CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT 10.16
DISTRIBUTION AGREEMENT
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This Agreement is made and entered into between CUE Paging
Corporation, a Delaware corporation, with its principal offices at 0000 Xxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxx ("CUE") and Satellink Paging, Inc., with its principal
place of business at 00 Xxxxxxxxx Xxxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx (the
"Distributor").
WHEREAS, CUE provides National Telecommunication Services using 57 KHz
subcarriers of FM broadcast stations and offers nationwide network services
which qualify under Part 90 of the Federal Communications Commission's Rules and
Regulations;
AND WHEREAS, the Distributor offers cellular telephone and/or paging
services and wishes to purchase Airtime and Network services from CUE to offer
nationwide and regional paging services in the Metropolitan Statistical Areas
("MSA"), indentified in Schedule "A;"
NOW THEREFORE, in consideration of the foregoing and the
representations and warranties contained in this Agreement, the parties agree as
follows:
1. Exclusivity. CUE hereby grants to the Distributor the exclusive
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right to purchase Airtime and Network services from CUE in the MSA for the
purpose of providing regional paging and the non-exclusive right to purchase
Airtime and Network services for the purpose of providing nationwide paging in
the MSA.
1.1 The Distributor agrees:
(a) not to provide paging services using the CUE Network to
subscribers not located in the MSA;
(b) not to use FM subcarrier pagers other than pagers supplied
by CUE pursuant to paragraph 8 of this Agreement during the
first two (2) years of this Agreement; and
(c) not to use an FM subcarrier Network other than the CUE
Network or to purchase Airtime and Network services from any
supplier other than CUE during the term of this Agreement.
2. Network Charges. The Distributor agrees to purchase Network
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services for FM subcarrier paging exclusively from CUE and to pay CUE pursuant
to Schedule "B":
(a) A one-time installation charge of $____________, payable on
execution of this Agreement or on the date the regional FM
subcarrier transmitter commences, whichever is later; and
(b) a monthly charge of $________________.
3. Airtime Charges. The Distributor agrees to purchase Airtime on the CUE
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Network at a rate of $*** per month per pager for nationwide service and $***
per month per pager for regional service provided that:
(a) the minimum average Airtime charge per pager shall be at least
$*** per month; and
(b) The minimum amount paid to CUE for Airtime by the Distributor
shall be $*** per month per MSA.
3.1 The Distributor agrees to provide within fifteen (15) days after
execution of this Agreement a list of all pager cap codes in service in the MSA
and to provide the additions and deletions on the 30th day of each month
thereafter during the term of this Agreement.
4. Price Increases. It is agreed that the monthly Airtime and Network
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charges set out in Paragraphs 2 and 3 above shall remain constant for year 1990
at the prices set out therein, Thereafter, these charges may be increased at the
sole discretion of CUE provided that the price increase in any year will not
exceed the increase in the United States All Cities Consumer Price Index for
that year over the previous year.
5. Telephone Charges. The Distributor agrees to pay CUE the amount of
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$*** per month for each regional pager processed through CUE's paging terminal
to reimburse CUE for long distance phone charges incurred by CUE in providing
regional service to the Distributor.
6. Effective Date. The monthly Network charge referred to in Paragraph
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2(b) and the Airtime charges referred to in Paragraphs 2(b), 3 and 5 commence on
the date this Agreement is executed or on the date the regional FM subcarrier
transmitter commences, whichever is later.
7. Cooperative Marketing Program. The Distributor and CUE each agree to
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fund a national advertising program by an
*** Denotes portions omitted pursuant to a request for confidential treatment.
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amount equal to $*** per month per pager using the CUE Network in the MSA.
This amount shall be paid monthly and shall be used to fund national marketing
activities of mutual benefit of the Distributor and CUE.
