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EXHIBIT 10.1
BTA MANAGEMENT AND
CONSTRUCTION SERVICES AGREEMENT
THIS Agreement ("Agreement") dated as of July 1, 1996, is made by and
between MERCURY, INC., a Louisiana corporation ("MI"), and MERETEL
COMMUNICATIONS, LIMITED PARTNERSHIP, a Louisiana partnership in commendum
("MC").
WITNESSETH
WHEREAS, MC won the Block C auction held by the Federal Communications
Commission (the "FCC") to construct a personal communications service ("PCS")
system operating on Frequency Block C (the "System") to nerve various basic
trading areas ("BTAs") specified by the FCC including the following: BTA #034 -
Beaumont, BTA #236 - Lafayette parishes, and BTA #265 - Lufkin (the
"Territory").
WHEREAS, MC desires to enter into an agreement for the construction,
management and operation of the System in the Territory, at all times subject
to oversight, review, supervision and control by MC;
WHEREAS, MI has the necessary experience, resources and expertise
pertinent to PCS system to provide the services contemplated by this Agreement
for the construction, management and operation of the System and the provision
by the System 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:
ARTICLE I.
DEFINITIONS
1.1 Initial Construction - Construction as proposed by MC's
equipment vendor/consultant to meet the first phase of the buildout of the
System as submitted by MC.
1.2 System Design - The RF and network plan of implementation as
submitted by MC.
1.3 Additional Construction - Construction as submitted by MC to
provide additional or fill-in coverage or capacity after the first phase of the
buildout of the System.
1.4 Operating License - Authority to operate the System as granted
by the FCC.
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CONSTRUCTION SERVICE
1.5 GENERAL
(a) Subject to MC's oversight and control, MI shall manage and
supervise: (i) the Initial Construction of the System in the
Territory in accordance with the System Design; and (ii) such
Additional Construction as may be necessary to expand the
System in the Territory to satisfy the requirement of the
FCC's rules and to meet demand in the Territory in accordance
with the System Design. MI shall use its best efforts to
devote such time and resources to construction of the System
in the Territory as may reasonably be necessary for completion
of construction of the Initial System within eighteen (18)
months after grant of the Operating License ("Initial
Construction Completion Date") by the FCC.
1.6 DESIGN DEVELOPMENT AND SYSTEM CONSTRUCTION. MI, subject to
MC's supervision, shall be responsible for the competent, business like and
timely management and supervision of all activities integral to the
construction of the System in the Territory, including, but not limited to, the
following:
(i) review of the System Design proposed by MC, and, if MI
recommends modifying the System Design, developing for MC'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 MC of such leases, options and
contracts and the securing of such third party consents and
agreements, including the entering into as agent for MC 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) secure as agent for MC 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) if requested by MC, preparation of proposed modifications to
the Operating License for MC's review, prior approval and
execution and, as agent for MC, securing FCC approval of any
FCC applications for such modifications to be filed by MC, and
securing as agent for MC such Federal Aviation Administration
("FAA") approvals as may be required for tower and antenna
placements and heights;
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(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 in the Territory
or, to the extent appropriate to or required by the System
Design, the negotiation and execution, as agent for MC, and
subject to MC'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 PCS systems,
provided that such planned system will become operational by
such date as to allow the timely commencement of operations of
the System; and
(vii) if requested by MC, the preparation and filing of any
applications necessary to obtain the Operating License from the
FCC for the Territory.
(viii) coordinate with other contractors providing similar services
to MC for other BTAs included in the System but outside the
Territory.
1.7 INTERCONNECTION. MC may direct and in such event MI shall be
responsible for negotiating, as agent for MC, with such local exchange
telephone company or companies as MI may deem appropriate, the terms and
conditions by which the System in the Territory 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 MC's oversight and control, MI shall
manage and supervise the daily operations of the System in the Territory. To
this end, MI 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 in the Territory; and (ii)
marketing, sales, advertising and such other promotional services as may be
necessary in the marketing of the System in the Territory; (iii) the
development and implementation of mechanisms for collecting the amounts billed
by the System in the Territory 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 in the Territory; and (vi) technical operations, engineering, and
maintenance of the System in the Territory. MI shall devote its best efforts to
operate and manage the System in the Territory properly and efficiently. MI,
subject to MC's supervision,
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shall be responsible for such additional activities integral to the operation
of the System in the Territory as follows:
(i) the hiring of personnel to manage and operate the System and
to market the services of the System in the Territory;
(ii) the entering into, as agent for MC of 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 Territory;
(iii) the development and implementation of promotional programs in
the Territory, including but not limited to the negotiation,
as agent for MC of resale arrangements;
(iv) the preparation of proposals for expansion of the System in
the Territory or for such other capital improvements as may be
necessary to comply with FCC rules or to meet market demand;
(v) the entering into of such agreement with other PCS system
operators, including but not limited to roaming and shared
facilities agreements, as may be appropriate or advisable to
the operation of the System in the Territory,
2.2 INSURANCE. If requested by MC during the term of this
Agreement, MI shall procure and maintain, at MC's expense, property damage and
liability insurance on the System with such coverage as are necessary to
protect the System in the Territory, workmen's compensation insurance and
fidelity bond coverage. Insurance will afford protection in an amount set forth
by MC.
