Exhibit 10.6
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MANAGEMENT AGREEMENT
between
TELECORP MANAGEMENT CORP, INC..
and
TELECORP PCS, INC.
Dated as of November 1, 2000
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TABLE OF CONTENTS
Page
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SECTION 1. ENGAGEMENT..................................................... 2
SECTION 2. MANAGEMENT STANDARDS........................................... 2
SECTION 3. SERVICES TO BE PROVIDED........................................ 2
(a) Scope of Services.............................................. 2
(b) Accounts....................................................... 4
(c) Senior Executives of Manager................................... 4
(d) Restrictions on Manager's Authority............................ 4
SECTION 4. COMPENSATION................................................... 6
(a) Reimbursement.................................................. 6
(b) Management Fees................................................ 6
(c) Disputes, etc.................................................. 7
(d) Directors and Officers Liability Insurance..................... 7
(e) Benefits....................................................... 7
SECTION 5. TERM AND TERMINATION........................................... 7
(a) Term........................................................... 7
(b) Termination.................................................... 7
(c) Benefits Payable Upon Termination.............................. 8
(d) Remedies....................................................... 9
(e) Continuing Obligations......................................... 9
(f) Transition Arrangements........................................ 10
(g) Return of Information.......................................... 11
SECTION 6. NONCOMPETITION AND CONFIDENTIALITY............................. 11
(a) Noncompetition................................................. 11
(b) Confidentiality................................................ 11
(c) Company Property............................................... 12
(d) Non-Solicitation of Employees.................................. 12
(e) Injunctive Relief with Respect to Covenants.................... 12
SECTION 7. VESTING AND REPURCHASE OF RESTRICTED SHARES, ETC.; COMPANY LOAN 13
(a) General........................................................ 13
(b) Repurchase of Shares Upon Termination.......................... 13
(c) Closing of Repurchase; Assignment of Repurchase Right.......... 13
(d) Escrow of Shares............................................... 13
(e) Legends........................................................ ▇▇
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▇▇▇▇▇▇▇ ▇. LIMITATIONS OF LIABILITY....................................... 14
(a) Force Majeure.................................................. 14
(b) Exculpation of Manager......................................... 15
(c) No Consequential or Special Damages............................ 15
(d) Vento and ▇▇▇▇▇▇▇▇............................................. 15
SECTION 9. BOOKS AND RECORDS.............................................. 15
SECTION 10. DISPUTE RESOLUTION............................................. 15
(a) Dispute Resolution............................................. 15
(b) Mediation...................................................... 16
(c) Arbitration.................................................... 16
(d) Confidentiality................................................ 17
(e) Fees and Expenses.............................................. 17
SECTION 11. INSPECTION RIGHTS; DELIVERY OF INFORMATION..................... 17
(a) Company's Right to Inspect..................................... 17
(b) Notice of Certain Events....................................... 17
(c) Other Information.............................................. 18
SECTION 12. REPRESENTATIONS AND WARRANTIES................................. 18
(a) Organization and Standing of Parties........................... 18
(b) Execution, Delivery, Performance and Binding Effect............ 18
(c) Consents....................................................... 18
(d) Litigation; Claims............................................. 18
(e) Court Orders, Decrees, Judgments, Etc.......................... 19
SECTION 13. INDEMNIFICATION; EXPENSES...................................... 19
(a) Indemnification................................................ 19
(b) Advancement of Expenses........................................ 19
SECTION 14. MISCELLANEOUS.................................................. 19
(a) Counterparts................................................... 19
(b) Construction................................................... 19
(c) Benefit; Assignment............................................ 19
(d) Complete Agreement............................................. 20
(e) Amendment...................................................... 20
(f) Governing Law.................................................. 20
(g) Severability................................................... 20
(h) Further Assurances............................................. 20
(i) Waiver......................................................... 20
(j) Notices........................................................ 20
SCHEDULE A.................................................................... A-1
SCHEDULE I.................................................................... I-1
SCHEDULE II................................................................... II-1
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MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT ("Agreement") dated as of November 1, 2000 (the
"Effective Date") and effective as of that same date, by and between TELECORP
MANAGEMENT CORP., INC., a Delaware corporation ("Manager"), and TELECORP PCS,
INC., a Delaware corporation (the "Company"). Capitalized terms used but not
defined in this Agreement shall have the meanings given to such terms in the
Stockholders Agreement of the Company, dated as of the date hereof (the
"Stockholders Agreement").
WITNESSETH:
WHEREAS, Manager and TeleCorp Wireless, Inc. (f/k/a TeleCorp PCS,
Inc.) ("Virginia") entered into that certain management agreement dated as of
July 17, 1998 (the "Original Agreement");
WHEREAS, pursuant to that certain Agreement and Plan of Reorganization
and Contribution by and among Virginia, Tritel, Inc. ("Mississippi"), and AT&T
Wireless Services, Inc. ("Washington") dated as of February 28, 2000 (the
"Merger Agreement"), Virginia as of the date hereof became a subsidiary of the
Company;
WHEREAS, as of the date hereof, Manager and Virginia entered into a
Termination Agreement whereby the Original Agreement was terminated subject to
the execution and delivery of this Agreement;
WHEREAS, Manager and the Company desire to replace the Original
Agreement with this Agreement;
WHEREAS, the operation of the Business, including, without limitation,
the determination of policy, the preparation and filing of any and all
applications and other filings with the FCC, the hiring, supervision and
dismissal of personnel, day-to-day system operations, and the payment of
financial obligations and operating expenses, shall be controlled by the
Company, and Manager shall assist the Company in connection therewith and any
action undertaken by Manager shall be under the Company's continuing oversight,
review, control and approval, and the Company shall retain unfettered control
of, access to and use of the Business, including its facilities and equipment
and shall be entitled to receive all profits from the operation of the Business;
WHEREAS, Manager is willing to provide management services for the
Company and its Subsidiaries on the terms and subject to the conditions
contained in this Agreement;
WHEREAS, the parties intend this Agreement to specify the terms upon
which Manager will perform services to the Company hereunder;
WHEREAS, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇")
are the owners of all of the ownership interests in Manager and pursuant to the
Merger Agreement,
are the beneficial and record owners of certain shares of Common Stock and
Preferred Stock of the Company set forth on Schedules I and II attached hereto
and subject to repurchase as described herein (the "Shares");
WHEREAS, in order to induce the Company to enter into this Agreement
with Manager, Vento and ▇▇▇▇▇▇▇▇ have agreed to grant to the Company the
repurchase rights with respect to certain of the Shares as set forth in this
Agreement;
NOW, THEREFORE, for and in consideration of the premises, the
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged by the
execution and delivery hereof, the parties, intending to be legally bound, agree
as follows:
Section 1. Engagement. The Company hereby engages Manager to oversee,
manage and supervise the Company and the development and operation of the
Business, and Manager hereby accepts such engagement, subject to and upon the
terms and conditions hereof.
Section 2. Management Standards. Manager shall discharge its duties
hereunder in compliance with the Stockholders Agreement, the Network Membership
License Agreement, the Resale Agreement and the Roaming Agreement (collectively,
as the same have been or may be amended from time to time, the "Operating
Agreements") and all applicable Law. In performing its obligations hereunder,
Manager shall act in a manner that it reasonably believes to be in or not
opposed to the best interests of the Company consistent with the standards set
forth herein. Nothing in this Agreement shall be construed as constituting
Manager an agent of the Company beyond the extent expressly provided in, and as
limited by, this Agreement.
Section 3. Services to be Provided.
