AUCTION PARTICIPATION AND
LICENSE PARTITIONING AGREEMENT
This Auction Participation and License Partitioning Agreement (the
"Agreement") is entered into this 17th day of August, 1998 (the "Effective
Date") by and between Intek Global Corp ("Intek"), a corporation organized
under the laws of the State of Delaware with principal offices at 000
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxxxx 00000-0000, Intek License
Acquisition Corp. ("ILAC"), a corporation organized under the laws of the
State of Delaware with principal offices at 00000 Xxx Xxxx Xxxxxx, Xxxx
Xxxxx, Xxxxxxxxxx 00000 and the National Rural Telecommunications Cooperative
("NRTC"), a non-profit cooperative organized under the laws of the District
of Columbia with principal offices at 0000 Xxxxxxxxxxx Xxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000.
RECITALS
WHEREAS, Intek, through its wholly owned subsidiary Roamer One, Inc.,
owns, operates and manages two-way land mobile radio stations in the 000-000
XXx xxxx (xxx "000 XXx Xxxx") within the United States listed on Attachment A;
WHEREAS, Intek, through its wholly-owned subsidiary Midland USA, Inc.,
distributes Linear Modulation ("LM") equipment capable of operating in the
220 MHz Band,
WHEREAS, Intek desires to enhance the coverage and capacity of those
Roamer One operated licenses in certain markets through acquisition of
additional channel capacity acquired through the auction of Phase II 220 MHz
Band licenses (the "220 MHz Auction") to be conducted by the Federal
Communications Commission ("FCC" or "Commission") and has formed ILAC to
participate in such auction;
WHEREAS, NRTC is a non-profit cooperative of rural telecommunication
companies, many of which are interested in procuring such channel capacity in
the 220 MHz Band as may reasonably accommodate the needs of their markets;
WHEREAS, the 220 MHz Auction will award through competitive bidding
Phase II 220 MHz Band licenses on a nationwide, Regional Economic Area
Grouping ("REAG") and Economic Area ("EA") basis as defined by the FCC;
WHEREAS, the parties desire to enter into an agreement to enable the
purchase by ILAC of certain Phase II 220 MHz Band licenses (the "Licenses")
in the 220 MHz Auction at aggregate prices higher than either party could
justify separately and to allow for the post-auction partitioning and
disaggregation (hereinafter "partitioning") of those certain Licenses to
enable each party to provide 220 MHz Band wireless communications services in
the most efficient and economical manner that more closely corresponds to
market demands;
NOW, THEREFORE, in consideration of the premises, and the agreements,
covenants, representations and warranties hereinafter set forth, and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
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1. LICENSES TO BE PARTITIONED
1.1 Prior to August 28, 1998, NRTC will submit to ILAC its proposed
Schedule 1 which will set forth a list of target licenses referenced
by nationwide, REAG, or EA market number and frequency block which
NRTC desires to acquire during the Auction (each License being a
"Target License" or collectively the "Target Licenses"). ILAC and
NRTC shall agree upon such Schedule 1 and shall identify and agree
upon a desired partitioned service area for the Target Licenses,
defined either by FCC recognized service areas, by county boundary,
by US Postal Service Zip Codes or otherwise as defined by the
parties. Each of such areas agreed to be partitioned by ILAC within
each Target License is hereafter referred to as a "NRTC License."
1.2 To the extent that, for licensing purposes, non-contiguous areas
within a particular Target License be separately partitioned and
subject to a separate license, there may be more than one NRTC
License within the Target License. Further, the parties understand
and agree that if a Target License designated in Schedule 1 would
overlap a 45 mile radius from the base site of (i) any 220 MHz
system currently licensed to Intek or one of its affiliates or (ii)
any 220 MHz system for which Intek or one of its affiliates
currently has a binding contractual commitment or option to acquire,
then such overlapping area shall not be included in the partitioned
NRTC License despite having been included in such NRTC License in
Schedule 1. The parties agree to negotiate mutually satisfactory
arrangements, including where appropriate, sharing and resale
arrangements, as will be required to accommodate each party's use of
the licensed 220 MHz spectrum in those areas in which the parties
own or operate overlapping system coverage areas.
1.3. NRTC shall provide on Schedule 2, to be attached hereto no later
than September 10, 1998, the maximum dollar amount it is willing to
pay for the partitioned license for the NRTC Licenses within each of
the Target Licenses, which amounts for the respective NRTC
License(s) are referred to as the "NRTC Maximum".
