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EXHIBIT 10.5
RSA MANAGEMENT AND
CONSTRUCTION SERVICES AGREEMENT
THIS Agreement ("Agreement") dated as of June 1, 1994, is made by and
among MERCURY, INC., a Louisiana corporation ("MLA") and MISSISSIPPI-34
CELLULAR CORPORATION, a Mississippi corporation ("MS-34").
WITNESSETH
WHEREAS, MS-34 has been granted authority (the "Construction Permit") by
the Federal Communications Commission (the "FCC") to construct a cellular
communications system operating on Frequency Block A to serve the Mississippi
4-Yalobusha, RSA #496 (the "MS-4 System");
WHEREAS, MS-34 has been granted authority (the "Operating License") by
the FCC to operate a cellular communications system on Frequency Block A to
serve the Mississippi 0-Xxxxxxx, XXX #000 (xxx "XX-0 System") (the MS-4 System
and MS-3 System are sometimes referred to herein collectively as the "System");
WHEREAS, MS-34 desires to enter into an agreement for the construction,
management and operation of the System, at all times subject to oversight,
review, supervision and control by MS-34;
WHEREAS, MLA has developed extensive experience, resources and expertise
pertinent to cellular system construction, management and operation and the
provision of quality cellular service to the public; and
WHEREAS, all of the foregoing and all of the agreements between the
parties herein shall be subject to FCC and other regulatory approvals, if any,
as required by law.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed as follows:
ARTICLE I.
CONSTRUCTION SERVICE
1.1 GENERAL.
(a) Subject to MS-34's oversight and control, MLA shall manage and
supervise: (i) the Initial Construction of the MS-34 System in
accordance with the MS-34 System Design; and (ii) such Additional
Construction as may be
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necessary to expand the System to satisfy the requirement of the
FCC's rules and to meet demand in the RSA in accordance with the
System Design. MLA shall use its best efforts to devote such time
and resources to construction of the MS-34 System as may
reasonably be necessary for completion of construction of the
Initial System within eighteen (18) months after grant of the
Construction Permit ("Initial Construction Completion Date").
1.2 DESIGN DEVELOPMENT AND SYSTEM CONSTRUCTION. MLA shall be
responsible for the competent, businesslike and timely management and
supervision of all activities integral to the construction of the System,
including, but not limited to, the following:
(i) reviewing the System Design proposed in the Applications, and, if
MLA recommends modifying the System Design, developing for
MS-34's consideration and approval a new System Design,
including, but not limited to, development of a cell
configuration, formulation of a frequency plan, analysis of
propagation characteristics, projection of the probable volume
and location of demand, allocation of system capacity, and
selection of control point, base station, and business office
sites;
(ii) negotiation as agent for MS-34 of such leases, options and
contracts and the securing of such third party consents and
agreements, including the entering into as agent for MS-34 of
such purchase agreements, leases or contracts, as may be
necessary to permit the full use of the control point, base
station, and business office sites selected;
(iii) securing as agent for MS-34 such zoning or other necessary
governmental approvals as may be required to permit the use of
the control point, base station, and business office sites
selected and acquired;
(iv) preparing proposed modifications to the Construction Permit and
Operating License for MS-34's review, prior approval and
execution and, as agent for MS-34, securing FCC approval of any
FCC applications for such modifications filed by MS-34, and
securing as agent for MS-34 such FAA approvals as may be required
for tower and antenna placements and heights;
(v) preparation of control point, base station, and business office
sites, including construction and/or modifications of radio
towers and buildings, if needed, to house switching and base
station equipment, construction and/or improvement of access
roads, and installations of such security facilities as may be
necessary to meet FCC, vendor and/or sound business requirements.
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(vi) installation of switching and base station equipment and such
other facilities as my be necessary or appropriate for the
operation of such equipment and the System or, to the extent
appropriate to or required by the System Design, the negotiation
and execution, as agent for MS-34, and subject to MS-34's prior
approval, of such agreements as are necessary to obtain use of
the joint or shared switching facilities of any other existing or
planned cellular systems, provided that such planned system will
become operational by such date as to allow the timely
commencement of operations of the System; and
(vii) the preparation and filing of any applications necessary to
obtain the Operating License from the FCC.
1.3 EQUIPMENT ACQUISITION. MLA shall be responsible for recommending
an equipment vendor and, upon approval by MS-34 of such vendor and the terms
and conditions of any vendor contract, acquire as agent for MS-34 such
switching, base station and ancillary equipment as may be necessary or
appropriate to the operation of the System in accordance with the System
Design.
1.4 INTERCONNECTION. MS-34 may direct and MLA shall be responsible
for negotiating, as agent for MS-34, with such local exchange telephone company
or companies as MLA may deem appropriate, the terms and conditions by which the
System will be interconnected to the local exchange switched telephone network
and/or to the facilities of one or more interexchange common carriers, and
shall supervise and manage such interconnections.