(a) Scope of Services. Subject to the Company's oversight, review and
ultimate control and approval and the limitations of Section 3(d) below, Manager
shall be responsible for the design, construction and operation of the Company
and the Business in accordance with the Operating Agreements, which shall be
carried out by the Company's employees under the supervision and control of
Manager's senior management. To this end Manager shall provide generally, on the
terms and subject to the conditions set forth herein and in a manner consistent
with the standards set forth herein and in the Operating Agreements, supervisory
services with respect to (I) all administrative, accounting, billing, credit,
collection, insurance, purchasing, clerical and such other general services as
may be necessary to the administration of the Business, (II) operational,
engineering, maintenance, construction, repair and such other technical services
as may be necessary to the construction and operation of the Business, and (III)
marketing, sales, advertising and such other promotional services as may be
necessary to the marketing of the Business. The services for which Manager shall
be responsible, subject in each case to the Operating Agreements, the Company's
oversight, review and ultimate control and approval and to the limitations of
Section 3(d) below, shall include but shall not be limited to the following:
(i) the marketing of Company Communications Services to be offered
and provided by the Company;
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(ii) the management, tax compliance, accounting and financial
reporting for the Company including, but not limited to, the preparation
and presentation of reports and reviews of the business, financial results
and condition, regulatory status, competitive position and strategic
prospects of the Company as requested by the Board of Directors;
(iii) the regulatory processing for the Company, including without
limitation the preparation and filing of all appropriate regulatory
filings, certificates, tariffs and reports that are required by, and
participation in any hearings or other proceedings before, local, state and
federal governmental regulatory bodies;
(iv) the engineering, design, planning, construction and installation,
maintenance and repair (both emergency and routine) and operation of, and
equipment purchases for, the Company;
(v) assisting the Company in the development and preparation of
budgets, including, without limitation, preparing and presenting, not later
than 90 days before the beginning of each fiscal year, a proposed draft of
an annual operating budget for the Company's review, evaluation and
approval setting forth in reasonable detail the anticipated capital
expenditures and other projected costs and expenses of constructing and
operating the Business during the period covered by the budget, as well as
projected revenues for that period, and generally describing all contracts
and commitments which Manager expects to enter into on behalf of the
Company during the period covered thereby;
(vi) services relating to sales of the products and services offered
by the Company, including without limitation processing orders for service,
customer support, billing for services provided by the Company and
collection of receivables for the Company;
(vii) management information services for the Company;
(viii) monitoring and controlling the Business and its PCS and
Cellular Systems;
(ix) negotiating contracts, issuing purchase orders and otherwise
entering into agreements on behalf of the Company for the purchase, lease,
license or use of such properties, services and rights as may be necessary
or desirable in the judgment of Manager for the operation of the Company;
(x) supervising, recruiting and training all necessary personnel to
be employed by the Company, and determining salaries, wages and benefits
for the Company's employees;
(xi) administering the Company's employee benefit programs and the
Company's programs for compliance with applicable laws governing the
administration and operation of such plans and programs;
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(xii) administering the Company's risk management programs, including
negotiating the terms of property and casualty insurance and preparing a
comprehensive disaster recovery program; and
(xiii) in furtherance of the foregoing, making or committing to make
expenditures (including capital expenditures) on behalf of the Company.
(b) Accounts. Subject to the foregoing, the Company shall be responsible
for payment of all costs and expenses necessary to fund the ongoing business and
operations of the Business and for the provision of all services of Manager
hereunder, which shall include, but not be limited to, expenses arising under
Article 3, payments to independent contractors, payments to vendors and
suppliers of the Business, and interest payments to creditors who have financed
the construction or operation of the Business. To the extent provided herein,
Manager shall make such payments on the Company's behalf from one or more
accounts maintained in the name of the Company at one or more banks acceptable
to the Board of Directors, into which all Company revenues shall be deposited
(the "Accounts"). All funds of the Company shall be promptly deposited in such
bank accounts. All disbursements made by the Company as permitted under this
Agreement shall be made by checks drawn on the Accounts, and all funds on
deposit in the Accounts shall at all times be the property of the Company.
Manager will have the right and authority to make deposits to and disbursements
and withdrawals from the Accounts as required in connection with the performance
of its services hereunder, provided that all signatories on the Accounts shall
be subject to the approval of the Board of Directors.
(c) Senior Executives of Manager. During the term of this Agreement,
Manager shall cause the services of Vento and ▇▇▇▇▇▇▇▇ to be provided to the
Company in connection with Manager's performance of its obligations hereunder.
Such individuals shall devote their entire business time and attention to the
services required to be provided by Manager pursuant to this Agreement. Except
for certain employee benefits provided to officers of the Company, they shall
receive all compensation and other benefits for such services directly from
Manager. In addition, Vento shall serve as Chairman, Chief Executive Officer and
President of the Company and ▇▇▇▇▇▇▇▇ shall serve as the Chief Financial
Officer, Executive Vice President/General Counsel, Treasurer and Secretary of
the Company. In the event that either of such individuals shall cease for any
reason to be employed by Manager, Manager shall immediately notify the Company.
Subject to the Company's rights under Section 5(b)(ii)(C), any individual hired
by Manager to replace either of such individuals shall be acceptable to the
Board of Directors (excluding Vento and ▇▇▇▇▇▇▇▇) in its sole discretion.
Nothing contained herein shall preclude (i) Vento or ▇▇▇▇▇▇▇▇ from devoting
reasonable periods of time to the management (including serving on the board of
directors) of any of their existing businesses, any business which has not
commenced operations, or any business at the request of the Company, (ii) Vento
or ▇▇▇▇▇▇▇▇ serving on a board of directors of a charitable organization; or
(iii) Vento or ▇▇▇▇▇▇▇▇ serving on other boards of directors or advisory groups
(in each case, with the consent of the Board of Directors excluding Vento and
▇▇▇▇▇▇▇▇), in each such case, so long as such activities do not interfere with
the performance of Vento's or ▇▇▇▇▇▇▇▇'▇ duties hereunder.