2. PHASE II LICENSE ACQUISITION
2.1 ILAC's management, staff and outside contractors will provide
ongoing expertise to NRTC with regard to the 220 MHz Auction without
charge to NRTC. ILAC shall provide a bidding center facility
together with the development of an electronic database,
telecommunications access, and computer resources as required to
conduct the auction preparation and the bidding process.
2.2 ILAC shall provide to NRTC a data base of Phase I, including Intek
incumbent positions. ILAC shall do so: as soon as possible after
the effective date of this Agreement; by August 21, 1998, if
practicable; and, in no event, later than August 26, 1998. In
addition, ILAC shall provide NRTC the following during the course of
the 220 MHz Auction:
2.2.1 Auction round results and ILAC round results reports;
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2.2.2 Access to bidding center as appropriate to implement the
purposes of this Agreement.
2.3 ILAC will submit to the FCC a Form 175 application seeking to
participate in the 220 MHz Auction. Subject to the satisfaction by
NRTC of its obligations pursuant to Section 4.1 of this Agreement
and the acceptance of its Form 175 by the FCC, ILAC shall tender an
up front payment (the "Upfront Payment") to the FCC as determined in
its sole discretion but, at a minimum, sufficient to qualify ILAC to
bid on each of the Target Licenses. To the extent required by the
FCC's rules, ILAC shall disclose in its Form 175 filing the
existence of this Agreement. ILAC and NRTC shall cooperate in
making all filings required by the FCC subsequent to the conclusion
of the 220 MHz Auction in order to obtain the Licenses for which
ILAC is the winning bidder in the Auction, and to partition them in
accordance with this Agreement and the FCC's Rules and regulations.
2.4 ILAC shall retain sole and exclusive authority and discretion to
determine the licenses it bids on in the 220 MHz Auction on its
behalf subject only to the reservation of those certain licenses
agreed by the parties to be Target Licenses as reflected on Schedule
1 hereto. ILAC shall retain sole and exclusive authority and
discretion to determine the amount of its bids in the 220 MHz
Auction, subject only to the provisions of this Agreement. NRTC will
have no authority to place bids on behalf of Intek or ILAC.
Notwithstanding the foregoing, ILAC and NRTC shall consult on the
bids to be placed on the Target Licenses, and NRTC may direct ILAC
to, and ILAC shall, place a bid on any Target License up to the NRTC
Maximum for that License, or such other value as may be permitted by
amendment to the NRTC Maximum. ILAC shall not bid on Target Licenses
except on behalf of NRTC unless and until the NRTC Maximum for that
Target License is exceeded or until NRTC notifies ILAC that it is no
longer pursuing that License. ILAC shall use its best efforts to
place such bids in the 220 MHz Auction as directed pursuant to this
Agreement; provided; however, that nothing in this Agreement shall
be interpreted to guarantee a particular result or a successful bid
in the 220 MHz Auction on any or all of the Target Licenses.
2.5 ILAC shall have the sole control over the bidding strategy and
management of bidding credits, waivers and maintenance of
eligibility.
2.6 NRTC shall identify in writing one or more NRTC designees who have
authority to make decisions with regard to License values and
bidding strategy. Such designees shall be available to ILAC during
the 220 MHz Auction either in person at the bidding center or
electronically within 15 minutes notice to render decisions with
respect to bid placements as deemed required by ILAC. Such designees
shall remain available until the conclusion of the 220 MHz Auction.
3. PARTITIONING.
3.1 Upon grant of a Target License to ILAC and without further charge to
NRTC, ILAC shall take all necessary steps, including filing all
required applications and related materials with the FCC, to
partition the Target Licenses or assign such Target Licenses as may
be required to create the NRTC Licenses designated pursuant to
Section 1.1. NRTC shall cooperate with ILAC in all such filings.
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3.2 By August 28, 1998, the Parties shall designate certain Target
Licenses as "Joint Target Licenses." The Joint Target Licenses
shall be partitioned between the parties in the following manner:
3.2.1 NRTC has designated nine (9) States (the "Designated
States"). The Designated States are as follows: Alabama,
Alaska, Arkansas, Kentucky, Louisiana, Nebraska, North
Carolina, Texas, and Washington. Any Joint Target License
granted to ILAC in the 220 MHz Auction within any Designated
State shall be partitioned entirely to NRTC.