8. Equipment Supply. CUE agrees to supply the Distributor with
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pagers which operate on the CUE Network at a price of $*** per pager, payable
within thirty (30) days of shipment by CUE of such pagers, provided that the
Distributor:
(a) provides CUE with monthly ninety (90) day rolling forecasts
indicating the number of pagers that the Distributor desires
to purchase or lease from CUE;
(b) purchases FM subcarrier pagers exclusively from CUE during
the first two (2) years of this Agreement; and
(c) does not resell or re-lease the pager to any other party
except end users or supply pagers to subscribers not located
in the MSA identified in Schedule "A,"
8.1. Equipment Lease. CUE shall also supply such pagers on a
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thirty-six (36) month lease at $*** per month provided that:
(a) the Distributor meets the usual commercial credit
requirements imposed by third party leasing organizations;
and
(b) the Distributor meets all the requirements specified in
paragraphs 8(a), 8(b) and 8(c).
8.2 Rolling Forecast. In each rolling forecast, the number of pagers
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forecasted for the first thirty (30) days shall be 100% firm, the number of
pagers forecasted for the second thirty (30) days shall be 75% firm and the
number of pagers forecasted for the third thirty (30) day period shall be 50%
firm.
8.3 The rolling forecast is to be provided by the Distributor to CUE
by the 15th day of each and every month during the term of this Agreement. The
first rolling forecast will be provided to CUE on the fourteenth (14th) day
after the execution of this Agreement.
*** Denotes portions omitted pursuant to a request for confidential treatment.
3
8.4 Price Increases. The price for the pager, specified in Paragraph
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6 above, shall remain constant in the years 1990 and 1991 and thereafter may be
changed at the sole discretion of CUE provided that the price change shall not
exceed the change in the United States All Cities Consumer Price Index for each
year after 1991 over 1990.
9. Regular Warranty. CUE warrants all pagers supplied hereunder
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against defects in material and workmanship. CUE further warrants that the
pagers will respond correctly to at least forty-eight (48) of fifty (50) pages
when tested under laboratory conditions (the performance standard). CUE will
repair or replace all pagers sold hereunder that are defective in material or
workmanship warranted under normal conditions of service (defined as including
normal wear and tear, but excluding abuse or improper treatment) or fail to meet
the performance standard at any time within one year of delivery. CUE and the
Distributor agree that the failure of products to meet the performance standard
either when delivered to the buyer or after a period of service will impose
costs on the Distributor very difficult or impossible to determine precisely.
Accordingly, CUE agrees to pay the Distributor liquidated damages of $5.00 for
each unit in excess of 1.5% of those delivered in any month that fails to meet
the performance standard when received and further agrees to pay the Distributor
liquidated damages of $15.00 for each unit in excess of 10% of those delivered
in any month that under normal conditions of service fails to meet the
performance standard within one year of receipt by the buyer.
9.1 Extended Warranty. CUE will agree to extend the foregoing
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warranty for one year periods up to a total of three years for an annual fee not
to exceed 10% of the Distributor's original sales price.
9.2 Limitation of Warranty. The aforesaid warranties are expressly
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in lieu of all other conditions and warranties, express, implied or statutory,
including without limitation any implied warranties of merchantability or of
fitness and all other obligations and liabilities of CUE with respect to any
defect or deficiency applicable to or resulting directly or indirectly from the
products supplied hereunder whether in contact or in tort or otherwise. CUE's
warranty liability shall under no circumstances exceed the invoice price of any
product for which the warranty claim is made, nor shall CUE in any event be
liable for consequential or special damages or lost profits. In the absence of
evidence satisfactory to CUE as to the actual date of sales of any product for
use, such date shall for the purpose of this
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paragraph be deemed to be sixty (60) days from the date of sale to the
Distributor.
10. Payment Terms. Payment for equipment or services will be due
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within thirty (30) days of receipt and in the event of any failure to pay within
this term the Distributor shall provide CUE with a Letter of Credit in an amount
equal to all future pager orders, which Letter of Credit shall be implemented
prior to shipment.
10.1 The Distributor agrees to pay CUE interest on any amounts unpaid
after the thirty (30) day period at the rate of prime plus two (2%) percent.
11. National Accounts. The Distributor agrees that it will
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participate in the National Accounts Program described in Paragraph 11.1 below.