(d) Restrictions on Manager's Authority. Any provision to the contrary in
this Agreement notwithstanding, unless such action is within (or on terms more
favorable to the Company than) parameters set forth in a budget or business plan
approved by the Board of Directors, Manager shall not do, or cause or permit to
be done, any of the following for or on behalf of the Company without the prior
written consent of the Board of Directors (excluding Vento and ▇▇▇▇▇▇▇▇):
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(i) settle any claim or litigation by or against the Company if the
settlement involves a payment of $100,000 or more, or any regulatory
proceedings involving the Company, unless such action is consistent with
the Company's regulatory strategy as set forth in a budget approved by the
Board of Directors;
(ii) lend money or guarantee debts of others on behalf of the Company,
or assign, transfer, or pledge any debts due the Company, or release or
discharge any debt due or compromise any claim of the Company, other than
trade credit and advances to employees in the ordinary course of business;
(iii) invest in or otherwise acquire any debt or equity securities of
any other Person, enter into any binding agreement for the acquisition of
any interest in any business entity or other Person (whether by purchase of
assets, purchase of stock or other securities, merger, loan or otherwise),
or enter into any joint venture or partnership with any other Person;
(iv) take any tax reporting position or make any related election on
behalf of the Company which is inconsistent with the directions given by
the Board of Directors;
(v) formally assert a strategic position with respect to a material
matter before the Federal Communications Commission or any Governmental
Authority on behalf of the Company with respect to any such matter;
(vi) knowingly take or fail to take any action that violates (A) any
Law relating to the Business, (B) any agreement, arrangement or
understanding to which the Company is a party, including an Operating
Agreement, (C) any License or other governmental authorization granted to
the Company in connection with its ownership and operation of the Business,
or (D) any judicial or administrative order or decree to which the Company
is subject, in each case unless such violation would not be reasonably
expected (so far as can be foreseen at the time) to have a material adverse
effect on the Company or the Business;
(vii) sell, assign, transfer, or otherwise dispose of, or hypothecate
or ▇▇▇▇▇ ▇ ▇▇▇▇ on any assets belonging to the Company (other than the
disposal of assets or equipment in the ordinary course of business);
(viii) take any action amending or agreeing to amend any License
granted to the Company in connection with its ownership and operation of
the Business;
(ix) borrow money on behalf of the Company or negotiate or enter into
other forms of financing for the Business, including any capital lease;
(x) commingle any funds of the Company with funds of any other entity
or Person;
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(xi) hire or fire the independent certified public accountants of the
Company;
(xii) pay to any employee or agent of, or consultant or advisor to,
the Company, compensation in any form in excess of $100,000 in any fiscal
year,
(xiii) establish any reserves; or
(xiv) enter into any contract, agreement or other commitment or issue
any purchase order, which contract or other agreement or purchase order (i)
is not in the ordinary course of business, (ii) obligates the Company to
make payments of $100,000 or more or (iii) will create a material variance
(greater than 15%) relative to (x) in the case of a capital expenditure,
the total budget for capital expenditures contained in any budget approved
by the Board of Directors and (y) in the case of an operating expense, the
total operating expense budget contained in any budget approved by the
Board of Directors, in each case for the year-to-date period in which the
expenditure is made or incurred and taking into account all previous
expenditures and commitments in such year-to-date period, provided, that
the approval of the Board of Directors shall not be required for any
contract, purchase order or agreement the material terms of which are
within (or on terms more favorable to the Company than) the parameters set
forth in any budget approved by the Board of Directors; or terminate or
amend in any material respect any contract, agreement or other commitment
or purchase order, in each case if the execution and delivery or issuance
thereof requires approval pursuant to this Section 3(d).
Section 4. Compensation.
(a) Reimbursement. The Company shall reimburse Manager for all
out-of-pocket expenses ("Out-of-Pocket Expenses") reasonably incurred by Manager
for goods and services provided by third parties to, for or on behalf of the
Company (including those out-of-pocket expenses incurred by Messrs. Vento and
▇▇▇▇▇▇▇▇ in traveling to and from and visiting the Business in connection with
providing services under this Agreement). Manager shall provide the Company with
a statement setting forth in reasonable detail (and with copies of invoices or
other supporting documentation) the Out-of- Pocket Expenses claimed and the
Company shall pay to Manager each such amount within thirty (30) days of receipt
of the statement. Notwithstanding anything to the contrary contained in this
Agreement, (i) no portion of the salaries of Messrs. Vento or ▇▇▇▇▇▇▇▇ or the
general overhead expenses of Manager shall be subject to reimbursement as
Out-of- Pocket Expenses and (ii) in no event will Manager be responsible for the
payment from its own funds of any expenses, obligations or liabilities of the
Company.
(b) Management Fees. In consideration of Manager's performance of its
responsibilities with respect to the Business, the Company shall pay Manager,
commencing on the date hereof, a management fee per annum equal to $550,000,
payable monthly in arrears on the last day of each calendar month. The
Compensation Committee of the Board of Directors shall annually review the
management fee in light of the performance of Manager and the Company, and may,
in its discretion, increase (but not decrease) the management fee by an amount
it determines to be appropriate. Manager's annual management fee payable
hereunder, as it may be increased from time to time, is referred to herein as
the "Management Fee." For
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each calendar year or part thereof during the term of this Agreement, Manager
shall be eligible to receive an annual bonus based upon the achievement of
certain objectives determined by the Compensation Committee of the Board of
Directors for such calendar year (the "Annual Bonus") payable within 30 days
after the certification of the Company's financial statements for such year but
in no event shall such bonus be less than 50% of the preceding year's Management
Fee.
(c) Disputes, etc. If the Company disputes the amount of expenses or fees
claimed by Manager, the Company shall notify Manager in writing before payment
is due, and if the matter cannot be resolved informally between the parties,
either the Company or Manager may request resolution of the dispute pursuant to
Section 10. The Company shall pay when due the portion of any such amounts that
is not in dispute.
(d) Directors and Officers Liability Insurance. The Company shall use its
reasonable efforts to obtain and maintain directors and officers liability
insurance coverage in amounts customary for similarly situated companies in the
telecommunications industry.
(e) Benefits. During the Term of this Agreement, Vento and ▇▇▇▇▇▇▇▇ shall
be entitled to participate in any welfare benefit plan sponsored or maintained
by the Company to the extent Vento or ▇▇▇▇▇▇▇▇, as applicable, is eligible to
participate in any such plan under the generally applicable provisions thereof,
such welfare plans to include life, health and disability insurance.
Section 5. Term and Termination.
(a) Term. This Agreement shall commence on the Effective Date and, unless
earlier terminated in accordance herewith, shall terminate on July 17, 2003 (the
"Term").
(b) Termination.
(i) By Either Party. Either party may terminate this Agreement in
the event that a Governmental Authority shall enter an order appointing a
custodian, receiver, trustee, intervenor or other officer with similar
powers with respect to the other party or with respect to any substantial
part of its property, or constituting an order for relief or approving a
petition in bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of such party; or if a party
files a petition seeking any such order; or if any such petition shall be
filed against such party and shall not be dismissed within sixty (60) days
thereafter; or an order shall have been issued granting such party a
suspension of payments under applicable law and any such order is not
dismissed within sixty (60) days thereafter.
(ii) By Company. The Company may terminate this Agreement:
(A) immediately in the event of the indictment or conviction of
Manager, Vento or ▇▇▇▇▇▇▇▇ of any felony; or any act constituting fraud,
embezzlement, willful misconduct or gross negligence by Manager that materially
adversely affects the Company or the Business monetarily or otherwise (as
determined by a majority vote of the Board of Directors (excluding Messrs. Vento
and ▇▇▇▇▇▇▇▇));
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(B) immediately in the event of a material breach of this Agreement
by Manager (as determined by a majority vote of the Board of Directors
(excluding Messrs. Vento and ▇▇▇▇▇▇▇▇)), which has not been cured within thirty
(30) days following notice thereof from the Company, including, without
limitation, the failure of the Company to meet any of the objectives set forth
on Schedule A hereto;
(C) immediately in the event of the failure by Manager to cause to be
provided to the Company the services of both Messrs. Vento and ▇▇▇▇▇▇▇▇ as
contemplated by Section 3(c) hereof;
(D) immediately in the event that the Company shall fail to comply
with the terms of any representation, warranty, covenant or agreement contained
in the Credit Documents or in any other agreement or instrument pursuant to
which the Company has incurred indebtedness for borrowed money in the principal
amount of $25,000,000 or more, which failure to comply results in, or with
notice or the passage of time would result in, an event of default thereunder;
or
(E) immediately in the event that the indebtedness incurred pursuant
to the Credit Documents or any other indebtedness for borrowed money of the
Company in the principal amount of $25,000,000 or more shall have been
accelerated by the holder thereof.
(iii) By Manager. Manager may terminate this Agreement:
(A) if the Company has failed to make any payment pursuant to Section
4 within thirty (30) business days following Manager's written notice to the
Company of such failure;
(B) in the event of a material breach of this Agreement by the
Company (other than a payment default) which has not been cured within thirty
(30) days following notice thereof from the Company;
(C) in the event that (i) Vento and ▇▇▇▇▇▇▇▇ are removed as directors
of the Company or are demoted or removed from their respective offices or there
is a material diminishment of Vento's and ▇▇▇▇▇▇▇▇'▇ responsibilities, duties or
status which diminishment is not rescinded within 30 days after the date of
receipt by the Board of Directors of the Company from Vento and ▇▇▇▇▇▇▇▇ of
their respective written notice referring to this provision and describing such
diminishment, or (ii) the Company relocates its principal offices without
Manager's consent to a location more than 50 miles from the principal offices of
the Company in Arlington, Virginia; or
(D) voluntarily upon thirty (30) days' prior written notice to the
Company.