3.2.2 Prior to September 10, 1998, with respect to the Nationwide
license, Intek shall designate up to fifty (50) of the 100
top MSAs not in the Designated States and, with respect to
the Regional licenses, Intek shall designate up to ten of
the top 100 MSAs not in a Designated State in each REAG (the
"Designated MSAs"). Any Joint Target License granted to
ILAC in the 220 MHz Auction within any Designated MSA shall
be partitioned as follows:
3.2.2.1 For National Licenses: five (5) of the channels
shall be partitioned to Intek, and five (5) of the
channels shall be partitioned to NRTC.
3.2.2.2 For Regional Licenses: eight (8) of the channels
shall be partitioned to Intek; seven (7) of the
channels shall be partitioned to NRTC, subject to
the provisions of Section 1.2 of this Agreement.
3.2.2.3 Any additional Joint Target license granted to
ILAC in the 220 MHz Auction that is not in a
Designated MSA shall be partitioned to NRTC
subject to the provisions of Section 1.2 of this
Agreement.
3.2.2.4 The parties shall provide on Schedule 1 for the
apportionment of FCC construction responsibilities
for each Joint Target License consistent with the
FCC's partitioning rules for the 220 MHz Band.
3.3 Any Target Licenses not identified as Joint Target Licenses
granted to ILAC shall be assigned or partitioned in their
entirety to NRTC subject to the provisions of Section 1.2
of this Agreement.
4. PAYMENT AND VALUATION
4.1 UPFRONT PAYMENT NRTC shall pay to ILAC one half of the Upfront
Payment. The NRTC portion shall be due and payable to ILAC on or
before August 28, 1998. Such payment to be made in cash, by wire
transfer of same day funds, to the bank as identified by ILAC.
4.2 ESCROW AGREEMENT The parties hereby agree to enter into an Escrow
Agreement for the purpose of apportioning and securing payment by
NRTC to ILAC of the winning bids on the Target Licenses upon the
close of the 220 MHz Auction. The
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terms of the Escrow Agreement shall include, but not be limited to
the following points: (1) Payment deadline shall be no later than
5:30 PM EDT, September 10, 1998, (2) the amount payable into escrow
by NRTC shall be no less than the sum total of the NRTC Maximum
amounts for each of the Target Licenses, (3) release of the escrowed
funds to ILAC for winning bids on the Target Licenses shall be due
at least 3 business days prior to the date prior to any ILAC payment
required on a Target License, (4) such payment shall be released to
ILAC automatically upon presentation to the escrow agent of an FCC
Public Notice announcing the conclusion of the 220 MHz Auction or
establishing any payment date on the Target Licenses. In the event
no Target Licenses are purchased at Auction, or funds remain in
escrow after disbursement to Intek for all purchased Target
Licenses, the total amount of the escrow funds remaining, together
with any accrued interest, will be refunded to NRTC. The cost of the
escrow account shall be borne by NRTC.
5. ASSIGNMENT AND INDEMNIFICATION
5.1 Each Party (the "Indemnitor") shall indemnify and hold harmless the
other (the "Indemnitee") from and against all loss, damage, expenses
including court costs, amounts paid in settlements, judgments,
reasonable attorneys' fees, and other expenses for investigating and
defending any suits, actions, claims, liability or obligations
relating to, caused by or arising from, any gross negligence or
willful misconduct of the Indemnitor or the Indemnitor's employees
or agents, misrepresentation by the Indemnitor, breach of warranty
by the Indemnitor, or failure by the Indemnitor to fulfill any
covenant or agreement contained herein. If any action is brought by
either Party to enforce any provision of this Agreement, the
prevailing Party shall be entitled to recover court costs,
arbitration expenses and reasonable attorneys' fees. The provisions
of this section shall survive any termination of this Agreement.
5.2 This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective legal representatives,
successors and assigns. No party may assign or transfer its rights,
benefits, duties or obligations under this Agreement without the
prior written consent of the other parties, which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, without
any prior consent of the other party, either party may assign or
transfer all or any part of its rights, benefits, duties or
obligations under this Agreement to a parent company or an affiliate
or subsidiary or to a partnership or other entity in which such
party or a parent, affiliate or subsidiary owns a substantial
interest or manages such entity, or as part of the sale, transfer or
assignment of substantially all of its wireless businesses; provided
that such assignee must satisfy applicable FCC qualifications, and
such assignee must agree in writing to be bound by and subject to
the applicable terms and conditions therein contained, and in the
absence of the other party's consent, which shall not be
unreasonably withheld and notwithstanding the validity of any such
assignment or transfer, the assigning party shall remain primarily
liable under this Agreement.