11.1 The Distributor agrees that the National Accounts specified in
the attached Schedule "C" shall be billed by CUE directly and such National
Accounts shall be CUE-owned subscribers provided that:
(a) in the event the Distributor sells paging services in its
MSA to a National Account, the Distributor shall receive a
one-time fee of $*** per National Account, if
(i) the account has not already been signed by CUE as a
National Account;
(ii) the Distributor signs the National Account to an
agreement on CUE's National Account Program; and
(iii) the aggregate orders in the first six (6) months are
for a minimum of *** pagers;
(b) the Distributor will also receive a commission of $*** per
month for each National Account pager sold and installed in
the Distributor's MSA so long as such pagers are active and
paid for;
(c) the Distributor will receive a commission of $*** per month
for each pager sold to a
*** Denotes portions omitted pursuant to a request for confidential treatment.
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National Account signed by the Distributor where the pager
is located outside the MSA; and
(d) the Distributor will receive a service fee of $*** per
month per pager for each National Account pager shipped into
the MSA as a result of the sale by CUE or another
Distributor to such National Account.
12. National Message Center. The Distributor agrees to provide all
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nationwide subscribers with access to the CUE National Message Center. The
Distributor shall pay to CUE an amount equal to $*** per minute for use of such
services.
13. Default. In the event the Distributor defaults with respect to
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any of the terms or conditions of this Agreement, including all amendments,
schedules and the two promissory notes attached hereto and incorporated herein
by reference, or fails to make any payment required hereunder for thirty (30)
consecutive days, upon notice from CUE, the Distributor shall transfer to CUE
all of the Distributor's current subscribers (or customers) using or being
provided with nationwide or regional services in the MSA. All contracts, billing
data and other pertinent information shall be transferred to CUE within ten (10)
days of the notice from CUE.
13.1 Upon transferring current subscribers to CUE, and CUE finding
such subscribers acceptable, the Distributor shall receive compensation equal to
$*** per pager, which compensation shall be first applied to any outstanding
indebtedness to CUE. In the occurrence of an Event of Default, the Distributor
not only agrees to transfer the Distributor's subscribers to CUE as provided for
in paragraph 13 above, but also agrees to cease using any CUE service xxxx,
trademark and/or name in the MSA.
14. Other Agreements. The Distributor agrees not to enter into any
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agreements relating to paging except local paging with companies engaged in
supply of paging services without CUE's prior written approval.
15. Government Regulations. Services provided under this Agreement
----------------------
by both parties shall be in accordance with all applicable rules and regulations
of the Federal Communications Commission and any applicable State Regulatory
Commission.
*** Denotes portions omitted pursuant to a request for confidential treatment.
6
16. Control of Network. It is understood that the control and
------------------
responsibility for the standards and quality of nationwide and regional data
distribution services supplied by CUE shall be retained, rest and remain solely
the prerogative and obligation of CUE. No provision of this Agreement shall be
construed as vesting in the Distributor any control whatsoever of CUE's radio
communication facilities and operations. The Distributor shall promptly, upon
the day of receipt, report to CUE any complaints received from subscribers
relating to the nationwide or regional services provided by CUE under this
Agreement.
17. Service. Each party shall make reasonable efforts to provide
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continuous, uninterrupted and errorless services to the other hereunder, but in
no event shall the providing party be liable to the receiving party for damages
incurred by it or its subscribers on account of any failure to provide such
services.
18. No Representations or Warranties. Except as provided in Paragraph
--------------------------------
9 of this Agreement, the Distributor shall not make any representations or
warranties, either express or implied, in regard to the nationwide and regional
services or pagers provided by CUE hereunder. The nationwide and regional
services and/or pagers shall carry only such warranties as shall be provided in
writing by CUE. CUE MAKES NO WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING
WARRANTIES AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO THE NATIONWIDE AND REGIONAL SERVICES OR THE PAGERS PROVIDED
HEREUNDER.
19. Independent Contractors. The respective parties hereto are
-----------------------
independent contractors and nothing herein shall be deemed to create a
relationship of partnership, joint venture, principal and agent or franchisee.
This Agreement does not entitle either party to make commitments of any kind for
the account of the other party as agent or otherwise or to assume or create any
obligations, express or implied, on behalf of the other party, or to bind the
other party in any respect, and each party agrees to, and will, indemnify and
hold the other party harmless in this regard.