(c) Benefits Payable Upon Termination.
(i) Following the termination of this Agreement pursuant to any
manner described in Section 5(b), the Company shall pay to Manager any
Management Fee earned, but unpaid, for services rendered to the Company on
or prior to the date of such termination.
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(ii) Following the termination of this Agreement by Manager pursuant
to Sections 5(b)(iii)(A), (B) or (C) or a termination by the Company
pursuant to Sections 5(b)(ii)(B), (C) or (D), Manager shall be entitled to
receive payment of (x) the Management Fee, and (y) the Annual Bonus. The
amount of the Annual Bonus shall be determined as follows: (I) In the event
that the date of termination is on or prior to June 30 of any applicable
calendar year, the amount of the Annual Bonus shall be equal to a pro rata
portion (based upon the actual number of days during such calendar year
that this Agreement shall have been in effect) of the Annual Bonus payable
in respect of such year (determined based upon the achievement by the
Company of the objectives for all of such calendar year). (II) In the event
that the date of termination is after June 30 of any applicable calendar
year, the amount of the Annual Bonus shall be equal to the Annual Bonus
payable in respect of such year (determined based upon the achievement by
the Company of the objectives for all of such calendar year), in either
instance payable on the later to occur of (x) 30 days after the
certification of the Company's financial statements for such year, and (y)
the last day of the month after which (a) a New Provider (as hereinafter
defined) shall be retained by the Company in accordance with Section
5(f)(i), and (b) the Manager shall have nominated a Successor Control Group
(as hereinafter defined) acceptable to the Board of Directors in its sole
discretion (excluding Vento and ▇▇▇▇▇▇▇▇) in accordance with Section
5(f)(ii). The Management Fee shall be payable monthly in arrears commencing
on the last day of the month after which (I) a New Provider shall be
retained by the Company in accordance with Section 5(f)(i) and (II) the
Manager shall have nominated a Successor Control Group reasonably
acceptable to the Board of Directors in its sole discretion (excluding
Vento and ▇▇▇▇▇▇▇▇) in accordance with Section 5(f)(ii).
(iii) Notwithstanding any provision herein to the contrary, upon the
termination of this Agreement by Manager pursuant to Section 5(b)(iii)(A),
(B) or (C) or by the Company, other than pursuant to Section 5(b)(ii)(A)
and (E), any Shares that have not previously vested shall immediately vest
(and shall not be subject to repurchase by the Company) on the date of such
termination.
(iv) The Company shall be entitled to set off against the Management
Fee payable to the Manager following the termination of this Agreement
pursuant to Section 5(c)(ii), any amounts earned by either Vento or
▇▇▇▇▇▇▇▇ in other employment after the termination of this Agreement during
the period in which the Company is paying the Manager the Management Fee
pursuant to Section 5(c)(ii) following the termination of this Agreement
pursuant to Sections 5(b)(ii)(B), (C) or (D) or Sections 5(b)(iii)(A), (B)
or (C); provided, however, that neither Vento nor ▇▇▇▇▇▇▇▇ shall be
required, as a condition to the receipt of such payment pursuant to Section
5(c)(ii), to seek such other employment.
(d) Remedies. The remedies set forth herein are not intended to be
exclusive, and all remedies shall be cumulative and may be exercised
concurrently with any other remedy available to Manager or the Company at law or
in equity.
(e) Continuing Obligations. After receipt of written notice of
termination, but prior to the effective date of such termination, Manager shall
continue to perform under this
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Agreement unless specifically instructed to discontinue such performance. In the
event of termination, Manager and the Company shall remain liable for their
respective obligations accrued under this Agreement prior to the effective date
of termination.
(f) Transition Arrangements.
(i) In the event of termination of this Agreement for any reason,
Manager shall at the Company's expense cooperate with the Company in order
to facilitate the transition to a new management service provider (the "New
Provider"). Upon such termination, the Board of Directors (excluding Vento
and ▇▇▇▇▇▇▇▇) shall nominate a New Provider that would not cause a
significant detrimental effect on the eligibility of the Company to realize
the benefits, if any, that the Company derives from its status as a "very
small business," as defined in 47 CFR Section 24.720(b)(2), which New
Provider shall be acceptable to the Manager. In the event that the Manager
does not approve such New Provider within five (5) business days of notice
of such nomination by the Board of Directors, then for each successive
thirty (30) day period or portion thereof following such five (5) business
day period that a New Provider shall not have been approved by Vento and
▇▇▇▇▇▇▇▇, each of Vento and ▇▇▇▇▇▇▇▇ shall sell to the Company, 50% of the
Shares, inclusive of those Shares already subject to repurchase pursuant to
Section 7(b), then owned by each of them at a price per share equal to $.0l
per Share. Manager shall at the Company's expense take whatever steps are
commercially reasonable to assist the New Provider in assuming the
management of the Company and the operation of the Business including,
without limitation, transferring to the New Provider all historical
financial, tax, accounting and other data in the possession of Manager, and
giving such consents, assigning such permits and executing such instruments
as may be necessary to vest in the New Provider those rights that were
necessary for Manager to perform its services hereunder.
(ii) Within five (5) business days after the nomination by the Board
of Directors of a New Provider, each of Vento and ▇▇▇▇▇▇▇▇ agrees to
nominate a successor Person or group of Persons (collectively, a "Successor
Control Group") that would not cause a significant detrimental effect on
the eligibility of the Company to hold a Block F PCS license and to realize
the benefits, if any, that the Company derives from its status as a "very
small business," as defined in 47 CFR Section 24.720(b)(2), to whom the
Voting Preference Common Stock, the Class C Common Stock set forth on
Schedule I (the "Class C Common Stock") and any shares of Class E Common
Stock acquired by Vento and ▇▇▇▇▇▇▇▇ after the date hereof as contemplated
by Section 7(f) below (any such shares being referred to as the "Class E
Common Stock") shall be transferred by Vento and ▇▇▇▇▇▇▇▇, which Successor
Control Group shall be reasonably acceptable to the Board of Directors in
its sole discretion (excluding Vento and ▇▇▇▇▇▇▇▇); it being understood
that the New Provider shall be deemed to be a Successor Control Group
reasonably acceptable to the Board of Directors. In the event that Vento
and ▇▇▇▇▇▇▇▇ do not nominate a Successor Control Group reasonably
acceptable to the Board of Directors in its sole discretion (excluding
Vento and ▇▇▇▇▇▇▇▇) within such five (5) business day period, then for each
successive 30-day period or portion thereof that Vento and ▇▇▇▇▇▇▇▇ shall
not have nominated a successor Control Group reasonably acceptable to the
Board of Directors in its sole discretion (excluding Vento and ▇▇▇▇▇▇▇▇),
10
each of Vento and ▇▇▇▇▇▇▇▇ shall sell to the Company after the expiration
of each 30-day period, in addition to any other Shares repurchased, and
after giving effect to the repurchase by the Company of Shares pursuant to
Section 5(f)(i), an additional 50% of the Shares then owned by each of them
at a price per share equal to $.01 per share. Immediately after a Successor
Control Group reasonably acceptable to the Board of Directors is nominated,
the Company, Vento and ▇▇▇▇▇▇▇▇ shall take, or cause to be taken, all
actions necessary or required, including, without limitation, filing of all
applications with the FCC, to obtain all requisite consents and
authorizations to permit the transfer of the Voting Preference Common
Stock, Class C Common Stock and Class E Common Stock to the Successor
Control Group. On the first business day after all such consents and
authorizations shall have been obtained, Vento and ▇▇▇▇▇▇▇▇ agree to resign
as directors and officers of the Company and to sell to the Successor
Control Group all of the shares of Voting Preference Common Stock, Class C
Common Stock and Class E Common Stock owned by them for a per share price
equal to the fair market value of the Company's Class A Common Stock. If at
any time, whether by reason of the inability of the Company to obtain all
requisite consents and authorizations to permit the transfer of the Voting
Preference Common Stock, Class C Common Stock and Class E Common Stock to
the Successor Control Group or otherwise, the Board of Directors withdraws
its consent to the nomination of a Successor Control Group, the procedure
outlined in Sections 5(f)(i) and (ii) shall be repeated commencing with the
nomination by Vento and ▇▇▇▇▇▇▇▇ of a Successor Control Group within five
(5) business days after the nomination by the Board of Directors of a
successor New Provider.
