and correct as of the applicable Closing Date as though made
on that date.
(b) Covenants. Clearwire shall have performed and complied in
all material respects with all covenants and obligations under this Agreement
required to be performed and complied with by Clearwire as of the applicable
closing date.
(c) Closing Certificate of Clearwire. HITN shall have received
a certificate executed on behalf of Clearwire by its duly authorized
representative and dated as of the applicable closing date (i) to the effect, as
of such closing, of Section 7.03(a) and Section 7.03(b) (unless otherwise waived
in accordance with the terms thereof).
Article 8.
INDEMNIFICATION
Section 8.01 Indemnification.
(a) HITN shall indemnify Clearwire, its Affiliates, and each
of their respective stockholders (other than HITN), directors, officers,
employees, agents, successors and assigns (collectively, the "Clearwire
Indemnified parties") and hold each of the Clearwire Indemnified parties
harmless from and against any and all Damages based upon, attributable to or
resulting from:
(i) The failure of any representation or warranty of
HITN set forth in Article 4 hereof, or any representation or warranty contained
in any certificate delivered by or on behalf of HITN pursuant to this Agreement,
to be true and correct as of the dates made; and
(ii) The breach of any covenant or other agreement on
the part of HITN under this Agreement.
For purposes of Section 8.01(a)(i), the amount of Damages in respect of any
breach of a representation or warranty shall be determined without regard to any
limitation or qualification
PAGE 17 - SPECTRUM OPTION AGREEMENT
as to materiality, HITN Material Adverse Effect, knowledge or similar language
set forth in such representation or warranty.
(b) Clearwire shall indemnify HITN, its Affiliates, and each
of their respective, agents, successors and assigns (collectively, the "HITN
Indemnified parties") and hold each of the HITN Indemnified parties harmless
from and against any and all Damages based upon, attributable to or resulting
from:
(i) The failure of any representation or warranty of
Clearwire set forth in Article 5 hereof, or any representation or warranty
contained in any certificate delivered by or on behalf of Clearwire pursuant to
this Agreement, to be true and correct as of the dates made; and
(ii) The breach of any covenant or other agreement on
the part of Clearwire under this Agreement.
For purposes of Section 8.01(b)(i), the amount of Damages in respect of any
breach of a representation or warranty shall be determined without regard to any
limitation or qualification as to materiality, Clearwire Material Adverse
Effect, knowledge or similar language set forth in such representation or
warranty.
Section 8.02 Limitations on Indemnification for Breaches of
Representations and Warranties. An indemnifying party shall not have any
liability under Section 8.01(a)(i) or Section 8.01(b)(i) hereof unless the
aggregate amount of Damages to the indemnified parties finally determined to
arise thereunder based upon, attributable to or resulting from the failure of
any representation or warranty to be true and correct, exceeds $10,000 (the
"Deductible") and, in such event, the indemnifying party shall be required to
pay the amount of such Damages including those used to compute the Deductible.
Section 8.03 Indemnification Procedures.
(a) In the event that any claim shall be asserted by any
Person in respect of which payment may be sought under Section 8.01 hereof
(regardless of the Deductible referred to above) (each, a "Claim"), the
indemnified party shall reasonably and promptly cause written notice of the
assertion of any Claim of which it has knowledge which is covered by this
indemnity to be forwarded to the indemnifying party. The indemnifying party
shall have the right, at its sole option and expense, to be represented by
counsel of its choice, which must be reasonably satisfactory to the indemnified
party, and to defend against, negotiate, settle or otherwise deal with any Claim
which relates to any Damages indemnified against hereunder. If the indemnifying
party elects to defend against, negotiate, settle or otherwise deal with any
Claim which relates to any Damages indemnified against hereunder, it shall
within five (5) days (or sooner, if the nature of the Claim so requires) notify
the indemnified party of its intent to do so. If the indemnifying party elects
not to defend against, negotiate, settle or otherwise deal with any Claim which
relates to any Damages indemnified against hereunder, fails to notify the
indemnified party of its election as herein provided or contests its obligation
to indemnify the indemnified party for such Damages under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise deal with
such Claim. If the indemnified party defends any
PAGE 18 - SPECTRUM OPTION AGREEMENT
Claim, then the indemnifying party shall reimburse the indemnified party for the
expenses of defending such Claim upon submission of periodic bills. If the
indemnifying party shall assume the defense of any Claim, the indemnified party
may participate, at his or its own expense, in the defense of such Claim;
provided, however, that such indemnified party shall be entitled to participate
in any such defense with separate counsel at the expense of the indemnifying
party if, so requested by the indemnifying party to participate or (ii) in the
reasonable opinion of counsel to the indemnified party, a conflict or potential
conflict exists between the indemnified party and the indemnifying party that
would make such separate representation advisable; and provided, further, that
the indemnifying party shall not be required to pay for more than one such
counsel for all indemnified parties in connection with any Claim. The parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation, or settlement of any such Claim.
(b) After any final deductible judgment or award shall have
been rendered by a court, arbitration board or administrative agency of
competent jurisdiction and the expiration of the time in which to appeal
therefrom, or a settlement shall have been consummated, or the indemnified party
and the indemnifying party shall have arrived at a mutually binding agreement
with respect to a Claim hereunder, the indemnified party shall forward to the
indemnifying party notice of any sums due and owing by the indemnifying party
pursuant to this Agreement with respect to such matter.
(c) The failure of the indemnified party to give reasonably
prompt notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
Section 8.04 Treatment for Tax Purposes. All payments by
Clearwire under this Article 8 shall be treated as an adjustment to the
consideration paid hereunder for all foreign, federal, state, and local income
tax purposes.
Article 9.
TERMINATION
Section 9.01 Expiration; Termination. This Agreement shall
expire on the last day of the last term under the last IUA executed pursuant to
this Agreement. Termination of this Agreement pursuant to this Section 9.01
shall terminate all rights and obligations of the parties hereunder and this
Agreement shall become void and have no force or effect. Notwithstanding the
foregoing, this Section 9.01 and Section 10.08 shall remain in effect, and no
party shall be relieved from any liability for any breach of any of its
covenants or agreements in this Agreement prior to such termination.
PAGE 19 - SPECTRUM OPTION AGREEMENT
Article 10.
GENERAL PROVISIONS
Section 10.01 Payment of Sales, Use or Similar Taxes.
Clearwire shall be liable for and shall pay (and shall indemnify and hold
harmless the HITN Indemnified parties against) all sales, use, stamp,
documentary, filing, recording, transfer, real estate transfer, registration,
duty or similar fees or taxes or governmental charges (together with any
interest or penalty, addition to tax or additional amount imposed) as levied by
any Taxing Authority in connection with the Contemplated Transactions.
Section 10.02 Survival of Representations and Warranties. The
parties hereto hereby agree that the representations and warranties contained in
this Agreement or in any certificate, document or instrument delivered in
connection herewith, shall survive each of the Closings hereunder for a period
of three (3) years from the each Option Closing Date regardless of any
investigation made by the parties hereto. All agreements and covenants contained
herein shall survive indefinitely until, by their respective terms, they are no
longer operative.
Section 10.03 Expenses. Except as set forth in Section 6.7 or
as otherwise provided in this Agreement, HITN and Clearwire shall each bear its
own expenses incurred in connection with the negotiation and execution of this
Agreement and each other agreement, document and instrument contemplated by this
Agreement and the consummation of the transactions contemplated hereby and
thereby.
Section 10.04 Entire Agreement; Amendments and Waivers. This
Agreement (including the annexes, schedules and exhibits hereto) represents the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant, or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power, or
remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power, or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
Section 10.05 Governing Law. The validity, meaning and effect
of this Agreement shall be determined in accordance with the laws of the State
of New York applicable to contracts made and to be performed in that state,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
PAGE 20 - SPECTRUM OPTION AGREEMENT
Section 10.06 Table of Contents and Headings. The table of
contents and section headings of this Agreement are for reference purposes only
and are to be given no effect in the construction or interpretation of this
Agreement.
Section 10.07 Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed given when
delivered personally or mailed by certified mail, return receipt requested, to
the parties (and shall also be transmitted by facsimile to the Persons receiving
copies thereof) at the following addresses (or to such other address as a party
may have specified by notice given to the other party pursuant to this
provision):
If to Clearwire, to: Clearwire Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to HITN, to: Hispanic Information and
Telecommunications Network, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Day, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: RJGLaw LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.08 Publicity. No public release, announcement or
other form of publicity concerning this Agreement or the Documents, shall be
issued by either party without the prior consent of the other party, except as
such release or announcement may be required by law, regulation or the rules or
regulations of any securities exchange, in which case the party required to make
the release or announcement shall, to the extent possible, allow the other party
PAGE 21 - SPECTRUM OPTION AGREEMENT
reasonable time to comment on such release or announcement in advance of such
issuance. The parties shall use reasonable efforts to consult in good faith with
each other with a view to agreeing upon any press release or public announcement
relating to the transactions contemplated hereby prior to the consummation
thereof.
Section 10.09 Severability. If any provision of this Agreement
is invalid or unenforceable, the balance of this Agreement shall remain in
effect.
Section 10.10 Binding Effect; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. Nothing in this Agreement shall create or be
deemed to create any third party beneficiary rights in any person or entity not
a party to this Agreement except as provided below. No assignment of this
Agreement or of any rights or obligations hereunder may be made by either HITN
or Clearwire (by operation of law or otherwise) without the prior written
consent of the other parties hereto (which consent will not be unreasonably
withheld) and any attempted assignment without the required consents shall be
void.
Section 10.11 Remedies. The parties recognize that, in the
event that a party should refuse to perform any provisions of this Agreement,
monetary damages alone will not be adequate. The non-defaulting party shall
therefore be entitled, in addition to any other remedies which may be available,
including money damages, to obtain specific performance of the terms of this
Agreement. Notwithstanding any other provision herein, no remedy conferred by
any of the specific provisions of this Agreement is intended to be exclusive of
any other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. The election of any one or more
remedies by a party shall not constitute a waiver of the right to pursue other
available remedies at any time.
Section 10.12 Resolution of Certain Disputes.
(a) If the parties are unable to resolve any monetary dispute
under this Agreement or any dispute as to the interpretation of a provision of
this Agreement (each, a "Dispute"), the baseball decision rules ("Baseball
Arbitration") set forth in Section 10.12(b) shall apply. If the parties are
unable to resolve any other disputes (each a "Breach Dispute"), including
without limitation disputes regarding a breach or default under this Agreement,
the parties shall arbitrate such dispute pursuant to the rules set forth in
Section 10.12(c).
(b) Any such Dispute shall be resolved by a single Arbitrator.
In the event of a Dispute, either party may request by written notice to the
other party that it wishes to submit the disputed matter for resolution by
Baseball Arbitration. The parties agree to submit to an Arbitrator within 30
days after the requesting party's notice has been received by the other party.
Within fifteen (15) days (the "Submission Period") after the appointment of the
arbitrator (the "Arbitrator") in accordance with the Commercial Arbitration
Rules (then in effect) of the American Arbitration Association for arbitration
of commercial disputes (the "AAA"), each party shall submit to the Arbitrator
its own proposal for the resolution of the contested issue. Such submissions
shall remain secret until after the Arbitrator has received each party's
proposal, at which time the Arbitrator shall inform each party of the other's
proposal. No such
PAGE 22 - SPECTRUM OPTION AGREEMENT
proposal may be amended after it is submitted to the Arbitrator. The Arbitrator
shall compare the proposals. The Arbitrator shall determine which proposal he or
she believes to be the resolution most closely in accordance with the relevant
provisions of this Agreement and shall order the adoption of such proposal as
the relief granted. If any party fails to submit its proposal by the end of the
Submission Period, the Arbitrator shall order the adoption of the other party's
proposal. The Arbitrator may rely upon such evidence as the Arbitrator may
choose in his or her discretion in making such determination, and may permit
discovery in accordance with the provisions of this Section 10.12(b).
(c) Any such Breach Dispute shall be resolved by a single
Arbitrator. In the event of a Breach Dispute either party may request by written
notice to the other party that it wishes to submit the disputed matter for
resolution by an Arbitrator. The parties agree to submit to an Arbitrator within
30 days after the requesting party's notice has been received by the other
party. During the Submission Period, the parties shall appoint the Arbitrator in
accordance with the Commercial Arbitration Rules (then in effect) of the AAA.
The parties agree to permit discovery proceedings of the type provided by the
Federal Rules of Civil Procedure both in advance of, and during recesses of, the
arbitration hearings. The parties agree that the Arbitrator shall have no
jurisdiction to consider evidence with respect to or render an award or judgment
for punitive damages (or any other amount awarded for the purpose of imposing a
penalty).
(d) The arbitration hearing shall be located at a neutral site
as mutually agreed by the parties, or if the parties cannot so agree, then the
location of the arbitration shall be New York, New York. The Federal Rules of
Evidence shall apply to the arbitration hearing. The party bringing a particular
claim or asserting an affirmative defense will have the burden of proof with
respect thereto. Each party shall bear the burden of persuasion with respect to
its proposal for resolution of the matter. The arbitration proceedings and all
testimony, filings, documents and information relating to or presented during
the arbitration proceedings shall be deemed to be information subject to the
confidentiality provisions of this Agreement. The Arbitrator will have no power
or authority, pursuant to the rules of the AAA or otherwise, to relieve the
parties from their agreement hereunder to arbitrate or otherwise to amend or
disregard any provision of this Agreement, including without limitation the
provisions of this Section.
(e) Should an Arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this Section, the Arbitrator shall be
replaced pursuant to the rules of the AAA. If an arbitrator is replaced after
the arbitration hearing has commenced, then a rehearing shall take place in
accordance with this Section and the rules of the AAA.
(f) Within fifteen (15) days after the closing of the
arbitration hearing, the Arbitrator will prepare and distribute to the parties a
writing setting forth the Arbitrator's or Arbitration Panel's finding of facts
and any relevant conclusions of law relating to the Dispute, including the
reasons for the giving or denial of any award. The findings and conclusions and
the award, if any, shall be deemed to be information subject to the
confidentiality provisions of this Agreement.
(g) The Arbitrator is instructed to schedule promptly all
discovery and other procedural steps and otherwise to assume case management
initiative and control to effect an efficient and expeditious resolution of the
Dispute. The Arbitrator is authorized to issue
PAGE 23 - SPECTRUM OPTION AGREEMENT
monetary sanctions against either party if, upon a showing of good cause, such
party is unreasonably delaying the proceeding.
(h) Any award rendered by the Arbitrator will be final,
conclusive, and binding upon the parties and any judgment thereon may be entered
and enforced in any court of competent jurisdiction.
(i) Each party will bear an equal one-half of all fees, costs
and expenses of the Arbitrators, and notwithstanding any law to the contrary,
each party will bear all the fees, costs and expenses of its own attorneys,
experts and witnesses; provided, however, in connection with any judicial
proceeding to compel arbitration pursuant to this Agreement or to confirm,
vacate or enforce any award rendered by the Arbitrator, the prevailing party in
such a proceeding shall be entitled to recover reasonable attorney's fees and
expenses incurred in connection with such proceedings, in addition to any other
relief to which it may be entitled; the non-prevailing party to an arbitration
shall pay its own expenses, the fees of each arbitrator, the administrative fee
of the AAA, and the expenses, including without limitation, attorneys' fees and
costs, and expert and witness fees and costs, incurred by the other party to the
arbitration.
(j) Notwithstanding anything to the contrary, neither party
shall have any obligation to arbitrate claims for injunctive relief, specific
performance, or other equitable relief or for the use or unauthorized disclosure
of confidential information, as to which either party shall be entitled to seek
and obtain relief from a court of competent jurisdiction.
Section 10.13 Counterparts. This Agreement may be executed in
one or more counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.
[THE REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK.]
PAGE 24 - SPECTRUM OPTION AGREEMENT
Each party has caused this Spectrum Option Agreement to be
duly executed by its duly authorized officer or representative on the date first
above written.
CLEARWIRE CORPORATION
By: /s/ R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
HISPANIC INFORMATION AND
TELECOMMUNICATIONS NETWORK, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: President
------------------------------------
PAGE 25 - SPECTRUM OPTION AGREEMENT
EXHIBIT A
DEFINITIONS AND INTERPRETATIONS
(a) The following terms have the following meanings throughout
this Master Spectrum Acquisition Agreement:
"50% Grant" has the meaning set forth in Section 1.02.
"AAA" has the meaning set forth in Section 10.12.
"Affiliate" means, with respect to any Person, any other
Person that directly, or through one or more intermediaries, controls or is
controlled by or is under common control with such first Person. As used in this
definition, "control" (including, with correlative meanings, "controlled by" and
"under common control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"Agreement" means this Spectrum Option Agreement (including
the annexes, schedules, and exhibits hereto, all of which are incorporated
herein by this reference), as it may be amended under Section 10.04 hereof.
"Arbitrator" has the meaning set forth in Section 10.12.
"Baseball Arbitration" has the meaning set forth in Section
10.12.
"Cash Consideration" has the meaning set forth in Section
1.02.
"Channels" has the meaning set forth in the first Recital of
this Agreement.
"Class A Common Stock" has the meaning set forth in Section
5.03(a).
"Class B Common Stock" has the meaning set forth in Section
5.03(a).
"Claim" has the meaning set forth in Section 8.03.
"Closings" means each Option Closing.
"Closing Dates" means each Option Closing Date.
"Commercial Spectrum Capacity" has the meaning set forth in
the second Recital of this Agreement.
"Communications Act" has the meaning set forth in the second
Recital of this Agreement.
"Contracts" means all oral and written contracts, agreements,
instruments, commitments, understandings, and binding arrangements, including
leases of real and personal
PAGE 1 - EXHIBIT A
property, licenses, purchase orders, sales orders, distribution agreements, and
partnership or joint venture agreements.
"CPOPs" has the meaning set forth in the first Recital of this
Agreement.
"Current Clearwire Stock Price" means the per share price of
Class A Common Stock determined by the Board of Directors of Clearwire from time
to time; provided, however, that if Clearwire has engaged in an equity funding
round in excess of Two Million Dollars ($2,000,000) within 120 days of the time
when the Current Clearwire Stock Price is to apply, then the Current Clearwire
Stock Price at such time shall be the per share price of capital stock of
Clearwire, determined on an as-converted basis to Class A Common Stock, paid in
the most recent funding round of Clearwire that meets such criteria.
"Damages" means any and all losses, claims, demands,
liabilities, obligations, actions, suits, orders, statutory or regulatory
compliance requirements, or proceedings asserted by any Person, and all damages,
costs, expenses, assessments, judgments, recoveries and deficiencies, including
interest, penalties, investigatory expenses, consultants' fees, and reasonable
attorneys' fees and costs, of every kind and description, contingent or
otherwise.
"Deductible" has the meaning set forth in Section 8.02.
"Dispute" has the meaning set forth in Section 10.12.
"Disqualification Event" has the meaning set forth in Section
6.04.
"EBITDA Notice" has the meaning set forth in Section 2.04.
"Effective Date" has the meaning set forth in the introductory
paragraph to this Agreement.
"Election Notice" has the meaning set forth in Section 1.04.
"Environmental Laws" has the meaning set forth in Section
4.08.
"Equity Consideration" has the meaning set forth in Section
1.02.
"Exercise Cash Consideration" has the meaning set forth in
Section 2.01(a).
"Exercise Consideration" has the meaning set forth in Section
2.01.