20. Coverage of Signal. CUE's Nationwide Network shall provide
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adequate coverage for nationwide and regional services in the MSA to the
Distributor. On execution of this Agreement, the Distributor shall have
satisfied itself that coverage being provided by CUE in the MSA is adequate to
meet the business requirements of the Distributor. CUE shall be under no
obligation to expand the CUE Network or the paging signal in the
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MSA unless such obligation is agreed to in writing by the parties and attached
hereto as a Schedule to this Agreement.
21. Termination. If the Distributor violates any provisions of this
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Agreement, including all amendments and exhibits hereto, or fails to perform
any obligations hereunder and if upon being given thirty (30) days' written
notice by CUE of such violation, the Distributor does not correct any such
violation, or if such violation is willful, then CUE shall have the right of
cancellation of this Agreement by giving the Distributor sixty (60) days'
written notice. If this occurs, CUE shall have the right to require the
Distributor to transfer its subscribers to CUE in accordance with the provisions
of Paragraph 13 above. Such an occurrence will constitute an Event of Default as
defined in the promissory notes copies of which are attached hereto and entitles
CUE to all rights and remedies provided herein.
21.1 If CUE violates any provision of this Agreement or fails to
perform any obligations hereunder and if upon being given thirty (30) days'
written notice by the Distributor of such violation CUE does not correct any
such violation, or if such violation is willful, then the Distributor shall have
the right of cancellation of this Agreement by giving CUE sixty (60) days'
written notice.
21.2 Notwithstanding the provisions of Paragraph 21 above, this
Agreement shall automatically terminate, at the option of CUE, upon the
occurrence of (1) the Distributor ceasing to provide nationwide or regional
services hereunder for any reason, (2) the Distributor making any general
assignment or trust mortgage for the benefit of creditors or is adjudged a
bankrupt, or (3) transfer of ownership or control of the Distributor. In such
event, CUE shall have an immediate right to cancel this Agreement.
21.3 The parties recognize that the services offered by both parties
are communications services and that the termination of this Agreement cannot be
permitted to interfere with the continuity of such services to all subscribers.
Therefore, termination of this Agreement shall be effected in such "best
efforts" manner by both parties as to avoid, insofar as possible, any
interruption of services to subscribers. Provided, however, that if upon default
the Distributor does not transfer the subscribers to CUE as provided in
Paragraph 13 above, CUE may immediately deactivate or invalidate the
Distributor's subscribers upon notice to the Distributor.
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22. Discontinuance of Operations. In the event that CUE decides for
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any reason to discontinue Network operations or services provided hereunder, CUE
shall:
(a) give the Distributor at least ninety (90) days' notice of
discontinuance of operation;
(b) if requested, assign any FM subcarrier agreements used to
provide service in the MSA to the Distributor; and
(c) offer to sell the Distributor, at the then depreciated cost,
any equipment located at the radio station, necessary to
operate on the FM subcarrier paging system.
23. Tradenames. The Distributor shall provide nationwide and
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regional paging services under its own name provided that whenever the
Distributor advertises paging services the advertisement shall contain the
following logo:
[LOGO OF CUE APPEARS HERE]
24. Notices. All notices and other communications hereunder shall be
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in writing and shall be deemed given if delivered personally or by certified
mail, return receipt requested, or mailed to the parties at the following
addresses:
If to the Distributor: Satellink Paging, Inc.
Attention: President
00 Xxxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
With a Copy To: V. Xxxxx Xxxxxxxxxxxxx
Powell, Goldstein, Xxxxxx & Xxxxxx
1100 C & S National Bank Building
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
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If to CUE: CUE Paging Corporation
Attention: President
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
25. Assignment. This Agreement and the rights granted may not be
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assigned or transferred in whole or in part by the Distributor without prior
written consent of CUE. Such consent shall also be required in the event that
the controlling shareholder interest in the Distributor changes. This Agreement
shall be binding upon and adhere to the benefit of the parties hereto and their
approved successors and assigns.
26. Severability. If any of the provisions contained in this Agreement be
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deemed invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired hereby.
27. Miscellaneous. This Agreement, including all amendments, schedules and
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two (2) attached promissory notes which are hereby incorporated by reference:
(a) constitutes the entire Agreement between the parties pertaining
to the subject matter hereof and supersedes all prior agreements
and understandings, both written and oral. Any variation of this
Agreement must be made in writing and signed by both CUE and the
Distributor;
(b) except as expressly stated herein, is not intended to and shall
not confer upon any other person any rights or remedies hereunder
or otherwise with respect to the subject matter hereof; and
(c) shall be governed by the laws of the State of New York.
