EXHIBIT 10.11
MANAGEMENT AGREEMENT
THIS Agreement ("Agreement") dated as of January 1, 1999, is made by and
among US Unwired Inc., a Louisiana corporation (hereinafter referred to as "USU"
or "Manager"), and Louisiana Unwired, LLC, a Louisiana Limited Liability Company
("LU").
WITNESSETH
WHEREAS, LU has been granted authority by the FCC to operate a
broadband personal communications service ("PCS") network on Frequency Block F
to serve the Lake Xxxxxxx Basic Trading Area ("BTA"), Alexandria BTA, Shreveport
BTA and the Monroe BTA (the "Operating Licenses"):
WHEREAS, LU is a party to that certain agreement dated as of June 8,
1998 (the "Sprint PCS Management Agreement") with Sprint Spectrum, L.P. and
SprintCom, Inc. ("Sprint") pursuant to which LU provides or will provide PCS
services and products utilizing spectrum owned by Sprint in the Houma-
Xxxxxxxxxx, Louisiana BTA, the El Dorado-Magnolia-Camden and Pine Bluff,
Arkansas BTAs and the Longview-Xxxxxxxx, Xxxxx, Texarkana and Tyler, Texas BTAs.
WHEREAS, the PCS network operating on the licenses owned by LU or
Sprint is collectively referred to as the "System".
WHEREAS, LU desires to enter into an agreement with MANAGER for the
construction, management and operation of the System, at all times subject to
oversight, review, supervision and control by LU;
WHEREAS, MANAGER has developed extensive experience, resources and
expertise pertinent to PCS network construction, management and operation and
the provision of quality PCS 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:
Section 1. Definitions. The following terms shall have the following
meanings ascribed thereto for purposes of this Agreement:
"Affiliate" means any Person that, directly or indirectly, controls, or is
controlled by or under common control with, another Person. For purposes of
this definition, "control" (including the terms "controlled by" and "under
common control with") means the power to direct or cause the direction of the
management and policies of any Person, directly or indirectly, through ownership
of voting securities, by contract, or otherwise.
"Construction Budget" shall mean the budget approved by LU for each
calendar year for the construction of the Network Assets in the Territories.
"Construction Requirements" shall mean the specifications and requirements
for construction and buildout of the Network Assets as required by the Sprint
PCS Management Agreement and approved by LU.
"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements by such
other entity or other practices and procedures as may be approved by a
significant segment of the accounting profession, which are applicable to the
circumstances as of the date of determination. For purposes of this Agreement,
GAAP shall be applied on an accrual basis in a manner consistent with historic
practices.
"Network Assets" shall mean the physical assets owned by LU that are
necessary to properly operate the System, including, without limitation, land,
switches, towers, antennas, control points, base stations, circuits, and
interconnection facilities.
"Network Design" shall mean the RF and network plan of implementation for
the System as required by the Sprint PCS Management Agreement and approved by
LU.
"Operations Budget" shall mean the budget approved by LU for each calendar
year with respect to the activities of LU associated with the Sprint PCS
Management Agreement, excluding any items contained in the Construction Budget.
"Person" shall mean any individual, a general or limited partnership, a
corporation (including a non-profit corporation), an association, a joint stock
company, a trust, a joint venture, an unincorporated organization, a limited
liability company, a bank, an estate, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Sprint Agreements" shall mean the Sprint PCS Management Agreement and all
agreements with Sprint executed in connection with the Sprint PCS Management
Agreement, including the Sprint PCS Services Agreement, Sprint Spectrum
Trademark and Service Xxxx License Agreement, Sprint Trademark License Agreement
and Sprint PCS Trademark License Agreement.
"Sprint PCS Management Agreement" shall have the meaning set forth above in
the Recitals.
"Sprint Programs" shall mean the Sprint PCS Management Agreement and all
agreements with Sprint executed in connection with the Sprint Management
Agreement, including the Sprint PCS Regional or National Distribution Program,
Sprint PCS National Accounts Program, Sprint PCS Roaming and Interservices Area
Program, Sprint PCS Technical Program and Sprint PCS Customer Service Program.
Section 2. Performance of Services. The Manager shall provide all
management, operational and administrative services necessary or appropriate to
fully discharge all of LU's management, operational and administrative
obligations under the Operating Licenses and the Sprint Agreements
(collectively, the "Management Services").