"Exercise Equity Consideration" has the meaning set forth in
Section 2.01(b).
"Existing ROFR" has the meaning set forth in Section 4.04.
"Expiration Time" has the meaning set forth in Section 1.05.
"FAA" has the meaning set forth in Section 4.05.
"FCC" has the meaning set forth in the first Recital of this
Agreement.
PAGE 2
"FCC Action" has the meaning set forth in Section 1.02.
"FCC Licenses" has the meaning set forth in the first Recital
of this Agreement.
"FCC Qualification" has the meaning set forth in Section 6.04.
"FCC Reports" means those reports, filings, notices and
regulatory fees required to be filed annually or periodically with the FCC by
licensees, permittees, conditional licensees and operators, including reports
and fees required by Sections 21.11(a), 21.911, 21.307(d) and 21.920 of the FCC
Rules, as such reports, filings, notices, regulatory fees and similar filing and
payment requirements may be added or amended.
"Clearwire" has the meaning set forth in the introductory
paragraph to this Agreement.
"Clearwire Option Documents" has the meaning set forth in
Section 5.02.
"Clearwire Indemnified Parties" has the meaning set forth in
Section 8.01.
"Clearwire Schedule" has the meaning set forth in Section
5.04.
"Clearwire Material Adverse Effect" means a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of Clearwire, taken as a whole, other than
changes affecting the broadband wireless business generally.
"Future ITFS Licenses" has the meaning set forth in Section
6.08.
"Governing Documents" means articles of incorporation,
certificate of incorporation, bylaws, certificate of formation, limited
liability company agreement, or similar governing documents of an entity.
"Government Agency" means any Federal, state or local
government or any foreign, national, provincial, or local government, or any
governmental, regulatory, legislative, executive, or administrative authority,
agency or commission, or any court, tribunal, or judicial body.
"Government Order" means any order, writ, judgment,
injunction, decree, stipulation, determination, or award entered by or with any
Government Agency.
"Gross Operating Margin" has the meaning set forth in Section
2.04.
"HITN" has the meaning set forth in the introductory paragraph
of this Agreement.
"HITN Option Documents" has the meaning set forth in Section
4.02.
"HITN Indemnified parties" has the meaning set forth in
Section 8.01.
PAGE 3
"HITN Material Adverse Effect" means a material adverse effect
on the business, operations, properties, assets, condition (financial or other)
or results of operations of HITN, taken as a whole, other than changes affecting
the broadband wireless business generally.
"HITN Schedule" has the meaning set forth in Section 4.03.
"Households" has the meaning set forth in the first Recital of
this Agreement.
"ITFS" has the meaning set forth in the first Recital of this
Agreement.
"IUA" has the meaning set forth in Section 1.01.
"Law" means the common law and any federal, provincial, state,
local, or foreign statute, law, ordinance, code, rule, regulation, or other
requirement or rule of law.
"Lien" means any lien, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction, encumbrance or any other restriction
or limitation whatsoever.
"Market" has the meaning set forth in the first Recital of
this Agreement.
"Option" has the meaning set forth in Section 1.01.
"Option Consideration" has the meaning set forth in Section
1.02.
"Option Exercise Period" has the meaning set forth in Section
1.01.
"Option Notice" has the meaning set forth in Section 1.02.
"Option Spectrum Rights" has the meaning set forth in the
third Recital of this Agreement.
"Outstanding Licenses" has the meaning set forth in 1.04.
"Pending Applications" means the applications pending with the
FCC for new FCC Licenses for ITFS, assignments or transfers of FCC Licenses for
ITFS, modifications of FCC Licenses for ITFS, extensions of time to construct
PSA stations and renewals of FCC Licenses for ITFS filed by HITN as set forth on
Annex I.
"Person," whether or not such term is capitalized, means any
individual, partnership, firm, corporation, limited liability company,
association, trust, unincorporated organization, or other entity.
"Positive EBITDA" has the meaning set forth under Section
2.04.
"Positive EBITDA Financial Statements" has the meaning set
forth in Section 2.04.
"Preferred Stock" has the meaning set forth in Section 5.03.
PAGE 4
"Proceeding" means any action, suit, litigation, arbitration
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving any
court or other Government Agency or any arbitrator or arbitration panel.
"Registration Rights Agreement" has the meaning set forth in
Section 5.03(b).
"Renewal Agreement" means a renewal or extension of an IUA on
the same terms as provided in Exhibit B hereto or a new agreement entered into
between Clearwire and HITN pursuant to the right of first refusal in Section
1.09.
"ROFR Offer" has the meaning set forth in Section 1.08.
"ROFR Offer Notice" has the meaning set forth in Section 1.08.
"ROFR Period" has the meaning set forth in Section 1.08.
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholders Agreement" has the meaning set forth in Section
5.03(b).
"Subsidiaries" has the meaning set forth in Section 5.04.
"Submission Period" has the meaning set forth in Section
10.12.
"Tax" means (a) any Federal, state, local or foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, employment, recapture, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such amounts,
and (b) any liability for the payment of any amounts of the type described in
clauses (a) as a result of any express or implied obligation to indemnify any
other Person.
"Tax Authority" means any Government Agency having
jurisdiction over the assessment, determination, collection, or other imposition
of Tax.
"Tax Return" means any report, return, document, declaration
or other information or filing required to be supplied to any Tax Authority with
respect to Taxes, including information returns, any documents with respect to
or accompanying payments of estimated Taxes, or with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information.
"Tier 1 FCC Licenses" means the FCC Licenses for the ***.
PAGE 5
"Tier 2 FCC Licenses" means the FCC Licenses for the ***.
"Tower Leases" means Contracts relating to the use by HITN
transmission towers or other transmission equipment (and the embedded software
and intellectual property rights incorporated therein) on the any real property
used or occupied by HITN on which transmission towers used by HITN are located.
"Warrant Agreement" means the Warrant Agreement, dated as of
November 13, 2003, between Clearwire and ITFS Spectrum Advisors, LLC.
(b) Other Definitional and Interpretive Matters. Unless
otherwise expressly provided, for purposes of the Agreement, the following rules
of interpretation shall apply:
(1) Calculation of Time Period. When calculating the
period of time before which, within which or following which any act is
to be done or step taken pursuant to this Agreement, the date that is
the reference date in calculating such period shall be excluded. If the
last day of such period is a non-Business Day, the period in question
shall end on the next succeeding Business Day.
(2) Dollars. Any reference in this Agreement to $
shall mean U.S. dollars.
(3) Exhibits/Schedules. The Annexes, Exhibits, and
Schedules to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement. Any capitalized
terms used in any Annex, Exhibit, or Schedule but not otherwise defined
therein shall be defined as set forth in this Agreement.
(4) Gender and Number. Any reference in this
Agreement to gender shall include all genders, and words imparting the
singular number only shall include the plural and vice versa.
(5) Headings. The provision of a Table of Contents,
the division of this Agreement into Articles, Sections and other
subdivisions and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in construing or
interpreting this Agreement. All references in this Agreement to any
"Section" are to the corresponding Section of this Agreement unless
otherwise specified.
(6) Herein. The words such as "herein,"
"hereinafter," "hereof," and "hereunder" refer to this Agreement as a
whole and not merely to a subdivision in which such words appear unless
the context otherwise requires.
(7) Including. The word "including" or any variation
thereof means "including, without limitation" and shall not be
construed to limit any general statement that it follows to the
specific or similar items or matters immediately following it.
(c) The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an ambiguity or
question of intent or interpretation arises,
PAGE 6
this Agreement shall be construed as jointly drafted by the parties hereto and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any provision of this Agreement.
PAGE 7
EXHIBIT B
FORM OF IUA
PAGE 8
ANNEX I
PART 1 -- TIER 1 LICENSES
OPTION
MARKET CHANNEL POPS CONSIDERATION
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PAGE 9
PART 2 -- TIER 2 LICENSES
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PAGE 10
ITFS CAPACITY USE AND ROYALTY AGREEMENT
THIS ITFS CAPACITY USE AND ROYALTY AGREEMENT (this "Agreement") is made
this ______ day of ____________, 200__ by and between (i) HISPANIC INFORMATION
AND TELECOMMUNICATIONS NETWORK, INC., a New York not-for-profit corporation
("Licensee") and (ii) FIXED WIRELESS HOLDINGS, LLC, a Delaware limited liability
company ("Operator"). Licensee and Operator are referred to individually without
distinction as a "Party" and collectively as the "Parties."
RECITALS:
WHEREAS, the Federal Communications Commission (including any successor
to its functions and powers, "FCC") allows Instructional Television Fixed
Service (including any name then used by the FCC for such radio service after
the date of the Option Spectrum Agreement, "ITFS") stations to be used for
commercial purposes;
WHEREAS, Licensee holds an FCC authorization with the call sign listed
on Exhibit A (the "License", including any associated authorizations other than
I-channel authorizations, the "Licenses") to operate the six (6) MHz ITFS
channels listed on Exhibit A (each such channel, is referred to individually as
an "ITFS Channel," and collectively as the "ITFS Channels") in the metropolitan
area where the ITFS Channels are authorized to operate as listed on Exhibit A
(the "Market Area");
WHEREAS, Operator desires to provide digital wireless services to
customers and to use the transmission capacity of the ITFS Channels for these
purposes;
WHEREAS, Operator may enter into capacity use agreements with other
ITFS and/or Multipoint Distribution Service (including any name then used by the
FCC for such radio service after the date of the Option Spectrum Agreement,
"MDS") licensees and applicants in the Market Area, may be the licensee of MDS
and ITFS channels in the Market Area and may use other radio frequencies,
including unlicensed spectrum in the Market Area (the radio transmission and
receive facilities in the Market Area using ITFS, MDS and other channels leased
or licensed to Operator or any of its Affiliates or otherwise made available to
Operator or any of its Affiliates for operation within the Market Area,
including signal input facilities, are referred to collectively as the
"System");
WHEREAS, Licensee and Flux U.S. Corporation are parties to that certain
Option Spectrum Agreement dated March 29, 2004 (the "Option Spectrum
Agreement"), which provides for additional rights and obligations between
Licensee and Operator;
1
WHEREAS, the excess transmission capacity of the ITFS Channels is
available for commercial and/or secondary purposes, consistent with the
Communications Act of 1934, as amended, and the rules, regulations and policies
of the FCC (collectively "FCC Rules"); and
WHEREAS, Licensee is licensed under the Federal Communications
Commission to disseminate its programming in the Instructional Television Fixed
Service and Operator wishes to utilize Licensee's capacity pursuant to FCC
Rules.
NOW THEREFORE, in consideration of the foregoing and the mutual
promises and undertakings set forth herein, Licensee and Operator agree as
follows:
1. TERM OF AGREEMENT.
Subject to PARAGRAPHS 8 AND 9 of this Agreement, the term of this
Agreement shall begin on the date hereof (the "Effective Date") and shall expire
on the fifteenth (15th) anniversary of that date ("Initial Term"). If further
extension of this Agreement or execution of a new Agreement is not then
precluded by the FCC Rules generally pertaining to ITFS licenses, then, then
upon the expiration of the Initial Term, if Operator is not then in default
under this Agreement, this Agreement will automatically renew for three
additional terms of five (5) years each (during the Initial Term or any Renewal
Term), not to exceed a maximum term of thirty (30) years (a "Renewal Term");
provided that this Agreement may be terminated by Operator at the expiration of
the Initial Term or upon the Renewal Term, if Operator provides written notice
to Licensee not less than ninety (90) days prior to the last day of the
preceding term. The Initial Term together with the Renewal Term shall be
referred to as the "Term". The terms and conditions of this Agreement for a
Renewal Term shall be identical to the terms and conditions for the Initial
Term.
2. ALLOCATION AND USE OF TRANSMISSION CAPACITY.
A) DISTRIBUTION OF CAPACITY PRIOR TO TWO WAY OPERATIONS.
(i) Transition from Legacy Operations to Two-way
Operations. The provisions of this SUBPARAGRAPH 2(a)
shall be effective from the Effective Date until the
date transitional operations provided for under this
SUBPARAGRAPH 2(a) are discontinued, and the
provisions of SUBPARAGRAPHS 2(c) THROUGH (p) shall be
effective from the Start Date until the termination
of this Agreement.
(1) Provision and Operation of Equipment.
Promptly after the Effective Date, Operator,
at its expense, shall procure and construct
such equipment and facilities as are required
to operate the ITFS Channels in accordance
with the Licenses,
2
and for Licensee to continue such services
as it last provided prior to the Effective
Date, whether pursuant to any prior
provision of the transmission capacity of
the ITFS Channels (a "Prior Use Agreement")
to a third party (a "Prior User") or
otherwise, including program input and video
equipment. Once constructed, Operator shall
operate and maintain such equipment and all
subscriber stations in service as of the
Effective Date used in conjunction with
Licensee's services, at Operator's expense,
in accordance with PARAGRAPH 3 and in
accordance with SUBPARAGRAPH 6(c) as though
such subscriber response stations were
Primary Response Stations. Operator also
shall procure and shall bear all expenses
under all site leases.
(2) Right to Buy and Use Legacy Equipment under
Prior Use Agreement or Otherwise.
(A) To the extent that Licensee owns,
or has the right to use or possess,
as of the Effective Date and apart
from any Prior Use Agreement, the
whole or any portion of the
transmission, hub site reception,
response station, program input
equipment or other equipment used
to operate the ITFS Channels in the
Market Area prior to the Effective
Date (any such equipment referred
to as "Licensee Legacy Equipment"),
Licensee agrees to make such
Licensee Legacy Equipment available
to Operator, at no additional cost
to Operator, for use in the
provision of ITFS services
contemplated under this
SUBPARAGRAPH 2(a) to the extent
Licensee is able to do so without
violating the terms of any
agreement creating such right to
use or possess.
(B) If the Prior Use Agreement provides
Licensee with a right existing on
the Effective Date to purchase the
whole or any portion of the
transmission and/or hub site
reception equipment used by the
Prior User or equipment in
replacement thereof (the "Prior
User Legacy Equipment," together
with the Licensee Legacy Equipment,
the "Legacy Equipment"), Licensee
shall either exercise such right
(any such purchase, a "Licensee
Purchase") or Licensee shall
promptly give Operator notice that
Licensee does not intend to
exercise such right. Unless
Operator intends to cause the Start
Date to occur so early that
Operator does not have a need to
use such Prior Use
3
Legacy Equipment, if Licensee gives
such notice, Operator shall tender
to Licensee notice that Operator
desires Licensee to exercise such
right and Operator shall tender to
Licensee such immediately available
funds as are required to exercise
and consummate such right by the
date that is five (5) days (or if
five days is not available, such
reasonable time) before the time
stated in the Prior Use Agreement
by which Licensee must take any
action to exercise such right of
purchase (the "Equipment Notice
Date"), and Licensee shall use
commercially reasonable efforts,
all at Operator's expense, to
purchase such Prior User Legacy
Equipment on behalf of Operator (an
"Operator Purchase") in accordance
with the terms of such purchase
right; provided, however, Licensee
shall not be required to, absent
its consent (which consent will not
be unreasonably withheld or
delayed), and Licensee shall not
without Operator's prior written
consent, invoke judicial processes,
invoke arbitral processes or take
any other extraordinary action to
require the Prior User's observance
of such right. In the event that
Licensee purchases the Prior User
Legacy Equipment in accordance with
this SUBPARAGRAPH 2(a)(i)(2)(B),
the Prior User Legacy Equipment
shall be used by Operator to
commence operation or continue
operation, as applicable, of the
ITFS Channels in accordance with
SUBPARAGRAPH 2(a)(i)(1). In the
event of a Licensee Purchase,
Licensee shall hold title in the
Prior User Legacy Equipment, but
Operator may use such equipment
pursuant to the provisions of this
SUBPARAGRAPH 2(a) and FCC Rules. In
the event of an Operator Purchase)
title shall be held by Operator
and, if used to operate the ITFS
Channels, such equipment shall be
deemed leased to Licensee for One
Dollar ($1.00) per year subject to
the provisions of this SUBPARAGRAPH
2(a). If Operator does not provide
notice that Operator desires
Licensee to exercise such purchase
right or fails to tender to
Licensee such funds by the
Equipment Notice Date, Licensee may
purchase the whole or any part of
the Prior Use Legacy Equipment free
of any and all rights of Operator
thereto, and Licensee may use such
equipment for any purpose,
provided, in the event of such
purchase, Licensee shall promptly
remove acquired Prior User Legacy
Equipment from any Transmission
site then being utilized by
Operator to provide transition
services.
4
(C) If (x) the Prior Use Agreement
provides Licensee with a right
existing on the Effective Date to
continue to use any of the Prior
User Legacy Equipment, in lieu of
or in addition to any right to
purchase the same, or to otherwise
occupy any one or more transmitter
and/or hub reception sites for the
ITFS Channels for any period after
the expiration or termination of
the Prior Use Agreement (a
"Hold-over Right"), and (y)
Operator shall tender to Licensee
notice that Operator desires
Licensee to exercise such right and
Operator shall tender to Licensee
such immediately available funds as
are required to exercise and
consummate such right by the date
that is five (5) days before the
time stated in the Prior Use
Agreement by which Licensee must
take any action to exercise the
Hold-over Right (the "Hold-over
Right Notice Date"), then Licensee
shall use good faith efforts, all
at Operator's expense, to exercise
the Hold-over Right in accordance
with the terms of such right;
provided, however, Licensee shall
not be required to, absent its
consent, and Licensee shall not
without Operator's prior written
consent, invoke judicial processes,
invoke arbitral processes or take
any other extraordinary action to
require the Prior User's observance
of such right; provided, further,
Licensee shall not be required to
exercise such Hold-over Right if
such Hold-over Right is not
available or will be precluded
because of the existence of this
Agreement. In the event that
periodic payments are required
under the Prior Use Agreement in
exchange for the Hold-over Right,
Operator shall tender such payments
to Licensee reasonably in advance
of their due dates to allow
Licensee to make such payments to
the Prior User via U.S. mail, and
if such payments are so tendered,
Licensee shall timely make such
payments. If the exercise of the
Hold-over Right is an alternative,
in whole or in part, to the
exercise of any option to purchase
the Prior User Legacy Equipment,
then Operator may require Licensee
to exercise the rights in this
SUBPARAGRAPH 2(a)(i)(2)(C) to the
extent that the exercise of such
rights would not conflict with the
exercise of the rights in
SUBPARAGRAPH 2(a)(i)(2)(B).
5
(D) In the event that Licensee
exercises the Hold-over Right,
Licensee may restrict Operator's
access to the equipment at the
Hold-over Right sites to the extent
required by the permission under
which Licensee continues to have
access to such sites, but Licensee
shall cooperate with Operator, at
Operator's expense, to cause
repair, maintenance and
installation personnel to have
access as is permissible to the
site(s).
(E) Upon request by Operator, Licensee
agrees to cooperate, at Operator's
expense, with Operator in
negotiations with a Prior User to
obtain access to equipment or
transmission sites on a
transitional basis in order to
minimize the costs of transition
services provided by Operator
pursuant to this SUBPARAGRAPH 2(a),
consistent with any rights of
Licensee described in this
SUBPARAGRAPH 2(a).
(F) Subject to SUBPARAGRAPH
2(a)(i)(2)(D), Operator shall
maintain, repair and replace any
equipment operated pursuant to this
SUBPARAGRAPH 2(a) as required for
it to operate in accordance with
manufacturers' specifications and
FCC Rules.