ARTICLE II.
MANAGEMENT AND OPERATION
2.1 GENERAL. Subject to MS-34's oversight and control, MLA shall
manage and supervise the dally operations of the System. To this end, MLA
shall provide (i) administrative, customer service, accounting, insurance,
purchasing, clerical and such other general services as may be necessary to the
administration of the System; (ii) marketing, sales, advertising and such other
promotional services as may be necessary in the marketing of the System; (iii)
the development and implementation of mechanisms for collecting the amounts
billed by the System which are not properly paid; (iv) the process of verifying
potential customer credit and defining deposit amounts when required; (v) the
establishment of bank accounts as may be necessary to the operation of the
System; and (vi) technical operations, engineering, and maintenance. MLA shall
devote its best effort to operate and manage the System properly and
efficiently. MLA shall be responsible for such additional activities integral
to the operation of the System as follows:
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(i) subject to supervision by MS-34, the hiring of personnel to
manage and operate the System and to market the services of the
System;
(ii) the entering into, as agent for MS-34 of such agreements as may
be necessary for the provision of services, supplies, office or
other types of space, utilities, insurance, and the like;
(iii) the development and implementation of promotional programs,
including but not limited to the negotiation, as agent for MS-34
of resale arrangements;
(iv) the preparation of proposals for expansion of the System or for
such other capital improvements as may be necessary to comply
with FCC rules or to meet market demand;
(v) the entering into of such agreement with other cellular system
operators, including but not limited to roaming and shared
facilities agreements, as may be appropriate or advisable to the
operation of the System.
2.2 INSURANCE. During the term of this Agreement, MLA shall procure
and maintain, at MS-34's expense, property damage and liability insurance on
the System with such coverage as are necessary to protect the System, workmen's
compensation insurance and fidelity bond coverage. Insurance will afford
protection in an amount agreed upon by the Parties.
ARTICLE III.
BUDGETS AND EXPENDITURES
3.1 GENERAL. In developing budgets, the Parties shall endeavor to
assure that the System shall be of sufficient size and provide a service of
sufficient quality to meet the demands of the RSA and to provide a viable
competitive alternative to the wireline system serving or authorized to serve
the RSA. However, the System shall be constructed and operated as
cost-effectively as possible.
3.2 CONSTRUCTION BUDGET. A budget for the construction of the System
(the "Construction Budget") shall be prepared by MLA and submitted to MS-34 for
approval within thirty (30) days from the Effective Date. MLA shall provide
MS-34 with weekly reports on the status of construction and a comparison of
expenditures versus amounts budgeted for the categories set out in the
Construction Budget.
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3.3 OPERATIONS BUDGET. MLA shall submit to MS-34 an annual
operations budget ("Operations Budget") by December I of each year for the
immediately succeeding calendar year which shall itemize the projected
expenditures and the anticipated net profit (as determined in accordance with
generally accepted accounting principles) of the System. Such Operations
Budget shall form the basis on which expenditures for the System shall be made.
ARTICLE IV.
AUTHORITY
4.1 LIMITATIONS. In addition to those matters elsewhere listed in
this Agreement for which MS-34's prior approval is required, MLA shall not have
authority, without prior approval by MS-34, to undertake any of the following
actions:
(i) sell, trade or surrender the Construction Permit or Operating
License or attempt to modify the Construction Permit or Operating
License;
(ii) modify the Construction Budget or Operations Budget;
(iii) enter into any joint venture, partnership or other agreement
dealing with the System;
(iv) grant a security interest in or hypothecate any of the assets of
the System except such security interest as may reasonably be
deemed necessary in the ordinary course of business;
(v) incur any debts not in the ordinary course of business;
(vi) settle any legal action or litigation in the name of MS-34 or the
System or brought by or against MS-34 or the System.
MLA shall have authority with prior approval of MS-34 to undertake, and
may undertake, any and all other action necessary or advisable to construct,
manage and operate the System which are not prohibited by law or regulation,
including the authority to act as agent for and on behalf of MS-34 in entering
into contractual arrangement and before federal, state and local governmental
authorities.
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ARTICLE V.
PERSONNEL
5.1 EMPLOYEES. Subject to MS-34's supervision, MLA may employ and
shall be responsible for recruiting, hiring, training, promotion and
terminating any employees it deems necessary and appropriate to the
construction, management and operation of the System, but shall be subject to
the Construction Budget and Operations Budget.
5.2 MMS AND MLA EMPLOYEES. MLA may elect to rely upon its own
employees for the performance of services in constructing and operating the
system to the extent, in their discretion, they deem necessary or advisable.
Should MLA use its own personnel to perform services for the System, such
services shall not be charged to the System separately and apart from the
Management Fees provided for in Section 6.2 of this Agreement.
