JOINT VENTURE AGREEMENT
by and among
Nextel Partners, Inc.,
Nextel Partners Operating Corp.,
and
Nextel WIP Corp.
Dated as of January 29, 1999
NEXTEL PARTNERS, INC.
JOINT VENTURE AGREEMENT
TABLE OF CONTENTS
Page
RECITALS...................................................................................1
1. DEFINITIONS............................................................................1
2. OPERATING ARRANGEMENTS................................................................10
2.1 Company Responsibilities................................................10
2.2 Territory...............................................................11
2.3 Exclusivity.............................................................11
2.4 Nextel Operations.......................................................11
2.5 Sufficiency of Rights...................................................12
2.6 Nondiscrimination; Standard of Care.....................................12
2.7 Special NWIP Approval Rights............................................13
3. TERM .................................................................................14
3.1 Initial Term; Renewal Terms.............................................14
4. FREQUENCIES AND LICENSES..............................................................14
4.1 Contribution of Licenses in Initial Sections............................14
4.2 Contribution of Licenses in Option Sections.............................15
4.3 Other Acquisitions of Licenses from Nextel Group........................16
4.4 Swaps and Exchanges of Licenses with Nextel Group.......................16
4.5 Acquisitions of Licenses from Third Parties.............................17
4.6 Frequency Auctions......................................................18
4.7 Cooperation.............................................................18
4.8 Transactions to Create Contiguous Spectrum..............................18
4.9 Nextel Analog Operations................................................19
4.10 Reserved................................................................19
4.11 Compliance with FCC Rules...............................................19
4.12 FCC Proceedings.........................................................20
4.13 Transfer Restrictions...................................................22
4.14 NWIP Right of First Refusal.............................................22
4.15 Company Rights of First Refusal.........................................23
4.16 NWIP Option Upon Change in Control of the Company.......................24
4.17 Representations and Warranties..........................................25
4.18 Frequency Construction..................................................25
5. COMPANY ACCESS TO PROPRIETARY
TECHNOLOGY AND NETWORK COMPONENTS................................................26
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Page
5.1 Coordination of Equipment Orders and Purchases..........................26
5.2 Access to Vendor Equipment and Agreements...............................27
5.3 Future Improvements and Enhancements to Technology or Network...........28
5.4 [RESERVED]..............................................................30
5.5 Access to National Switching Network....................................30
5.6 Integration with Nextel Owned Switching Facilities......................30
5.7 Company Owned Network Switches and Other Facilities.....................30
5.8 Access to Systems Platform..............................................31
5.9 Certain System and Network Services.....................................32
6. BUILD-OUT REQUIREMENTS................................................................33
6.1 Required Services.......................................................33
6.2 Build-out Requirement and Target Launch Dates...........................34
6.3 Launch Criteria.........................................................35
6.4 Frequency Design Standards..............................................35
6.5 Site Acquisition Standards..............................................36
6.6 Construction Standards..................................................36
6.7 Telco Standards.........................................................37
6.8 Switching Facility Standards............................................37
6.9 Company Towers..........................................................37
6.10 Potential Relaxation of Performance Standards...........................40
7. OPERATIONS............................................................................40
7.1 Network Performance Requirements........................................40
7.2 Customer Care...........................................................40
7.3 Customer Satisfaction...................................................41
A. Measurement....................................................41
B. Sample.........................................................41
C. Targets........................................................41
7.4 Employees...............................................................41
8. MARKETING AND ADVERTISING.............................................................41
8.1 Brand Identity..........................................................41
8.2 Brand Awareness.........................................................42
8.3 Creative Services.......................................................42
8.4 Media Services..........................................................43
8.5 Direct Mail.............................................................43
8.6 Telemarketing...........................................................43
8.7 Collateral Marketing Materials..........................................44
8.8 World Wide Website......................................................44
8.9 Market Research.........................................................44
8.10 Subscriber Transfer Fee.................................................45
9. SERVICE AND EQUIPMENT PRICING.........................................................45
9.1 Service Pricing Structure...............................................45
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Page
9.2 Service Pricing Plans - Local...........................................46
9.3 Service Pricing Plans - National........................................46
9.4 Service Pricing Plans - International...................................46
9.5 Subscriber Equipment Pricing............................................47
10. SALES AND DISTRIBUTION...............................................................47
10.1 Objective...............................................................47
10.2 Local Sales and Distribution............................................47
10.3 National Indirect Distribution..........................................48
10.4 Websites and Telemarketing..............................................48
11. NATIONAL ACCOUNTS/PRIVATE SYSTEMS....................................................48
12. BREACH; DEFAULT; DISPUTE RESOLUTION..................................................49
12.1 Non-Material Breach.....................................................49
12.2 Company's Material Breach...............................................50
12.3 NWIP's Material Breach..................................................50
12.4 Procedures for a Material Breach........................................51
12.5 Excusable Delay/Time Extension..........................................52
12.6 Alternate Dispute Resolution............................................52
12.7 Arbitration.............................................................53
12.8 Equitable Remedies......................................................53
12.9 Damages and Termination for Material Breach.............................54
A. Procedure......................................................54
B. Right to Nextel Name and Trademarks............................55
C. Determination Required for Termination Remedy..................55
D. Termination Awarded to NWIP....................................55
E. Termination Awarded to the Company.............................55
F. Limitations on Damages.........................................56
13. MISCELLANEOUS........................................................................56
13.1 Choice of Law...........................................................56
13.2 Attorneys Fees..........................................................56
13.3 Pass-Throughs...........................................................56
13.4 [RESERVED]..............................................................57
13.5 Monitoring..............................................................57
13.6 Payment.................................................................57
13.7 Company Audit Right.....................................................58
13.8 Company Personal Obligation.............................................58
13.9 Disclaimer of Partnership...............................................59
13.10 Confidentiality.........................................................59
13.11 Amendments..............................................................60
13.12 Entire Agreement........................................................60
13.13 Notices.................................................................60
13.14 Counterparts............................................................61
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Page
13.15 Waiver..................................................................61
13.16 Third Parties...........................................................62
13.17 Schedules and Exhibits..................................................62
13.18 Headings................................................................62
13.19 Severability............................................................62
13.20 Jurisdiction............................................................62
13.21 Waiver of Jury Trial....................................................62
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EXHIBITS
Exhibit I Transaction Documents & Collateral Agreements
Exhibit 4.1 Initial Frequencies and Option Frequencies
Exhibit 4.4 Nextel Group Frequencies
Exhibit 4.13 Commitments Required of Secured Lenders
Exhibit 5.7A Charges for Company Switch and RSO Monitoring
Exhibit 5.7B Trigger Points for Network Elements
Exhibit 5.9B Charges for NDS Backbone Network
Exhibit 6 Territory (Including map, Sections and Build Areas)
Exhibit 6.1 Required Services
Exhibit 6.4 Certain Frequency Design Agreements
Exhibit 6.5 Certain Site Acquisition and Construction Agreements
Exhibit 6.9 Tower Sites Committed by Company to Another Builder
Exhibit 7.2 Certain Billing and/or Customer Care Agreements
Exhibit 9.1A Nextel Service Pricing Structure
v
NEXTEL PARTNERS, INC.