28. Term. The term of this Agreement if ten (10) years, subject to renewal
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for a further ten (10) year term at the option of either party if the
Distributor is not in default in any payment of or terms and conditions of
this Agreement at the renewal date.
29. Arbitration. All disputes arising in connection with this Agreement
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shall be finally settled under the Rules of
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Conciliation and Arbitration of the International Chamber of Commerce by three
(3) arbitrators appointed in accordance with the said Rules. The arbitration
shall be held in New York, New York.
IN WITNESS wherever the parties hereto have caused this Agreement to
be executed by their duly authorized officers this 2nd day of April, 1990.
CUE PAGING CORPORATION
By: Xxxxxx X. Xxxxxx
________________________ -----------------------------------
Witness Title: Chairman & Chief Executive Officer
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SATELLINK PAGING, INC.
By: Xxxxx X. Xxxxxxxx
________________________ -----------------------------------
Witness Title: Executive Vice President
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SCHEDULE "A"
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REGION
Metropolitan Statistical Area (MSA)
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1. Anniston, AL
2. *Birmingham, AL
3. Dothan, AL
4. *Florence, AL
5. Gadsden, AL
6. *Huntsville-Decatur, AL
7. *Mobile, AL
8. Montgomery, AL
9. *Tuscaloosa, AL
10. Albany, GA
11. Athens, GA
12. Xxxxxxx, XX
00. Xxxxxxx, XX
14. Columbus, GA
15. Macon-Warner Robins, GA
16. Svannah, GA
17. *Asheville, NC
18. *Burlington, NC
19. Charlotte-Gastonia-Xxxxxxxx, NC
20. Fayetteville, NC
21. Greensboro-Winston-Salem-High Point, NC
22. Hickory, NC
23. Jacksonville, NC
24. Raleigh-Durham, NC
25. *Wilmington, NC
26. Anderson, SC
27. Xxxxxxxxxx, XX
00. Xxxxxxxx, XX
29. *Florence, SC
30. Greenville-Spartanburg, SC
31. *Biloxi-Gulfport, MS
32. *Jackson, MS
33. *Pascagoula, MS
????? on-MSA Markets
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Baxley, GA 12. *Bude-Natchez, MS
Burnswick/Waycross, GA 13. *Columbus/Starkville, MS
Manchester, GA 14. *Greenwood, MS
Moultrie, GA 15. *Laurel, MS
Rockmart/Rome/Dalton, GA 16. *Oxford, MS
Valdosta 17. *Tupelo, MS
*Vidalia, GA
*Forest City, NC
*Lexington, NC
Washington/Greenville, NC
Evergreen, AL
Distributor will have operational within 120 days.
CUE has right to sell to MCCA within 120 days, as provided for in Paragraph
17 of the Amendment to the Distribution Agreement.
SCHEDULE "B"
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NETWORK CHARGES
MSA POPULATION MSA INSTALLATION MONTHLY
Class [000] Group Charge Charge
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A 6,000 plus 1 - 4 *** ***
B 4,000-5,999 5 - 7 $*** ***
C 2,500-3,999 8 - 13 $*** $***
D 1,000-2,499 14 - 37 $*** $***
E 500-999 38 - 74 $*** $***
F 250-499 75 - 132 $*** $***
G 000-000 000 - 258 $*** $***
H 50-99 259 + $*** $***
I 30-49 N/A $*** $***
*** Denotes portions omitted pursuant to a request for confidential treatment.
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AMENDMENT
TO THE DISTRIBUTION AGREEMENT
DATED APRIL 2, 1990
This Amendment amends that certain Distribution Agreement dated April
2, 1990 between CUE Paging Corporation and Satellink Paging, Inc. (the
Distribution Agreement as herein amended is referred to herein as the
"Agreement").
1. The Agreement is contingent upon CUE and Satellink entering into
a mutually acceptable Financing Agreement, which Agreement shall become Schedule
"C" to the Agreement and shall be incorporated in the Agreement by reference.
