AMENDMENT TO AUCTION PARTICIPATION AND
LICENSE PARTITIONING AGREEMENT
This AMENDMENT (the "Amendment") is made and entered into this 6th day
of November, 1998 (the "Amendment Date"), by and between Intek Global Corp.
("Intek"), a corporation organized under the laws of the State of Delaware
with principal offices at 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx
Xxxxxx 00000-0000, Intek License Acquisition Corp. ("ILAC"), a corporation
organized under the laws of the State of Delaware with principal offices at
00000 Xxx Xxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxxxx 00000 and the National Rural
Telecommunications Cooperative ("NRTC"), a non-profit cooperative organized
under the laws of the District of Columbia with principal offices at 0000
Xxxxxxxxxxx Xxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000.
WITNESSETH:
WHEREAS, the parties entered into an Auction Participation and License
Partitioning Agreement dated August 17, 1998 (the "Auction Agreement")
pursuant to which the parties agreed to participate jointly in the auction
held by the Federal Communications Commission (the "FCC") for certain Phase
II licenses in the 000-000 XXx xxxx (xxx "000 XXx Xxxx");
WHEREAS, in the Auction Agreement, the parties agreed to a process that
would enable each party to carry out its 220 MHz Band communications services
plans in the most efficient and economical manner, through cooperation and
post-auction license partitioning, disaggregation and assignments of
specified Target Licenses won in the 220 MHz Band auction, thereby enabling
each party to purchase the geographic portions of the various licenses in
nationwide ("NWAs"), regional ("REAGs") and Economic Areas ("EAs") in which
each is interested;
WHEREAS, in accordance with the terms of the Auction Agreement, ILAC
entered the 220 MHz Band auction, and ILAC was the successful high bidder for
certain 220 MHz Band licenses (the "Acquired Licenses"); and
WHEREAS, the parties have agreed to further define their rights and
obligations as to the Acquired Licenses and now are desirous of further
memorializing in this Amendment their current understandings regarding the
assignment, disaggregation and partitioning of the Acquired Licenses.
NOW, THEREFORE, in consideration of the foregoing and of the respective
representations, warranties, agreements and conditions contained herein, the
parties hereto agree as follows:
1. Except to the extent that a new definition is provided in this
Amendment, all Capitalized terms used herein shall have the meaning defined
for such terms in the Agreement.
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2. NRTC hereby acknowledges that to the best of its knowledge Intek and
ILAC have fully performed their obligations under Section 2 of the Auction
Agreement.
3. Notwithstanding any provision of the Auction Agreement, and in
furtherance of the obligations set forth in Section 1 of the Agreement, the
parties hereby agree as follows:
(a) Nationwide license Block L shall be retained in its entirety
to ILAC; nationwide license Block K shall be partitioned or assigned in its
entirety to NRTC. The parties agree that ILAC shall bear the construction
obligations pursuant to Section 90.769 of the Commission's Rules with respect
to Nationwide Block L and NRTC shall bear the construction obligations
pursuant to Section 90.769 of the FCC's Rules with respect to Nationwide
Block K.
(b) As set forth on Exhibit 1 to this Amendment, REAG licenses on
Block J for all regions shall be disaggregated by assigning the upper eight
(8) channel pairs to ILAC and the lower seven (7) channel pairs to NRTC. The
parties agree to share the construction obligations pursuant to Section
90.767 with respect to the REAG licenses on Regional Block J. The parties
shall negotiate and enter into a Construction Agreement with respect to such
obligations, which Construction Agreement shall provide for mutual options
between the parties to acquire partitioned areas which remain unconstructed
three years after the grant of the license.
(c) For each Acquired License, Exhibit 1 to this Amendment sets
forth (i) whether the license is to be assigned, partitioned or disaggregated
in its entirety to ILAC or NRTC or jointly to both parties, (ii) the cost of
the successful bid in the 220 MHz Band auction for each Acquired License to
be borne respectively by ILAC and NRTC and (iii) the apportionment of the
construction obligations pursuant to the FCC's Rules.