JOINT VENTURE AGREEMENT
This is the JOINT VENTURE AGREEMENT (this "Agreement"), dated as of
January 29, 1999, by and among Nextel Partners, Inc., a Delaware corporation
(the "Company"), Nextel Partners Operating Corp., a Delaware corporation
("Opco"), and Nextel WIP Corp., a Delaware corporation ("NWIP"). Capitalized
terms used herein have the meanings set forth or cross referenced in Article 1,
unless otherwise stated.
RECITALS
A. Nextel Communications, Inc. ("Nextel") through its subsidiaries
operates digital networks for wireless communications services throughout the
United States. Nextel's digital networks are integrated wireless systems that
use a single transmission technology (iDEN, as defined below) to serve large
cities throughout the United States. Nextel's wireless telecommunications
service competes with, but is distinguished from, the services offered by other
telecommunications companies by, among other things, features of its subscriber
equipment (for example, push to talk transmission), and by its pricing
structure (for example, per second billing and home rate charges).
B. The Company and Opco have been formed to build and operate a
wireless communications system using iDEN technology to provide service in
certain mid-sized and smaller cities and towns throughout the United States,
most of which are not presently served by Nextel.
C. By expanding the geographic area in which such services are
offered, by providing services with similar features and functions under the
same national brand, and by allowing their subscribers to travel and obtain
service in each other's territory, the parties intend, among other things, to
make iDEN wireless communications service available to more people over a
broader area.
D. NWIP, an indirect, wholly owned subsidiary of Nextel, the Company
and Opco desire to enter into this contractual joint venture to accomplish the
foregoing.
AGREEMENT
NOW THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS
1
For purposes of the Agreement, the following terms have the meanings
set forth or cross referenced below:
"Accelerated Areas" -- see Section 6.2C.
"Agreement" -- see Preamble.
"Affiliate" means, with respect to the specified person, any other
person who, directly or indirectly, controls, is controlled by, is under common
control with, or is a director or officer of such specified person; provided,
that neither NWIP nor any other member of the Nextel Group shall, for purposes
of this Agreement, be considered Affiliates of the Company or any of its
Subsidiaries.
"Alternate Dispute Resolution Process" means the dispute resolution
process set forth in Section 12.6.
"Analog Management Agreement" means the Management Agreement dated the
same date as this Agreement between Opco and NWIP, as amended and in effect
from time to time.
"Analog Services" means wireless communications services provided by
Analog Systems.
"Analog Systems" means wireless communications systems that use analog
transmission technology.
"Arbitration Rules" -- see Section 12.7.
"Asset Purchase Agreement" means the Asset Transfer and Reimbursement
Agreement by and between Opco and NWIP, dated the same date as this Agreement,
as amended and in effect from time to time.
"Augmented Company Value" -- see Section 12.9E.
"Beneficial Owner" means a beneficial owner as defined in Rules 13d-3,
13d-5 or 16a-1 under the Securities Exchange Act of 1934 (the "Exchange Act")
(or any successor rules), including the provision of such Rules that a Person
shall be deemed to have beneficial ownership of all securities that such person
has a right to acquire within 60 days, but such provision of the Rules will
apply only if (i) all conditions (other than payment of the purchase or
acquisition price of such securities) to such person's exercise of such rights
have been satisfied and (ii) such securities (if options, warrants, or similar
derivatives) are "in-the-money," provided that in all cases a person shall not
be deemed a Beneficial Owner of, or to own beneficially, any securities if such
beneficial ownership (1) arises solely as a result of a revocable proxy
delivered in response to a proxy delivered in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and the
applicable rules and regulations thereunder, and (2) is not also then
reportable on Schedule 13D under the Exchange Act.
2
"best reasonable efforts," where required of a party by this Agreement
or any of the Collateral Agreements, means the party will expend only such sums
as are normally incidental to the performance of the relevant task, such as
payment of salaries of the persons carrying out such efforts and such persons'
incidental travel and other related expenses, and in no event will require the
payment of any sum to any third-party from whom performance of the relevant
task is sought, nor the retention or compensation of outside agents, brokers,
consultants or other professionals to obtain the desired outcome.
"Board" means the Board of Directors of the Company.
"Build Areas" means the (i) MSAs, (ii) cities and towns with
populations in excess of 20,000 people that are not otherwise included within
an MSA boundary and (iii) all other rural areas, in each case, identified on
Exhibit 4.1.
"Build Out" means the completion of the construction of a Section as
described in Section 6.2A.
"Build Site" -- see Section 6.9A.
"Build Year" means the year by which the Build Out for any Build Area
must be completed. The first Build Year shall commence on the date hereof and
terminate on the day 30 days after the first anniversary of the date hereof;
the second Build Year shall commence on the day after the end of the first
Build Year and terminate 365 days later; and the third Build Year shall
commence on the day after the end of the second Build Year and terminate 365
days later.
"Business Objectives" -- see Section 2.7(ii).
"Change in Control of the Company" -- see Section 4.16B.
"Claimant" -- see Section 12.9A.
"Collateral Agreements" means the agreements identified as the
Collateral Agreements on Exhibit I.
"Company" -- see Preamble.
"Company Group" means the Company and its Subsidiaries.
"Company Indemnitees" -- see Section 4.11B.2.
"Company Transferor" -- see Section 4.14A.