(ii) Within thirty (30) days of any request by
Licensee, Operator shall cease using and
shall return to Licensee such Licensee
Legacy Equipment and Prior Use Legacy
Equipment as requested by Licensee in such
notice (the "Identified Legacy Equipment").
If the Identified Legacy Equipment is Prior
User Legacy Equipment constituting an
Operator Purchase, Licensee shall reimburse
Operator the amount Operator actually paid
the Prior User for such equipment, minus any
depreciation accumulated during the period
held by Operator for such equipment within
sixty (60) days of Licensee's receipt of
such equipment. The Identified Legacy
Equipment shall be shipped by Operator to
such domestic location as named in
Licensee's notice and shall be delivered to
Licensee in good operating condition subject
to normal wear and tear. If the removal of
such equipment would render any station
operating on the ITFS Channels inoperable,
in whole or part, Operator shall, at
Operator's expense, replace such equipment
on the day it is dismantled with comparable
equipment that meets the requirements of FCC
Rules and the applicable License.
6
(iii) Distribution of Capacity Prior to Start
Date. The full capacity of the ITFS
Channels, including all associated response
channels (if any), shall be allocated to
Licensee from the Effective Date until the
Start Date, provided Licensee shall, upon
request by Operator, permit Operator to
enter into subleases of video excess
capacity to third parties in conformity with
FCC Rules in order to defray the costs of
the analog transition services provided by
Operator pursuant to this SUBPARAGRAPH 2(a).
All proceeds from any such sublease shall be
paid to and retained by Operator. To comply
with FCC Rules in the event of such
sublease, and in addition to such other
requirements as may be imposed by the FCC
for such subleasing, all of which
requirements shall be satisfied by Operator
at its sole expense, either (x) a full ITFS
Channel shall be reserved to Licensee at the
Primary Transmission Site during any such
sublease if requested by Licensee (the "Full
Channel Option") or (y) Licensee shall have
reserved to Licensee such number of hours in
a week on one ITFS Channel as equals the
product of the number of ITFS Channels and
twenty (20) (with such hours falling during
those times when schools ordinarily are in
session) (the "Partial Channel Option").
Operator, at its expense, shall transmit
educational programming provided by Licensee
for transmission over such ITFS Channel
full-time, if the Full Channel Option is
selected, or for the specified number of
hours per week, if the Partial Channel
Option is selected. Further, during any such
sublease, if the Partial Channel Option is
selected, Licensee shall have the
unabridgeable right to recapture, subject to
six (6) months' advance written notification
by Licensee to Operator, an average of an
additional twenty (20) hours per ITFS
Channel per week. In the event that the
sublease involves any Licensed Booster
Station or Unlicensed Booster Station in
addition to a Primary Transmission Site,
Operator may sublease the entire capacity of
such booster station but Licensee shall
maintain the unabridgeable right to ready
recapture at least forty (40) hours per ITFS
Channel per week for Licensee's services.
(iv) Digital Transition. Licensee shall cooperate
with Operator's efforts to plan for,
construct and test the System at Operator's
expense prior to the Start Date, such
cooperation including the limitation of
legacy operations as reasonably requested by
Operator for the purpose of System tests.
Licensee and Operator shall cooperate so as
to minimize the adverse impact on Licensee
and its services of any such change in the
facilities or operating on the ITFS
Channels. Licensee shall be responsible for
assisting its existing end users in
connection with the transition to digital
transmission, subject to Operator's
obligations to provide equipment or services
expressly provided in this Agreement.
7
B) OPERATOR'S DIGITAL NETWORK.
(i) Subject to SUBPARAGRAPHS 3(b)(i) AND (ii), Operator
will use reasonable efforts to prepare FCC
applications for two-way facilities in the Market
Area as soon as possible, subject to Operator's
overall business development plans approved by the
Board of Directors of Operator, or to the extent
applicable, by the Board of Directors of Operator's
ultimate parent, and consistent, to the extent
reasonably achievable, with the educational
objectives of Licensee which involve the System.
Operator will use reasonable efforts to notify
Licensee in writing at least ninety (90) days prior
to its plans to begin developing two-way facilities
in the Market Area, and to submit written updates to
Licensee of any material changes to such plans, until
such time that Operator has launched services to the
public in the Market Area. Subject to SUBPARAGRAPH
3(b)(ii), the timing of such construction will be at
Operator's discretion, provided the construction
shall be consistent with the Licenses and FCC Rules.
(ii) The Parties intend that the System of which the ITFS
Channels will form a part will, subject to required
FCC authorizations and FCC Rules, provide an array of
services and functionalities selected by Operator in
accordance with its business plan, as such business
plan may evolve from time to time, and the Parties
anticipate that the architecture of the System and
its service set will evolve in accordance with
technological developments and Operator's plan to
employ technological developments in its business.
Accordingly, it is the intention and the agreement of
the Parties that this Agreement shall be understood
and interpreted in an expansive fashion to adapt to
such changes in technology, so as to give effect to
the original intent of the Parties as closely as
possible in order that the provisions hereof are
given effect as originally contemplated to the
greatest extent possible.
(iii) Subject to SUBPARAGRAPH 3(b)(ii), at such time as
Operator determines to construct a two-way system in
the Market Area, Operator shall notify Licensee and
consult with Licensee on the schedule. The date on
which Operator commences digital commercial
operations on any ITFS Channel authorized by special
temporary or regular authority to Licensee in the
Market Area shall be deemed to be the "Start Date."
C) OPERATOR'S CAPACITY. Subject to FCC Rules, commencing on the
Start Date, Licensee hereby provides to Operator all
transmission capacity associated with the ITFS Channels
("Operator's Capacity"), other than such
8
capacity on the ITFS Channels as is allocated to Licensee's
Educational Reservation under SUBPARAGRAPH 2(d).
D) LICENSEE'S EDUCATIONAL RESERVATION.
(i) General. From the Start Date until the termination of
this Agreement (the "Operational Period"), Operator
shall reserve for Licensee's use in the System, at no
expense to Licensee, five percent (5%) of the Total
ITFS Throughput Rate at the time of determination,
but in no event any less than the reservation
required by FCC Rules ("Licensee's Educational
Reservation"). Operator may cause the reservation of
Licensee's Educational Reservation through any
reasonable measures that effectively reserves
Licensee's Education Reservation for Licensee and its
users; provided, however, no such system shall impair
Licensee's ability to effectively use the full amount
of Licensee's Educational Reservation to provide
services on the System equivalent to the generally
prevailing quality, functions, speed and performance
of services Operator provides to its other customers
in the Market Area. Operator shall cooperate with
Licensee in developing reasonable technical means and
procedures to determine, at Operator's expense, when
the usage of Licensee and Licensee's Permitted End
Users taking service under Licensee's Education
Reservation (each, a "Five Percent User" and,
collectively, "Five Percent Users") exceeds
Licensee's Educational Reservation, provided that any
such procedures shall afford Licensee the opportunity
to purchase additional capacity in accordance with
the terms of this Agreement in lieu of accepting
restrictions on usage. Licensee shall have the right
to distribute activations associated with Licensee's
Educational Reservation throughout the System in a
geographically even or uneven fashion in Licensee's
discretion, provided that in the event that
activations of additional Five Percent Users in the
area served by particular Transmission Equipment are
not feasible due to the fact that the System has no
further capacity in that geographical area, Operator
shall not be obligated to permit such additional
activations unless and until it is commercially
reasonable to add capacity, as determined by Operator
in its reasonable business judgment, based upon
demand requirements, including those of Licensee.
"Throughput" shall mean all data delivered to or
received from the end user, measured in total bytes,
net of overhead (such as forward error correction and
framing). "Throughput Rate" shall mean the data rate
delivered to or received from the end user, measured
in bytes per second, net of overhead (such as forward
error correction
9
and framing). "ITFS Engineered Throughput Rate" shall
mean the maximum uplink and downlink Throughput Rate
achievable on any specific Transmission Equipment,
measured in bytes per second, as installed in the
Market Area. "Total ITFS Throughput Rate" shall mean
the total of the ITFS Engineered Throughput Rates of
all Transmission Equipment as installed in the Market
Area. An example of the calculation of Total ITFS
Throughput Rate and of Licensee's Educational
Reservation is set forth on Exhibit C, page 1.
(ii) The Parties understand and agree that the following
method of effectuating Licensee's Educational
Reservation set forth in this SUBPARAGRAPH 2(d)(ii)
and SUBPARAGRAPHS 2(D)(iii), (iv) AND (v) is an
acceptable interpretation of SUBPARAGRAPH 2(d)(i),
for so long as Operator employs technology in the
System to which the following method can be applied.
In connection with Licensee's Educational
Reservation, Licensee shall be entitled to activate
Five Percent Users at any End User Throughput Rate
then offered by Operator. "End User Throughput Rate"
shall mean the sum of the ordered uplink and downlink
Throughput Rates provided to an End User. For
example, an Operator offering an ordered Throughput
Rate of 128 kbps upload and 128 kbps download equals
an End User Throughput Rate of 256 kbps. Licensee
shall be permitted to activate Five Percent Users
with combined End User Throughput Rates no greater
than Licensee's Educational Reservation times the
Oversubscription Level ("Licensee's Throughput Rate
Entitlement"). "Oversubscription Level" means the
number utilized by Operator in its network activation
and planning activities in a Market Area that
represents the number of customer activations at an
End User Throughput Rate offered by Operator which
Operator will permit for each increment of Engineered
Throughput Rate. "Engineered Throughput Rate" shall
mean the maximum uplink and downlink Throughput Rate
achievable on any specific transmission or reception
equipment in the System (other than backhaul
equipment or CPE), measured in bytes per second, as
installed in the Market Area. The Operator may change
the Oversubscription Level from time to time in
Operator's sole discretion based upon the data
traffic generated by its customers. A sample
calculation of Licensee's Throughput Rate Entitlement
is shown in page 1 of Exhibit C. Licensee understands
and acknowledges that the actual Throughput speed of
a Permitted End User may be restricted from exceeding
the ordered End User Throughput Rate by Operator's
network technology and Customer Premises Equipment.
10
(iii) Licensee and Operator acknowledge that Operator's
permitted Oversubscription Level is based upon
Operator's estimation of the actual total Throughput
of its customers, and that actual total Throughput
delivered to or received from Licensee's Five Percent
Users in any calendar month ("Licensee's Throughput")
may be less than or greater than such estimate,
thereby allowing action with respect to Five Percent
Users as set forth in clauses (iv) and (v). If
Licensee desires to determine if such difference
exists in any calendar month, Licensee shall request
prior to the end of such calendar month (the "Target
Month"), and Operator shall provide Licensee by the
tenth (10th) day of the next calendar month, reports,
consistent with System capabilities, listing
Operator's permitted Oversubscription Level for the
Target Month, Operator's calculation of the use of
Licensee's Educational Reservation during the Target
Month and each Five Percent User's actual usage in
total bytes for the Target Month, separately stated
for Peak Hours and Non-peak Hours (a "Utilization
Report"). If Operator desires to determine if such
difference exists in any calendar month, Operator
shall prepare a Utilization Report for the Target
Month and shall provide it to Licensee by the tenth
(10th) day of the next calendar month. To determine
if a Utilization Report for a calendar month
indicates the right of Operator to require an
adjustment under SUBPARAGRAPH 2(d)(iv) or the right
of Licensee to require an adjustment under
SUBPARAGRAPH 2(d)(v), Operator shall make the
following calculations:
(1) The Operator shall calculate the amount of
the adjustment that would be required for
Peak Hours by:
(A) First, Operator shall determine, by
measurement, Licensee's Throughput
for the Target Month.
(B) Second, Operator shall multiply
Licensee's Educational Reservation
times the number of seconds during
Peak Hours during the Target Month
("Peak Benchmark").
(C) Third, Operator shall divide
Licensee's Throughput by the Peak
Benchmark, and the resulting
quotient shall be known as the
Adjustment Ratio.
(D) Fourth, Operator shall divide the
Licensee's Throughput Rate
Entitlement by the Adjustment
Ratio,
11
and the quotient shall be known as
the Adjusted Licensee's Throughput
Rate Entitlement.
(E) Fifth, Operator shall determine the
reduction or increase to the
Licensee's Throughput Rate
Entitlement by subtracting the
Licensee's Throughput Rate
Entitlement from the Adjusted
Licensee's Throughput Rate
Entitlement ("Peak Adjustment
Number"). If the result is a
negative number, there is an Excess
Usage Situation and if the result
is a positive number, there may be
an Underutilization Situation.
(2) For Non-peak Hours, Operator shall repeat
the above five steps (A) through (E), with
the following exceptions: (1) the term
Non-peak shall replace Peak; (2) in step (B)
multiply the number produced by the
calculation in (B) by three (3) so as to
triple the Benchmark applicable to Non-peak
Hours.
(3) "Peak Hours" shall mean periods generally
specified by Operator for the System in its
reasonable discretion based upon System
users' traffic patterns (whether contiguous
or in different periods of the day, that may
vary by day) of greatest usage of the System,
as specified by Operator in advance from time
to time, provided that only one specification
of Peak Hours may apply in any one (1)
calendar month. "Non-peak Hours" shall mean,
with respect to any calendar month, all hours
which are not Peak Hours.
(iv) If either the Non-peak Adjustment Number or the Peak
Adjustment Number is negative for the Target Month
(an "Excess Usage Situation"), Licensee at Operator's
request shall adjust Licensee's Total Ordered Data
Speeds downward by the lesser of such adjustment
number so as to result in Licensee's Total Ordered
Data Speeds for the second (2nd) calendar month
following such Target Month being equal to or less
than the Adjusted Licensee's Throughput Rate
Entitlement. "Licensee's Total Ordered Data Speeds"
shall mean the sum of the End User Throughput Rates
for all Five Percent Users. This downward adjustment
may be accomplished, at Licensee's option, by any
combination of (x) converting Licensee-selected Five
Percent Users to paying customers in accordance with
the terms of the Licensee Service Contract, (y)
reducing the ordered End User Throughput Rate of
Licensee-selected Five Percent Users to a lower End
User Throughput Rate then offered by Operator, or (z)
terminating the
12
subscriptions of Licensee-selected Five Percent
Users. License shall provide notice of its election
no later than fifteen (15) days after receipt of the
Utilization Report, which notice shall specify the
identity of the customers to be affected by its
election, and the disposition of their activations.
An example of an Excess Usage Situation and a sample
reduction are set forth on Exhibit C, Page 3.
(v) If both the Non-peak Adjustment Number and the Peak
Adjustment Number are positive for the Target Month
(an "Underutilization Situation"), Licensee may, in
Licensee's discretion, instruct Operator to adjust
Licensee's Total Ordered Data Speeds upward by the
lower of such adjustment numbers to produce
Licensee's Total Ordered Data Speeds for the second
(2nd) calendar month following such Target Month.
This permitted upward adjustment may be accomplished,
at Licensee's option, by any combination of (x)
adding Five Percent User activations or (y)
increasing the ordered End User Throughput Rates of
Licensee-selected Five Percent Users.
E) Licensee's Wholesale Agreement, Reference Contract and
Licensee Service Contract
(i) Wholesale Agreement. Between ninety (90) and sixty
(60) days prior to the initiation of service to the
public in the Market Area with the ITFS Channels,
Operator shall provide Licensee with a complete and,
except for non-price and non-service information as
would identify the customer or any proprietary
technology of the customer, unredacted copy of each
presently effective, non-duplicative Wholesale
Agreement whereby Operator or any of its Affiliates
offers any radio-based transmission service or
service including radio-based transmission, either
with or without other services and equipment, to
third parties in the Market Area. As used herein,
"Wholesale Agreement" means an agreement for the sale
to third parties who are not Affiliates of Operator,
on an arms length basis, of a package of wireless
communications services to a third party reseller who
packages such services and offers them on a retail
basis without creating the services. In the event
that there are no such Wholesale Agreements for the
Market Area, Operator shall provide Licensee with
Wholesale Agreements for a reasonable number of
comparable market areas, if any, and such contracts
shall be considered the Wholesale Agreement for the
Market Area, provided Operator shall not be obligated
to provide or offer contracts which Operator
reasonably determines are not commercially reasonable
or technically feasible in the Market Area. In the
event that Licensee
13
notifies Operator that Licensee may desire terms or
conditions other than those which appear in such
Wholesale Agreements, Licensee shall inform Operator
and specify the general nature of the terms and
conditions desired, and Operator shall provide
Licensee with copies of Wholesale Agreements for
areas other than the Market Area that provide
Licensee with Licensee's desired terms and
conditions, if any, provided Operator shall not be
obligated to provide or offer contracts that Operator
in its good faith judgment determines are not
commercially reasonable or technically feasible in
the Market Area. In the event that there are no
Wholesale Agreements, the Parties shall in good faith
negotiate the terms of a Wholesale Agreement for
services that contain the discounts for Licensee's
Intermediate Capacity and Excess Capacity as defined
below, and including terms and conditions that take
into consideration all other provisions contained
herein that govern Licensee's provision of services
in the Market Area. "Affiliate" means an entity that
controls, is controlled by or is under common control
with the subject entity or entities.
(ii) Reference Contract. Licensee shall be entitled to
select any Wholesale Agreement to serve as the basis
for its contract with Operator for any activation of
Licensee's Educational Reservation, Licensee's
Intermediate Capacity and Excess Capacity (a
"Reference Contract"), and Operator and Licensee
shall be obligated to accept all terms, conditions,
rights and obligations associated with such contract,
including, without limitation, terms related to
price, term, volume commitment, and service levels,
except (w) that the terms for the provision of
Customer Premises Equipment shall be in accordance
with PARAGRAPH 6 hereof; (x) that the price paid by
Licensee for services associated with Licensee's
Educational Reservation shall be zero, the price paid
for Licensee's Intermediate Capacity shall be
governed by SUBPARAGRAPH 2(f)(i), and the price paid
for Excess Capacity shall be governed by SUBPARAGRAPH
2(f)(ii); (y) the provisions of Subparagraph 2(h)
shall govern Enhanced Features, Network Management
Services, Internet Transit for Five Percent Users and
Collocation, and (z) to the extent that any provision
of this Agreement contradicts any provision or
requirement of such Reference Contract, the
applicable provision of this Agreement shall control
and shall be incorporated into such Reference
Contract to the extent required to eliminate such
contradiction.
(iii) Licensee Service Contract. Upon selection of a
Reference Contract pursuant to SUBPARAGRAPH 2(e)(ii),
Licensee shall notify Operator
14
and immediately thereafter, Licensee and Operator
shall cooperate in good faith to diligently and
expeditiously execute and deliver an agreement on the
terms and conditions of the Reference Contract as
modified by SUBPARAGRAPH 2(e)(ii) (each, a "Licensee
Service Contract"). Pending the execution and
delivery of a Licensee Service Contract, Operator
shall provide service to Licensee under the terms of
the Reference Contract subject to the provisions of
SUBPARAGRAPH (2)(e)(ii). Upon the expiration of one
year following the date of execution of the first
Licensee Service Contract, or upon the expiration or
termination of any subsequent Licensee Service
Contract in accordance with its terms, Licensee shall
be entitled to select a replacement contract in
accordance with the provisions of SUBPARAGRAPH
2(e)(i) AND (ii). Accordingly, in the event that
Licensee notifies Operator of Licensee's desire to
execute a new agreement to replace the first Licensee
Service Contract, Operator shall repeat the Customer
Contract delivery, review, and Reference Contract
selection process described in Subparagraphs 2(e)(i)
and (ii) provided (x) Operator shall not be obligated
to provide contracts from other Market Areas if
Operator is able to deliver at least six (6) sample
contracts to Licensee from the Market Area subject to
this Agreement, (y) the delivered sample contracts
shall be those in effect at the time of Licensee's
notice and (z) the time for completion of the Initial
Delivery shall be thirty (30) days after Licensee's
notice. In this event, the existing agreement between
Operator and Licensee shall remain in effect until
superceded by a new agreement.
