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EXHIBIT 10.7
RSA MANAGEMENT AND
CONSTRUCTION SERVICES AGREEMENT
THIS Agreement ("Agreement") dated as of 5-1-96, is made by and among
MERCURY, INC., a Louisiana corporation ("MLA") and MERCURY CELLULAR TELEPHONE
COMPANY, a Louisiana corporation ("MCELL").
WITNESSETH
WHEREAS, MCELL has been granted authority (the "Construction Permit") by
the Federal Communications Commission (the "FCC") to construct a cellular
communications system operating on Frequency Block B to serve the Mercury
Cellular Telephone Company Xxxx Xxxxxxx XXX #000 xxx Xxxxxxxxx XXX #000X0 and
#458B1 (the "MCELL System");
WHEREAS, MCELL has been granted authority (the "Operating License") by
the FCC to Operate a cellular communications system on Frequency Block B to
serve the Mercury Cellular Telephone Company Xxxx Xxxxxxx XXX #000 xxx
Xxxxxxxxx XXX #000X0 and #458B1 (the "MCELL System").
WHEREAS, MCELL 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 MCELL;
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 MCELL's oversight and control, MLA shall manage and
supervise: (i) the Initial Construction of the MCELL System in
accordance with the MCELL System Design; and (ii) such Additional
Construction as may be necessary to expand the System to satisfy
the requirement of the FCC's rules and to meet demand in the MSA
and RSA in accordance with the System Design. MLA shall use its
best efforts to devote such time and resources to construction of
the
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MCELL 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
MCELL'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 MCELL of such leases, options and
contracts and the securing of such third party consents and
agreements, including the entering into as agent for MCELL 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 MCELL 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 MCELL's review, prior approval and
execution and, as agent for MCELL, securing FCC approval of any
FCC applications for such modifications filed by MCELL, and
securing as agent for MCELL 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.
(vi) installation of switching and base station equipment and such
other facilities as may 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 MCELL, and subject to MCELL'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
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(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 MCELL of such vendor and the terms
and conditions of any vendor contract, acquire as agent for MCELL 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. MCELL may direct and MLA shall be responsible
for negotiating, as agent for MCELL, 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 MCELL's oversight and control, MLA shall
manage and supervise the daily 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:
(i) subject to supervision by MCELL, 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 MCELL 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 MCELL
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;
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(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 MCELL'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 MSA and RSA and to provide a
viable competitive alternative to the wireline system serving or authorized to
serve the MSA and RSA. However, the System shall be constructed and operated as
cost-effectively as possible.
3.2 CONSTRUCTION BUDGETS. A budget for the construction of the System
(the "Construction Budget") shall be prepared by MLA and submitted to MCELL for
approval within thirty (30) days from the Effective Date. MLA shall provide
MCELL 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.
3.3 OPERATIONS BUDGET. MLA shall submit to MCELL an annual operations
budget ("Operations Budget") by December 1 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 MCELL's prior approval is required, MLA shall not have
authority, without prior approval by MCELL, 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;
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(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 MCELL or the
System or brought by or against MCELL or the System.
MLA shall have authority with prior approval of MCELL 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 MCELL in entering
into contractual arrangement and before federal, state and local governmental
authorities.
ARTICLE V.
PERSONNEL
5.1 EMPLOYEES. Subject to MCELL'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 MCELL 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. MCELL 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 MCELL's behalf in fulfilling its construction, operating, or other
responsibilities hereunder.
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6.2 MANAGEMENT FEE. MCELL 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 equal $216,000. This fee is subject to change quarterly based on
operational analysis. 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 MCELL, shall be
included in the Management Fee and shall not be separately charged to MCELL.
Salaries of employees located in the MCELL market will not be included in the
Management Fee.
6.3 STATEMENTS. MLA shall each provide to MCELL, within fifteen (15)
days after the close of each month during the term of this Agreement, a monthly
invoice, supported by documentation satisfactory to MCELL, 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"). MCELL 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 MCELL unaudited
financial statements, which all include a balance sheet, an income statement
and such other information as MCELL 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 MCELL's request any and all such
additional statements or reports as may be necessary for MCELL's oversight and
control of System construction and operation.
7.3 ACCESS TO BOOKS AND RECORDS. MCELL 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. l of this Agreement,
which books, records and information shall be kept at the principal offices of
MLA, as applicable.
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ARTICLE VIII.
TERM
8.1 TERMINATION. This Agreement shall continue for one (1) year,
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 MCELL 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 MCELL 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 Louisiana.
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 5-1-96.
MERCURY, INC.
By: /s/ [ILLEGIBLE]
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It's: Secretary
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MERCURY CELLULAR TELEPHONE COMPANY
By: /s/ XXXX XXXXX
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It's: Vice President
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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 5-1-96.
MERCURY, INC.
By: /s/ [ILLEGIBLE]
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It's: Secretary
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MERCURY CELLULAR OF KANSAS, INC.
By: /s/ XXXX XXXXX
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It's: Vice President
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