"Comparable Service Areas" or "Comparable Sections" means service
areas or Sections in the Territory which are roughly equal in size and share
similar topographic, population and
3
economic characteristics including but not limited to population density,
number of business customers and per capita income as service areas in the NDS
territory (and vice versa).
"Completion Notice" -- see Section 6.9B.
"Constructed Frequencies" -- see Section 4.18A
"Constructed Site" -- see Section 6.9D.
"Digital Services" means wireless communications services provided by
Digital Systems.
"Digital Systems" means wireless communications systems that use
digital transmission technology.
"Election Period" -- see Section 6.2B.
"ESMR Network" means a wide-area network of specialized mobile radio
base stations that uses iDEN digital technology to provide wireless
communications services including voice, dispatch, interconnected telephone and
data services, using SMR Frequencies.
"Equity" means (i) prior to the initial public offering of the
Company's equity securities, shares of Series C Preferred Stock, and (ii) after
the initial public offering of the Company's equity securities, shares of Class
B Common Stock.
"Equity Value" -- of a share of Equity means (i) during the first 24
months following the date hereof, the price per share of Series C Preferred
Stock issued on the date hereof, compounded on a monthly basis at an annual
rate of twenty percent (20%) per annum, (ii) after 24 months from the date
hereof and until the common stock of the Company is traded on a national stock
exchange or NASDAQ National Market (the "Interim Period"), a value set annually
by the Board that is generally applicable to issuances of Equity, including,
without limitation, for cash or property or for options for which the exercise
price is fair market value at the date of agreement by the Company at or about
the relevant time (e.g., used to set the strike price for options awarded under
the Company's incentive stock option plan during such year), and (iii) after
there has been an initial public offering of common stock of the Company, the
arithmetic average of the closing sales price for the Company's common stock on
a national stock exchange or NASDAQ National Market for the twenty trading days
immediately preceding the date as of which Equity Value is to be determined.
During the Interim Period NWIP has the right to challenge the value set by the
Board, by giving written notice to the Company not later than the later of (a)
30 days after NWIP is notified that the Board has established a new Equity
Value, or (b) 30 days after NWIP (or any other member of the Nextel Group) is
notified that it is required by this Agreement to assign licenses for
additional frequencies to the Company. In its notice NWIP will state its
proposed Equity Value. Within 10 days after receipt of the Notice, the Company
and NWIP will either mutually agree on an appraiser that will be retained and
instructed to determine the value of a share of the Company's common stock for
purposes of making payment with Equity as provided by Article 4, or will
implement the procedures of Section 4.04 of the Shareholders' Agreement to
select three appraisers. The value established by the Board and
4
NWIP's proposed value will not be disclosed to the appraiser(s) who will be
instructed to complete the valuation within 30 days. If the value determined by
the appraiser(s) is closer to the value that was established by the Board, the
value determined by the Board will be the Equity Value for the applicable
period, and NWIP will reimburse the Company for any out-of pocket expenses
incurred by the Company in connection with determining the value (including,
without limitation, any fees or expenses of the appraiser(s)). If the value
determined by the appraiser(s) is closer to the value that was proposed by
NWIP, the value proposed by NWIP will be the Equity Value for the applicable
period, and the Company will reimburse NWIP for any out-of pocket expenses
incurred by NWIP in connection with determining the value (including, without
limitation, any fees or expenses of the appraiser(s)).
"Excusable Delay" -- see Section 12.5.
"Exhibit 4.1 Value" means, with respect to each Build Area in the
Territory, the per frequency dollar value of a Useable Frequency in such Build
Area as identified on Exhibit 4.1.
"Fair Market Value" means, with respect to any frequencies, the fair
market value thereof as agreed to by the parties or, if the parties fail to
agree within 10 days, as determined by arbitration in accordance with Section
12.7.
"FCC" means the Federal Communications Commission or any similar
regulatory authority established in replacement thereof.
"FCC Change of Control" means the granting or withholding of any
rights, powers or obligations, that either individually or in combination,
would require the approval of the FCC pursuant to Section 310(d) of the
Communications Act or any of the FCC Rules or policies implementing Section
310(d).
"FCC Rules" -- see Section 4.12C.
"4.14 Notice" -- see Section 4.14A.
"4.18D Frequencies" -- see Section 4.18D.
"Frequency Acquisition Amount" means $20,439,979 on the date hereof,
subject to adjustment as provided in Section 4.4 or 4.5A.
"Frequency Delay" -- see Section 12.5.
"Frequency Value" means:
(i) for purposes of Section 4.4:
5
(A) with respect to Old Frequencies or New Frequencies
owned by any member of the Nextel Group on the date hereof, the
Exhibit 4.1 Value of such frequencies, and
(B) with respect to Old Frequencies or New Frequencies
that are not owned by any member of the Company Group or Nextel Group
on the date hereof, the cost to the Company or the applicable member
of the Company Group or Nextel Group, as the case may be, of such
frequencies (including incidental transaction costs and costs of any
related assets acquired with the frequencies and conveyed to the
transferee); and
(ii) for purposes of Sections 4.3 and 4.14:
(A) with respect to frequencies owned by any member of
the Nextel Group on the date hereof, the Exhibit 4.1 Value of such
frequencies, and
(B) with respect to frequencies that are not owned by any
member of the Company Group or the Nextel Group on the date hereof,
the historical cost to the Company of such frequencies (including
incidental transaction costs and costs of any related assets acquired
with the frequencies and conveyed to the Nextel Group).
"iDEN" means Motorola's integrated Dispatch Enhanced Network wireless
communications technology, or any other successor technology designated under
Section 7.03 of the Shareholders' Agreement as such may exist from time to time
and at any time during the term of this Agreement, including any Renewal Terms.
"Improvements" -- see Section 5.3A.
"Initial Assets" means the assets transferred to Opco by NWIP under
the Asset Purchase Agreement.
"Initial Asset Transfer" means the transfer of the Initial Assets to
Opco effected pursuant to the Asset Purchase Agreement.
"Initial Frequencies" means the frequencies covered by the Initial
Licenses.
"Initial Licenses" means the FCC licenses set forth on Schedule C to
the Subscription Agreement.
"Initial Sections" means the Sections of the Territory described as
Initial Sections on Exhibit 6.