5.3 INDEPENDENT CONTRACTORS. MLA may, at its discretion, engage
Independent Contractors to perform any service necessary to construction,
management and operation of the System. MLA shall be responsible for selecting
and contracting on behalf of MS-34 or the System with any such Independent
Contractors, but shall be subject to the Construction Budget and Operations
Budget.
ARTICLE VI.
COMPENSATION
6.1 REIMBURSEMENT. MS-34 shall reimburse MLA for all expenses
reasonable incurred in the performance of its responsibilities under this
Agreement ("Reimbursable Expenses"), including but not limited to, capital
costs and the costs and expenditures of any Independent Contractors employed by
MLA on MS-34's behalf in fulfilling its construction, operating, or other
responsibilities hereunder.
6.2 MANAGEMENT FEE. MS-34 shall pay MLA a management fee ("Management
Fee") for the performance of their responsibilities under this Agreement. The
Management Fee shall be payable in advance at the beginning of each month and
shall not be less than $17,000 and not more than $21,000 per month based on the
actual resources required to perform the responsibilities previously defined.
All cost of services of MLA in providing management, supervisory and
operational functions, with the exception of travel, lodging, long distance,
postage and shipping expenses related to MS-34, shall be included in the
Management Fee and shall not be separately charged to MS-34. Salaries of
employees located in the MS-34 market will not be included in the Management
Fee.
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6.3 STATEMENTS. MLA shall each provide to MS-34, within Fifteen (15)
days after the close of each month during the term of this Agreement, a monthly
invoice, supported by documentation satisfactory to MS-34, setting forth in
reasonable detail all expenses incurred by MLA on behalf of the System during
that month, including all of MLA's Reimbursable Expenses (the "Monthly
Invoice"). MS-34 shall remit payment of each Monthly Invoice within ten (10)
days of the date it receives such statement.
ARTICLE VII.
ACCOUNTING AND REPORTS
7. 1 BOOKS AND RECORDS. MLA shall each keep or cause to be kept
accounts and complete books and records with respect to the aspects of the
construction, management and operation of the System for which it is
responsible, in accordance with generally accepted accounting principles
consistently applied, showing all costs, expenditures, assets, and liabilities,
and all other records necessary or convenient for recording the financial
aspects of the construction, management and operation of the System.
7.2 MONTHLY FINANCIAL STATEMENT. Within twenty (20) days after the
end of each month and within thirty (30) days after the end of each fiscal
year, MLA shall prepare or cause to be prepared and transmit to MS-34 unaudited
financial statements, which all include a balance sheet, an income statement
and such other information as MS-34 reasonably requires (the "Monthly and
Annual Statements", respectively). The Monthly and Annual Financial Statements
shall further provide reconciliations between the Construction Budget or
Operations Budget, as applicable, and actual costs and revenues for the period
covered by the statements and, in the case of the Monthly Statements, for the
Year to date. MLA shall also provide at MS-34's request any and all such
additional statements or reports as may be necessary for MS-34's oversight and
control of System construction and operation.
7.3 ACCESS TO BOOKS AND RECORDS. MS-34 shall have at all reasonable
times during normal business hours access to and the right to photocopy the
books and records maintained by MLA pursuant to Section 7.1 of this Agreement,
which books, records and information shall be kept at the principal offices of
MLA, as applicable.
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ARTICLE III.
TERM
8.1 TERMINATION. This Agreement shall continue for one (1) year
(ending May 31, 1995), unless terminated as follows:
(a) Any Party may terminate this agreement on thirty (30) days prior
written notice to the other Parties.
8.2 TERMINATION DUTIES. After receipt of written notice of
termination, but prior to the effective date of such termination, MLA shall
continue to perform under this Agreement unless specifically instructed to
discontinue such performance. In any event, even if so instructed, MLA will
nonetheless be entitled to reimbursement of Reimbursable Expenses and payment
of Management Fees, if payable pursuant to Section 6.2 hereof, for the period
ending on the effective date of termination. Fifteen (15) days prior to the
effective date of expiration or termination of this Agreement, MLA shall
relinquish to MS-34 or its designers possession and control of all property of
the System, including but not limited to, all documents, data and records
pertaining to the System. MLA and MS-34 shall commit to use their best efforts
to assure a smooth transition in the event of termination.
ARTICLE IX.
MISCELLANEOUS
9.1 CHOICE OF LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Mississippi.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized officers on the dates indicated below to be effective
as of ______________________.
MISSISSIPPI-34
CELLULAR CORPORATION MERCURY, INC.
By: /s/ XXXX XXXXXX, III By: /s/ XXXXXX XXXXX
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Xxxx Xxxxxx, III Xxxxxx Xxxxx
Director Senior Vice President/CFO
+ Xxxxx Xxxxxx'x Oral Consent
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