F) LICENSEE'S ADDITIONAL CAPACITY RIGHTS.
(i) Licensee's Right to Purchase Intermediate Capacity.
In addition to Licensee's Educational Reservation,
Licensee may during the Operational Period purchase
additional transmission capacity on the System from
Operator in an amount up to double the amount of
Licensee's Educational Reservation ("Licensee's
Intermediate Capacity"). The terms of the Licensee
Service Contract then in effect shall govern the
provision and use of Licensee's Intermediate Capacity
except that the price paid by Licensee for each
activation of Licensee's Intermediate Capacity shall
be set at (1)(A) if Operator sells transmission
capacity to wholesale customers in the Market Area,
eighty-five percent (85%) of the "Wholesale Price"
which shall be the lowest wholesale price generally
made available by Operator to its wholesale customers
(who are not Affiliates of Operator) for the Market
Area, or (B) if Operator does not sell
15
transmission capacity on a wholesale basis in the
Market Area, seventy percent (70%) of the "Retail
Price" which shall be the lowest retail price
generally made available by Operator to its retail
customers in the Market Area, excluding promotional
pricing that is offered for a period of less than
four (4) months, plus (2) only those taxes Operator
is required by law to collect from Licensee, such as
sales taxes. The Wholesale Price shall include the
value of all cash and non-cash consideration received
by Operator and its Affiliates, including all
tangible and intangible benefits accruing to Operator
and its Affiliates as a result of the business
relationship between Operator and the wholesale
customer, as reasonably determined by Operator in
good faith. For example, non-cash consideration that
would be considered in determining the Wholesale
Price would include, but not be limited to, the value
of equity issued to or received from the wholesale
customer, the value of a customer base made available
to Operator and the value of spectrum made available
to Operator.
(ii) Licensee's Right to Purchase Excess Capacity. During
the Operational Period, Licensee may purchase
additional transmission capacity on the System in an
amount equal to the Intermediate Capacity ("Excess
Capacity"). The terms of the Licensee Service
Contract then in effect shall govern the provision
and use of such Excess Capacity; provided, however,
that (x) the price paid by Licensee for each
activation of the Excess Capacity shall be set at
(1)(A) if Operator sells transmission capacity to
wholesale customers in the Market Area, the Wholesale
Price, or (B) if Operator does not sell transmission
capacity on a wholesale basis in the Market Area,
eighty percent (80%) of the Retail Price, plus (2)
only those taxes Operator is required by law to
collect from Licensee, such as sales taxes); and (y)
Operator may defer its provision of Excess Capacity
to Licensee by providing notice to Licensee to the
extent that Operator's then-existing use of
Operator's Capacity (determined by the
Oversubscription Level) would be curtailed by meeting
Licensee's request for Excess Capacity. Such notice
(a "Deferral Notice"), to be effective, shall state
with specificity reasons for the deferral, shall
state its maximum duration (which may not be in
excess of three hundred and sixty-five (365) days),
shall state the projected delivery date of portions
of the Excess Capacity, if any, during the deferral
period (including the size of the portions), and
shall be delivered to Licensee within fifteen (15)
days after Licensee's delivery of its request for
Excess Capacity to Operator. If Licensee, following
receipt of the Deferral
16
Notice, still wishes to purchase the Excess Capacity
after reviewing such schedule, Licensee shall agree
to accept and pay for such Excess Capacity upon
delivery, except that Licensee may specify the dates
for the provision of service, which dates shall be no
later than thirty (30) days after the delivery
date(s) set forth in such Deferral Notice. Delivery
dates specified in accordance with this SUBPARAGRAPH
shall form a part of the Licensee Service Contract
then in effect between Licensee and Operator for such
Excess Capacity order.
(iii) Operator shall inform Licensee promptly after
Operator becomes aware that Licensee has used all of
Licensee's Intermediate Capacity or Excess Capacity.
G) PROVISION OF BASIC SERVICES.
(i) Operator agrees to provide free of charge to each
Five Percent User, for each category of service used
by such Five Percent User, all services, capabilities
and functionalities, and any access to facilities
that Operator and/or its Affiliates ("Operator's
Group") provides at no separately stated additional
charge to customers who subscribe to Operator's basic
package of services for such category generally
available at the time to customers in the Market
Area, as such basic package(s) of services shall be
modified by Operator from time to time (each, a
"Basic Feature"). "Affiliate" means an entity that
controls, is controlled by or is under common control
with the subject entity or entities.
(ii) Licensee shall have the right to make reasonable
requests for information from Operator in order to
verify the contents and basis of Operator's selection
of any basic package of services offered to Licensee
pursuant to SUBPARAGRAPH 2(g)(i) and Operator shall
provide such information promptly. In the event that
Licensee believes that any such package offered by
Operator to Licensee pursuant to SUBPARAGRAPH 2(g)(i)
is not a bona fide basic services offering, Licensee
shall provide written notice to Operator. The Parties
shall thereafter consult in good faith for no more
than thirty (30) days in order to address Licensee's
claim, during which time Operator shall give Licensee
access to information in the possession of Operator
or any of its Affiliates in the Market Area that is
relevant to the issue. If the Parties are unable to
reach agreement following such consultation, Licensee
and a representative of Operator's management shall
present their respective positions in writing to the
other Party within thirty (30) additional days.
Following the
17
submission of written positions, the parties shall
consult in good faith for a period of fifteen (15)
additional days to resolve these issues.
(iii) If Licensee and Operator have not reached a mutually
acceptable agreement with respect to an appropriate
basic service package following completion of the
dispute resolution procedures set forth in
SUBPARAGRAPH 2(g)(ii), the issue shall be submitted
for resolution pursuant to the Baseball Arbitration
procedures provided for in PARAGRAPH 14 hereof, as
modified by this SUBPARAGRAPH 2(g)(iii). Each Party
shall submit a service package then offered by
Operator for consideration by the Arbitrator. The
Arbitrator in any such proceeding shall select the
basic service package in the Market Area the
Arbitrator determines to be the bona fide Basic
Feature offering of Operator for the applicable
category of service, in light of the following
criteria (the "Basic Service Criteria"): (1) whether
the offering is commonly available and utilized by
subscribers to carriers of comparable size in
comparable markets; (y) whether it is consistent with
the basic service offerings of competitive carriers
of comparable size in terms of price and included
services, capabilities, functionalities, and access
to facilities. Licensee shall not be entitled to once
again invoke the dispute resolution procedures set
forth in this SUBPARAGRAPH 2(g) until one (1) year
after the conclusion of any arbitration proceeding
under this SUBPARAGRAPH 2(g).
H) ADDITIONAL OPERATOR-PROVIDED SERVICES AND FACILITIES.
(i) In addition to Basic Features, Operator agrees to
provide to Five Percent Users all services,
capabilities and functionalities, and any access to
facilities that any member of Operator's Group makes
generally available at the time to customers in the
Market Area for which Operator imposes a separate
charge (each such service, capability and
functionality and access to facilities, other than
Network Management Services, Internet Transit and
Collocation, is referred to as an "Enhanced
Feature"), and only for so long as Operator makes
such Enhanced Feature generally available, at a price
equal to (x) for the period of one year after an
Enhanced Feature is made generally available to
customers in the Market Area, ninety percent (90%) of
the average price (plus only taxes Operator is
required by law to collect from Permitted End Users,
such as sales taxes) then charged to customers taking
such Enhanced Feature in the Market Area for
comparable orders of capacity, excluding introductory
offers of temporary duration; and (y) at any time
after
18
the expiration of the period of one year after an
Enhanced Feature is made generally available to
customers in the Market Area, eighty-five percent
(85%) of the average price (plus only taxes Operator
is required by law to collect from Permitted End
Users, such as sales taxes) then charged to customers
taking such Enhanced Feature in the Market Area for
comparable orders of capacity, excluding introductory
offers of temporary duration. If Operator intends to
cease offering an Enhanced Feature, Operator shall
give Licensee at least such notice of discontinuance
of such Enhanced Feature as it provides generally to
its customers who receive the particular Enhanced
Service. In the event that a dispute is pending under
SUBPARAGRAPH 2(g)(ii) OR (iii) as to whether any
service, capability, functionality or access to
facilities is a Basic Feature, Licensee may
nonetheless take such disputed feature during the
pendency of such dispute in accordance with the
ordering and payment provisions of this SUBPARAGRAPH
2(h)(i) and, if the dispute is ultimately resolved in
Licensee's favor, Operator shall refund the payments
made for such feature.
(ii) Operator shall periodically advise Licensee of new
features and functionalities of the System so as to
allow Licensee to better and more efficiently employ
Licensee's Educational Reservation in its educational
mission and in service of the needs and desires of
Licensee's students and other Permitted End Users.
(iii) Operator shall make available to Licensee free of
charge all generally available comparable wireless
carrier back-office functionality, including
trouble-reporting, fault isolation, network
management and other similar services, functions and
reporting performed by Operator's network operations
center ("Network Management Services") that Operator
provides at no separately stated charge to any
wholesale customers of Operator in the Market Area
or, if there is a charge for such services to such
wholesale customers, Operator shall provide each such
service for which there is a charge at Operator's
generally applicable charge. In the event that
Operator has no wholesale customers in the Market
Area, Operator shall make available to Licensee free
of charge the Network Management Services that
Operator customarily provides at no separately stated
charge to wholesale customers of Operator in other
comparable Market Areas where Operator has wholesale
customers. If Operator has no wholesale customers in
any of its Market Areas, then Operator shall provide
Licensee with such Network Management Services as are
commonly and customarily
19
provided by comparable wireless carriers to their
wholesale customers at no additional charge.
(iv) Operator shall provide to Licensee, at Operator's
expense, Internet Transit ("Internet Transit") for
all Internet-bound traffic generated by Five Percent
Users at data speeds for each such customer that are
not less than those provided to Operator's other
customers who receive a service comparable in data
speed to that of the Five Percent User.
(v) Operator shall offer Collocation to Licensee in
accordance with all applicable terms and conditions
directly related to Operator's offering, if any, of
Collocation to any other customer of Operator in the
Market Area, as selected by Licensee (the
"Collocation Reference Contract"), at such
Collocation points, if any, that Operator makes
available to any such customer, provided Operator
shall not be obligated to provide Collocation in any
circumstance where such Collocation is not practical
for technical reasons or because of space
limitations. "Collocation" means an arrangement
whereby Licensee's facilities are terminated in
Operator equipment (x) necessary to interconnect with
Operator's network or facilities and (y) that is
installed and maintained at the premises of Operator,
and shall include rack space to the extent provided
by Operator. Collocation shall consist of physical
collocation only, in which Licensee is responsible
for installing and maintaining its own equipment in
Operator's premises. If more than one Collocation
arrangement is made available to Operator's customers
in a Market Area, Licensee may select one such
offering, subject to all applicable terms and
conditions directly related to such offering.
Licensee shall be responsible for all government
approvals associated with any collocation offering,
including, but not limited to, local zoning and/or
building permits required for such Collocation, and
Operator shall use reasonable efforts to assist
Licensee in Licensee's efforts to obtain such
governmental approvals. At Licensee's request,
Operator shall also use reasonable efforts to obtain
roof access rights for Licensee to install and
maintain a satellite dish at a Collocation site,
provided the acquisition of such roof rights shall
not interfere with the roof access needs of Operator.
Licensee and Operator shall execute an agreement
governing the Collocation arrangement on the material
terms of the portions of the Collocation Reference
Contract that relate to Collocation. In the event
that Operator does not provide Collocation, Operator
shall, upon written request by Licensee,
20
provide to Licensee a service proposal setting forth
the price, term, location, service levels and other
terms and conditions under which Operator will
provide Collocation, which such price, term,
location, service levels, time to make Collocation
available, access of Licensee to Operator's premises,
and other terms and conditions shall be reasonable in
all respects. Operator shall be entitled to quote a
price in any such service proposal which provides
operating profit margins and recovery of related
capital expenditures comparable to those received by
Operator on its other services in the Market Area. If
utilization of Collocation by Licensee requires
interconnection of Licensee equipment or facilities
with equipment or facilities of Operator, any such
collocation arrangement shall also be subject to the
requirements of SUBPARAGRAPH 2(k)(ii). Operator shall
provide such a service proposal within thirty (30)
days of receipt of Licensee's request and shall
negotiate in good faith with Licensee to the end of
reaching agreement for such Collocation on mutually
agreeable terms in a reasonably expeditious time
frame.
I) SYSTEM-WIDE SCOPE OF LICENSEE'S EDUCATIONAL RESERVATION AND
LICENSEE'S INTERMEDIATE CAPACITY. Subject to the overall
limitations provided for herein, Licensee's Educational
Reservation, Licensee's Intermediate Capacity and Excess
Capacity shall be available, as provided herein, throughout
the ITFS Channels, including any Transmission Equipment or
unlicensed spectrum, MDS channel and ITFS channel transmitters
and receivers (other than those used exclusively as Customer
Premises Equipment at the premises of Operator's other
customers), and shall include adequate backhaul and access to
radio-carried response (return path) capacity, to the extent
that radio-carried response (return path) capability is then
made available by Operator, as desired by Licensee to use
Licensee's Educational Reservation, Licensee's Intermediate
Capacity and Excess Capacity.
J) SPECTRUM USE. Subject to the receipt of any necessary
authorization of the FCC and FCC Rules, Operator's Capacity
may be transmitted in such transmission formats or protocols
as Operator may select from time to time. To the extent it is
technically feasible, and Licensee elects not to use the
transmission formats or protocols then used by Operator for
Operator's Capacity, transmissions by Licensee and its
Permitted End Users in the System shall be in a format or
protocol and shall be limited to signals having formats,
waveform transmission characteristics and emissions as will
not interfere with systems then used or future systems when
used by Operator in the System elements or sub-elements
carrying such traffic.
21
K) INTERCONNECTION AND INTERNET ACCESS.
(i) Operator acknowledges that Licensee may require
access, not otherwise provided pursuant to this
Agreement, to Internet points of presence (including,
for example, Internet Network Access Points) for the
transmission of Internet traffic. Operator shall,
upon written request by Licensee specifying the
nature of the connection desired, the location of the
desired connection and Licensee's proposed monetary
commitment, provide to Licensee a service proposal
setting forth the price, term, location, service
levels and other terms and conditions under which
Operator will provide such connection, which such
price, term, location, service levels, time to make
such connection available, access of Licensee to
Operator's premises, peering arrangements, if
available, and other terms and conditions shall be
reasonable in all respects and, with respect to
pricing, may be priced to provide operating profit
margins and recovery of related capital expenditures
comparable to those earned by Operator on its
services in the Market Area generally.
(ii) With respect to any Internet connections provided to
Licensee pursuant to SUBPARAGRAPH 2(k)(i), or in the
event that Licensee requires the connection of any
equipment or facilities supplied by Licensee to the
facilities or equipment of Operator in order to
provide the services contemplated by this Agreement
to its Permitted End Users, and no other provision of
this Agreement or the applicable Licensee Service
Contract provides for the same, Operator and Licensee
shall cooperate in good faith to provide for such
interconnection through then available industry
standard interfaces at such points of interconnection
as Operator determines in its good faith judgment to
be commercially reasonable. Operator's obligation to
provide any such interconnection is expressly
conditioned upon (i) the Parties' reaching prior
written agreement on routing, appropriate sizing and
forecasting, equipment, ordering, provisioning,
maintenance, repair, testing, augmentation, peering
arrangements, if available, reasonable compensation
procedures and arrangements for establishing and
maintaining any interconnection arrangements,
reasonable distance limitations, and on any other
arrangements necessary to implement such
interconnection and (ii) such other appropriate
protections as reasonably deemed necessary by either
Party. Any such arrangement shall be priced to
provide gross margins comparable to Operator's gross
margins on its services in the Market Area generally.
In the event the Parties agree to any such
interconnection
22
arrangement, Licensee agrees to bear all expenses
associated with the purchase of facilities,
equipment, materials, circuits or services necessary
to facilitate and maintain any such interconnection
arrangement on Licensee's side of the interconnection
point.
L) USE OF LICENSEE'S EDUCATIONAL RESERVATION AND LICENSEE'S
ADDITIONAL CAPACITY. The Parties recognize that Licensee may
sell or otherwise provide directly to nonprofit accredited and
unaccredited educational institutions and other similar
nonprofit institutions and their members (including Licensee
and its Affiliates, "Permitted End Users") services utilizing
the System. Licensee agrees that it shall utilize any capacity
provided for under this Agreement for the provision or sale of
service directly to Permitted End Users (such uses
constituting "Permitted Uses"). Licensee acknowledges and
agrees that sale to resellers of communications services is
not a Permitted Use, and that Licensee shall provide Permitted
End Users only under contract that prohibits Permitted End
Users from reselling service or otherwise providing capacity
to any third party; provided, however, nothing contained
herein shall prohibit the sale of communication services by a
Permitted End User directly to any individual to whom such
Permitted End User provides educational services utilizing
such communications services on a not for profit basis in the
ordinary course of its business, to its employees or to
students enrolled in the educational offerings of such
Permitted End User.
M) IMPLEMENTATION OF CHANGES TO OPERATOR'S DIGITAL SYSTEM.
Operator shall provide notice equal to the notice provided to
its other customers in the Market Area of any changes in the
System (each, a "System Change") that could impair the
performance or functionality of Licensee or Permitted End
Users' equipment using the System. All Operator replacements
and upgrades shall be scheduled and completed so as to cause
no more disruption to Licensee or its Permitted End Users than
the System Change causes to Operator and its other customers.
Further, Operator shall consult with Licensee reasonably in
advance of the implementation of any System Change so that
Licensee may assess the potential effects of proposed System
Change on Licensee and its Permitted End Users, and Operator
shall cooperate with Licensee to minimize the disruption
caused by System Changes to Licensee and Licensee's Permitted
End Users. Operator, at its expense, shall take such steps and
make such equipment, software and services and infrastructure
changes to Standard Customer Packages at the Primary Response
Station Sites and Additional Standard Customer Packages as
necessary or appropriate in the event of a System Change in
equipment or software affecting such a station, including
replacing the equipment and/or software of such station; and
as necessary, reorienting or
23
modifying the transceiver antennas at such response station
(return path) sites if any such site experiences or would
experience a material degradation in signal reception quality
or transmission capability as a result of any relocation of or
other changes to any associated Transmission Equipment, or
change in the backhaul or communications systems used for
interconnecting the System to facilities not a part of the
System.
N) AVAILABILITY OF SERVICE. Provision of service by Operator to
Licensee and Permitted End Users at any location is subject to
System capabilities and the ability to establish an adequate
radio link given topography, terrain, location and other
factors to the Permitted End User. Operator shall provide
Licensee free of charge with access to Operator's
pre-qualification system, if any, applied generally by
Operator in the Market Area to confirm service availability.
Operator shall confirm service availability to a Permitted End
User with such system prior to installation.