(g) Return of Information. Upon termination of this Agreement, all books
and records in the possession of Manager relating to the maintenance and
operation of and accounting for the Company, together with all supplies and
other items of property owned by the Company and in Manager's possession, shall
be delivered to the Company.
Section 6. Noncompetition and Confidentiality.
(a) Noncompetition. During the Term and (x) for one year thereafter if
after the expiration of the Term the Company offers to extend this Agreement for
at least one (1) year on terms and conditions no less favorable than those
contained herein and the Manager rejects such offer, and (y) for so long as the
Company is paying to the Manager the Management Fee pursuant to Section 5(c)(ii)
following the termination of this Agreement pursuant to Sections 5(b)(ii)(B),
(C) or (D) or Sections 5(b)(iii) (A), (B) or (C), none of Manager, Vento,
▇▇▇▇▇▇▇▇ or any of their respective Affiliates shall, without the consent of the
Company, assist or become associated with any person or entity, whether as a
principal, partner, employee, consultant or shareholder (other than as a holder
of not in excess of 5% of the outstanding voting shares of any publicly traded
company) that is actively engaged in the business of providing mobile wireless
telecommunications services in the Territory.
(b) Confidentiality. Without the prior written consent of the Company,
except to the extent required by an order of a court having competent
jurisdiction or under subpoena from a governmental body or agency, none of
Manager, Vento, ▇▇▇▇▇▇▇▇ or any of their respective Affiliates shall disclose
any trade secrets, customer lists, drawings, designs, information regarding
product development, marketing plans, sales plans, manufacturing plans,
financial
11
records, packaging design or other financial, commercial, business or technical
information relating to the Company or any of its subsidiaries or affiliates
(collectively, "Confidential Information"), to any third person, unless such
Confidential Information has been previously disclosed to the public by the
Company or is in the public domain (other than by reason of Manager's, Vento's,
▇▇▇▇▇▇▇▇'▇ or any of their respective Affiliates' breach of this Section 6(b)),
except that Manager, Vento, ▇▇▇▇▇▇▇▇ and their respective Affiliates may
disclose Confidential Information to the extent advisable in their sole
discretion in connection with (i) the performance of Manager's duties hereunder,
or (ii) the issuance of Company securities, or (iii) obtaining financing for the
Company, or (iv) the enforcement of Manager's rights under this Agreement, or
(v) any disclosures that may be required by law, including securities laws.
(c) Company Property. Promptly following the termination of this
Agreement, Manager, Vento and ▇▇▇▇▇▇▇▇ shall return to the Company all property
of the Company, and all copies thereof in its possession or under its control,
and all tangible embodiments of Confidential Information in its possession in
whatever media such Confidential Information is maintained.
(d) Non-Solicitation of Employees. During the Term and for one year
thereafter, none of Manager, Vento, ▇▇▇▇▇▇▇▇ or any of their respective
Affiliates will directly or indirectly induce any employee of the Company or any
of its subsidiaries or affiliates to terminate employment with such entity, and
will not directly or indirectly, either individually or as owner, agent,
employee, consultant or otherwise, employ or offer employment to any person who
is or was employed by the Company or a subsidiary thereof, unless such person
shall have ceased to be employed by such entity for a period of at least six
months.
(e) Injunctive Relief with Respect to Covenants. Manager, Vento and
▇▇▇▇▇▇▇▇ acknowledge and agree that the covenants and obligations with respect
to noncompetition, inventions, confidentiality and Company property contained in
this Section 6 relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause the
Company irreparable injury for which adequate remedies are not available at law.
Therefore, Manager, Vento and ▇▇▇▇▇▇▇▇ agree that the Company shall be entitled
to an injunction, restraining order, or such other equitable relief as a court
of competent jurisdiction may deem necessary or appropriate to restrain Manager,
Vento and ▇▇▇▇▇▇▇▇ from committing any violation of the covenants and
obligations contained in this Section 6. These injunctive remedies are
cumulative and are in addition to any other rights and remedies the Company may
have at law or in equity. Notwithstanding the foregoing, in the event that this
Agreement is terminated by the Company pursuant to Section 5(b)(ii)(A) by reason
of the indictment or conviction of Vento, ▇▇▇▇▇▇▇▇ or the Manager of any felony
or any act constituting fraud, misappropriation or embezzlement due to the
wrongful acts of either Vento or ▇▇▇▇▇▇▇▇, that materially adversely effects the
Company or the Business monetarily or otherwise (as determined by a majority
vote of the Board of Directors (excluding Vento and ▇▇▇▇▇▇▇▇), ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇, as applicable, shall sell to the Company, and the Company shall purchase
from Vento or ▇▇▇▇▇▇▇▇, as applicable, all of the Shares (whether or not vested)
at a price per share equal to $.0l per Share, it being understood that in the
event that the Company shall have terminated this Agreement by reason of any
such event, and either Vento or ▇▇▇▇▇▇▇▇ shall not have been indicted for or
been convicted of any felony or act constituting fraud, misappropriation or
embezzlement that materially adversely effects the Company or the Business
monetarily or otherwise (as determined by a majority vote of the Board of
Directors (excluding Vento and ▇▇▇▇▇▇▇▇), such individual shall not be obligated
to sell his vested Shares to the Company.
12
Section 7. Vesting and Repurchase of Restricted Shares, Etc.; Company Loan
(a) General. Each of Vento and ▇▇▇▇▇▇▇▇ hereby agrees that the Shares set
forth on Schedule II shall be subject to the vesting schedules set forth on
Schedule II, and are subject to repurchase by the Company at a repurchase price
of $.01 per shares in accordance with the terms of this Section 7. As used in
this Section 7, the following terms have the following meanings:
(i) "Extraordinary Event Shares" means a number of Shares equal to
1,441,152 shares of Class A Voting Common Stock.
(ii) "Restricted Holder" means each of Vento and ▇▇▇▇▇▇▇▇.
(b) Repurchase of Shares Upon Termination. Following the termination of
this Agreement for any reason, each Restricted Holder shall sell to the Company,
and the Company shall purchase from each Restricted Holder such Restricted
Holder's Shares that have not theretofore vested pursuant to Schedule II.