(d) For each EA license to be jointly partitioned between
NRTC and ILAC, Exhibit 2 to this Amendment, sets forth the areas to be
partitioned in accordance with Section 1.2 of the Auction Agreement, which
areas partition to ILAC from the EA license a 45 mile service area from the
coordinates of the base stations of all Intek 220 MHz systems currently
licensed to Intek or one of its affiliates or for which Intek or its
affiliates has a binding contractual commitment or option to acquire.
(e) The E Block license in EA 147 shall be disaggregated by
assigning five (5) channel pairs to Intek and five (5) channel pairs to NRTC.
The parties shall bear the purchase price of the license for EA 147, E Block
equally.
(f) Notwithstanding any provision of the Auction Agreement, NRTC
shall contribute to the payments due to the FCC from ILAC high bids in the
220 MHz Band auction for the Acquired Licenses that amount for each NRTC
License as reflected on Schedule 1 hereto, which amounts total $5,576,600.00
(the "NRTC Payments"). NRTC Payments shall be made in accordance with the
terms and conditions of that certain Escrow Agreement entered into between
the parties on September 10, 1998 (the "Escrow Agreement"). NRTC shall make
such payment into the Escrow not later than five (5) business days prior to
the date payment on the Acquired Licenses is due to the FCC upon the FCC's
release of a Public Notice announcing that it is
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prepared to grant the Acquired Licenses in the amount equal to $1,533,402.00
(the "NRTC Supplemental Deposit").
(g) Notwithstanding any provision of the Auction Agreement, NRTC
shall make such payments as necessary to make payment to ILAC of fifty
percent (50%) of those certain penalties (the "Withdrawal Penalties") imposed
on ILAC by the FCC for withdrawal of the high bids in the 220 MHz Band
auction as set forth in Exhibit 3 to this Amendment. Exhibit 3 to this
Amendment sets forth (i) certain licenses for which ILAC withdrew high bids
during the auction, (ii) the amount of such ILAC high bid, (iii) the amount
of the winning bid, if any, for that license in the auction, (iv) the amount
of the Withdrawal Penalty for that license or the contingent liability for a
Withdrawal Penalty. NRTC, in addition, shall make such further payments from
time to time to ILAC in an amount equal to 50% of any Withdrawal Penalties
assessed by the FCC within five (5) business days of its receipt on written
notice from ILAC of any request by the FCC for further payments of Withdrawal
Penalties. NRTC shall be entitled to receive from ILAC 50% of the amounts of
any monies refunded to ILAC by the FCC that were withheld in anticipation of
the Withdrawal Penalties within five (5) business days of ILAC's receipt of
such funds.
(h) NRTC's failure to timely make any payments due under the
Auction Agreement or this Amendment shall be deemed a material breach of the
Auction Agreement, and shall entitle ILAC to apply any funds then held in
escrow as necessary to pay such amounts as are due and owing. ILAC shall not
have any obligation to apply for a partitioned license until such time as all
amounts then due and owing are paid in full.
4. Section 3.2.1 of the Auction Agreement is hereby deleted in its
entirety, and the following Section 3.2.1 is hereby inserted in its stead:
NRTC has designated eleven (11) states (the "Designated States"). The
Designated States are as follows: Alaska, Arizona, Arkansas, Kentucky,
Louisiana, Nebraska, New Mexico, North Carolina, Oklahoma, Texas and
Washington.
5. Sections 3.2.2 and of the Auction Agreement is hereby deleted in its
entirety.
6. Each of Intek, ILAC and NRTC hereby restate and confirm as of the date
hereof the truth and accuracy in all material respects of the representations
and warranties contained in Sections 10.1 and 10.2, respectively of the
Auction Agreement.
7. Except as expressly amended by the terms of this Amendment, the Auction
Agreement remains in full force and effect between the parties.
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In Witness whereof, the parties have hereunto set their hands and seals
this 6th day of November, 1998.
NATIONAL RURAL TELECOMMUNICATIONS COOPERATIVE
/s/
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By:
INTEK GLOBAL CORP.
/s/
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By:
INTEK LICENSE ACQUISITION CORP.
/s/
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By:
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