ARTICLE III
BUDGETS AND EXPENDITURES
3.1 GENERAL. In developing budgets, MI and MC shall endeavor to
assure that the System in the Territory shall be of sufficient size and provide
a service of sufficient quality to meet the demands of the Territory and to
provide a viable competitive services to serve the Territory. However, the
System in the Territory shall be constructed and operated as cost-effectively
as possible.
3.2 CONSTRUCTION BUDGET. A budget for the construction of the
System (the "Construction Budget") shall be prepared by MI and submitted to MC
for approval within thirty (30) days from the date when MC selects an equipment
vendor. Thereafter, an annual Construction Budget shall be submitted to MC for
approval by December 1 of each year for the immediate succeeding calendar year.
MI shall provide MC with weekly reports on the status of
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construction and a comparison of actual expenditures versus amounts budgeted
for the categories set out in the Construction Budget.
3.3 OPERATIONS BUDGET. MI shall submit to MC 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 or loss (as determined in accordance with generally
accepted accounting principles) of the System in the Territory. Such Operations
Budget shall form the basis on which expenditures for the System in the
Territory shall be made.
ARTICLE IV.
AUTHORITY
4.1 LIMITATIONS. In addition to those matters elsewhere listed in
this Agreement for which MC's written prior approval is required, MI shall not
have authority, without prior written approval by MC, to undertake any of the
following actions in the name of or on behalf of MC:
(i) sell, xxxx or surrender the Operating License or attempt to
modify the Operating License;
(ii) modify the Construction Budget or Operations Budget;
(iii) enter into any joint venture, partnership or other agreement
dealing with the System;
(iv) grant a security interest in or hypothecate any of the assets
of the System;
(v) incur any debts not in the ordinary course of business;
(vi) settle any legal action or litigation in the name of MC or the
System or brought by or against MC or the System.
Except as otherwise expressly provided for in this Agreement, MI shall
have authority without prior approval of MC to undertake, and may undertake,
any and all other actions necessary or advisable to construct, manage and
operate the System in the Territory which are not prohibited by law or
regulation, including the authority to act as agent for and on behalf of MC in
entering into contractual arrangements and before federal, state and local
governmental authorities.
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ARTICLE V.
PERSONNEL
5.1 EMPLOYEES. Subject to MC's supervision, MI 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 MI AND MC EMPLOYEES. MI may elect to rely upon its own
employees, and upon its subsidiaries and affiliates and their employees for the
performance of services in constructing, managing, and operating the system to
the extent, in its discretion, it deems necessary or advisable. Should MI use
its own personnel or its subsidiaries' or affiliates' employees to perform
services for the System, such services shall not be charged to MC separately
and apart from the Management Fees provided for in Section 6.2 of this
Agreement.
5.3 INDEPENDENT CONTRACTORS. MI may, in its discretion, engage
independent contractors to perform any service to be provided by MI hereunder
under its Management Fee in its construction, management and operation of the
System in the Territory. MI shall be responsible for selecting and contracting
on behalf of MC or the System with any such Independent Contractors, but such
expense shall be subject to the Construction Budget, Operations Budget, and
Management Fee.
ARTICLE VI.
REIMBURSEMENT AND COMPENSATION
6.1 REIMBURSEMENT. MC shall reimburse MI for all expenses
reasonably incurred in the performance of its responsibilities under this
Agreement ("Reimbursable Expenses"), including but not limited to, capital
costs expended to comply with the Construction Budget and the costs and
expenditures of any independent contractors engaged by MI on MC's behalf in
fulfilling its construction, operating, or other responsibilities hereunder.
However, before any independent contractor is engaged by MI on behalf of MC
which expense will not be covered by the Management Fee, such engagement of the
independent contractor shall first have to be approved by MC.