2. CUE agrees to waive the payment provided under Paragraph 2 of the
Agreement on the condition that:
(a) Satellink retains ownership of the SCA generator equipment
located in the MSA identified in Schedule "A" of the
Agreement;
(b) Satellink retains the subcarrier leases applicable to these
MSAs and makes all necessary payments thereon to the
broadcasters/licensees;
(c) Satellink allows CUE to distribute nationwide paging signals
over the local subcarrier without charge;
(d) Satellink allows CUE to distribute non-paging traffic over
the local subcarrier without charge provided such traffic is
off-peak, provided, however, that paging traffic will have
priority over non-paging traffic;
(e) In the event that Satellink decides for any reason to
discontinue operations or services provided hereunder,
Satellink shall:
(i) give CUE at least ninety (90) days' notice of
discontinuance of operation;
(ii) if requested, assign any FM subcarrier agreements
used to provide service in the MSA to CUE; and
(iii) offer to sell CUE, at the then depreciated cost,
any equipment located at the radio station,
necessary to operate on the FM subcarrier paging
system; and
(f) In the event that Satellink makes any general assignment or
trust mortgage for the benefit of creditors or is adjudged a
bankrupt, Satellink shall:
(i) give CUE at lease ninety (90) days' notice of
discontinuance of operation;
(ii) if requested, assign any FM subcarrier agreements
used to provide service in the MSA to CUE; and
(iii) offer to sell CUE, at the then depreciated cost,
any equipment located at the radio station
necessary to operate on the FM subcarrier paging
system.
3. (a) Paragraph 1 to the Agreement is hereby amended to provide
that the Distributor's exclusive right to purchase Airtime
and Network services for regional paging is subject to the
pre-existing contracts that CUE has entered into with
respect to regional paging listed on Schedule "D" hereto.
(b) With respect to nationwide paging services to customers in
the Distributor's MSA, (i) the pricing and discounts made
available by CUE to the Distributor will equal that made
available by CUE to any other distributor(s) and/or any
other national marketing contractor(s), and (ii) then either
the Distributor will receive a rebate from CUE, or such
other nationwide distributor(s) or national marketing
contractor(s) will be assessed an additional charge by CUE,
to adjust for the additional regional costs that Distributor
pays.
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4. Paragraph 1.1(a) of the Agreement is hereby amended to provide
that the Distributor may nevertheless continue to provide paging services to
those customers in the Distributor's client base as of April 1, 1990 that are
not located in the MSA. A list of each such customer is attached hereto as
Schedule "E."
5. For the purposes of this Agreement, (i) the Metropolitan
Statistical Areas referred to in Schedule A hereto shall mean cellular
Metropolitan Communications Commission; and (ii) a region, for delimiting
regional paging, shall mean any area not to exceed five (5) contiguous states
unless agreed to in writing.
6. Paragraph 7 of the Agreement is amended to provide that national
marketing activities shall be directed solely to publications and events
broadcast, disseminated or advertised nationwide. Sales leads resulting from
such national marketing activities that pertain to potential customers located
in the Distributor's MSA will be given to the Distributor.