"Initial Site Notice" -- see Section 6.9A.
"Initial Term" -- see Section 3.1.
6
"Interim Management Agreement" means the frequency Management
Agreement, dated the same date as this Agreement, between NWIP and Opco, as
amended and in effect from time to time.
"Launch Criteria" -- see Section 6.3.
"License Co." means Nextel WIP License Corp., a Delaware corporation.
"Licensed Marks" means the "Nextel" name and the other marks licensed
to Opco under the Trademark License Agreement.
"Losses" -- see Section 4.11B.1.
"Marketing Services Vendor" means the person that, from time to time,
provides market research services and compiles customer satisfaction data for
the Company or Opco and the NDS.
"Master Site Lease" means the Master Site Lease Agreement dated the
same date as this Agreement, by and between NWIP and Opco, as amended and in
effect from time to time.
"Material Breach" means, with respect to the Company, the breaches
described in Section 12.2 and, with respect to NWIP, the breaches described in
Section 12.3.
"May 20th Frequencies" -- see Section 4.18B.
"Motorola" means Motorola, Inc., a Delaware corporation.
"MSA" means a metropolitan statistical area as defined by the U.S.
Office of Management and Budget.
"National Accounts" -- see Section 9.3.
"NDS" means, individually, a Nextel Subsidiary operating all or any
portion of an ESMR Network in the United States and "the NDS" means,
collectively, all of Nextel's Subsidiaries operating all or any portion of an
ESMR Network in the United States.
"New License" or "New Frequency" means an FCC license or SMR frequency
which is acquired by the Company from a member of the Nextel Group, but does
not include licenses or frequencies contributed to the Company by NWIP pursuant
to Sections 4.1 and 4.2
"Nextel" -- see Recitals.
"Nextel Agreement" means the Agreement Specifying Obligations of, and
Limiting Liability and Recourse to, Nextel, dated the same date as this
Agreement, among Nextel, the Company and Opco, as amended from time to time.
7
"Nextel Group" means Nextel and its Subsidiaries.
"Nextel Indemnitees" -- see Section 4.11B.1.
"Nextel Retained Frequencies" -- see Section 4.4B.
"Nextel Transferor" -- see Section 4.15A.
"NWIP" -- see Preamble.
"NWIP Call Right" has the meaning set forth in the Shareholders'
Agreement and, after Section 5.1(a)(i) of the Company Amended and Restated
Certificate of Incorporation becomes effective, means the NWIP Call Right as
defined therein.
"NWIP Response" -- see Section 4.3.
"Old License" or "Old Frequency" means an FCC license or SMR frequency
which was previously contributed to the Company by a member of the Nextel
Group.
"Opco"-- see Preamble.
"Option Frequencies" -- see Section 4.2.
"Option Licenses" -- see Section 4.2.
"Option Sections" means the "Option Sections" on Exhibit 6 that may be
added to the Territory under Section 6.2.
"Option Territory" means, collectively, the Option Sections with
respect to which the Company's rights under Section 6.2 have not expired or
been exercised.
"Partner Auction" -- see Section 4.6.
"Partner Frequency" means an 800 MHz SMR or a 900 MHz SMR frequency
owned by, licensed to or managed or used by the Company (or a Company
Subsidiary).
"person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, any governmental or political subdivision or
department thereof, any governmental or regulatory body, commission, board,
bureau, agency or instrumentality, any pension, profit sharing or other benefit
plan or trust, or other entity.
"Recommended Systems" -- see Section 5.8.
"Remedial Plan" -- see Section 12.1.
8
"Renewal Term" -- see Section 3.1.
"Required Services" -- see Section 6.1.
"Required Systems" -- see Section 5.8.
"Roaming Agreement" means the Roaming Agreement, dated the same date
as this Agreement, between Opco and NWIP, as amended and in effect, from time
to time.
"SCI" -- see Section 7.3C.
"Section" means each of the Sections identified in Exhibit 6, whether
an Initial Section or an Option Section.
"Section 4.3 Frequencies" -- see Section 4.3.
"Service Pricing Structure" -- see Section 9.1.
"Shareholders' Agreement" means the Shareholders Agreement, dated the
same date as this Agreement, among the Company, NWIP and the other stockholders
of the Company named therein, as amended and in effect, from time to time.
"Site Acquisition Work" means, with respect to each tower site, taking
the following actions in material compliance with all applicable laws: (i)
obtaining from a qualified surveyor a recent (i.e. prepared or updated no more
than six months before the date of the Completion Notice, if any) ground survey
depicting the boundaries and areas of the site location, all easements, rights
of way and other matters affecting title thereto, any improvements thereon,
applicable setback lines, if any, information regarding flood plain location
and any encroachments affecting the site, (ii) obtaining all building permits
and FAA and FCC approvals (if any) needed to construct the tower and related
assets on such site, (iii) obtaining all zoning approvals or designations
necessary to construct and operate the tower and related assets on such site,
(iv) obtaining an environmental transaction screening of such site and a
related report, which report shall be addressed to NWIP and to the Company, and
(v) obtaining a title commitment or abstract for the site, dated within six
months of the Completion Notice (if any), provided that the Company will not be
penalized for failure to comply with (i) - (iv) above to the extent that the
average level of compliance achieved by the NDS during the same relevant period
does not exceed the level of the Company's compliance.
"SMR Frequencies" means 800 MHz specialized mobile radio frequencies.
"Special Option Sections" means those Option Sections designated as
"Special Option Sections" on Exhibit 6.
"Subsidiary" of a specified person means a corporation, partnership,
limited liability company or other entity in which the specified person
directly or indirectly owns or controls the
9
shares of stock having ordinary voting power to elect a majority of the board
of directors (or appoint other comparable managers) of such corporation,
partnership, limited liability company or other entity.
"Substantial Agreement" means each of the Collateral Agreements except
the Transition Services Agreement and the Analog Management Agreement.
"swaps" -- see Section 4.8.
"Switch Sharing Agreement" means the Switch Sharing Agreement, dated
the same date as this Agreement, between Opco and NWIP, as amended and in
effect from time to time.
"Territory" means, at the date hereof, the Initial Sections, and, if
and when the Company elects to add Option Sections under Section 6.2, will
include such Option Sections, and will also include or exclude, from time to
time, as the case may be, Sections or service areas that are removed or
returned pursuant to Section 6.2C or 6.2D.