(c) Closing of Repurchase; Assignment of Repurchase Right. The closing of
a purchase and sale of Shares pursuant to Section 7(b) shall take place on a
date mutually agreed by the applicable Restricted Holder and the Company, but in
no event later than 30 days after the date that this Agreement terminated. At
such closing, the Company shall deliver to the applicable Restricted Holder a
check in the amount of the aggregate repurchase price and, upon delivery
thereof, the Company shall become the legal and beneficial owner of such Shares
and all rights and interests therein or relating thereto, and the Company shall
have the right to retain and transfer to its own name the shares of Preferred
Stock and/or Common Stock being repurchased by the Company. Whenever the Company
shall have the right to repurchase Preferred Stock and/or Common Stock
hereunder, the Company may designate and assign one or more employees, officers,
directors or shareholders of the Company or other persons or organizations to
exercise all or a part of the Company's repurchase rights under this Agreement
and purchase all or a part of such Preferred Stock and/or Common Stock.
(d) Escrow of Shares. The Certificate(s) representing all Shares, subject
to repurchase pursuant to Section 7(b) shall be held by the Secretary of the
Company as escrow holder (the "Escrow Holder"), along with a stock power
executed by the applicable Restricted Holder in blank. The Escrow Holder is
hereby directed to permit transfer of such Shares only in accordance with this
Agreement and the Stockholders Agreement. In the event further instructions are
desired by the Escrow Holder, he shall be entitled to rely upon written
directions of the Board of Directors (excluding Vento and ▇▇▇▇▇▇▇▇). The Escrow
Holder shall have no liability for any act or omission hereunder while acting in
good faith in the exercise of his own judgment. If the Company or any assignee
repurchases any of such Shares pursuant to this Section 7, the Escrow Holder,
upon receipt of written notice of such repurchase from the proposed transferee,
shall take all steps necessary to accomplish such repurchase. From time to time,
upon a Restricted Holder's request, the Escrow Holder shall: (i) cancel the
certificate(s)
13
held by the Escrow Holder and representing such Shares, (ii) cause new
certificate(s) to be issued representing the number of Shares no longer subject
to repurchase pursuant to this Section 7, which certificate(s) the Escrow Holder
shall deliver to such Restricted Holder, and (iii) cause new certificate(s) to
be issued representing the balance of such Shares, which certificate(s) shall be
held in escrow by the Escrow Holder in accordance with the provisions of this
Section 7(d). Subject to the terms hereof, a Restricted Holder shall have all
the rights of stockholder with respect to such Shares while they are held in
escrow, including without limitation, the right to vote such Shares and receive
any cash dividends declared thereon. If, from time to time during the term of
the Company's repurchase right, there is (i) any stock dividend, stock split or
other change in such Shares, or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which such Restricted Holder is entitled
by reason of his ownership of such Shares shall be immediately subject to this
escrow, deposited with the Escrow Holder and included thereafter as "Shares" for
purposes of this Agreement and the Company's repurchase right.
(e) Legends. The share certificates evidencing the Shares which have not
theretofore vested pursuant to Schedule II shall be endorsed with the following
legend (in addition to any legend required to be placed thereon by applicable
federal or state securities laws or the Stockholders Agreement):
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF A MANAGEMENT AGREEMENT BETWEEN THE
COMPANY AND AN AFFILIATE OF THE STOCKHOLDER, A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE COMPANY, WHICH PROVIDES, AMONG OTHER
THINGS FOR THE REPURCHASE BY THE COMPANY OF THE SHARES REPRESENTED BY
THIS CERTIFICATE.
(f) Company Loans. In the event that Vento and ▇▇▇▇▇▇▇▇ are permitted
to purchase shares of the Company's capital stock owned by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and/or ▇.▇. ▇▇▇▇▇▇ pursuant to the employment agreements by and between the
Company and such Persons, then upon the request of Vento and/or ▇▇▇▇▇▇▇▇, the
Company shall lend Vento and ▇▇▇▇▇▇▇▇ such amounts as needed in order to fund
such purchases, upon such terms as the parties may agree to, which terms shall
include that any such loan shall be non-recourse to the borrower, and Schedule I
hereto shall be amended to reflect such purchase. Such shares shall be subject
to purchase by the Company if this Agreement is terminated for any reason at a
price per share equal to the fair market price of the Company's Class A Common
Stock.
Section 8. Limitations of Liability.
(a) Force Majeure. Neither of the parties will be liable for
nonperformance or defective or late performance of any of its obligations
hereunder to the extent and for such periods of time as such nonperformance,
defective performance or late performance is due to reasons outside such party's
control, including acts of God, war (declared or undeclared), acts (including
failure to act) of any governmental authority, riots, revolutions, fire, floods,
explosions, sabotage, nuclear incidents, lightning, weather, earthquakes,
storms, sinkholes,
14
epidemics, strikes, or delays of suppliers or subcontractors for the same
causes. Neither party shall be required to settle any labor dispute in any
manner which is deemed by that party to be less than totally advantageous, in
that party's sole discretion.
(b) Exculpation of Manager. Notwithstanding any other provision of this
Agreement, Manager shall not be liable for any failure or delay in its
performance hereunder (except with respect to its performance of its obligations
under Section 5(f)) or for any performance which is substandard, except where
such failure, delay or substandard performance is the result of willful
misconduct or gross negligence on the part of Manager.
(c) No Consequential or Special Damages. Manager shall not be responsible
to the Company for any indirect, incidental, consequential or special damages to
the Company, the Business or any subscriber or customer of any Business or any
other person, including any damage to or loss of revenues, business or goodwill,
suffered by any person or entity for any failure of any system or failure of
performance hereunder. Manager's liability to the Company in respect of any such
failure shall be limited (in addition to the limits set forth in paragraphs (a)
and (b) above) to the amounts paid by the Company to Manager pursuant to this
Agreement for the period of any such failure.
(d) Vento and ▇▇▇▇▇▇▇▇. The limitations of liabilities set forth in
paragraphs (a), (b) and (c) above shall apply to Vento's and ▇▇▇▇▇▇▇▇'▇
obligation to use good faith efforts to cause the Manager to perform all of its
obligations pursuant to this Agreement.
Section 9. Books and Records. Manager shall keep or cause to be kept
accounts and complete books and records with respect to its management of the
operation of the Business, showing all costs, expenditures, allocations,
receipts, revenues, assets, and liabilities; any and all other records
necessary, convenient or incidental to recording the financial aspects of the
operation of the Business and sufficient to record the profits and losses
generated by the operation of the Business. Within 15 days after the end of each
month Manager shall prepare or cause to be prepared and transmit to the Company
unaudited statements, which shall include a general ledger and a trail balance.
Manager shall also provide at the Company's request any and all such additional
statements or reports as may be reasonably necessary to the Company's oversight
and control of the Business. The Company shall have control over and access, at
all reasonable times during normal business hours, to the books and records
maintained by Manager pursuant to this Section 9.
Section 10. Dispute Resolution.
(a) Dispute Resolution. The parties desire to resolve disputes arising
out of this Agreement without litigation. Accordingly, except for an action
seeking a temporary restraining order injunction related to the purposes of this
Agreement, or suit to compel compliance with this dispute resolution process,
the parties agree to use the dispute resolution procedures set forth in Section
10 as their sole remedy with respect to any controversy or claim arising out of
or relating to this Agreement or its breach.
At the written request of any party, the parties to the dispute will
appoint knowledgeable, responsible representatives to meet and negotiate in good
faith to resolve any dispute arising
15
under this Agreement. The parties intend that these negotiations be conducted by
business representatives, including at least one senior executive of each party
to the dispute. The location, format, frequency, duration and conclusion of
these discussions shall be left to the discretion of the representatives.
Discussion and correspondence among the representatives for purposes of these
negotiations shall be treated as confidential information developed for purposes
of settlement, exempt from discovery and production, which shall not be
admissible in the arbitration described below. Documents identified in or
provided with such communications, which are not prepared for purposes of the
negotiations, are not so exempted and may, if otherwise admissible, be admitted
in evidence in the arbitration or lawsuit.