7. Paragraph 8(c) of the Agreement is further amended to provide
that the Distributor may nevertheless sell or lease pagers and airtime (i) to
those authorized resellers listed in Schedule F, provided that the authorized
resellers will restrict their activities to those MSA's listed in Schedule F and
that if such authorized resellers fail to so restrict their activities the
Distributor will immediately terminate its relationship with that authorized
reseller, (ii) to those customers not located in the MSA that are in the
Distributor's existing client base, which customers are listed on Schedule E,
and (iii) to Arch Communications ("Arch"), provided that not later than 120 days
after the date hereof (as such period may be extended as hereinafter provided)
Distributor shall either terminate its existing Distribution Agency Agreement
with Arch or obtain from Arch an amendment to such agreement to provide that all
sales of Distributor's products and services by Arch thereunder shall be to end
users who shall be the direct customers of Distributor. The 120 days period
specified in clause (iii) shall be extended by CUE for up to an additional sixty
(60) days upon request of the Distributor subject to approval of such extension
by any third parties whose consent thereto may be required by the terms of any
agreements with such third parties to which CUE is a party. If Distributor shall
fail to terminate the Distribution Agency Agreement or to obtain the agreement
of Arch to the amendment thereof within the time and as provided above, then
upon the lapse of such time period, Distributor shall release all rights
3
and interest in distributing, selling or promoting the products and services of
CUE within the MSA's located in the states of North Carolina and South Carolina
by executing all documents necessary for such release; and the principal balance
then remaining under the Distributor's five-year-term promissory note of even
date herewith in favor of CUE shall be reduced by a credit equal to the sum of
the fees paid by the Distributor with respect to North Carolina and South
Carolina plus the Distributor's start-up and buildout costs incurred in
connection therewith. Distributor shall provide adequate proof of fees paid and
start-up and buildout costs incurred. CUE covenants and agrees that, if
Distributor shall release its rights and interest with respect to the states of
North Carolina and South Carolina as above provided, CUE will not, for the
period of one (1) year following the effective date of such release, enter into
any Distribution Agreement or agreement or arrangement substantially similar
thereto with any entity that was on April 2, 1990 or at any time thereafter a
distributor or reseller of Distrubutor in any MSA located in either North
Carolina or South Carolina.
8. Paragraph 11.1 of the Agreement is amended to provide that with
respect to Kodak the parties will mutually agree on variations in the National
Account program that may be necessary to provide service to Kodak. Variations in
the National Account program for other subscribers is the Distributor's current
customer base will be discussed and considered by the Parties.
9. Paragraphs 13 and 13.1 of the Agreement are amended to provide
that, upon the transfer to CUE of the Distributor's current subscribers, the
compensation shall be the fair market value of such subscriber base as
determined by the mutual agreement of the parties or, failing such agreement,
determined by arbitration in accordance with Section 29 of the Agreement. The
$*** per pager paid by CUE upon such transfer shall be applied against the
fair market value so determined, and CUE shall promptly pay to the Distributor
the amount by which such fair market value exceeds $*** per pager, or the
Distributor shall refund to CUE the amount by which $*** per pager exceeds
such fair market value, as the case may be.
10. Paragraph 14 of the Agreement is amended to provide that the
Distributor may nevertheless enter into agreements to provide solely local
paging services without CUE's approval.
11. Paragraph 16 of the Agreement is amended to provide that the
control and responsibility for the equipment
*** Denotes portions omitted pursuant to a request for confidential treatment.
4
owned or leased by the Distributor shall be retained, rest and remain solely the
prerogative and obligation of the Distributor. No provision of this Agreement
shall be construed as vesting in CUE any control whatsoever of the Distributor's
communication facilities and operations, absent an Event of Default or
termination of services by the Distributor.
12. (a) Paragraph 20 of the Agreement is amended to provide that the
Distributor may expand its system in the MSA in its sole
discretion and at its sole cost.
(b) Paragraph 20 of the Agreement is amended to provide that, if
the traffic over the CUE Network reaches 75% of capacity,
CUE will adjust its nationwide and regional service
distribution so as to optimize service.
13. The parties agree the Distributor shall attempt to raise, within
120 days of the date of this Agreement, new common equity funding for the
Distributor equal to at least twenty (20%) percent of the total debt of the
Distributor on the date of this Agreement, which shall be in the form of cash
invested for the issuance of additional shares of Distributor's common or
preferred stock. If the Distributor is unable to obtain such additional equity
funds, it shall, at its option, either:
(a) release all rights and interest in distributing, selling or
promoting the products and services of CUE within the MSA's
located in the states of North Carolina and South Carolina
by executing all documents necessary for such release; and
the principal balance then remaining under the Distributor's
five-year-term promissory note of even date herewith in
favor of CUE shall be reduced by a credit equal to the sum
of the fees paid by the Distributor with respect to North
and South Carolina plus the Distributor's start-up and
buildout costs incurred in connection therewith. Distributor
shall provide adequate proof of fees paid and start-up and
buildout costs incurred; or,
(b) Immediately reduce its debt to CUE, evidenced by the
Promissory Note, attached hereto as Exhibit "___" and
incorporated herein by
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reference, by the sum of Five Hundred Thousand and no/100 Dollars ($500,000).