6. The validity and effectiveness of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
and the applicable rules and policies of the FCC without giving effect to
the provisions, policies or principles relating to choice or conflict laws.
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7. Should any provision of this Agreement be determined to be invalid or
unenforceable, it shall be deemed severed from this Agreement, and so long
as invalidity or unenforceability does not deny either party the material
benefits of this agreement for which it has bargained, such invalidity or
unenforceability shall not affect the remaining provisions of this
Agreement, which shall remain in full force and effect.
8. TERMINATION:
8.1 This Agreement shall automatically terminate without further
liability by either party if NRTC files a Form 175 to participate in
the 220 MHz Auction.
8.2 This Agreement shall automatically terminate in the event that NRTC
fails to make the payments to ILAC pursuant to Section 4.1 or to
fund the escrow pursuant to Section 4.2 of this Agreement.
8.3 This Agreement shall automatically terminate without further
liability by either party ten days after the close of the Auction if
ILAC was not the winning bidder for at least one of the Target
Licenses, and upon such termination all funds previously paid by
NRTC to ILAC or otherwise remaining in Escrow shall be promptly
refunded.
8.4 Either party may terminate this Agreement upon the existence of a
Material Uncured Breach by the other party. For purposes of this
Agreement, a Material Uncured Breach shall be deemed to occur if
either party breaches a material obligation or covenant imposed
hereunder, or there exists a material breach of any representation
or warranty made hereunder or thereunder, in either case, which
breach has not been cured within thirty days after written notice of
such breach has been given to the breaching party.
8.5 Intek, ILAC and NRTC shall each have the right to terminate this
Agreement without any further liability to the other parties, in the
event that NRTC, Intek or ILAC files or has filed against it a
petition for voluntary or involuntary bankruptcy or is dissolved
during the initial term of this Agreement or any renewal term
thereof; or any court or governmental agency, order, or any material
agreement to which Intek is a party, would require such termination
in order for Intek to avoid being in violation thereof.
8.6 Termination of this Agreement by either party pursuant to this
Section shall not prevent such terminating party from seeking and
securing damages or equitable relief permitted by this Agreement.
8.7 This Agreement may be terminated by the mutual consent of the
parties, and upon such termination all funds previously paid by NRTC
to ILAC or otherwise remaining in Escrow shall be promptly refunded.
9. FCC MATTERS. The parties are familiar with the Rules, regulations and
policies of the FCC, including those pertaining to spectrum auctions as
published by the FCC. NRTC acknowledges that it has been provided a copy of
Intek's Statement of Corporate Policy concerning the conduct of its
employees, officers, directors, affiliates and agents during the 220 MHz
Auction in compliance with Section 1.2105 of the FCC's Rules. The parties
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and their respective officers, directors, affiliates, agents and designees
hereunder will abide by the Intek Statement of Corporate Policy and will
not engage in any communications in violation of the FCC's Rules during the
220 MHz Auction. NRTC acknowledges that ILAC has informed it that ILAC will
not claim credits to bid as a small business or a very small business in
the 220 MHz Auction. In addition, the parties are aware of the United
States Department of Justice guidelines with regard to alliances designed
to affect the pricing or availability of products to be sold in a public
forum. The parties will make all appropriate disclosures and will take all
steps required to insure full compliance with the FCC rules and other
regulatory bodies. The parties further acknowledge their understanding that
the Rules and regulations of the FCC which permit the partitioning and
disaggregation of 220 MHz Band Phase II Licenses may be subject to
reconsideration by the FCC on its own motion or at the request of a third
party. In the event that the FCC determines that any terms hereof would
violate its Rules, regulations or policies or would otherwise be cause for
the denial of grant of a 220MHz License to ILAC or the revocation of any
license granted, then the parties shall use their best efforts to reform
this Agreement or negotiate and execute such further documents as may be
permissible and necessary or other arrangement which will satisfy any FCC
concerns and which maintains the essential benefits of the bargain between
the parties.
10. REPRESENTATIONS AND WARRANTIES.
10.1 NRTC hereby represents and warrants to Intek and ILAC as follows:
(i) NRTC is duly organized, validly existing and in good standing
under the jurisdiction of its organization with all the requisite
power and authority to enter into and perform under this Agreement;
(ii) neither the execution nor the delivery of this Agreement nor
the consummation of the transaction contemplated hereby will
conflict with or result in any violation of or constitute a default
under any term of the Articles of Incorporation or by-laws of NRTC
or any agreement, mortgage, indenture, license, permit, lease or
other instrument, judgment, decree, order, law or regulation by
which NRTC is bound; (iii) neither NRTC nor its officers, directors,
affiliates or members have entered into any bidding agreements,
partitioning agreements or other agreements with third parties which
contemplate participation in the 220 MHz Auction, nor do NRTC, its
officers, directors, affiliates and members intend to participate in
the 220 MHz auction except as contemplated by this Agreement.