"Total Common Equity" of the Company means, as of any day of
determination, the product of (i) the aggregate number of shares of fully
diluted common stock of the Company on such day and (ii) the average closing
price of such common stock over the 20 consecutive trading days immediately
preceding such day. If no such closing price exists with respect to shares of
any such class, the value of such shares for purposes of clause (ii) of the
preceding sentence shall be determined by the Board in good faith and evidenced
by a resolution of such Board.
"Trademark License Agreement" means the Trademark License Agreement,
dated the same date as this Agreement, between NWIP and Opco, as amended and in
effect from time to time.
"Transaction Documents" means the agreements or instruments identified
on Exhibit I.
"Trigger Point" -- see Section 5.7B.
"Upper 200" -- see Section 4.8.
"Useable Frequency" with respect to each type of Build Area has the
meaning specified in Exhibit 4.1.
"Voting Stock" of any person means capital stock of such person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
"VPN" -- see Section 11D.
10
"Year One Build Areas" are the areas identified with the number "1" in
the "PTNR Build Year" column of Exhibit 6.
2. OPERATING ARRANGEMENTS
2.1 COMPANY RESPONSIBILITIES. The Company will be responsible for the
construction and ongoing operation of an ESMR Network in the Territory. Except
as otherwise required by this Agreement or any Collateral Agreement, the
Company's responsibilities include, without limitation, the following
activities in the Territory:
A. Planning, supervising, and monitoring the Build Out of the local
ESMR Network;
B. RF design work;
C. Securing site leases or other similar real property rights to
install and maintain cell sites;
D. Acquiring and deploying the infrastructure equipment
(essentially cell sites);
E. Securing adequate financing for capital expenditures and working
capital;
F. Provisioning necessary telco facilities to connect to the
national ESMR Network of the NDS;
G. Ongoing maintenance and operation of local cell sites and telco
facilities;
H. Local area advertising and marketing;
I. Local sales and customer support;
J. Fulfillment, billing, collections, customer care, accounting,
equipment and systems monitoring and other standard general and administrative
functions;
K. Preserving and maintaining FCC licenses to use SMR Frequencies
held by the Company (or any of its Subsidiaries); and
L. Clearing of the upper 200 SMR Frequencies to create contiguous
spectrum, so long as Nextel is acting under Section 4.8.
2.2 TERRITORY. Exhibit 6 identifies (i) the Initial Sections; (ii) the
Option Sections that may be added to the Territory under Section 6.2; (iii) the
Build Areas in each Section; and (iv) the Build Year by which the Build Out for
Build Areas must be completed.
11
2.3 EXCLUSIVITY. NWIP will cause the Nextel Group to recognize the
Company's exclusive right, subject to the next sentence, to build and operate
an ESMR Network and to provide wireless communications services in the
Territory and, until the Company's right to include the Option Sections in the
Territory has expired, in the Option Sections. The Company's exclusive right is
subject to the rights of NWIP and other members of the Nextel Group set forth
in Sections 2.4A, B, and C, 6.2C and D, 8.2, 8.4, 8.6, 8.8, 9.2 (the last
sentence), 9.3, 9.5, 10.3, 11, 12.1, 12.4 of this Agreement, and Sections
2.1(a) and 2.2(c) of the Roaming Agreement and to any other exceptions to or
limitations on such exclusive rights as may be agreed to in writing with any
required approval of the Board (or the Board of Directors of a relevant
Subsidiary) from time to time after the date hereof between the Company, Opco
or any other Company Subsidiary, on the one hand, and NWIP or any other member
of the Nextel Group, on the other.
2.4 NEXTEL OPERATIONS.
A. Except to the extent required to satisfy its obligations under
Section 4.18, NWIP has no obligation to contribute, assign, or otherwise
transfer to the Company any rights or assets of the Analog Systems or Analog
Services in the Territory (nor Analog Services customer revenue nor Analog
Systems fixed assets) nor, subject to 2.4D, any non-800 MHz frequencies, other
assets or contracts.
B. No member of the Nextel Group may operate Digital Systems or
provide Digital Services in the Territory using 800 MHz frequencies, except as
permitted by Sections 12.1 and 12.4. The Nextel Group may operate Analog
Systems and provide Analog Services in the Territory and the Option Territory
using 800 MHz frequencies, provided that such Analog Systems and Analog
Services (1) are not operated or offered under any of the Licensed Marks or any
similar branding or product or service identification and (2) do not involve
the use of iDEN or any other digital transmission technology with respect to
800 MHz.
C. Subject to Section 2.4D, the Nextel Group may operate Digital
Systems and provide Digital Services in the Territory and the Option Territory
using non-800 MHz frequencies, provided that such Digital Systems and Digital
Services (1) are not operated or offered under any of the Licensed Marks or any
similar branding or product or service identification, (2) do not involve the
use of iDEN or any other digital transmission technology with respect to 800
MHz frequencies and (3) do not offer interconnection with landline
telecommunications providers.
D. NWIP and the Company shall negotiate in good faith with each
other (and with any relevant third parties) to reach agreement on arrangements
whereby the Company would be permitted to have the first right to own and
operate any business that proposes to use or manage the use of 900 MHz
frequencies in the Territory and/or in the Option Territory. If the Company,
NWIP and any relevant third party are unable to reach a mutually satisfactory
agreement on such arrangements within 90 days after the start of negotiations,
NWIP, another Nextel Subsidiary or such third party may operate the business
using or managing the use of 900 MHz frequencies licensed to one or more
members of the Nextel Group, but only in compliance with Section 2.4C, and the
terms of the arrangements between NWIP or any other Nextel
12
Subsidiary and any such third party are not, taken as a whole, more favorable
to such third party than the terms offered to the Company. For a period of 365
days after the conclusions of negotiations with the Company, the business using
or managing the use of the 900 MHz frequencies shall not be sold or otherwise
transferred to any third party on terms that are, taken as a whole, more
favorable to such third party than the terms that were offered to the Company.
2.5 SUFFICIENCY OF RIGHTS. During the period that any of the
Collateral Agreements is in force, NWIP will obtain from the relevant member of
the Nextel Group the ownership, leasehold, or other authorized use rights of
any NDS that are needed by NWIP to perform its obligations under each such
Collateral Agreement that is in force.