14. The Distributor shall have a period of 120 days within which to
install the equipment for the provision of service to those Metropolitan
Statistical Areas in North Carolina, South Carolina and Alabama that are marked
with an asterisk on Schedule "A" to the Distribution Agreement. As to each such
Metropolitan Statistical Area with respect to which the Distributor does not
satisfy the foregoing requirement, the Distributor shall relinquish and reconvey
to CUE the Distributor's rights and interest in distributing, selling or
promoting the products and services of CUE within such Metropolitan Statistical
Areas and the principal balance then remaining under the Distributor's
five-year-term promissory note of even date herewith in favor of CUE shall be
reduced by a credit equal to the fees paid by the Distributor attributable to
such relinquished Metropolitan Statistical Areas.
15. Paragraph 1.1(c) is hereby amended to provide that if CUE Airtime
and Network services should suffer a lack of capacity, the Distributor shall
have the right to arrange additional Airtime and Network services through other
sources, provided that the Distributor notifies CUE in working of any lack of
capacity which Distributor believes exists or will exist at least 120 days
before utilizing any other such sources. Lack of adequate capacity shall be
deemed to exist if the response time between a completed call to the paging
switch and notification of the pager exceeds three (3) minutes at peak time of
day as verified by an independent engineer.
16. Paragraph 1.1(c) is hereby amended to provide that if CUE Airtime
and Network services should suffer a lack of capacity, the Distributor shall
have the right to arrange additional Airtime and Network services through other
sources, provided that the Distributor notifies CUE in working of any lack of
capacity which Distributor believes exists or will exist at least 120 days
before utilizing any other such sources. Lack of adequate capacity shall be
deemed to exist if the response time between a completed call to the paging
switch and notification of the pager exceeds three (3) minutes at peak time of
day as verified by an independent engineer.
17. (a) The parties agree that CUE, for a period of 120 days from
the date hereof, will attempt to sell all distribution
rights to its products and services within the state of
Mississippi to Mobile Communication
6
Corporation of America ("MCCA"). If such rights are sold,
the principal balance then remaining due under the
Distributor's five-year-term promissory note of even date
herewith shall be reduced by the total cost of all capital
expenditures made by Distributor within the state of
Mississippi and by any and all franchise or affiliation fees
paid by Distributor. Distributor shall provide satisfactory
proof of the amount of such capital expenditures, franchise
and affiliation fees to CUE. Any amount received by CUE as
an affiliation fee for distribution rights formerly held by
Distributor in Mississippi in excess of the affiliation fee
paid by Distributor shall be paid to Distributor by CUE.
(b) If CUE fails to sell such distribution rights within 120
days, those rights shall continue in Distributor, provided
that Distributor agrees to establish operational facilities
in the following markets within one hundred eighty (180)
days of the date hereof:
1. Bude-Natchez, MS
2. Columbus/Starkville, MS
3. Greenwood, MS
4. Laurel, MS
5. Oxford, MS
6. Tupelo, MS
If Distributor will not agree to establish such facilities within one hundred
eighty (180) days of the date hereof or fails to establish such facilities
--
within one hundred eighty (180) days of the date hereof, distribution rights for
CUE's products and services in the state of Mississippi will be transferred to
CUE by Distributor for an amount determined and paid in accordance with the
terms outlined in Paragraph 17 (a).
18. All schedules contemplated in the Agreement or in this Amendment
that are not attached upon the execution hereof shall be prepared in good faith
and attached to the originals of such documents within fourteen (14) days after
the execution hereof, whereupon such schedules shall automatically be
incorporated therein.
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19. All rights and remedies provided either party to the Agreement in
the event of default or termination of services, whether contained in the
Agreement, its Amendments or its exhibits, shall survive the termination of the
Agreement.
AGREED TO AND ACCEPTED this 2nd day of April, 1990.
CUE PAGING CORPORATION
/s/ X. X. Xxxxx By: /s/ Xxxxxx X. Xxxxxx
--------------- ---------------------------
Witness Title: Chairman and Chief Executive Officer
-------------------------------------
SATELLINK PAGING, INC.
By: /s/ Xxxxx X. Xxxxxxxx
_______________ ---------------------------
Witness Title: Executive Vice President
---------------------------
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