(b) Mediation. If the negotiations set forth in Section 10(a) do not
resolve the dispute within thirty (30) days of the initial written request, the
parties agree to work in good faith to settle the dispute by mediation under the
commercial mediation rules of the American Arbitration Association. The parties
will attempt to agree on a mediator. If they are unable to do so, the mediation
will be referred to the New York, New York office of the American Arbitration
Association for mediation which will appoint a qualified mediator to serve. The
mediation shall take place in New York, New York or such other location as
mutually agreed upon by the parties. Unless the parties agree otherwise, the
first mediation session shall take place no later than ten (10) days after the
initial written request to negotiate. The mediation shall continue until the
dispute is resolved or until such time as the mediator makes a good faith
determination that the likelihood of resolution is sufficiently remote that
continuation of the mediation is not warranted.
(c) Arbitration. If the mediation conducted pursuant to Section 10(b)
does not resolve the dispute within thirty (30) days of the commencement of
mediation, or if prior to the expiration of such thirty (30) day period the
mediator determines that continuation of the mediation process is not warranted,
the dispute shall be submitted to binding arbitration by a panel of three
arbitrators pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. Any party may demand such arbitration in accordance
with the procedures set out in those rules. Each party shall have the right to
take the deposition of up to five individuals (or a larger number of individuals
with the consent of two of the three arbitrators), and any expert witness
designated by the other party. Each party shall also have the right to request
production of relevant documents, the scope and enforcement of which shall be
governed by the arbitrator. Additional discovery may be only by order of the
arbitrator, and only upon a showing of substantial need. The arbitrator shall be
authorized to issue subpoenas for the purpose of requiring attendance of
witnesses at depositions. The arbitration hearing shall be commenced within ten
(10) days of the determination that mediation is not going to be successful. The
arbitration shall be held in New York, New York or such other location as
mutually agreed upon by the parties. The arbitrator shall control the scheduling
so as to process the matter expeditiously. The parties may submit written
briefs. The arbitrator shall rule on the dispute by issuing a written opinion
within thirty (30) days after the close of hearings. The times specified in this
section may be extended upon mutual agreement of the parties or by the
arbitrator upon a showing of good cause. The award rendered by arbitration shall
be a final, binding and nonappealable judgment and the award may be entered in
any court of competent jurisdiction in the United States. Special, consequential
or punitive damages shall not be awarded by the arbitrator.
16
(d) Confidentiality. The parties agree that all communications and
negotiations between the parties during the dispute resolution process, any
settlements agreed upon during the dispute resolution process and any
information regarding the other party obtained during the dispute resolution
process (that are not already public knowledge) are confidential and may be
disclosed only to employees and agents of the parties who shall have a "need to
know" the information and who shall have been made aware of the confidentiality
obligations set forth in this Section, unless the party is required by law to
disclose such information.
(e) Fees and Expenses. The parties shall equally split the fees of the
mediator and the arbitrator. Any party found by the arbitrator to have breached
this Agreement shall pay all other out-of-pocket costs and expenses, including
reasonable attorneys' fees and expenses, of the other party incurred in
connection with the dispute resolution process. If the arbitrator does not find
that any party has breached this Agreement, then each party shall bear its own
costs and expenses, including attorneys' fees and expenses.
Section 11. Inspection Rights; Delivery of Information.
(a) Company's Right to Inspect. Manager will permit representatives of
the Company, at the Company's cost, during normal business hours and upon not
less than five business days' advanced written request, to (i) visit and inspect
during normal business hours Manager's properties and facilities which are
utilized in connection with Manager's provision of services to the Company
pursuant to this Agreement, including without limitation access to, and the
right to make copies of, books and records of the Company located at such
properties and facilities, and (ii) discuss with Manager's officers and
employees such properties and facilities and Manager's provision of services to
the Company pursuant to this Agreement. All such information shall be held in
confidence by the Company, except for disclosures made to the Company's
advisors, lenders and investors, or as required to be disclosed by process of
law or other applicable law.
(b) Notice of Certain Events. Promptly and in any event within three (3)
business days after Manager has received notice or has otherwise become aware
thereof, Manager shall give the Company notice of (i) the commencement of any
material proceeding or investigation against the Company or Manager by or before
any governmental body or in any court or before any arbitrator which would be
likely to have a material adverse effect on Manager, the Business or the
Company, or on Manager's ability to perform its obligations hereunder, and (ii)
the occurrence or nonoccurrence of any event (x) which constitutes, or which
with the passage of time or giving of notice or both would constitute, a default
by the Company or Manager under this Agreement or under any other material
agreement to which the Company or Manager is a party or by which its properties
may be bound, and (y) would be likely to have a material adverse effect on
Manager, the Business or the Company, or on Manager's ability to perform its
obligations hereunder, giving in each case the details thereof and specifying
the action being taken or proposed to be taken with respect thereto. Promptly
upon receipt thereof, Manager shall deliver to the Company copies of any
material notice or report regarding any License from the grantor of such license
or from any Governmental authority regarding the Business or the Company.
17
(c) Other Information. From time to time and promptly upon each request,
Manager shall provide the Company with such data, certificates, reports,
statements, financial projections, documents or further information regarding
the business, equity owners, assets, liabilities, financial position or results
of operations of Manager, as may be reasonably requested by the Company.
Section 12. Representations and Warranties. Each party makes the following
representations and warranties to the other party, as a material inducement to
the other party to enter into this Agreement.
(a) Organization and Standing of Parties. Each party is a corporation and
is duly organized, validly existing and in good standing under the laws of the
State of its incorporation referenced in the first paragraph of this Agreement.
Each party has full corporate power and authority to own its assets and carry on
its business as now conducted by it.
(b) Execution, Delivery, Performance and Binding Effect. The execution,
delivery and performance by each party of this Agreement have been duly
authorized by all necessary corporate action, including by each party's board of
directors. Each party has full power and authority to enter into and perform its
obligations under this Agreement. The execution, delivery and performance by
such party of this Agreement will not (with the passage of time or giving of
notice or both) conflict with, violate any provision of, result in the breach of
or constitute a default under (i) such party's certificate of incorporation or
by-laws, (ii) any License held by such party, (iii) any Law, (iv) any order,
writ, injunction, decree, judgment or regulation of any Governmental Agency or
(v) any contract, agreement, arrangement or understanding, (A) to which such
party is a party, (B) to which or by which such party is subject or bound, or
(C) to which or by which such party's assets are subject or bound. The
execution, delivery and performance of this Agreement will not (with the passage
of time or giving of notice or both) (i) create or impose any Lien upon the
assets of such party, (ii) result in the termination, suspension, modification
or impairment of any contract, agreement, arrangement or understanding (A) to
which such party is a party, (B) to which, or by which, such party is subject or
bound, or (C) to which or by which such party's assets are subject or bound, or
(iii) result in the termination, suspension, modification or impairment of any
governmental license, permit, authorization or certificate held by such party or
relating to is assets or businesses. This Agreement constitutes the legal, valid
and binding obligation of such party enforceable against it in accordance with
its term.
(c) Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
Governmental Authority or other Person is required on the part of each party in
connection with the execution, delivery and performance of this Agreement.
(d) Litigation; Claims. With respect to each party, there is no claim,
action, audit, arbitration, dispute, investigation, suit, litigation or legal
proceeding pending, or to the best of such party's knowledge threatened, against
such party (i) relating to or otherwise affecting such party's ability to
execute and deliver this Agreement or to perform such party's obligations
hereunder, or (ii) which would materially adversely affect the Company or the
Company's contemplated business.