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2.1 Construction of Network Assets. The Management Services shall
include, without limitation, the management and supervision of the construction
and build-out of the Network Assets in accordance with the Network Design,
Construction Requirements, and Construction Budget (the "Construction
Services"). The Construction Services shall include, without limitation, the
following:
(a) the development of a Network Design to be proposed to LU,
including, but not limited to, development of a cell configuration,
formulation of an RF plan, analysis of propagation characteristics,
projection of the probable volume and location of demand, allocation
of System capacity, and selection of control point, and base station
sites;
(b) negotiation of such leases and options and the securing of
such third party consents and agreements as may be necessary to permit
the full use of the control point, base station, and switching sites
selected;
(c) secure such zoning or other necessary governmental approvals
as may be required to permit the use of the control point, base
station and switching sites selected and acquired;
(d) secure such Federal Aviation Administration ("FAA") approvals
as may be required for tower and antenna placements and heights;
(e) preparation of control point, base station, and switching
sites, including construction and/or modifications of radio towers and
buildings, as 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,
Sprint and/or sound business requirements;
(f) 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 Network Design, the negotiation of such agreements as
are necessary to obtain use of the joint or shared switching
facilities of any other existing or planned PCS systems;
(g) the preparation and filing of any applications necessary to
maintain the Operating Licenses with the FCC;
(h) coordination with other contractors providing similar
services to LU for other BTAs included in the System; and
(i) such other activities as may be requested by LU, including
the preparation and filing of any applications or forms required by
the FCC or other governmental agencies.
2.2 Operation of System. The Management Services shall include,
without limitation, conducting all management and administrative services
associated with the operation and
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development of the System in accordance with the Operations Budget (the
"Operations Services"). The Operations Services shall include, without
limitation, the following:
(a) supervise technical personnel responsible for maintaining and
operating the Network Assets;
(b) manage and provide the daily technical operations,
engineering and maintenance of the Network Assets;
(c) prepare and submit proposals to LU for expansion of the
Network Assets, or for such other capital improvements therein, as may
be necessary to comply with the Sprint Agreements, FCC rules or to
meet market demand;
(d) obtain, develop and manage vendor relationships, including
discussions concerning discounts through the Sprint affiliation;
(e) compliance with the Sprint Agreements and Sprint Programs;
(f) provide and manage quality customer service functions to meet
or exceed standards set forth by Sprint;
(g) manage customer activities and disconnects along with the
provision of customer care services to the customers;
(h) develop, maintain and manage adequate fraud deterrence
programs;
(i) negotiate, obtain and manage roaming contracts, and manage
roaming functions between LU and its roaming partners and customers;
(j) provide administrative, customer service, finance,
accounting, insurance, purchasing, clerical and other general services
as may be necessary to the administration of the System;
(k) provide marketing, sales advertising and such other
promotional services as may be necessary in marketing of the System;
(l) establish bank accounts as may be necessary to the operation
of the System;
(m) negotiate, obtain and supervise adequate credit and
collection services;
(n) maintain and manage an adequate inventory program for LU's
retail equipment;
(o) negotiate such agreements as may be necessary for the
provision of services, supplies, office or other types of space,
utilities, insurance, and the like in the System (other than the
Management Services);
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(p) develop, negotiate, and implement resale and wholesale
arrangements with other carriers;
(q) negotiate such agreements with other wireless system
operators including, but not limited to, roaming and shared facilities
agreements, as may be appropriate or advisable to the operation of the
System;
(r) assure compliance with all applicable laws, regulations and
rules;
(s) cause all federal, state and local tax returns required to be
filed by LU to be prepared and timely filed and all taxes due and
owing to be paid;
(t) negotiate agreements with local exchange telephone companies
regarding the interconnection of the System with the local exchange
switched telephone network and/or to the facilities of one or more
interexchange common carriers;
(u) manage and supervise interconnection relationships; and
(v) obtain and maintain on behalf of LU, and require all parties
providing services to LU to obtain and maintain, all necessary
insurance coverages in appropriate amounts and with appropriate
deductibles and other terms, including property damage and liability
insurance on the System, workmen's compensation insurance, and
fidelity bond insurance.
Section 3. Budgets and Expenditures. The Management Services shall
include, without limitation, the performance of the services specified in this
Section 3.
3.1 Preparation and Proposal of Budgets. No later than December 1 of
each year, the Manager shall deliver to LU a proposed Construction Budget and
proposed Operations Budget for the immediate succeeding calendar year in such
form and detail as is requested by LU. In developing such budgetary proposals,
the Manager shall endeavor to assure that the System shall be of sufficient size
and provide a service of sufficient quality to meet the requirements of the
Sprint Agreements, the Operating Licenses and the demands of the System, and
provide viable competitive services within the System. However, the System
shall be constructed and operated as cost-effectively as possible.