2.6 NONDISCRIMINATION; STANDARD OF CARE.
A. All products, services and systems that NWIP is required to make
available to the Company pursuant to this Agreement and the Collateral
Agreements will (1) except as provided herein or therein, be the same products,
services and systems provided to or used by the NDS, and (2) be made available
to the Company in the manner and on the schedule and at the same service levels
as provided to or used by the NDS. NWIP will provide or cause to be provided to
the Company all such products, services, and systems, and will otherwise deal
with the Company under this Agreement and the Collateral Agreements in a manner
that does not discriminate against the Company in favor of the NDS, but, except
as otherwise provided in this Agreement or the Collateral Agreements, no member
of the Nextel Group is required to provide any product, service, or system, or
take any action for or on behalf of the Company or any of its Subsidiaries that
is not provided to or taken for the NDS. Neither NWIP nor any member of the
Nextel Group will be liable for damages, or shall be subject to any claim for
monetary recovery against or from them, under this Agreement or any Collateral
Agreement with respect to such products, services or systems unless there has
been negligence or wilful misconduct in providing (or failing to provide) such
products, services or systems and where such damages or monetary recoveries are
allowed, the limitations of Section 12.9F will be applicable.
B. To the extent that, as provided herein and in the Collateral
Agreements, the Company in designing, constructing, operating and maintaining
the ESMR Network in its Territory is required to comply with requirements,
procedures and standards in effect from time to time and applicable generally
to the corresponding activities relating to the NDS ESMR Network, NWIP will
communicate to the Company such requirements, procedures and standards at the
same time and in substantially the same manner as such requirements, procedures
and standards are communicated to the NDS (which may be in writing or may be by
presentation or discussion at meetings).
C. The Company acknowledges that the products, services, and
systems used by the NDS were designed and are operated and maintained for their
businesses, and that the NDS expect to continue to develop, operate and
maintain their products, services and systems for their businesses. If the
products, services and systems made available to the Company are provided as
stated in Section 2.6A and B, and those products, services or systems are not
as effective in the Company's businesses as they are in the businesses of the
NDS, NWIP will not be
13
in violation of the terms of this Agreement or any of the Collateral Agreements
with respect to any such reduced effectiveness.
D. If NWIP is required under this Agreement or any of the
Collateral Agreements to provide or cause to be provided to the Company
products, services or systems that are materially different from or not
provided to the NDS, neither NWIP nor any member of the Nextel Group will be
liable for damages, or shall be subject to any claim for monetary recovery
against or from them, under this Agreement or any Collateral Agreement with
respect to such products, services or systems unless there has been gross
negligence or wilful misconduct in providing (or failing to provide) such
products, services or systems and where such damages or monetary recoveries are
allowed, the limitations of Section 12.9F will be applicable.
E. Except as otherwise provided herein or a Collateral Agreement,
the schedule for the Company's implementation of, or compliance with, the
requirements, procedures and standards of the NDS will be the schedule in
effect at the relevant time and applicable generally to the NDS.
F. No claim can be made or relief sought for the Company's
violation of this Agreement or any Collateral Agreement to the extent that the
Company's compliance with the requirements, procedures, and standards that
apply to the NDS, equals or exceeds the compliance achieved by the NDS
generally.
2.7 SPECIAL NWIP APPROVAL RIGHTS.
No action by the Company, License Co., Opco or any other Subsidiary
(including but not limited to any action by the Board or any committee thereof
or the board of directors or any committee thereof of the relevant Subsidiary)
shall be taken after the date hereof with respect to any of the following
matters without the prior written approval (which shall be given or withheld
within 30 days of the Company's written request therefor) of the NWIP Designee
(as defined in the Shareholders' Agreement), provided, that (a) approval by the
NWIP Designee of the matters referred to in paragraph (ii) below will no longer
be required on the earlier of the date on which (x) NWIP transfers any Shares
(as defined in the Shareholders' Agreement) owned by NWIP as of the date hereof
to a Person (other than the Company) that is not a "Permitted Transferee" under
the Shareholders' Agreement and (y) the NWIP Call Right expires and (b)
approval by the NWIP Designee (as defined in the Shareholders' Agreement) of
the matters referred to in this Section 2.07 will no longer be required if the
Nextel Shareholders transfer their Shares (as defined in the Shareholders'
Agreement) pursuant to Section 3.08 of the Shareholders' Agreement:
(i) any material change in the technology used by the Company;
(ii) any decision to expand or to broaden the scope of the
Company's business beyond building and operating an ESMR digital mobile
communications network in the Territory including any decision to make any
acquisition other than 800 MHz or 900 MHz frequency licenses (the "Business
Objectives");
14
(iii) any modification or change in the Business Objectives that is
inconsistent with the Company's or any of its Subsidiaries' duties and
obligations under this Agreement or any of the Transaction Documents; or
(iv) any sale, exchange or other disposition of all or
substantially all of the assets of the Company; or
(v) the entering into any agreement or series of agreements the
terms of which would be materially altered if Nextel or NWIP either exercised
or elected not to exercise its right to acquire the relevant Company Capital
Stock (as defined in the Shareholders' Agreement) under Sections 3.05, 3.07,
4.01, 4.02, 5.03, 7.03 or 7.04 of the Shareholders' Agreement or otherwise
acquired beneficial ownership of a majority of the outstanding or Fully Diluted
(as defined in the Shareholders' Agreement) shares of the Company Capital
Stock.
3. TERM
3.1 INITIAL TERM; RENEWAL TERMS. The term of this Agreement is for an
initial term of ten years, plus an additional time period equal to the period
of any postponement of the NWIP Call Right under Section 4.02(a) of the
Shareholders' Agreement (the "Initial Term"), and is subject to renewal for up
to four additional ten-year terms (each, a "Renewal Term") at the Company's
option exercisable by providing 180 days' written notice prior to the end of
the Initial Term or any Renewal Term. Any extension of the Initial Term of this
Agreement or any renewal of this Agreement for a Renewal Term will
automatically extend and continue the terms of the Collateral Agreements so
that (unless the arbitrators have determined pursuant to Section 12.9D, that
the Trademark License Agreement should be terminated) the term of those
agreements are the same as this Agreement. Either the Company or NWIP may
terminate the Collateral Agreements at any time upon or after termination of
this Agreement (unless the arbitrators have determined pursuant to Section
12.9D that the Trademark License Agreement should continue).