O) OPERATOR CONFIRMATION OF COMPLIANCE. Upon written request by
Licensee no more than twice annually, Operator shall confirm
in writing that any service, facility or feature required to
be provided to Licensee in accordance with prices, terms or
conditions provided to other customers of Operator are being
provided in accordance with such prices, terms or conditions.
P) ACTIVATIONS AND DEACTIVATIONS OF LICENSEE'S SERVICES. Operator
shall activate and deactivate, as requested by Licensee,
Licensee's services on the System to Licensee and Permitted
End Users consistent with the time frames Operator activates
and deactivates similar services to its customers.
Q) DETERMINATIONS WHEN CAPACITY SUBLEASED. Operator and Licensee
acknowledge that portions of this Agreement describe
Licensee's access to capacity, services and equipment by
reference to access to the same Operator provides to its other
customers, but that Operator may have subleased Operator's
Capacity and therefor may not serve end-users directly. In
those instances in which Operator does not serve end-users
(not considering service by a reseller to itself), Operator's
customers shall be deemed to be the end-users of the ITFS
Channels' capacity and Operator shall obtain such information
from the reseller or sublessee having the direct relationship
with the end-user as is required to determine Licensee's
access to such capacity, services and equipment.
R) PREEMPTION BY GOVERNMENTAL AUTHORITY. In the event that the
FCC, or any other governmental entity having authority or
apparent authority to so order, orders the cessation or
curtailment of operations of any one or more of the ITFS
Channels because of the existence of exigent or unusual
24
circumstances, or as a part of the FCC's or any other
governmental agency's efforts to control, isolate, detect or
eliminate interference or real or potential harm from any of
the Transmission Equipment or related equipment or operations,
Operator shall comply with such order within the time frame
specified in such order.
3. TRANSMISSION SITES AND FACILITIES.
A) SYSTEM PARAMETERS. During the Operational Period, Operator
shall purchase and maintain, at Operator's expense, all
equipment necessary to operate the System in accordance with
the terms of this Agreement and the Licenses.
(i) The current primary transmission site(s) of
Licensee's ITFS Channels are identified in Exhibit A
(as such sites may be changed from time to time, the
"Primary Transmission Sites"). During the Operational
Period, Operator shall purchase at Operator's expense
and lease to Licensee all equipment located at
Primary Transmission Sites which regularly operates
on the ITFS Channels (the "Primary Transmission
Equipment"). Subject to PARAGRAPH 26, Operator shall
maintain and operate the Primary Transmission
Equipment during the Term of this Agreement solely at
its expense.
(ii) During the Operational Period, if any of the ITFS
Channels regularly is transmitted at Operator's
request by an FCC-licensed booster station (a
"Licensed Booster Station"), Operator shall purchase
and maintain, at Operator's expense, and lease to
Licensee the equipment associated with such Licensed
Booster Station to transmit each ITFS Channel in the
System then-authorized to Licensee (the "High Power
Booster Station Equipment"). When, during the
Operational Period, any of the ITFS Channels is
regularly transmitted at Operator's request by a
Licensed Booster Station that does not require an FCC
license ("Unlicensed Booster Station"), Operator
shall lease to Licensee the equipment associated with
such Unlicensed Booster Station to transmit the ITFS
Channel ("Low Power Booster Station Equipment").
(iii) During the Operational Period, Operator shall supply
Licensee with the right, at Operator's expense, to
use the signal processing equipment and associated
software, if any, that processes the signal(s)
transmitted over transmission capacity then allocated
or provided to Licensee under PARAGRAPH 2.
25
(iv) During the Operational Period, Operator shall supply
Licensee with a right to use, at no expense to
Licensee, all reception equipment at each Unlicensed
Booster Station regularly transmitting and/or
receiving an ITFS Channel.
(v) During the Operational Period, Operator shall
purchase and maintain, at Operator's expense, and
lease to Licensee, all hub receive site receiving
equipment ("Hub Receive Equipment") tuned or
regularly used to receive any ITFS Channel at any hub
receive site ("Hub Receive Site").
(vi) During the Operational Period, Operator shall
purchase, maintain and replace for Licensee, at
Operator's expense, and shall supply Licensee with
the right to use, the shared radio frequency
equipment at each Primary Transmission Site (the
"Common Equipment"), at each Licensed Booster Station
site and at each Hub Receive Site, including antenna
and wave guide, if any. During the Operational
Period, Operator shall supply Licensee with a right
to use, at no expense to Licensee, the equivalent
equipment at each Unlicensed Booster Station site
transmitting and Hub Receive Site regularly receiving
an ITFS Channel to the extent necessary to transmit
or receive such ITFS Channel during the Operational
Period.
(vii) Any and all leases provided for in this SUBPARAGRAPH
2(a) shall be subordinate to any lien, security
interest or other rights of any secured lender or
other secured party providing financing to Operator
or to any Affiliate of Operator.
(viii) All equipment and software leased or otherwise
provided to Licensee pursuant to SUBPARAGRAPHS
2(a)(i)-(vii) shall be leased or otherwise provided
for the sum of One Dollar ($1.00) per year. To the
extent that any such equipment also operates on
frequencies licensed to another FCC licensee, the
lease provided herein shall be subject to the grant
of a similar lease or use right to any such licensee.
(ix) All equipment provided for in this SUBPARAGRAPH 2(a)
shall be installed, maintained and operated by
Operator in compliance with FCC Rules.
(x) For purposes of this Agreement, any and all Primary
Transmission Equipment, High Power Booster Station
Equipment, if any, Low Power Booster Station
Equipment, if any, Hub Receive Equipment, if any,
Common Equipment, any related software, and any other
26
transmission and/or reception equipment operating on
the ITFS Channels in the Market Area, as such
equipment may be modified, replaced, or upgraded by
Operator from time to time, but not including
response stations (return path) or other transmission
and/or reception equipment located and operated at
the premises of Licensee, a Permitted End User, or a
customer of Operator (each, an "End User") for the
transmission or reception of communications by any
such End User and not for relay purposes, shall be
referred to as "Transmission Equipment." Response
stations (return path) or other transmission and/or
reception equipment located and operated at the
premises of an End User, for the transmission or
reception of communications by any such End User and
not for relay purposes shall be referred to as
"Customer Premises Equipment". Consistent with
SUBPARAGRAPH 2(b)(ii), the parties understand and
agree that references in this Agreement to System
elements and components (for example, Hub Receive
Sites) shall not be construed to create an obligation
on the part of Operator to utilize a particular
network architecture, or to utilize any particular
network equipment or components other than those
selected by Operator in its business judgment from
time to time, consistent with this Agreement
(including SUBPARAGRAPH 2(b) AND 3(c)) and FCC Rules.
B) STATION MODIFICATIONS.
(i) From time to time, but subject to Licensee's consent
(which consent will not be unreasonably delayed or
withheld), Operator may determine that it desires
Licensee to seek FCC approvals required to modify the
use of the ITFS Channel(s) or that additional FCC
authorizations are necessary or convenient for the
use of the ITFS Channel(s). Examples of such
modifications and/or authorizations include, but are
not limited to, changing the authorized digital
emission(s) of the ITFS Channel(s), changing their
transmission power, or reconfiguring, adding or
relocating Transmission Equipment. In such event,
Operator shall inform and consult with Licensee
regarding any such proposed modification or
authorization, and provide Licensee with such
engineering studies and technical information as
Licensee may reasonably request to determine whether
Licensee shall consent to the modification. Licensee
shall not unreasonably withhold its consent to any
such modification or new authorization. Licensee
agrees to utilize reasonable best efforts to review
and process information and materials provided by
Operator in connection with any application and to
respond to Operator in a commercially reasonable and
timely manner. If such
27
consent shall be given in writing and following
Licensee's receipt from Operator of such FCC
applications for authorization of such modification
or grant of such additional authorization in form and
substance reasonably acceptable to Licensee, Licensee
shall complete such applications and shall file such
applications at the FCC no later than the later of
ten (10) days after Licensee's receipt of such
applications and the first date that the FCC accepts
that type of application. Following such filing,
Licensee shall use its reasonable best efforts to
cause the grant of any such application by the FCC,
and shall file such supplements, amendments,
documents or reports as may reasonably be requested
for grant of such application or authorization.
Operator shall, pursuant to PARAGRAPH 5, reimburse
Licensee's Expenses for the preparation, analysis,
review, filing and prosecution of each application or
filing made by Licensee, including appeals of
partially or fully adverse actions, undertaken to
seek authorizations and licenses to implement such
Operator proposals.
(ii) Operator, at its expense, shall construct the
facilities used to operate or receive the ITFS
Channels before the end of the construction period
stated in the modification or additional
authorization (as such may thereafter be extended).
Operator and Licensee shall cooperate so as to
complete construction in accordance with Operator's
reasonable schedule and plans. In the event that
unforeseen business circumstances make it unduly
burdensome or impractical for Operator to complete
construction of two-way facilities following initial
authorization within the FCC-specified construction
period, Licensee agrees to cooperate in the filing
and prosecution of such extension requests as
Operator may reasonably request to extend the
construction period for a reasonable period beyond
the circumstances, provided Licensee shall not be
obliged to seek any such extension to the extent that
Licensee reasonably believes that the FCC will not
grant the proposed extension.
(iii) The Parties agree that it is in their mutual best
interest, and that of each of their customers, to
prevent and limit interference to operations the
operators on the ITFS Channels. The Parties further
recognize that the grant and receipt of interference
consents may be necessary to construct and operate
the System efficiently and to comply with FCC Rules
requiring cooperative resolution of interference
issues. Subject to such Licensee control as is
required by the FCC, Licensee and Operator agree to
cooperate in good faith to consider the terms under
which Licensee may provide interference
28
consents in any particular situation in order to
maximize Operator's ability to efficiently engineer
its Transmission Equipment during the Operational
Period while protecting Licensee's independent
interests in preserving the viability of operations
on the ITFS Channels and the protection of the
reception of the ITFS Channels from interference. To
promote this process, Licensee and Operator shall use
reasonable best efforts to promptly make available to
each other all information in their possession
reasonably necessary or appropriate to inform the
Parties' consideration of proposed interference
consents. Operator shall perform necessary work on
behalf of Licensee, at Operator's expense, required
to implement such agreements or consents. Licensee
shall not use a demand for monetary compensation,
other than the reimbursement of Licensee's expenses
of negotiation and compliance, as a reason not to
enter into any interference consent agreement.
Without limiting the foregoing, Licensee and Operator
shall use their respective reasonable best efforts to
maximize protection of the ITFS Channels from
interference and the foreclosure of service to the
Market Area, including, without limitation, by making
FCC filings in opposition to third party
applications, consistent with FCC Rules and the
Parties' contractual and legal obligations.
C) EFFORTS TO SECURE SPECIAL TEMPORARY AUTHORIZATIONS. Promptly
after Operator's request, Licensee shall apply to the FCC for
special temporary authorization or developmental authorization
("STA") to operate the ITFS Channels in such configuration or
configurations as Licensee may reasonably accept for such
temporary period. Such STA application shall be in form and
substance reasonably acceptable to Licensee and Operator.
Operator is authorized to operate the ITFS Channels in
accordance with the STA and this Agreement. Licensee shall use
commercially reasonable efforts to keep such STA in full force
and effect to the extent the FCC shall allow by taking such
actions as are required to do so, including applying to the
FCC to renew and extend such STA, until such time as the FCC
shall have granted Licensee regular authorization to operate
the ITFS Channels. Operator shall, pursuant to PARAGRAPH 5,
reimburse Licensee's Expenses for the preparation, filing and
prosecution of each such application or filing.
D) SITE LEASES. Operator shall negotiate all site leases for
locations where Transmission Equipment is operated and
Operator shall be the lessee thereunder. Operator shall pay
the full cost of such leases (including all rental,
reimbursements and pass-throughs). Operator agrees to
cooperate with Licensee and to use reasonable best efforts to
assist Licensee, when requested by Licensee, upon the
expiration of any master site lease or other
29
site leases covering such sites, in obtaining the rights to
utilize or lease any site utilized by Operator, following the
expiration or termination of this Agreement, provided Licensee
shall pay any increase in rent resulting from the grant of any
such rights. Operator shall not be required to accept adverse
conditions in order to obtain any such rights for Licensee
and, except to the extent Licensee's occupation of a site is
pursuant to PARAGRAPH 9, Licensee shall bear the site rent for
the period of its occupancy of a site after the expiration or
termination of this Agreement. To the extent that Operator has
the right to grant any such rights to Licensee under an
existing lease, Operator shall do so.
E) STATION IDENTIFICATION. During the Term, Operator shall cause
the Transmission Equipment to transmit any identification
information to the extent required by the FCC, and in such
form or forms as the FCC may then require. If the FCC shall
require any response station (return path) provided by
Operator to transmit any identification information, Operator
at its expense shall take such steps as required to comply
with such FCC requirement.
F) INSTALLATION OF RESPONSE STATIONS AND TRANSMISSION EQUIPMENT.
Operator shall construct and install all Transmission
Equipment and response station (return path) equipment in
accordance with FCC Rules, including such procedures
then-required by the FCC (such as professional installation
and advanced notice to licensees of ITFS receivers near the
proposed response station site), and the orders of the
Occupational Safety and Health Administration (including any
previous or future successor to its powers and functions,
"OSHA") and OSHA regulations.
4. FEES.
A) ROYALTY FEES GENERALLY. Commencing on the date of this
Agreement, Operator shall pay to Licensee monthly royalty fees
equal to $0.09 per CPOP, calculated on a net present value
basis, as a thirty (30) year annuity discounted at ten percent
(10%) and growing at a three percent (3%) annual growth rate
split into twelve (12) payments per year as reflected on
Schedule 4(a).
B) FAIR MARKET VALUE ROYALTY FEES.
(i) Within sixty (60) days following a Decoupling Event
(as defined below), Licensee may cause the monthly
royalty fees (the "Royalty Fee") payable by Operator
to Licensee to be reset from those stated on Schedule
5(a) to an amount equal to the Fair Market Value
Royalty Fee. A "Decoupling Event" shall occur upon
the sale of all
30
or substantially all of the assets of Operator due to
a voluntary or involuntary insolvency proceeding
being commenced against Operator which is not
dismissed within sixty (60) days or the winding up of
Operator's business operations, or upon an assignment
or transfer of this Agreement that is not permitted
under either this Agreement or the Option Spectrum
Agreement. For clarification, a "Decoupling Event"
shall not have occurred upon the sale of all or
substantially all of the assets of Operator's
business as a going concern. The "Fair Market Value
Royalty Fee" shall be the highest reasonable periodic
royalty rate that a willing, third party capacity
operator could be expected to pay for the use of
Operator's Capacity in an arms-length transaction,
assuming a remaining use period of not less than ten
(10) years. To establish the Fair Market Value
Royalty Fee, Licensee must notify Operator that
Licensee wishes to establish the Fair Market Value
Royalty Fee. The date of such notice is referred to
as "Licensee's Notice Date". Within ten (10) days of
Licensee's Notice Date, Operator and Licensee shall
meet to discuss and attempt to agree upon the Fair
Market Value Royalty Fee. Such discussions shall
continue for not more than ten (10) days. If, at the
end of that time, the Parties have not agreed upon
the Fair Market Value Royalty Fee, the matter shall
be promptly submitted to arbitration under the
Baseball Arbitration procedures set forth in
PARAGRAPH 13. Within the Submission Period, each of
the Operator and Licensee shall submit to the
arbitrator its own proposal for the Fair Market Value
Royalty Fee. If the arbitrator determines that the
proposals reasonably can be expected to result in
monthly royalties that do not differ by more than
five percent (5%) of the proposal the arbitrator
believes will generate the higher royalties, then the
arbitrator shall fashion a royalty provision which
reasonably is expected to result in monthly royalties
that are between the monthly royalties that would be
expected under the competing proposals. Otherwise,
the arbitrator shall determine which proposal he or
she believes to be closer to the Fair Market Value
Royalty Fee and shall select that proposal as the
Fair Market Value Royalty Fee. Upon such selection,
the monthly royalty set forth on Schedule 5(a) shall
automatically be changed to the selected Fair Market
Value Royalty Fee, and that change shall relate back
to Licensee's Notice Date. Operator shall have thirty
(30) days to pay Licensee the difference between the
Fair Market Value Royalty Fee and the amount of
royalties paid for the period starting with
Licensee's Notice Date and ending on such selection
date, and no interest or penalties shall accrue as a
result of such deficiency being unpaid during such
period. Licensee shall bear
31
thirty percent (30%) and Operator shall bear seventy
percent (70%) of the expenses and fees of such
arbitrator and the AAA, and each party shall bear its
own attorneys' fees, experts' fees and out-of-pocket
costs of such arbitration.
(ii) Operator shall, for a period of at least two (2)
years after their creation, keep, maintain and
preserve complete and accurate records by which Fair
Market Value Royalty Fees due hereunder may be
audited. Such records shall be made available for
inspection and audit no more than twice in any
calendar year by Licensee or its designee at
Operator's address listed in SUBPARAGRAPH 16(i),
during normal business hours, upon at least seven (7)
days' advance written notice.
C) PAYMENTS AND LATE CHARGES. Operator shall transmit to Licensee
each monthly Royalty Fee payment accompanied by a statement
showing how the Royalty was calculated by the twenty-fifth
(25th) day of the next calendar month. All payments from
Operator to Licensee shall be paid by bank check made payable
to the order of Licensee, mailed to Hispanic Information and
Telecommunications Network, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: Accounting Department, or mailed to such
other address as Licensee shall designate in writing to
Operator. If Operator shall fail to make the whole or any part
of a payment to Licensee required by the terms of this
Agreement within ten (10) days of the due date therefore, then
interest shall accrue on such delinquent amount (both before
and after judgment) at the lesser of the highest lawful rate
and the rate of one and one-half percent (1.5%) per month
(based upon a thirty (30) day month) and shall be payable upon
Licensee's demand.
D) NET TAXES, ETC. All payments required to be made by Operator
to Licensee under this Agreement are net to Licensee. If
federal, state or local taxes or assessments (other than taxes
assessed on the income or assets of the Licensee) are
applicable, or become applicable, to the whole or any part
thereof, then Operator shall pay such taxes and assessments
and Operator shall indemnify and hold harmless Licensee for
any liability for such taxes and assessments, including
reasonable attorneys' fees and costs associated with defending
against liability for such taxes and assessments; provided,
however, that Licensee shall bear any interest, penalties or
fines which are not attributable to any act or omission of
Operator. In the event Operator is prohibited by law from
paying any such taxes or assessments, then the payment
required by this PARAGRAPH 4 shall be increased by such amount
as is required to ensure that Licensee's compensation
hereunder, after
32
paying such taxes and assessments, is not below such
compensation as Licensee would receive absent payment of such
taxes and assessments.