3.2 Development of Construction Budget. The Construction Budget
shall be prepared in a manner that is consistent with and in accordance with the
requirements of the Sprint Agreements. Manager will provide LU with monthly
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 Development of Operations Budget. The Operations Budget shall be
prepared in a manner that is consistent with and in accordance with the
requirements of the Sprint Agreements.
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The Operations Budget shall itemize by month the projected reserves,
expenditures and anticipated net profit or loss (as determined in accordance
with GAAP).
3.4 Expenditures. The Manager shall make all expenditures in
connection with its performance of the Management Services, including the
Construction Services and Operations Services, in strict compliance and
adherence to the Construction Budget and Operations Budget; provided, however,
the Manager may make expenditures that vary from the Construction Budget and
Operations Budget upon the prior approval of LU.
Section 4. Accounting and Reports. The Management Services shall include,
without limitation, the performance of the services specified in this Section 4.
4.1 Maintenance of Books and Records. The Manager shall keep or
cause to be kept at its principal offices complete and accurate accounts, books
and records with respect to all matters for which it is responsible under this
Agreement, in accordance with GAAP, showing all revenues, costs, expenditures,
assets, and liabilities, and all other records necessary or convenient for
recording the financial affairs associated with the Management Services. LU
shall have the right to inspect and photocopy such accounts, books and records,
as well as any accounts, books or records of the Manager related to the
performance of the Management Services, at any reasonable time during normal
business hours.
4.2 Monthly and Annual Financial Statements. No later than the third
Wednesday after the end of each calendar month, and within 30 days after the end
of each fiscal year of LU, the Manager shall prepare (or cause to be prepared)
in accordance with GAAP, and transmit LU for receipt by such third Wednesday or
the end of such 30-day period, as the case may be, unaudited financial
statements as of the end of such month or year, as the case may be, and for the
period then ended, which financial statements shall include a balance sheet, an
income statement and such other information as of the end of such month and
year, and for the period then ended, as LU reasonably requires (the "Monthly
Statements" and the "Annual Statements", respectively). The Monthly Statements
and Annual Statements shall further provide reconciliation between the
Construction Budget and the 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 current year-to-date period.
4.3 Additional Financial Statements. In addition to the Monthly
Statements and Annual Statements, the Manager shall prepare and provide to LU
such financial statements or reports as LU may request from time to time with
respect to the Management Services.
4.4 Audited Financial Statements. The Manager shall take all
reasonable steps to cooperate with LU's independent certified public accountants
in the preparation of LU's annual audited financial statements.
4.5 Report of Financial Problems. The Manager shall report the
nature and extent of any financial problems associated with the performance of
the Management Services to LU as soon as possible after the Manager becomes
aware of the existence of the problem.
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Section 5. Personnel. The Management Services shall include, without
limitation, the performance of the services specified in this Section 5.
5.1 Human Resources. The Manager shall recruit, hire, train,
promote, terminate, and otherwise manage and supervise, all personnel necessary
or appropriate to perform the Management Services (the "Personnel"), including,
without limitation, sales personnel for LU's retail stores and technical
personnel to operate the System, in accordance with the Construction Budget and
Operations Budget.
5.2 Designation of Employer. All Personnel shall be hired as
employees or independent contractors of LU; provided, however, that, except for
sales personnel for LU's retail stores and technical personnel to operate the
System who are physically located in BTAs, the Manager may in its discretion use
its own employees and independent contractors to discharge Management Services
functions. If an independent contractor is utilized, Manager shall be
responsible for selecting and contracting on behalf of LU with such Independent
Contractor, but shall be subject to the Construction Budget and Operation
Budget.
5.3 Manager's Continuing Primary Obligation. The Manager shall
continue to have the primary obligation to perform the Management Services
regardless of the relationship that any particular personnel might have to the
Manager or LU under Sections 5.1 or 5.2.
Section 6. Authority to Act on Behalf of LU. Except as otherwise provided
below in Section 6.1, the Manager shall have the power and authority without the
prior approval of LU to take such actions for and on behalf of LU as are
necessary or appropriate, and commercially reasonable, in connection with the
performance of the Management Services, including entering contractual
arrangements and making statements to federal, state or local governmental
authorities regarding the operation of the System, subject to the other
requirements otherwise set forth in this Agreement with respect to the
performance of the Management Services.