6.2 MANAGEMENT FEE. MC shall pay MI a management fee ("Management
Fee") for the performance of its responsibilities under this Agreement. The
Management Fee shall be payable in advance at the beginning of each month and
shall equal $90,000. This fee is subject to change annually by MC based on
operational analysis. All cost of services of MI in providing management,
supervisory and operational functions, with the exception of travel, lodging,
long distance, postage and shipping expenses related to MC, shall be included
in the Management Fee and shall not be separately charged to MC. Salaries of
employees of MI located in the MC market and working full-time for MC will not
be included in the Management Fee.
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6.3 STATEMENTS. MI shall each provide MC, within fifteen (15) days
after the close of each month during the term of this Agreement, a monthly
invoice, supported by documentation satisfactory to MC, setting forth in
reasonable detail all expenses incurred by MI under this Agreement during that
month, including all of MI's Reimbursable Expenses (the "Monthly Invoice"). MC
shall remit payment of each Monthly Invoice within ten (10) days of the date it
receives such statement.
6.4 REASONABLENESS. All Reimbursable Expenses and Management Fees
charged under this Agreement shall be no less favorable than those that MC
could obtain from unrelated third parties.
ARTICLE VII.
ACCOUNTING AND REPORTS
7.1 BOOKS AND RECORDS. MI shall 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 in the Territory 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 in the
Territory pursuant to this Agreement.
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, MI shall prepare or cause to be prepared and transmit to MC unaudited
financial statements for the just ended month or year, which shall include a
balance sheet, an income statement and such other information as MC reasonably
requires (the "Monthly and Annual Statements", respectively). The Monthly
Statements must be received in the MC office no later than 30 days after the
end of each month. 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. MI
shall also provide at MC's request any and all such additional statements or
reports as may be necessary for MC's oversight and control of the construction
and operation in the Territory.
7.3 ACCESS TO BOOKS AND RECORDS. MC shall have at all reasonable
times during normal business hours access to and the right to photocopy the
books and records maintained by MI pursuant to Section 7.1 of this Agreement,
which books, records and information shall be kept at the principal offices of
MI, as applicable.
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ARTICLE VIII.
TERM
8.1 TERMINATION. This Agreement shall continue for one year from
the date hereof unless terminated as follows:
(a) If MI does not meet the Construction Budget or
Operating Budget for 90 consecutive days, then MI is
automatically placed on probation. If MI does not meet the
Construction Budget or Operating Budget for another 90
consecutive days, MC, at its discretion, may terminate this
Agreement.
8.2 TERMINATION DUTIES. After receipt of written notice of
termination, but prior to the effective date of such termination, MI shall
continue to perform under this Agreement unless specifically instructed to
discontinue such performance. In any event, even if so instructed, MI 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, MI shall
relinquish to MC 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. MI and MC 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.
9.2 OWNERSHIP OF SYSTEM. Despite the fact that MI may make a
payment on any capital equipment or advance a payment for any capital equipment
on behalf of MC, MI hereby acknowledges that all capital equipment purchased on
behalf of and in furtherance of the System is the property of MC.
9.3 NOTICES. All notices and other communications relating to this
Agreement shall be in writing and delivered by hand, by certified mail, postage
paid, return receipt requested, by confirmed facsimile transmission or by
overnight delivery service as follows:
Mercury, Inc. Xxx Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxx Xxxxxxx, XX 00000
Meretel Communications, L.P. 000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
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9.4 SEVERABILITY. Should any provision of this Agreement be
illegal, invalid, or unenforceable, under present or future laws effective
during the term hereof, the remainder of this Agreement shall not be affected
thereby; and in lieu of each provision there shall be substituted a clause as
similar in terms to such invalid provision as may be possible and be legal,
valid and enforceable. However, should any law, governmental regulation, or
judicial interpretation thereof, come into force, which shall prevent the
exercise of any substantial right hereunder, the party whose right is so
affected may terminate this Lease 90 days after written notice of termination
to the other party.
9.3 ASSIGNMENT. MI or MC shall not assign or transfer this
Agreement in whole or in part, without the prior written consent of MI or MC
which shall not be unreasonably withheld.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized officers to be effective as of July 1, 1996.
MERCURY, INC.
By:
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XXXXXX X. XXXXXXX, SECRETARY
MERETEL COMMUNICATIONS,
LIMITED PARTNERSHIP
BY WIRELESS MANAGEMENT CORPORATION,
ITS GENERAL PARTNER
By:
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XXXXXX X. XXXXXXX, CHAIRMAN
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