5. LICENSEE'S EXPENSES.
A) Subject to this PARAGRAPH 5, not later than thirty (30) days
after receipt of detailed invoices from Licensee, Operator
shall reimburse Licensee or its designated counsel directly,
for all reasonable, out-of-pocket expenses actually incurred
by Licensee (net of any credits, refunds or retainers
previously paid by operator to Licensee or its counsel for
such expenses), and that are not after the Effective Date in
connection with this Agreement at the request of Operator,
including legal and engineering consulting expenses incurred
in Licensee's efforts to obtain, renew, maintain and modify
its authorization(s) for the ITFS Channels; Licensee's
counsels' efforts to evaluate, prepare and advise with respect
to applications to the FCC filed by Licensee or to renew any
License; Licensee's counsels' efforts to prepare and prosecute
any petition to deny, objection or appeal request by Operator
or submitted to protect any License; Licensee counsels'
efforts to analyze and report on any proposal submitted by
Operator; to negotiate any site lease with respect to this
Agreement; and Licensee's counsels' efforts to defend this
Agreement, its provisions before the FCC, courts, arbitrators
and appellate forums; and Licensee counsels' efforts to
provide assistance to Licensee as requested by Operator from
time to time (collectively referred to as "Licensee's
Expenses"); provided, however, any such expense for which
Licensee seeks reimbursement which is in excess of One
Thousand Dollars ($1,000) shall have been approved by Operator
prior to the time such expense was incurred, which approval
shall not be unreasonably withheld; provided, further,
however, if after such approval, any event occurs which leads
Licensee to believe that the approved cap of Licensee's
Expenses for any action will not fully cover Licensee's
Expenses, Licensee shall have the right to request that
Operator raise the cap to the new amount that is Licensee's
reasonable estimate of Licensee's Expenses and, absent such
approval, Licensee may relieve itself of the obligation for
which Licensee's Expenses are to be paid hereunder.
B) Notwithstanding anything to the contrary in this Agreement, in
the event that Licensee files, at Operator's request, an
application to modify any License, and such application is or
becomes subject to disposition by the FCC through a
competitive bidding procedure, Licensee shall participate in
such competitive bidding procedure as a bidder and shall
submit bids in such auction to the extent that Operator agrees
(i) to defray the upfront payment required to bid in such
auction for such authorization and (ii) to defray bids by
Licensee for the grant of such License modification(s);
33
provided, however, Licensee's bids and Licensee's total
financial obligation to the federal government may exceed the
amount Operator has agreed to defray, but such excess shall be
the sole responsibility of Licensee. Licensee shall not submit
any bids in such auction procedure without first consulting
with Operator. Operator shall have the right to modify the
maximum bid amount Operator has agreed to defray, by notice to
Licensee, but no such modification shall reduce that amount
below the portion of the last bid preceding such notice that
would be Operator's responsibility to pay. In the event that
Operator declines to authorize bidding or declines to
authorize further bidding once bidding has commenced, Licensee
may thereafter bid, but shall not be required to bid, at its
own expense.
C) Operator shall pay all taxes and other governmental charges
assessed against its equipment, without cost to or
reimbursement by Licensee. In addition, if the FCC or any
governmental body collects any regulatory, spectrum or similar
fees (including any excise tax) with respect to the ITFS
Channels or Operator's Capacity, Operator shall pay such fees.
6. ADDITIONAL OPERATOR-SUPPLIED EQUIPMENT AND SERVICES.
A) PRIMARY SUBSCRIBER RESPONSE STATIONS. At any time during the
Operational Period Operator shall provide and install for the
use of Licensee or a Permitted End User, at Operator's
expense, one standard Customer Premises Equipment package (a
"Standard Customer Package"), at up to twenty five locations
selected by Licensee (the "Primary Response Station Sites"). A
Standard Customer Package shall consist of the lowest cost
Customer Premises Equipment package made generally available
at the time to Operator's retail customers in the Market Area
permitting full utilization of the lowest cost tier of service
generally available at the time to retail customers in the
Market Area. The number of Primary Response Station Sites
shall provided to Licensee at Operator's expense shall equal
twenty-five (25). Upon provision, each such Standard Customer
Package at a Primary Response Station shall be deemed the
exclusive property of Licensee or its designee.
B) LICENSEE ACCESS TO ADDITIONAL RESPONSE STATION EQUIPMENT. At
such time that Licensee requires more than twenty-five
Standard Customer Packages, Operator shall provide, install
for the use of Licensee or a Permitted End User and activate
on the System, additional Standard Customer Packages
("Additional Standard Customer Packages"), certain of which
may be nonstandard ("Nonstandard Installations"). Each such
Additional Standard Customer Package or Nonstandard
Installation shall be made available at a price equal to the
greater of (i) the price then generally
34
offered to Operator's wholesale customers in the Market Area
which customers are most comparable to Licensee with respect
to the price such customers pay for capacity and the volume of
capacity purchased or, if Operator has no wholesale customers
in the Market Area, then eighty percent (80%) of the price
generally offered to those retail customers in the Market Area
who pay the lowest subscription prices for Operator's
services, or (ii) Operator's out-of-pocket cost of supplying
such equipment and installation.
C) MAINTENANCE OF STANDARD CUSTOMER PACKAGES. Operator shall at
its expense provide the first on premises service call
required for each Primary Response Station Site. Operator
shall provide any additional on-premises service at a price no
greater than the lowest price (plus only taxes Operator is
required by law to collect from the party receiving the
service call, such as sales taxes) then generally offered to
customers of Operator in the Market Area ordering comparable
amounts of capacity. Notwithstanding any other provisions of
this Agreement: (i) Licensee shall bear the expenses of
maintenance, repair and replacement of Standard Customer
Packages if such maintenance, repair or replacement is
required because of misuse, negligence, theft or vandalism;
and (ii) Operator shall not be required to eliminate or reduce
interference caused by Licensee or a Permitted End User.
D) UPGRADES. Subject to SUBPARAGRAPH 2(k), Operator shall make
available to Licensee and Permitted End Users any equipment or
software upgrades and associated services that Operator makes
generally available to other customers of Operator in the
Market Area receiving comparable services in the event of a
System change in equipment or software, on the same terms and
conditions as Operator makes generally available. In the event
that any equipment upgrade involves any replacement of
equipment, the replaced equipment and the ownership of the
replaced equipment shall be returned to Operator and the
equipment provided in replacement of such equipment shall be
owned by Licensee.
7. APPROVAL OF AGREEMENT; PROSECUTION OF APPLICATIONS AND PETITIONS;
PROTECTION OF LICENSES.
A) REASONABLE BEST EFFORTS TO SECURE APPROVAL OF THIS AGREEMENT.
The Parties recognize that this Agreement may be required to
be filed with the FCC and that the FCC may, by formal or
informal action (including oral requests of FCC staff),
request Licensee to change or eliminate one or more provisions
in this Agreement, or add one or more provisions to this
Agreement. In that event, the Parties shall cooperate, at
Operator's expense, to defend the provisions of this Agreement
to the extent feasible
35
and, should efforts to defend the provision fail, to comply
with any request for such a change as may be imposed as a
condition to leasing under this Agreement.
B) COOPERATION ON FCC MATTERS. Except for FCC license and license
modification applications, Licensee shall file at the FCC
petitions, requests and other such comments, consents,
objections, petitions, requests or other filings with respect
to any other stations, authorizations, applications, proposals
or amendments as may be reasonably requested by Operator,
provided Licensee finds a good faith basis for the filing of
any such comments, objections or petitions. Licensee shall
have no obligation to participate or to take any position in
any rule making proceeding. Licensee and Operator shall each
promptly notify the other of any event of which it has
knowledge that may affect any license, permit or authorization
for any ITFS Channel. Except for the execution and delivery of
interference consents and agreements, Licensee shall
cooperate, at Operator's expense, but shall not be required to
accept any adverse conditions, with Operator's efforts to
cause other ITFS and MDS operators to collocate at the Primary
Transmission Sites and Licensed Booster Station sites.
Operator and Licensee understand that the FCC may change, or
may have changed, after the date of the Option Spectrum
Agreement those actions, activities and agreements that must
be taken or must exist for an ITFS station licensee to allow
third party use of the capacity of its station (a "FCC Use
Change"). In the event that an FCC Use Change occurs, or has
occurred since the date of the Option Spectrum Agreement, and
such FCC Use Change either by itself or with other FCC Use
Changes, increases the cost to Licensee of complying with this
Agreement, then Operator shall reimburse such costs.
8. DEFAULT AND TERMINATION.
A) TERMINATION OF FCC LICENSES. This Agreement shall terminate as
to any ITFS Channel upon the expiration, without FCC renewal,
of any License necessary to operate on such ITFS Channel, or
the revocation of any License necessary to operate on such
ITFS Channel; provided, however, this Agreement shall not
terminate as to such ITFS Channel notwithstanding the
expiration or revocation of any such License for it for so
long as an application to renew the License or reconsider
revocation is pending or subject to lawful and timely
reconsideration, review or appeal and Licensee continues to
have authority to operate such ITFS Channel.
B) TERMINATION BY REASON OF DEFAULT OR NONPERFORMANCE. If a Party
is in material breach of its obligations under this Agreement,
then the other Party shall give notice to the breaching party
of such breach of this Agreement. If the breaching Party fails
to cure such breach (or, if the breach is of a
36
negative covenant, to cease such breach) within (i) thirty
(30) days of written notice if the breach is the failure to
make a payment, or (ii) such period as may be specified in any
order of any governmental authority, which order has not been
stayed pending any appeal or request for reconsideration or
(iii) ninety (90) days of notice of any other material breach,
then, in addition to all rights and remedies available to the
other Party under law or at equity, such other Party may
terminate this Agreement by notice to the breaching Party.
Material breaches of this Agreement by Operator include, but
are not limited to, any payment default by Operator, the
failure of Operator to maintain operations on any ITFS Channel
for a one hundred eighty (180) day period, or such longer
period as Licensee may determine in its discretion, (without
regard to Licensee control obligations under FCC Rules), the
failure of Operator within the time frame specified by the FCC
to obey any order of the FCC directed to Operator or Licensee
concerning the ITFS Channels.
C) TERMINATION BY REASON OF INSOLVENCY OR BANKRUPTCY. If either
Party files a petition pursuant to Title 7 or 11 of the United
States Bankruptcy Code or is adjudged a debtor after the
filing of an involuntary bankruptcy petition against that
Party, or if either Party files a petition for relief pursuant
to any state insolvency laws, then, to the extent allowed
under law, this Agreement may be immediately terminated by the
other Party upon notice.
D) NO RIGHTS BEYOND TERM OF LICENSES. This Agreement shall not
give rise to any rights or remedies beyond the expiration of
any FCC License necessary for the continued operation of the
ITFS Channels; provided, however, any such expiration shall
not be effective so long as an application to renew such
license or reconsider such revocation is pending or subject to
lawful and timely reconsideration, review or appeal, and
Licensee has authority to operate the related ITFS Channel.
E) LICENSEE'S RIGHT TO PERFORM OPERATOR'S OBLIGATIONS. In the
event that Operator shall fail or refuse to perform any
material obligation or duty of Operator under this Agreement,
Licensee may perform such obligation after notifying Operator
of its failure or refusal to perform such obligation and all
of Licensee's reasonable out-of-pocket costs and expenses in
connection with such performance shall be reimbursed by
Operator within thirty (30) days of each request therefor,
along with interest on such amount accruing for each dollar
when paid by Licensee at the rate set forth in SUBPARAGRAPH
4(c) and also due within thirty (30) days of demand.
9. PURCHASE OPTION UPON EXPIRATION OR TERMINATION. Subject to
SUBPARAGRAPHS 8(d), 9(a), 9(b) AND 9(c), in the event this Agreement
expires
37
or is terminated for any reason other than a default by Licensee,
Licensee shall have the option upon giving written notice to Operator
within thirty (30) days of such expiration or termination to (i)
purchase in the event that Operator discontinues services in the Market
Area following such expiration or termination ("Equipment Purchase"),
or (ii) lease from Operator, if Operator uses such equipment in
connection with other channels or operations ("Equipment Lease"), only
that minimum portion of the software and/or equipment necessary to
continue operation of the Channels for the provisions of services to
Licensee's then existing customers (the "Transferable Equipment").
A) OPERATOR'S DEFAULT. If this agreement is terminated by reason
of a default by Operator, Licensee shall have the option (i)
with respect to an Equipment Purchase, to purchase the
Transferable Equipment at a price equal the lesser of (A) to
the then fair market value of the Transferable Equipment
(taking into account depreciation) or (B) the net book value
of the Transferable Equipment, or (ii) with respect to an
Equipment Lease, to lease the Transferable Equipment from
Operator for a period of not longer than the date on which the
FCC License expires or is otherwise terminated at a lease rate
equal to the then fair market lease value of the Transferable
Equipment.
B) TERMINATION WITHOUT DEFAULT. If this Agreement is terminated
or expires for any reason other than a default by Licensee or
a default by Operator, then Licensee shall have the option (i)
with respect to an Equipment Purchase, to purchase the
Transferable Equipment at a price equal to the greater of (A)
the then fair market value of the Transferable Equipment
(taking into account depreciation) or (B) the replacement
value of the Transferable Equipment, or (ii) with respect to
an Equipment Lease, to lease the Transferable Equipment from
Operator for a period of not longer than the third (3rd)
anniversary of the date of the termination or expiration of
this Agreement at a lease rate equal to (x) the then fair
market lease value of the Transferable Equipment or (y) a
market lease rate based on the replacement value of the
Transferable Equipment.
C) OPTION PROCEDURE. To exercise its purchase or lease rights as
set forth in this PARAGRAPH 9, Licensee shall provide Operator
with notice of its intent to exercise such rights and written
notice of such exercise elections as allowed by SUBPARAGRAPHS
9(a) and (b) within thirty (30) days after the termination or
expiration of this Agreement. In the event that Licensee
elects to purchase the Transferable Equipment, Licensee shall
promptly pay to Operator the purchase price and Operator shall
convey to Licensee title and possession of the Transferable
Equipment. Deliver of the Transferable Equipment shall be
accompanied by a ▇▇▇▇ of sale. In the event that
38
Licensee elects to lease the Transferable Equipment, Licensee
and Operator shall, in good faith, promptly negotiate the
terms of and enter into a lease agreement
D) FAIR MARKET VALUE OR LEASE RATE OF TRANSFERABLE EQUIPMENT. If
the parties do not agree on the fair market value or fair
market lease value of the Transferable Equipment within thirty
(30) days of Licensee's exercise of its option, the fair
market value shall be submitted to Baseball Arbitration
pursuant to PARAGRAPH 14. The cost of the arbitrator shall be
borne equally by both parties.
E) SURVIVAL. The provisions of this PARAGRAPH 9 shall survive the
expiration or termination of this Agreement.
10. ASSIGNMENT AND TRANSFER OF RIGHTS AND OBLIGATIONS.
A) Operator may, without the prior consent of Licensee, assign
its rights and/or obligations under this Agreement; provided
that, (i) Operator gives written notice to Licensee of such
assignment; and (ii) the assignee, upon the effective date of
the assignment, either (w) pays all Monthly Royalty Fees then
Due Licensee pursuant to SUBPARAGRAPH 4(a) on an accelerated
basis; (x) provides a letter of credit or other security
reasonably acceptable to Licensee; (y) Operator provides
Licensee with a guaranty of payment at that time; or (z)
Licensee, in its reasonable determination is satisfied that
the assignee is creditworthy and has the financial abilities
to perform the obligations of this Agreement; and (iii)
unconditionally agrees in writing to assume Operator's
obligations under this Agreement.
B) Licensee may assign or transfer the License to (i) a
non-profit Affiliate or wholly-owned subsidiary of Licensee or
(ii) subject to a prior FCC Transfer Decision occurring, a
for-profit Affiliate or wholly-owned subsidiary of Licensee;
provided, however that in either case, Licensee provides
Operator written notice on or before the effective date of the
assignment, the assignee agrees in writing to assume
Licensee's obligations under this Agreement, and Licensee
provides Operator with a guaranty of performance of the
assignee's obligations under this Agreement prior to the
effectiveness of the assignment. In addition, Operator
acknowledges and understands that Licensee may at some point,
for reasons deemed sufficient to Licensee, discontinue ITFS
operations. Subject to SUBPARAGRAPH 9(c), Licensee shall
notify Operator in writing in advance of finalizing any such
decision and, to the extent not then prohibited by FCC Rules,
shall not discontinue ITFS operations without first assigning
the License to an FCC-qualified entity which is reasonably
acceptable to Operator and which agrees to assume Licensee's
obligations under this Agreement.
39
C) RIGHT OF FIRST REFUSAL UPON SALE OF FCC LICENSES.
(i) If (i) at any time the FCC modifies its rules to
permit the sale, assignment or transfer of the FCC
Licenses to for-profit entities (an "FCC Transfer
Decision"), and Licensee chooses, in its sole
discretion to sell, assign or transfer one or more of
the FCC Licenses to a for profit entity (other than a
for-profit entity that is an Affiliate of Licensee)
(collectively such sale, assignment or transfer, a
"FCC Licenses Sale"), or (ii) Licensee chooses, in
its sole discretion to sell, assign or transfer one
or more of the FCC Licenses to a not-for-profit
entity (other than a not-for-profit entity that is an
Affiliate of Licensee) ("Not-for-Profit Transfer"),
then the following provisions shall apply with
respect to each such FCC License:
(ii) Licensee shall deliver to Operator a written notice
("Transfer Notice"), which notice shall (A) state
Licensee's intention to make a FCC Licenses Sale or
Not-for-Profit Transfer of one or more FCC Licenses
to one or more qualified Persons, a description of
the FCC License involved, the purchase price
therefore and a summary of the other material terms
of the proposed FCC Licenses Sale or Not-for-Profit
Transfer (as applicable) and (B) offer, in accordance
with this SUBPARAGRAPH 10(c), to Operator (x) the
option to acquire the applicable FCC License(s) upon
the terms and subject to the conditions of the
proposed FCC Licenses Sale as set forth in the
Transfer Notice (the "FCC Licenses Sale Offer"), or
(y) the option to designate a FCC qualified entity to
acquire the applicable FCC License(s) upon the terms
and subject to the conditions of the proposed
Not-for-Profit Transfer as set forth in the Transfer
Notice (the "FCC Transfer Offer"). The FCC Licenses
Sale Offer or FCC Transfer Offer, as applicable,
shall remain open and irrevocable for the periods set
forth below (and, to the extent the FCC Licenses Sale
Offer or FCC Transfer Offer is accepted during such
periods, until the consummation of the FCC Licenses
Sale or the Not-for Profit Transfer as contemplated
by the FCC Licenses Sale Offer or the FCC Transfer
Offer, as applicable). Operator (or its FCC qualified
designee with respect to an FCC Transfer Offer) shall
have the right and option, for a period of forty-five
(45) days after receipt of the Transfer Notice
("Acceptance Period"), to accept the FCC Licenses
Sale Offer or the FCC Transfer Offer, as applicable,
on the terms stated in the Transfer Notice. Such
acceptance shall be made by delivering a written
notice of such acceptance to Licensee within the
Acceptance Period.
40
(iii) If the acceptance of the FCC Licenses Sale Offer or
FCC Transfer Offer, as applicable, is not delivered
pursuant to SUBPARAGRAPH 10(c)(ii) within the
Acceptance Period, then Licensee may sell, assign or
transfer the applicable FCC License so offered for
sale, assignment or transfer in the Transfer Notice
and not so accepted, at a price not less than the
price and on the terms, taken as a whole, no more
favorable to the purchaser thereof than the price and
terms stated in the Transfer Notice at any time
within one hundred twenty (120) days after the
expiration of the Acceptance Period (the "Licensee
Transfer Period"). In the event that the applicable
FCC License is not sold, assigned or transferred by
Licensee during the Licensee Transfer Period, the
right of Licensee to sell, assign, or transfer such
FCC License shall expire and the obligations of this
SUBPARAGRAPH 10(c) shall be reinstated; provided,
however, that in the event that Licensee determines,
at any time during the Licensee Transfer Period, that
the sale , assignment or transfer of the FCC License
on the terms set forth in the Transfer Notice is
impractical, then Licensee may terminate the offer
and reinstate the procedure provided in this
SUBPARAGRAPH 10(c) without waiting for the expiration
of the Licensee Transfer Period.