6.1 Actions Requiring Prior LU Approval. The Manager shall not take
any of the following actions for or on behalf of LU without the prior
written approval of LU:
(a) enter into, modify, or amend any agreement (including any
joint venture or partnership) with any third party, including, without
limitation, insurance agreements, resale and wholesale arrangements
with other carriers, roaming and shared facility agreements, purchase
and lease agreements with respect to the Construction Services;
provided, however, this limitation shall not apply to (i) agreements
with retail customers of the System; (ii) agreements for vendor
relationships not exceeding 180 days that are contemplated by the
Operations Budget and Construction Budget; (iii) agreements for the
provision of utility and other routine items needed in the ordinary
course of business to operate LU's retail store locations and
contemplated in the Operations Budget; and (iv) the incurrence of
other debts and obligations in the ordinary course of business as
contemplated in the Operations Budget.
(b) undertake any material variance from the Construction Budget
or Operations Budget;
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(c) sell, lease, trade, exchange, mortgage, pledge, hypothecate
or otherwise encumber any of the Network Assets or other property
owned by LU;
(d) the incurrence of any debts or obligations other than in the
ordinary course of business or not contemplated in the Operations
Budget, including entering into or modifying, or amending any loan
agreements;
(e) exercising control and direction over, including settling,
any legal action or litigation brought by or against LU or the System;
(f) exercising control and direction over any significant
governmental proceedings (including FCC compliance matters); and
(g) amending, modifying, terminating or extending the Sprint
Agreements, granting any waivers of defaults or breaches thereunder,
consenting to the assignment thereof, or exercising any rights
thereunder.
Section 7. Management Fee and Reimbursements.
7.1 Management Fee. As full and complete consideration for the
performance of the Management Services, and except as otherwise provided below
in Section 7.2 for the reimbursement of certain expenses, LU shall pay the
Manager a fee to be determined annually as agreed upon by LU and the Manager but
not to exceed the limitations set forth in accordance with Attachment 1, (the
"Management Fee"). Any changes to the Management Fee shall take into account
any changes in the nature and extent of LU's business activities, and any
changes in the nature and extent of the responsibilities and actions that the
Manager must undertake in order to satisfy its obligation to delivery the
Management Services. Salaries and benefits of employees of Manager whose duties
and responsibilities are 100% attributed to LU and work in the LU BTAs will be
in addition to the Management Fee.
7.2 Reimbursement of Expenses. LU shall reimburse the Manager for
the following costs and expenses reasonably incurred by the Manager in the
course of performing the Management Services (collectively, the "Reimbursable
Expenses"):
(a) items specifically identified in either the Construction
Budget or the Operations Budget as expenses reimbursable to the
Manager;
(b) any item identified as being performed by an independent
contractor prior to work being performed; and
(c) any other item specifically approved in advance by LU.
7.4 Payment of Management Fee and Reimbursable Expenses. LU shall
pay the Management Fee and Reimbursable Expenses on a monthly basis.
Specifically, within 15 days after the close of each calendar month, the Manager
shall provide LU a billing statement setting forth the amount due for such month
for the Management Fee and Reimbursable Expenses in such detail as
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LU may reasonably request, along with such supporting documentation as LU may
reasonably request (the "Monthly Invoice"). LU shall remit payment of the
amounts due for each month within 10 days of LU's receipt of the Monthly
Invoice.
Section 8. Term and Termination
8.1 Termination. This Agreement shall continue for five (5)
years from the date hereof. Unless otherwise terminated, this Agreement
shall automatically renew for additional one (1) year terms, unless notice
of non-renewal is received by either party at least ninety (90) days prior
to the expiration date of the initial term of this Agreement or renewals
thereof.
8.2 Termination Duties. After receipt of written notice of
termination, but prior to the effective date of such termination, Manager
shall continue to perform under this Agreement unless specifically
instructed to discontinue such performance. In any event, even if so
instructed, Manager 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, Manager shall relinquish to LU or its
designees' possession and control of all property of the System, including
but not limited to, all documents, data and records pertaining to the
System. Manager and LU shall commit to use their best efforts to assure a
smooth transition in the event of termination.
Section 9. Additional Covenants and Agreements
9.1 Ownership of System. Notwithstanding anything in this Agreement
to the contrary, the Manager acknowledges and agrees that the Network Assets and
all other property purchased under the Construction Budget, the Operations
Budget or as a Reimbursable Expense are owned solely and entirely by LU.
9.2 Manager's Delegation of Obligations. The Manager shall not
delegate its obligations to perform the Management Services, or otherwise enter
into an agreement to subcontract for the performance of the Management Services,
with any Affiliate of the Manager or any third party without the prior consent
of LU.