18
(e) Court Orders, Decrees, Judgments, Etc. There is outstanding no order,
writ, injunction, decree or judgment of any court, governmental agency or
arbitration tribunal against a party (i) relating to or otherwise affecting such
party's ability to execute and deliver this Agreement or to perform such party's
obligations hereunder or (ii) which would materially adversely affect the
Company or the Company's contemplated business.
Section 13. Indemnification; Expenses.
(a) Indemnification. In the event Vento or ▇▇▇▇▇▇▇▇ (each, an
"Indemnified Party") is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding (a "Proceeding"), whether
civil, criminal, administrative, or investigative (whether or not by or in the
right of the Company), by reason of the fact that such person is or was a
director, officer, incorporator, employee, or agent of the Company, or is or was
serving at the request of the Company as a director, officer, incorporator,
employee, partner, trustee, or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise (including the
Manager) (an "Other Entity"), shall be entitled to be indemnified by the Company
to the full extent then permitted by law against expenses (including counsel
fees and disbursements), judgments, fines (including excise taxes assessed on a
person with respect to an employee benefit plan), and amounts paid in settlement
incurred by him in connection with such Proceeding.
(b) Advancement of Expenses. The Company shall, from time to time,
reimburse or advance to any Indemnified Party the funds necessary for payment of
expenses, including attorneys' fees and disbursements, incurred in connection
with any Proceeding, in advance of the final disposition of such Proceeding;
provided, however, that, if (and only if) required by the Delaware General
Corporation Law, such expenses incurred by or on behalf of any such Indemnified
Party may be paid in advance of the final disposition of a Proceeding only upon
receipt by the Company of an undertaking, by or on behalf of such Indemnified
Party, to repay any such amount so advanced if it shall ultimately be determined
by final judicial decision from which there is no further right of appeal that
such Indemnified Party is not entitled to be indemnified for such expenses.
Section 14. Miscellaneous.
(a) Counterparts. This Agreement may be executed by one or more of the
parties hereto in any number of counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
(b) Construction. Each of the parties hereto acknowledge that it has
reviewed this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments hereto.
(c) Benefit; Assignment. This Agreement shall be binding upon and inure
to the benefit of all parties hereto and their respective successors and
permitted assigns; provided, however, that Manager shall not assign or otherwise
transfer its rights and obligations under this Agreement without the Company's
prior written consent. Any sale, assignment, sublease or
19
other transfer in violation of this Section 14(c) shall be null and void. Each
of the Stockholders (as such term is defined in the Stockholders Agreement)
shall be deemed a third party beneficiary of the Company's rights under this
Agreement and shall be permitted to exercise any rights pursuant to this
provision with the consent of Washington and two-thirds in interest of the Cash
Equity Investors.
(d) Complete Agreement. This document and the exhibits attached hereto
and each of the documents referred to herein embody the complete agreement and
understanding among the parties and supersede and preempt any prior
understandings, agreements, or representations by or among the parties written
or oral, which may have related to the subject matter hereof in any way.
(e) Amendment. This Agreement may not be amended except by a writing
signed by each of the parties.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws, and not the laws of conflict, of the State of
New York.
(g) Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall for any reason or to any extent be
invalid or unenforceable, the remainder of this Agreement and the application of
such provision to other persons or circumstances shall not be affected thereby,
but, rather, shall be enforced to the extent permitted by law. Furthermore, in
lieu of such an illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid or enforceable.
(h) Further Assurances. The parties agree that they will take all such
further actions and execute and deliver all such further instruments and
documents as may be required in order to effectuate the agreements set forth in
this Agreement.
(i) Waiver. No failure or delay on the part of the parties or any of them
in exercising any right, power or privilege hereunder, nor any course of dealing
among the parties or any of them shall operate as a waiver of any such right,
power or privilege nor shall any single or partial exercise of any such right,
power or privilege preclude the simultaneous or later exercise of any other
right, power or privilege. The rights and remedies herein expressly provided are
cumulative and are not exclusive of any rights or remedies which the parties or
any of them would otherwise have.
(j) Notices. All notices and communications hereunder shall be in writing
and shall be deemed to have been duly given to a party when delivered in person
(including delivery by an express delivery service or by facsimile transmission
during the recipient's regular business hours) to an officer of the Company or
Manager, respectively, or three business days after such notice is enclosed in a
properly sealed envelope, certified or registered, and deposited (postage and
certification or registration prepaid) in a post office or collection facility
regularly maintained by the United States Postal Service and addressed as
follows:
20
If to Manager:
TeleCorp Management Corp., Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
TeleCorp Management Corp., Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
TeleCorp PCS, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
TeleCorp Management Corp., Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Washington Wireless Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
And
21
Washington Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Telephone:
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
To each Cash Equity Investor, to its address set forth on Schedule A to the
Stockholders Agreement.
and
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other addresses as either party may designate in a written notice
served upon the other party in the manner provided herein.
22
IN WITNESS WHEREOF, the parties have set their hands effective as of the
date first written above.
COMPANY:
TELECORP PCS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
MANAGER:
TELECORP MANAGEMENT CORP., INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
In order to induce the Company to execute and deliver the foregoing Management
Agreement, by their execution in the spaces provided below each of the
undersigned hereby agrees to be bound by the provisions of Sections 5(f), 6 and
7 of this Agreement and (subject to the limitations on liability set forth in
Section 8(d)) to use good faith efforts to cause the Manager to perform all of
its obligations pursuant to this Agreement.
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
23
SCHEDULE A
Objectives
Sched. A-1
SCHEDULE I
Class C Common Voting Preference
--------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ 105,008 1,545
--------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 65,277 1,545
--------------------------------------------------------------
Sched. I-1
SCHEDULE II
Certain Class A Common Stock and Series E Preferred Stock owned by Vento
and ▇▇▇▇▇▇▇▇ which are not Extraordinary Event Shares (in aggregate, 5,764,596
shares of Class A Common Stock and 18,220 shares of Series E Preferred Stock)
shall vest as follows.
Vesting Date Percent of Shares
------------ -----------------
Vested 20%
July 17, 2000 15%
July 17, 2001 15%
July 17, 2002 15%
July 17, 2003 15%
Completion of Year 1 and Year 2 of 10% of the Shares issued at the
Minimum Build-Out Plan of the Domestic Market Closing
Domestic Market attached as Exhibit A
Completion of Year 3 of Minimum 10% of the Shares issued at the
Build-Out Plan of the Domestic Domestic Market Closing
Market plus aggregate POP coverage
of 60% of total POPs in the Domestic
Market (based on 1995 POPs, as
defined in the Stockholder's
Agreement)
Completion of Year 1 and Year 2 of 10% of the Shares issued at the
Minimum Build-Out Plan of the Puerto Puerto Rico Market Closing
Rico Market attached as Exhibit B
Completion of year 3 of Minimum 10% of the Shares issued at the
Build-Out Plan of the Puerto Rico Puerto Rico Market Closing
Market plus aggregate POP coverage
of 60% of total POPs in the Puerto
Rico Market (based on 1995 POPs, as
defined in the Stockholder's
Agreement)
Total 100%
Sched. II-1
Vesting of Vento's and ▇▇▇▇▇▇▇▇'▇ Extraordinary Event Shares.
Vento's and ▇▇▇▇▇▇▇▇'▇ Extraordinary Event Shares shall vest as follows:
Vesting Date Percent of Shares
------------ -----------------
The Effective Date 50%
The Effective Date/November 23, 2000 16 2/3%
November 23, 2001 16 2/3%
November 23, 2002 16 2/3%
Total 100.00%
Sched. II-2