(iv) All transfers of FCC Licenses to Operator that are
subject to a Transfer Notice pursuant to this
Agreement shall be consummated contemporaneously at
the offices of Operator on a mutually satisfactory
Business Day within thirty (30) days following the
expiration of the Sale Acceptance Period or, if
later, the fifth business day following the receipt
of any regulatory approvals.
11. REPRESENTATIONS AND WARRANTIES OF LICENSEE.
A) ORGANIZATION AND GOOD STANDING; POWER AND AUTHORITY;
QUALIFICATIONS. Licensee is a nonprofit corporation duly
organized, validly existing and in good standing under the
laws of the State of New York and has all requisite corporate
power and authority to own, lease and operate its properties
and to carry on its business as now conducted and as proposed
to be conducted. Licensee is duly qualified or authorized to
do business as a foreign corporation and is in good standing
under the laws of each jurisdiction in which it owns or leases
real property or the Licenses and each other jurisdiction in
which the conduct of its business or the ownership of its
properties requires such qualification or authorization.
B) AUTHORIZATION OF AGREEMENT. Licensee has all requisite
corporate power and authority (i) to enter into, deliver and
carry out the transactions contemplated by this Agreement and
each other agreement, document, or
41
instrument or certificate contemplated by this Agreement, and
(ii) to consummate the transactions contemplated hereby and
thereby. This Agreement has been duly and validly executed and
delivered by Licensee and (assuming the due authorization,
execution and delivery by the other parties hereto and
thereto) this Agreement constitutes the legal, valid and
binding obligations of Licensee, enforceable against it in
accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
C) NO CONFLICT.
(i) Neither the execution and delivery by Licensee of
this Agreement, nor compliance by Licensee with any
of the provisions hereof or thereof will (i) conflict
with, or result in the breach of, any provision of
the Governing Documents (as defined in the Option
Spectrum Agreement) of Licensee, (ii) conflict with,
violate, result in the breach of, constitute (with or
without due notice, lapse of time or both) a default
under, result in the acceleration of, create in any
party the rights to accelerate, terminate, modify or
cancel, or require any notice, consent or waiver
under, any note, bond, mortgage, indenture, license,
agreement or other obligation to which Licensee is a
party or by which Licensee or any of its properties
or assets is bound or (iii) violate any statute,
rule, regulation, order or decree of any Government
Agency or authority by which Licensee is bound.
(ii) No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or
notification to, any Person or Government Agency is
required on the part of Licensee in connection with
the execution and delivery of this Agreement or the
compliance by Licensee with any of the provisions
hereof.
D) COMPLIANCE WITH LAWS. Except as provided in Schedule 11(d),
Licensee (a) has complied in all respects with all federal,
state, local and foreign laws, rules, ordinances, codes,
consents, authorizations, registrations, regulations, decrees,
directives, judgments and orders applicable to it and its
business other than where noncompliance would not,
individually or in the aggregate, reasonably be expected to
have a Licensee Material Adverse Effect and (b) has all
federal, state, local and foreign governmental Permits
necessary in the conduct of its business as currently
conducted and to own and use its assets in the manner in which
such assets are currently owned
42
and used other than where the failure to possess such Permits
would not, individually or in the aggregate, reasonably be
expected to have a Licensee Material Adverse Effect, such
Permits are in full force and effect, and no violations have
been recorded in respect of any such Permit, and no proceeding
is pending or, to the best knowledge of Licensee, threatened
to revoke or limit any such Permit. Schedule 11(d) sets forth
a list of all material licenses, permits and qualifications
(other than the FCC Licenses) and the expiration dates
thereof.
E) FCC MATTERS. Throughout the Term of this Agreement and the
term of this Agreement:
(i) Licensee holds, and is fully qualified in all
respects to hold, the FCC Licenses set forth and
described on Exhibit A, which sets forth the name of
the licensee, the FCC call sign, the Channels, the
Market Area, the number of Households and the number
of CPOPs. The Licenses constitute all of the
licenses, permits and authorizations from the FCC
that are necessary or required for and/or used in the
operations of Licensee in the Market Area. To the
best knowledge of Licensee, all information set forth
in such Schedule is complete and accurate in all
respects. Except for Pending Applications (as defined
in the Option Spectrum Agreement) filed prior to the
Effective Date and those modifications that have been
granted by the FCC prior to the Effective Date,
neither Licensee nor any of its Affiliates have
modified or sought to have modified any License.
(ii) Licensee holds all of the Licenses set forth on
Exhibit A and such Licenses are free and clear of all
Liens (except for the rights of first refusal set
forth on Schedule 11(e)(ii)). None of the Licenses
set forth such schedule are subject to CCI Rights (as
defined in the Option Spectrum Agreement) or are
otherwise subject to the terms of the Clearwire
Agreement (as defined in the Option Spectrum
Agreement).
(iii) Except as set forth on Schedule 11(e)(iii), to the
best knowledge of Licensee, (i) the grant, renewal or
assignment of the Licenses to the existing licensee
thereof was approved by the FCC by final order and
the Licenses are validly issued and in full force and
effect; (ii) except with respect construction permit
extension requests, there is no Proceeding pending
before the FCC or threatened with respect to any
License; (iii) Licensee and its Affiliates have made
on a timely basis all payments to any applicable
Government Agency with respect to the Licenses,
including all payments due to the FCC and all
required copyright royalty fee payments and all
required
43
Statements of Account to the U.S. Copyright Office
relating to retransmission of television and radio
broadcast signals; and (iv) Licensee is otherwise in
compliance with the requirements of the compulsory
copyright license described in Section 111 of the
Copyright Act and with all applicable rules and
regulations of the Copyright Office.
(iv) Except as set forth on Schedule 11(e)(iv), to the
best knowledge of Licensee, all Pending Applications
(as defined in the Option Spectrum Agreement) have
been timely filed, and the FCC has not notified any
of Licensee that any of the Pending Applications is
subject to denial due to lack of timely filing or
other defect.
(v) Except as set forth on Schedule 11(e)(v), to the best
knowledge of Licensee, (i) the facilities subject to
a License for which a certification or notification
of completion of construction has been filed with the
FCC ("Constructed Facilities") are operating, and
have been operating, in material compliance with the
License therefore, the Communications Act and FCC
Rules, (ii) Licensee is not transmitting from or
otherwise operating any Constructed Facility that is
not the subject of an License, (iii) none of the
Constructed Facilities subject to a License (A) is
authorized pursuant to an authorization which is
subject to challenge before any court of competent
jurisdiction or (B) other than as set forth on
Schedule 11(e)(v), is subject to any lease, sub-lease
or any agreement to make it available to a third
party; (iv) no License is subject to a revocation
proceeding; and (v) no Constructed Facilities are
operating pursuant to special temporary or
developmental authority.
(vi) Except as set forth on Schedule 11(e)(vi), to the
best knowledge of Licensee, Licensee's licensed ITFS
facilities are being operated, and Licensee's
operations and activities pursuant to any Licenses
are being conducted, in compliance with (A) the
Communications Act, (B) the terms and conditions of
the Licenses applicable to them, and (C) the FCC
Rules.
(vii) Except as set forth Schedule 11(e)(vii), to the best
knowledge of Licensee, all FCC Reports and fees
required to be filed by each Licensee with the FCC
with respect to the Licenses and they have been
timely filed. All FCC Reports filed by any of
Licensee are complete and correct in all material
respects.
(viii) Licensee holds the License free and clear of all
Liens. No Person other than Licensee has any right,
title or interest in or to the
44
License, nor does any Person other than Licensee have
any right to acquire, lease or otherwise use the
License, whether such right may be currently existing
or would become effective on the occurrence of any
event, the failure of an event to occur, notice, or
passage of time, or any of the above.
F) TOWER LEASES. Schedule 11(f) sets forth a true and complete
list of each Tower Lease to which Licensee is party in a
Market Area, the Market Area, the expiration date of the
lease, the name of the lessor, the address or location of the
leased premises or tower site, and the monthly, quarterly or
annual rent, as applicable, payable under such Tower Lease.
Each Tower Lease is valid, binding on Licensee and, to the
best knowledge of Licensee, each other party thereto and is in
full force and effect, enforceable by Licensee in accordance
with its terms. Neither Licensee nor, to the best knowledge of
Licensee, any other party to any of the Tower Leases has
failed to comply with or is in material breach or material
default thereunder. Except as set forth on Schedule 11(f), to
the best knowledge of Licensee, no condition exists or event
has occurred and is continuing which, with or without the
lapse of time or the giving of notice, or both, would
constitute a material default by any party under any Tower
Lease.
G) INTERFERENCE COORDINATION AGREEMENTS. To the best knowledge of
Licensee, Schedule 11(g) sets forth a true and complete list
of all interference consents that have been granted by
Licensee with respect to any Licenses and that would have a
material impact on the use of the Channels.
H) LITIGATION. Except as set forth on Schedule 11(h), there is no
Proceeding now in progress or pending or, to the best
knowledge of Licensee, threatened against Licensee or the
assets (including the intellectual property rights) or the
business of Licensee, nor to the best knowledge of Licensee,
does there exist any basis therefore, except for immaterial
claims brought against Licensee in the ordinary course of
business. Licensee is not subject to any order, writ,
injunction or decree of any court of any federal, state,
municipal or other domestic or foreign governmental
department, commission, board, bureau, agency or
instrumentality ("Government Agency").
I) DISCLOSURE. Neither this Agreement (including all exhibits,
annexes, schedules or attachments hereto) nor any certificate
furnished or made to Operator or pursuant to or in connection
with this Agreement (including all exhibits, annexes,
schedules or attachments hereto) contains any untrue statement
of a material fact or, to the best knowledge of Licensee,
omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading.
45
J) KNOWLEDGE. Any representation, warranty, covenant, obligation,
or part thereof that states that it is made to the best
knowledge of Licensee is made to its best knowledge after
commercially reasonable investigation and includes all facts
which it knew or should have known as a result of such
investigation, including the best knowledge after commercially
reasonable investigation of Licensee's executive officers and
legal counsel.
12. INSURANCE.
From and after the Effective Date, Operator, at its sole expense, shall
secure and maintain (to the extent available at commercially reasonable
rates) with financially reputable insurers one or more policies of
insurance insuring the Transmission Equipment and Operator's
utilization of the ITFS Channels against casualty and other losses of
the kinds customarily carried under similar circumstances by such
firms, including, without limitation: (a) "All risk" property insurance
covering such Transmission Equipment to the extent of one hundred
percent (100%) of its full replacement value without deduction for
depreciation; (b) comprehensive general liability insurance covering
liability resulting from Operator's operation of the ITFS Channels on
an occurrence basis having minimum limits of liability in an amount of
not less than Three Million Dollars ($3,000,000.00) for bodily injury,
personal injury, or death to any person or persons in any one
occurrence, and not less than Six Million Dollars ($6,000,000.00) in
the aggregate for all such losses during each policy year, and not less
than Three Million Dollars ($3,000,000.00) with respect to damage to
property (such minimum limits in clauses (a) and (b) to be increased by
fifteen percent (15%) as of January 1, 2006 and every five years
thereafter); and (c) all workers compensation, automobile liability and
similar insurance required by law. All such policies shall designate
Licensee as either the insured party or as a named additional insured
party, shall be written as primary policies, not contributory with and
not in excess of any coverage which Licensee may carry, and shall
provide that the issuer shall notify Licensee thirty (30) days prior to
any cancellation or lapse of such insurance or in any change in the
coverage thereof. Executed copies of the policies of insurance required
under this Paragraph or certificates thereof shall be delivered to
Licensee prior to the Effective Date. Operator shall furnish Licensee
with evidence of renewal of each such policy prior to the expiration of
the term thereof. All insurance policies obtained pursuant to this
Subparagraph shall reflect that loss proceeds payable thereunder shall
be made payable to the party or parties incurring the related loss
except to the extent that such loss proceeds relate to the repair,
maintenance or replacement of Transmission Equipment or other equipment
or facilities the repair, maintenance, or replacement of which (i) is
the financial responsibility of the
46
Operator or (ii) has been commenced or completed by the Operator, in
which case such loss proceeds shall be made payable to the Operator
only and Operator shall be responsible for such repair, maintenance or
replacement. In the event that any loss proceeds are paid or intended
to be paid other than in accordance with the foregoing sentence,
Licensee agrees to fully cooperate with either the applicable insurer
or the Operator as required to ensure that such loss proceeds are paid
in accordance herewith.
13. RESTRICTIVE COVENANTS.
Each Party (the "Protected Party") acknowledges that there may be made
available to it pursuant to this Agreement, or may have been made
available to it, proprietary information of the other Party (the
"Protecting Party") or its board members, Affiliates, agents or
contractors ("Confidential Information"), the value of which may be
reduced or destroyed by unauthorized dissemination. Accordingly, the
Protecting Party agrees that, except and to the extent it may be
required by law or to the extent necessary to enforce or defend its
rights under this Agreement before an appropriate tribunal, neither it
nor any of its board members, Affiliates, employees, agents,
controlling parties or contractors shall, in any manner, directly or
indirectly, disclose such Confidential Information to any person, firm,
corporation, agent or contractor or other entity (other than the
Protecting Party's attorneys and consultants who agree in writing with
the Protected Party to these confidentiality provisions) and said
undertakings are enforceable by injunctive or other equitable relief to
prevent any violation or threatened violation thereof and without
prejudice to any other legal remedies of the Protected Party. Each
Protecting Party may disclose this Agreement to its Affiliates;
strategic partners; actual or potential investors, lenders, acquirers,
merger partners; and others whom the Protecting Party deem in good
faith to have a need to know such information for purposes of pursuing
a transaction or business relationship with the Protecting Party;
provided that the Protecting Party secures an enforceable obligation
from such third party to limit the use and disclosure of Confidential
Information as provided herein. To the extent a copy of this Agreement
or any amendment thereto is required to be filed with the FCC, all
terms (including financial terms) stating compensation, reimbursement
or contributions from Operator to Licensee or third parties must be
redacted from such filing to the extent permitted by the FCC.
14. RESOLUTION OF CERTAIN DISPUTES.
A) If the Parties are unable to resolve any monetary dispute
under this Agreement or any dispute as to the interpretation
of a provision of this Agreement (each, a "Dispute"), subject
to the additional procedures set forth in SUBPARAGRAPHS 2(e)
AND 5(b), the baseball decision rules ("Baseball Arbitration")
set forth in SUBPARAGRAPH 14(b) shall apply. If
47
the Parties are unable to resolve any other disputes (each a
"Breach Dispute"), including without limitation disputes
regarding a breach or default under this agreement, the
parties shall arbitrate such dispute pursuant to the rules set
forth in SUBPARAGRAPH 14(c).
B) Any such matter shall be resolved by a single Arbitrator. In
the event of a Dispute, either party may request by written
notice to the other party that it wishes to submit the
disputed matter for resolution by Baseball Arbitration. The
parties agree to submit to an Arbitrator within 30 days after
the requesting party's notice has been received by the other
party. Within fifteen (15) days (the "Submission Period")
after the appointment of the arbitrator (the "Arbitrator") in
accordance with the Commercial Arbitration Rules (then in
effect) of the American Arbitration Association for
arbitration of commercial disputes (the "AAA"), each Party
shall submit to the Arbitrator its own proposal for the
resolution of the contested issue. Such submissions shall
remain secret until after the Arbitrator has received each
Party's proposal, at which time the Arbitrator shall inform
each Party of the other's proposal. No such proposal may be
amended after it is submitted to the Arbitrator. The
Arbitrator shall compare the proposals. Except as otherwise
provided in SUBPARAGRAPH 4(b) for arbitration thereunder, the
Arbitrator shall determine which proposal he or she believes
to be the resolution most closely in accordance with the
relevant provisions of this Agreement and shall order the
adoption of such proposal as the relief granted. If any Party
fails to submit its proposal by the end of the Submission
Period, the Arbitrator shall order the adoption of the other
Party's proposal. The Arbitrator may rely upon such evidence
as the Arbitrator may choose in his or her discretion in
making such determination, and may permit discovery in
accordance with the provisions of this SUBPARAGRAPH 14(a).
C) Any such mater shall be resolved by a single Arbitrator. In
the event of a Breach Dispute either party may request by
written notice to the other party that it wishes to submit the
disputed matter for resolution by an Arbitrator. The parties
agree to submit to an Arbitrator within 30 days after the
requesting party's notice has been received by the other
party. During the Submission Period, the parties shall appoint
the Arbitrator in accordance with the Commercial Arbitration
Rules (then in effect) of the American Arbitration Association
for arbitration of commercial disputes (the "AAA"). The
parties agree to permit discovery proceedings of the type
provided by the Federal Rules of Civil Procedure both in
advance of, and during recesses of, the arbitration hearings.
The parties agree that the arbitrator shall have no
jurisdiction to consider evidence with respect to or
48
render an award or judgment for punitive damages (or any other
amount awarded for the purpose of imposing a penalty).
D) The arbitration hearing shall be located at a neutral site as
mutually agreed by the parties, or if the parties cannot so
agree, then (i) if the arbitration is commenced by Licensee,
the location of the arbitration shall be in Seattle,
Washington, or (ii) if the arbitration is commenced by
Operator, the location of the arbitration shall be in New
York, New York. The Federal Rules of Evidence shall apply to
the arbitration hearing. The Party bringing a particular claim
or asserting an affirmative defense will have the burden of
proof with respect thereto. Each Party shall bear the burden
of persuasion with respect to its proposal for resolution of
the matter. The arbitration proceedings and all testimony,
filings, documents and information relating to or presented
during the arbitration proceedings shall be deemed to be
information subject to the confidentiality provisions of this
Agreement. The Arbitrator will have no power or authority,
pursuant to the rules of the AAA or otherwise, to relieve the
Parties from their agreement hereunder to arbitrate or
otherwise to amend or disregard any provision of this
Agreement, including without limitation the provisions of this
Paragraph.
E) Should an Arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this Paragraph, the
Arbitrator shall be replaced pursuant to the rules of the AAA.
If an arbitrator is replaced after the arbitration hearing has
commenced, then a rehearing shall take place in accordance
with this Paragraph and the rules of the AAA.
F) Within fifteen (15) days after the closing of the arbitration
hearing, the Arbitrator will prepare and distribute to the
parties a writing setting forth the Arbitrator's or
Arbitration Panel's finding of facts and any relevant
conclusions of law relating to the Dispute, including the
reasons for the giving or denial of any award. The findings
and conclusions and the award, if any, shall be deemed to be
information subject to the confidentiality provisions of this
Agreement.
G) The Arbitrator is instructed to schedule promptly all
discovery and other procedural steps and otherwise to assume
case management initiative and control to effect an efficient
and expeditious resolution of the Dispute. The Arbitrator or
Arbitration Panel is authorized to issue monetary sanctions
against either party if, upon a showing of good cause, such
party is unreasonably delaying the proceeding.
49
H) Any award rendered by the Arbitrator will be final, conclusive
and binding upon the Parties and any judgment thereon may be
entered and enforced in any court of competent jurisdiction.