Section 11. Miscellaneous
11.1 Entire Agreement. This Agreement sets forth the complete
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings among the parties with
respect to the subject matter hereof.
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11.2 Notices. All notices, requests, demands, claims, and other
communications pertaining to this Agreement ("Notices") must be in writing, must
be sent to the addressee at the address set forth in this Section, or at such
other address as the addressee has designated by a Notice given in the manner
set forth in this Section, and must be sent by telegram, telex, facsimile,
electronic mail, courier, or prepaid, certified U.S. mail. Notices will be
deemed given when received, if sent by telegram, telex, electronic mail or
facsimile, and if received between the hours of 8:00 a.m. and 5:00 p.m., local
time of the destination address, on a business day (with confirmation of
completed transmission sufficing as prima facie evidence of receipt of a notice
sent by telex, telecopy, electronic mail, or facsimile), and when delivered and
receipted for (or when attempted delivery is refused at the address where sent)
if sent by courier or by certified U.S. mail. Notices sent by telegram, telex,
electronic mail, or facsimile and received between 12:01 a.m. and 7:59 a.m.,
local time of the destination address, on a business day will be deemed given at
8:00 a.m. on that same day. Notices sent by telegram, telex, electronic mail,
or facsimile and received at a time other than between the hours of 12:01 a.m.
and 5:00 p.m., local time of the destination address, on a business day will be
deemed given at 8:00 a.m. on the next following business day after the day of
receipt. The addresses for Notices are as follows:
If to the Manager: US Unwired Inc.
Xxxxx 0000
Xxx Xxxxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx Xxxxx
If to LU: Louisiana Unwired, LLC
X.X. Xxx 0000
Xxxx Xxxxxxx, Xxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
11.3 Severability. Each part of this Agreement is intended to be
severable. If any term, covenant, condition or provision hereof is unlawful,
invalid, or unenforceable for any reason whatsoever or in any jurisdiction, it
shall not affect the validity or enforceability of the remaining terms,
covenants, conditions, and provisions hereof, or the validity or enforceability
of the offending term, covenant, condition, or provision under other
circumstances or in other jurisdictions.
11.4 Rights Cumulative; Waivers. The rights of each of the parties
under this Agreement are cumulative and may be exercised as often as any party
considers appropriate. The rights of each of the parties hereunder shall not be
capable of being waived or varied otherwise than by an express waiver or
variation that is in writing and signed by the parties. Any failure to exercise
or any delay in exercising any of such rights shall not operate as a waiver or
variation of that or any other such right. Any defective or partial exercise of
any of such rights shall not preclude any other or further exercise of that or
any other such right. No act or course of conduct or negotiation on the part of
any party shall in any way preclude such party from exercising any such right or
constitute a suspension or any variation of any such right.
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11.5 Headings. The headings of the Sections and Subsections
contained in this Agreement are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or any provision thereof.
11.6 Construction. Unless the context otherwise requires, singular
nouns and pronouns, when used herein, shall be deemed to include the plural of
such noun or pronoun and pronouns of one gender shall be deemed to include the
equivalent pronoun of the other gender.
11.7 Assignment. This Agreement and the terms, covenants,
conditions, provisions, obligations, undertakings, rights and benefits hereof,
shall be binding upon, and shall inure to the benefit of, the undersigned
parties and their respective successors and permitted assigns.
11.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
11.9 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED, AND THE
RIGHTS AND OBLIGATIONS OF THE SELLER AND THE BUYER HEREUNDER DETERMINED, IN
ACCORDANCE WITH THE LAWS OF THE STATE OF LOUISIANA WITHOUT REGARD TO THE
CONFLICTS OF LAWS AND RULES THEREOF.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
executed by their duly authorized officers of the dates indicated below to be
effective as of January 1, 1999.
LOUISIANA UNWIRED, LLC US UNWIRED INC.
By:/s/ XXXXXX X. XXXXXXX By:/s/ XXXXXX XXXXX
------------------------------- ------------------------------
Xxxxxx X. Xxxxxxx Xxxxxx Xxxxx
Assistant Operating Manger President
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ATTACHMENT 1
YEAR MAXIMUM FEE
1999 $ 2,693,235
2000 $ 2,799,232
2001 $ 2,909,699
2002 $ 3,024,743
2003 $ 6,472,293
2004 $ 8,257,464
2005 $10,012,347
2006 $12,159,928
2007 $14,595,508
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