4. FREQUENCIES AND LICENSES
4.1 CONTRIBUTION OF LICENSES IN INITIAL SECTIONS.
A. Prior hereto, members of the Nextel Group have assigned to
License Co. the Initial Licenses. On the date hereof, NWIP is filing with the
FCC an application for approval to permit the Company to acquire all of the
outstanding capital stock of License Co. Pending FCC approval of the transfer
of the License Co. stock to the Company, NWIP has agreed to grant to the
Company certain rights to manage the use of the Initial Frequencies, subject to
the terms and conditions of the Interim Management Agreement being entered into
on the date hereof. In consideration for, among other things, entering into the
Interim Management Agreement, the Company is issuing shares of Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock of the
Company to NWIP pursuant to the Subscription and Contribution Agreement, in an
aggregate amount equal to the aggregate Exhibit 4.1 Value of the Initial
Frequencies (that are identified on Exhibit 4.1). Upon FCC approval for the
transfer of the stock
15
of License Co. to the Company, License Co. will become a wholly owned
Subsidiary of the Company and the Interim Management Agreement will terminate
in accordance with its terms.
B. The parties will use their respective reasonable best efforts to
obtain FCC approval for the transfer of control of License Co. to the Company
and (if applicable) the arrangements contemplated by the Transaction Documents
as in effect on the date hereof.
C. Within 60 days after such FCC approval is granted, the Company
will notify NWIP of the number of Useable Frequencies that License Co. is
licensed to use in each Build Area of the Initial Sections. In the event of any
discrepancy between such number of Useable Frequencies and the number of
Useable Frequencies to which the Company is entitled as set forth on Exhibit
4.1 which discrepancy is not the result of the matters described in Part I of
Exhibit D to the Subscription and Contribution Agreement (identified on Exhibit
I), the parties will promptly make such filings and take such other actions as
are necessary to ensure that License Co. is licensed to use the number of
Useable Frequencies set forth on Exhibit 4.1 (but no more than that).
D. If, as a direct result of the ultimate outcome (including any
judicial review or appeals) of Case No. 95F 860 that is identified in Part II
of Schedule D to the Subscription and Contribution Agreement, the Company loses
the right to an Initial Frequency (a "Chadmoore Lost Frequency"), then at the
Company's request (delivered to NWIP within sixty (60) days after such ultimate
outcome), NWIP will (or will cause the appropriate member of the Nextel Group
to) make such filings and take such other actions as are necessary so that, for
each Chadmoore Lost Frequency in any Build Area, the Company receives in
replacement therefor a Nextel Retained Frequency in that Build Area (so long as
any Nextel Retained Frequency is available in that Build Area). If there are
not sufficient Nextel Retained Frequencies in a Build Area to replace all
Chadmoore Lost Frequencies in that Build Area, then at the Company's request,
NWIP will (or will cause the appropriate member of the Nextel Group to) make
such filings and take such other actions as are necessary to transfer to the
Company Nextel Retained Frequencies in any other Build Area for the Lost
Chadmoore Frequencies being replaced so long as the Exhibit 4.1 Value of such
Nextel Retained Frequencies is equal to or less than the Exhibit 4.1 Value of
Lost Chadmoore Frequencies being replaced (any Nextel Retained Frequency so
acquired, a "4.1D Frequency"). NWIP shall have no further obligations under
this Section 4.1D and shall have no other liability or obligation in respect of
or otherwise connected with any Chadmoore Lost Frequency upon the earlier to
occur of (i) all Chadmoore Lost Frequencies being replaced pursuant to this
Section 4.1D and (ii) no Nextel Retained Frequency having an Exhibit 4.1 Value
equal to or less than the Chadmoore Lost Frequencies that have not been
replaced.
4.2 CONTRIBUTION OF LICENSES IN OPTION SECTIONS. If the Company elects
to include any Option Section in the Territory pursuant to Section 6.2, NWIP
will, within 30 days thereafter, cause appropriate applications to be filed
with the FCC for the approval of the assignment to License Co. of licenses (the
"Option Licenses") for that number of Useable Frequencies for each Build Area
within such Option Section as set forth on Exhibit 4.1 (the "Option
Frequencies"). Pending FCC approval of any such assignment, NWIP will, if the
Company so requests, grant to License Co. the right to manage the use of the
Option Frequencies, subject to the terms and conditions of a management
agreement in substantially the form of the Interim Management
16
Agreement, such grant to be made on or prior to the date of filing of the
transfer applications with the FCC. Upon the earlier of the granting of FCC
approval of the assignment of the Option Licenses to License Co. or, if
applicable, the granting by NWIP of management rights with respect to the
Option Frequencies, the Company will issue to NWIP a number of shares of Equity
equal to the aggregate Exhibit 4.1 Value of such frequencies divided by the
Equity Value on the date hereof, as appropriately adjusted for stock splits and
combinations, stock dividends and the like.
4.3 OTHER ACQUISITIONS OF LICENSES FROM NEXTEL GROUP. If the
Company requires frequencies in any Build Area in the Territory in addition to
the Initial Frequencies or Option Frequencies in such Build Area, the Company
may ask NWIP whether any member of the Nextel Group is licensed to use any
frequencies in such Build Area. NWIP will respond to such request within 30
days, indicating the number and its estimate of the fair market value of any
such frequencies. Within 10 days after receiving NWIP's response (the "NWIP
Response"), the Company may notify NWIP of the frequencies that it wants to use
(the "Section 4.3 Frequencies"). Within 30 days after receipt of such notice,
NWIP will cause appropriate applications to be filed with the FCC for the
approval of the assignment to License Co. of licenses for the Section 4.3
Frequencies in such Build Area. Pending FCC approval of such assignment, NWIP
will, if the Company so requests, grant to License Co. the right to manage the
use of the Section 4.3 Frequencies, subject to the terms and conditions of a
management agreement in substantially the form of the Interim Management
Agreement, such grant to be made on or prior to the date of filing of the
assignment applications with the FCC. Notwithstanding the foregoing, NWIP will
not be obligated to assign any such license, or to grant to License Co. the
right to manage the use of any such Section 4.3 Frequency, that is being used
by the Nextel Group to provide Analog Services, prior to 180 days following the
date of the Company's request. Upon the earlier of the granting of FCC approval
of the assignment of such licenses to License Co. or, if applicable, the
granting by NWIP of management rights with respect to the Section 4.3
Frequencies, the Company will (i) issue to NWIP a number of shares of Equity
equal to the aggregate Fair Market Value of the Section 4.3 Frequencies divided
by the Equity Value on the date of issuance or (ii) assign to NWIP, in
accordance with Section 4.4, Old Licenses for frequencies with an aggregate
Frequency Value equal to the aggregate Frequency Value of the Section 4.3
Frequencies; provided, that the issuance of shares by the Company or the
assignment of licenses by License Co., and the assignment of licenses or
granting of management rights by NWIP, will take place simultaneously and will
be delayed until the aggregate Fair Market Value of the Section 4.3 Frequencies
is determined.