I) Each Party will bear an equal one-half of all fees, costs and
expenses of the Arbitrators, and notwithstanding any law to
the contrary, each Party will bear all the fees, costs and
expenses of its own attorneys, experts and witnesses;
provided, however, in connection with any judicial proceeding
to compel arbitration pursuant to this Agreement or to
confirm, vacate or enforce any award rendered by the
Arbitrator, the prevailing party in such a proceeding shall be
entitled to recover reasonable attorney's fees and expenses
incurred in connection with such proceedings, in addition to
any other relief to which it may be entitled; the
non-prevailing party to an arbitration shall pay its own
expenses, the fees of each arbitrator, the administrative fee
of the AAA, and the expenses, including without limitation,
attorneys' fees and costs, and expert and witness fees and
costs, incurred by the other party to the arbitration.
J) Notwithstanding anything to the contrary in this PARAGRAPH 14,
either party may seek injunctive relief from a court of
competent jurisdiction (in accordance with PARAGRAPH 19 at any
time without complying with the foregoing provisions.
15. FORCE MAJEURE.
If by reason of Force Majeure either Party is unable in whole or in
part to perform its obligations hereunder, such Party shall not be
deemed to be in violation or default during the period of such
inability solely as a result of such inability, provided that this
provision shall not be construed to limit in any way or otherwise
relieve either Party of its obligation under any other provision of
this Agreement, which is applicable upon the occurrence of Force
Majeure. "Force Majeure" shall mean the following: acts of God, acts of
third parties outside of such Party's control, acts of public enemies,
orders of any branch of the government of the United States, or any
State or any political subdivisions thereof having legal jurisdiction
(unless such order would otherwise be the basis for a termination
pursuant to SUBPARAGRAPH 8(a)) which are not the result of action or
inaction of the Party that would constitute a breach of this Agreement,
public insurrections, interference from unauthorized sources, floods,
sinkholes, riots, epidemics, fires, civil disturbances, explosions,
power outages, meteorological or astronomical events, labor
disturbances and strikes or any other cause or event not reasonably
within the control of the Party failing in its performance hereunder.
50
16. INDEMNIFICATION.
A) Operator shall indemnify, defend and hold Licensee, its
Affiliates, their respective officers, directors, partners,
managing directors, Affiliates, employees, agents,
consultants, representatives, successors and assigns harmless
from and against all Losses (as hereinafter defined) incurred
or suffered by such person or entity arising out of, relating
to, or resulting from (i) harmful interference caused or
allegedly caused by the installation, use or maintenance by
Operator or for Operator's subscribers of Transmission
Equipment or subscriber response station equipment, (ii) any
claims that Operator's operation of equipment using any of the
ITFS Channels including, is causing or has caused or allegedly
is causing or allegedly has caused any adverse effect on
health or the environment; (iii) any claims by third parties
related to Operator's operation of the System; and (iv) any
action by the FCC pursuant to or arising directly from a
breach by Operator of the terms or conditions of this
Agreement (as amended from time to time). Notwithstanding the
foregoing, Operator's indemnification obligations hereunder
shall be subject to the deductible of Five Thousand Dollars
($5,000).
B) For purposes of this Agreement, "Losses" shall mean, subject
to the proviso following, each and all of the following items:
claims, losses (including, without limitation, losses of
earnings), liabilities, obligations, payments, damages
(actual, punitive or consequential), charges, judgments,
fines, penalties, amounts paid in settlement, costs and
expenses (including, without limitation, interest which may be
imposed in connection therewith), costs and expenses of
investigation, actions, suits, proceedings, demands,
assessments and fees, lost FCC Licenses, expenses and
disbursements of counsel, consultants and other experts;
provided, however, Losses shall not include consequential
damages, special damages, loss of earnings or punitive
damages.
C) A Party seeking indemnification under this Agreement shall,
promptly upon becoming aware of the facts indicating that a
claim for indemnification may be warranted, give to the Party
from whom indemnification is being sought a claim notice
relating to such Loss (a "Claim Notice"). Each Claim Notice
shall specify the nature of the claim, the applicable
provision(s) of this Agreement or other instrument under which
the claim for indemnity arises, and, if possible, the amount
or the estimated amount thereof. No failure or delay in giving
a Claim Notice (so long as the same is given prior to
expiration of the representation or warranty upon which the
claim is based) and no failure to include any specific
information relating to the claim (such as the amount or
estimated amount thereof) or any reference to any provision of
this Agreement or other instrument under which the claim
arises shall affect the obligation of the Party from whom
indemnity is
51
sought except to the extent such Party is materially
prejudiced by such failure or delay.
17. NOTICE.
All notices, requests, consents and other communications hereunder to
any party shall be deemed to be sufficient if contained in a written
instrument delivered in person or sent by telecopy (with a confirmatory
copy sent by a different means within three business days of such
notice), nationally recognized overnight courier or first class
registered or certified mail, return receipt requested, postage
prepaid, addressed to such party at the address set forth below or such
other address as may hereafter be designated in writing by such party
to the other Parties:
(i) if, to Operator, to:
Fixed Wireless Holdings, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
(ii) if to Licensee:
Hispanic Information and Telecommunications
Network, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with copies to:
Day, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
52
and
RJGLaw LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
All such notices, requests, consents and other communications shall be
deemed to have been given when received.
18. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to the
principles of conflicts of law that might result in the application of
the laws of any other jurisdiction.
19. SPECIFIC PERFORMANCE.
The Parties acknowledge and agree that the rights reserved to each of
them hereunder are of a special, unique, unusual and extraordinary
character, and that irreparable harm would occur in the event that any
of the agreements and provisions of this Agreement were not performed
fully by the Parties hereto in accordance with their specific terms or
conditions or were otherwise breached, and that money damages are an
inadequate remedy for breach of the Agreement because of the difficulty
of ascertaining and quantifying the amount of damage that will be
suffered by the Parties hereto in the event that this Agreement is not
performed in accordance with its terms or conditions or is otherwise
breached. It is accordingly hereby agreed that each Party hereto shall
be entitled to an injunction or injunctions to restrain, enjoin and
prevent breaches of this Agreement by the other Party and to enforce
specifically such terms and provisions of this Agreement in any state
or federal court of the United States, such remedy being in addition to
and not in lieu of, any other rights and remedies to which the other
Parties are entitled to at law or in equity. The non-prevailing party
shall pay its own expenses, court costs and the expenses, including
without limitation, attorneys' fees and costs, and expert witness fees
incurred by the other party.
20. CONSTRUCTION.
The definitions in this Agreement shall apply to both the singular and
plural forms of the terms defined. For the convenience of the parties,
Exhibit B references the Paragraphs and Subparagraphs of this Agreement
in which terms are defined. The
53
words "include," "includes," and "including" shall be deemed to be
followed by the phrase "without limitation." All references to
Paragraphs, to Subparagraphs and to Exhibits are references to
Paragraphs, to Subparagraphs and to Exhibits of this Agreement. The
terms "this Agreement," "hereof," "hereunder" and similar expressions
refer to this Agreement as a whole unless specifically stated.
21. HEADINGS.
The Paragraph and Subparagraph headings are for the convenience of the
parties and shall not be used to interpret this Agreement.
22. RELATIONSHIP OF PARTIES.
This Agreement creates a capacity use relationship and not a joint
venture or partnership. Each Party will act so as to preserve that
intent and neither shall present itself as the other party or represent
itself as having the right to represent, bind, or contract on behalf
of, the other Party.
23. WAIVER.
The express or implied waiver by either Party of any breach of any
representation or warranty or any failure to fulfill any condition,
covenant or other obligation under this Agreement shall not constitute
a waiver of any other representation or warranty or of any other
failure in the future or in the past by the other Party to fulfill such
representation, warranty, condition, covenant or obligation hereunder.
24. ENTIRE AGREEMENT, AMENDMENTS.
This Agreement, along with its Exhibits, the Option Spectrum Agreement
and the agreements executed pursuant to the Option Spectrum Agreement,
constitutes the entire Agreement between the Parties regarding its
subject matter and supersedes all oral or prior written agreements of
any kind between the Parties relating to its subject matter. This
Agreement may be modified only by an amendment in writing executed by
both Parties.
25. COUNTERPARTS.
This Agreement and any amendments to it may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument. The Parties shall
accept facsimile signatures as original signatures.
54
26. LICENSEE CONTROL.
To the extent required by FCC Rules, Licensee shall have: (a) access to
and control over the Transmission Equipment upon not less than
twenty-four (24) hours notice outside of business hours and four (4)
hours notice during business hours; (b) reasonable access during normal
business hours to the Transmission Equipment and response station
equipment operating on any ITFS Channels; and (c) the right to consult
with Operator's maintenance personnel at reasonable times, for
reasonable periods and upon reasonable notice concerning the
maintenance of Transmission Equipment used for the ITFS Channels and
response station equipment operating on any ITFS Channels; provided,
however, Licensee shall not exercise rights under this Paragraph in any
manner that interferes with Operator's lawful use of Operator's
Capacity in accordance with this Agreement and FCC Rules, or interferes
with Operator's or any third party's lawful use in accordance with this
Agreement and FCC Rules of the equipment utilizing the ITFS Channels.
Operator shall at all times provide Licensee with the capability of
deactivating any and all response stations operating on the ITFS
Channels in accordance with FCC Rule 74.939(o).
27. VALIDITY AND SEVERABILTY.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid, but if any
term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any law or public policy, all other
terms and provisions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the
Parties hereto affected by such determination in any material respect
shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in order that
the provisions hereof are given effect as originally contemplated to
the greatest extent possible.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
OPERATOR LICENSEE
FIXED WIRELESS HOLDINGS, LLC HISPANIC INFORMATION AND
TELECOMMUNICATIONS
NETWORK, INC.
By: By:
-------------------------------- ----------------------------
R. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
[Signature Page to IUA for the ________________, _____________ Market Area]
55
INCLUDED EXHIBITS AND SCHEDULE LIST:
A ITFS LICENSE, CHANNELS, METROPOLITAN AREA, PRIMARY TRANSMISSION SITE,
LOCATION OF LICENSEE'S ORIGINATION POINT AND LICENSEE'S DIGITAL CHANNEL
CAPACITY
B. DEFINITIONS
C. EXAMPLES PURSUANT TO SUBPARAGRAPH 2(d)(i) AND (ii)
56
EXHIBIT A
ITFS LICENSE, CHANNELS, METROPOLITAN AREA,
PRIMARY TRANSMISSION SITE,
LOCATION OF LICENSEE'S ORIGINATION POINT
AND LICENSEE'S DIGITAL CHANNEL CAPACITY
License Call Sign:
---------------------
ITFS Channels:
-------------------------
Market Area:
--------------------------
Primary Transmission Site:
-------------
57
EXHIBIT B
DEFINITIONS
"AAA" is defined in Paragraph 14(a).
"Acceptance Period" is defined in Subparagraph 9(c)(ii).
"Affiliate" is defined in Subparagraph 2(e)(i).
"Additional Standard Customer Packages" is defined in Subparagraph 6(b).
"Agreement" is defined in the opening paragraph.
"Arbitrator" is defined in Subparagraph 14(a).
"Baseball Arbitration" is defined in Subparagraph 14(a).
"Basic Feature" is defined in Subparagraph 2(g)(i).
"Basic Service Criteria" is defined in Subparagraph 2(g)(iii).
"Breach Dispute" is defined in Section 14(a).
"Claim Notice" is defined in Subparagraph 16(c).
"Collocation" is defined in Subparagraph 2(h)(v).
"Collocation Reference Contract" is defined in Subparagraph 2(h)(v).
"Common Equipment" is defined in Subparagraph 3(a)(vi).
"Confidential Information" is defined in Paragraph 13.
"Decoupling Event" is defined in Subparagraph 4(b).
"Deferral Notice" is defined in Subparagraph 2(f)(ii).
"Dispute" is defined in Subparagraph 14(a).
"Effective Date" is defined in Paragraph 1.
"End User" and "End Users" are defined in Subparagraph 3(a)(x).
"End User Throughput Rate" is defined in Subparagraph 2(d)(ii).
58
"Engineered Throughput Rate" is defined in Subparagraph 2(d)(ii).
"Enhanced Feature" is defined in Subparagraph 2(h)(i).
"Equipment Lease" is defined in Paragraph 9.
"Equipment Purchase" is defined in Paragraph 9.
"Equipment Notice Date" is defined in Subparagraph 2(a)(i)(2)(B).
"Excess Capacity" is defined in Subparagraph 2(f)(ii).
"Excess Usage Situation" is defined in Subparagraph 2(d)(iv).
"Fair Market Value Royalty Fee" is defined in Subparagraph 4(b)(i).
"FCC" is defined in the Recitals.
"FCC Licenses" is defined in Subparagraph 11(d).
"FCC Licenses Sale" is defined in Subparagraph 9(c).
"FCC Licenses Sale Offer" is defined in Subparagraph 9(c)(ii).
"FCC Rules" is defined in the Recitals.
"FCC Transfer Decision" is defined in Subparagraph 9(c).
"FCC Transfer Offer" is defined in Subparagraph 9(c)(ii).
"FCC Use Change" is defined in Subparagraph 7(b).
"Five Percent User" and "Five Percent Users" are defined in Subparagraph
2(d)(i).
"Force Majeure" is defined in Paragraph 15.
"Full Channel Option" is defined in Subparagraph 2(a)(iii).
"High Power Booster Station Equipment" is defined in Subparagraph 3(a)(ii).
"Hold-over Right" is defined in Subparagraph 2(a)(i)(2)(C).
"Hold-over Right Notice Date" is defined in Subparagraph 2(a)(i)(2)(C).
"Hold-over Services" is defined in Paragraph 9.
"Hub Receive Equipment" is defined in Subparagraph 3(a)(v).
59
"Hub Receive Site" is defined in Subparagraph 3(a)(v).
"Identified Legacy Equipment" is defined in Subparagraph 2(a)(ii).
"Initial Term" is defined in Paragraph 1.
"Internet Transit" is defined in Subparagraph 2(h)(iv).
"ITFS" is defined in the Recitals.
"ITFS Channel" and "ITFS Channels" are defined in the Recitals.
"ITFS Engineered Throughput Rate" is defined in Subparagraph 2(d)(i).
"Legacy Equipment" is defined in Subparagraph 2(a)(i)(2)(B).
"License" and "Licenses" are defined in the Recitals.
"Licensed Booster Station" is defined in Subparagraph 3(a)(ii).
"Licensee" is defined in the opening paragraph.
"Licensee Legacy Equipment" is defined in Subparagraph 2(a)(i)(2)(A).
"Licensee Material Adverse Effect" means a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of Licensee, taken as a whole, other than changes
affecting the broadband wireless business generally
"Licensee Purchase" is defined in Subparagraph 2(a)(i)(2)(B).
"Licensee Service Contract" is defined in Subparagraph 2(e)(iii).
"Licensee Transfer Period" is defined in Subparagraph 9(c)(iii).
"Licensee's Educational Reservation" is defined in Subparagraph 2(d)(i).
"Licensee's Expenses" is defined in Subparagraph 5(a).
"Licensee's Intermediate Capacity" is defined in Subparagraph 2(f)(i).
"Licensee's Notice Date" is defined in Subparagraph 4(b)(i).
"Licensee's Throughput" is defined in Subparagraph 2(d)(iii).
"Licensee's Throughput Rate Entitlement" is defined in Subparagraph 2(d)(ii).
60
"Licensee's Total Ordered Data Speeds" is defined in Subparagraph 2(d)(iv).
"Losses" is defined in Subparagraph 16(b).
"Low Power Booster Station Equipment" is defined in Subparagraph 3(a)(ii).
"Market Area" is defined in the Recitals.
"MDS" is defined in the Recitals.
"Network Management Services" is defined in Subparagraph 2(h)(iii).
"Nonstandard Installation" is defined in Subparagraph 6(b).
"Non-peak Hours" is defined in Subparagraph 2(d)(iii)(3).
"Not-for-Profit Transfer" is defined in Subparagraph 9(c).
"Operational Period" is defined in Subparagraph 2(d)(i).
"Operator" is defined in the opening paragraph.
"Operator Purchase" is defined in Subparagraph 2(a)(i)(2)(B).
"Operator's Capacity" is defined in Subparagraph 2(c).
"Operator's Group" is defined in Subparagraph 2(e)(i).
"Option Spectrum Agreement" is defined in the recitals.
"OSHA" is defined in Subparagraph 3(f).
"Oversubscription Level" is defined in Subparagraph 2(d)(ii).
"Partial Channel Option" is defined in Subparagraph 2(a)(iii).
"Party" and "Parties" are defined in the opening paragraph.
"Peak Adjustment Number" is defined in Subparagraph 2(d)(iii)(1)(E).
"Peak Benchmark" is defined in Subparagraph 2(d)(iii)(1)(B).
"Peak Hours" is defined in Subparagraph 2(d)(iii)(3).
"Permitted End Users" is defined in Subparagraph 2(l).
"Permitted Uses" is defined in Subparagraph 2(l).
61
"Proceeding" means any action, suit, litigation, arbitration proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), hearing, inquiry, audit, examination or investigation commenced,
brought, conducted or heard by or before, or otherwise involving any court or
other Government Agency or any arbitrator or arbitration panel.
"Price Index" is defined in Subparagraph 4(b)(iii).
"Primary Response Station Sites" is defined in Subparagraph 6(a).
"Primary Transmission Equipment" is defined in Subparagraph 3(a)(i).
"Primary Transmission Sites" is defined in Subparagraph 3(a)(i).
"Prior Use Agreement" is defined in Subparagraph 2(a)(i)(1).
"Prior User" is defined in Subparagraph 2(a)(i)(1).
"Prior User Legacy Equipment" is defined in Subparagraph 2(a)(i)(2)(B).
"Protected Party" and "Protecting Party" are defined in Paragraph 12.
"Purchase Option" is defined in Paragraph 10(d).
"Reference Contract" is defined in Subparagraph 2(e)(ii)
"Renewal Term" is defined in Paragraph 1.
"Retail Price" is defined in Subparagraph 2(f)(i).
"Royalty Fee" is defined in Subparagraph 4(b)(i).
"STA" is defined in Subparagraph 3(c).
"Standard Customer Package" is defined in Subparagraph 6(a).
"Start Date" is defined in Subparagraph 2(b)(iii).
"Submission Period" is defined in Subparagraph 14(a).
"System" is defined in the Recitals.
"System Change" is defined in Subparagraph 2(m).
"Target Month" is defined in Subparagraph 2(d)(iii).
"Term" is defined in Paragraph 1.
62
"Throughput" is defined in Subparagraph 2(d)(i).
"Throughput Rate" is defined in Subparagraph 2(d)(i).
"Total ITFS Throughput Rate" is defined in Subparagraph 2(d)(i).
"Transfer Notice" is defined in Subparagraph 9(c)(ii).
"Transferable Equipment" is defined in Paragraph 9.
"Transmission Equipment" is defined in Subparagraph 3(a)(x).
"Underutilization Situation" is defined in Subparagraph 2(d)(v).
"Unlicensed Booster Station" is defined in Subparagraph 3(a)(ii).
"Utilization Report" is defined in Subparagraph 2(d)(iii).
"Wholesale Agreement" is defined in Subparagraph 2(e)(i).
"Wholesale Price" is defined in Subparagraph (2)(f)(i)
63
EXHIBIT C
EXAMPLES PURSUANT TO SUBPARAGRAPH 2(d)(i) AND (ii)
64