10.2 Intek and ILAC represent and warrant to NRTC as follows: (i) Intek
and ILAC are duly organized, validly existing and in good standing
under the jurisdiction of its organization, with all the requisite
power and authority to enter into and perform under this Agreement;
(ii) neither the execution nor the delivery of this Agreement nor
the consummation of the transaction contemplated hereby will
conflict with or result in any violation of or constitute a default
under any term of the Articles of Incorporation or by-laws of Intek
or ILAC or any agreement, mortgage, indenture, license, permit,
lease or other instrument, judgment, decree, order, law or
regulation by which Intek or ILAC is bound.
11. DISCLOSURE. Subject to Section 2.3 hereof, each party agrees that it will
not disclose the terms of this Agreement or any confidential information
exchanged in the negotiation or implementation of the terms of this
Agreement, including any valuation information relating to the value of all
or any part of the Licenses being auctioned, to any other party, except to
each party's officers, directors, attorney, consultants, accountants,
employees
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and NRTC members involved in the transactions contemplated hereby, and
only then on the condition that such individuals not disclose the
information disclosed to them. Notwithstanding the foregoing, either
party may disclose the terms of this Agreement to any third party at any
time if: (1) it is required to do so by law (including without limitation
applicable securities and communications laws and regulations, this
Agreement or other contractual obligation); or (2) it is reasonably
determined to be required to do so by its lender or other source of
financing or their agents; or (3) the other party consents in writing to
such disclosure.
12. NOTICES. Any notice or other communication required or permitted hereunder
shall be given in person or sent by express overnight courier, express mail
or by registered or certified mail, postage prepaid, addressed as follows:
If to NRTC to: Xxxxxx X. Xxxxxx
NRTC
0000 Xxxxxxxxxxx Xxx
Xxxxx 000
Xxxxxxx, XX 00000
With a copy to: Xxxx Xxxxxxxx
Xxxxxx & Xxxxxxx
0000 X Xx., X.X.
Xxxxxxxxxx, X.X. 00000
If to Intek: Xxxxxx Xxxxxx
Intek Global Corp.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
With a copy to: Xxxxxx X. Xxxxx
Xxxxxx, Xxxxxxx & Xxxxxxx LLP
0000 Xxxxxxxxxxxx Xxx., XX
Post Office Xxx 000
Xxxxxxxxxx, X.X. 00000-0000
If to ILAC: Xxxxx Xxxxxxx
Intek License Acquisition Corp.
00000 XxxXxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxxxxx 00000
or at such other address or with additional copied parties as shall be
furnished in writing by any such Party.
13. MISCELLANEOUS. This Agreement may be executed simultaneously in one or
more counterparts, each of which be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement shall
become effective upon its execution by the parties and their transmitting to the
other party by facsimile proof of their execution of the
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Agreement. This Agreement constitutes the entire agreement between the
Parties pertaining to the subject matter contained herein and supersedes all
prior and contemporaneous agreements, representations, and understandings of
the parties. No party shall be liable to the other party as a result of its
failure to perform hereunder due to acts of god, civil unrest or
disobedience, or other cause entirely beyond its control ("Force Majeure").
No supplement, modification, or amendment of this Agreement shall be binding
unless executed in writing by all of the Parties. Amendment of this Agreement
and all prior agreements must be in writing and executed by each of the
parties. Notwithstanding any law or rule of contract interpretation to the
contrary, this Agreement shall not be interpreted strictly for or against
any party hereto. In the event of litigation between the parties pursuant to
a dispute under this Agreement, the prevailing party shall be entitled to
recover its costs incurred in such litigation, including reasonable
attorneys' fees. Each of the parties hereto acknowledges to the other that
it has reviewed this Agreement with, and is relying solely upon the advice
of, its independent counsel and tax advisor, as to the negotiation,
preparation, execution and delivery of this Agreement and as to the legal and
tax implications hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals this
17th day of August, 1998.
NATIONAL RURAL TELECOMMUNICATIONS COOPERATIVE
By: /s/
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INTEK GLOBAL CORP.
By: /s/
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INTEK LICENSE ACQUISITION CORP.
By: /s/
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