4.4 SWAPS AND EXCHANGES OF LICENSES WITH NEXTEL GROUP. In lieu of
issuing Equity in consideration for licenses as provided in Section 4.3, the
Company may elect to assign Old Licenses for Old Frequencies to NWIP in
exchange for New Licenses for New Frequencies, in accordance with the following
provisions:
A. If the Frequency Acquisition Amount is greater than zero (after
giving effect to any proposed license or frequency exchange pursuant to this
Section 4.4), the Company may exchange an Old Frequency in any Build Area for a
New Frequency in the same or any other Build Area without NWIP's consent or
approval.
17
B. After the Frequency Acquisition Amount has been reduced to zero,
the Company shall have the right to exchange:
1. for a New Frequency in any Build Area, an Old Frequency in the
same Build Area:
a. without the consent of NWIP, if the Old Frequency has
substantially the same coverage characteristics as the New Frequency, and
b. with the consent of NWIP not to be unreasonably withheld,
if the Old Frequency does not have substantially the same coverage
characteristics as the New Frequency; and
2. for a New Frequency in any Build Area, an Old Frequency in a
different Build Area, with the consent of NWIP not to be unreasonably withheld,
if the New Frequency is licensed to any member of the Nextel Group (other than
License Co.) on the date hereof. Exhibit 4.4 lists the frequencies that are
licensed on the date of this Agreement to a member of the Nextel Group (other
than License Co.) (the "Nextel Retained Frequencies").
C. For any exchange, the Company shall cause appropriate
applications to be filed with the FCC for the approval of the assignment to
NWIP (or another member of the Nextel Group designated by NWIP) of such Old
Licenses. Pending FCC approval of such assignment, the Company will, if NWIP so
requests, or will cause License Co. to, grant to NWIP (or such other member of
the Nextel Group) the right to manage the use of the frequencies subject to
such Old Licenses, subject to the terms of a management agreement in
substantially the form of the Interim Management Agreement, such grant to be
made on or prior to the date of filing of the assignment applications with the
FCC.
D. For any exchange, the aggregate Frequency Value of the Old
Frequencies being exchanged, together (if necessary) with Equity issued to NWIP
pursuant to Section 4.3, must be equal to the aggregate Frequency Value of the
New Frequencies being acquired.
E. For any exchange, the Frequency Acquisition Amount, if not
already zero, will be reduced by an amount equal to the aggregate Frequency
Value of the Old Frequencies being exchanged.
4.5 ACQUISITIONS OF LICENSES FROM THIRD PARTIES.
A. The Company may acquire FCC licenses for frequencies from third
parties on such terms as the Company and such third parties may agree, and the
Company will pay the purchase price of such licenses and otherwise be
responsible for such acquisitions; provided, that so long as the Frequency
Acquisition Amount has not been reduced to zero (after giving effect to any
transaction pursuant to this Section), the provisions of this Section 4.5A will
apply. At the closing of any such acquisition, (i) NWIP will pay the purchase
price of such licenses to the extent
18
of any remaining Frequency Acquisition Amount (or any portion thereof properly
specified by the Company) to the Company or (at the Company's request) directly
to the third party seller, whereupon the Frequency Acquisition Amount will be
reduced by the amount of such payment, (ii) the third party seller will assign
such licenses to License Co. and (iii) License Co. will assign to NWIP (or
another member of the Nextel Group designated by NWIP) Old Licenses for Old
Frequencies in any Build Area with an aggregate Exhibit 4.1 Value equal to the
purchase price (or portion thereof) paid by NWIP under clause (i) above. The
Company will give NWIP at least 10 days' notice of any such closing, and it
will be a condition precedent to NWIP's obligations under this Section that the
FCC shall have granted approval for the assignment of licenses to NWIP under
clause (iii) above.
B. The Company and NWIP will coordinate their frequency acquisition
efforts, among other reasons, to avoid conflict with NWIP's activities under
Section 4.8. If any party becomes aware that licenses are available for
acquisition in the Territory or the Option Territory, it will promptly notify
the other party. For 90 days thereafter, the Company, upon notice to NWIP of
its intent to acquire such licenses, will have the exclusive right to negotiate
with the prospective seller of such licenses. If the Company elects not to
pursue the acquisition of such licenses, it will promptly notify NWIP,
whereupon any member of the Nextel Group may acquire such licenses.
4.6 FREQUENCY AUCTIONS. NWIP will have the right to participate in any
FCC auction of licenses for frequencies (whether or not in the 800 MHz
frequency band and whether in the Territory or elsewhere in the United States)
and may assign such right to any other member of the Nextel Group. The Company
will have the right to participate in any FCC auction of licenses for 800 MHz
or 900 MHz frequencies in the Territory (a "Partner Auction") either with NWIP
or NWIP's assignee (collectively referred to in this Section 4.6 as "NWIP") or
independently if NWIP elects not to participate. If both NWIP and the Company
desire to participate in a Partner Auction, NWIP and the Company will enter
into a consortium agreement to form an auction consortium to bid on and fund
the purchase of any auction licenses in the Territory acting in accordance with
FCC Rules. In the consortium agreement, the Company will control the bidding
and have the right to fund 100% of the auction cost (in which case License Co.
will be the licensee of any license awarded in the auction). If the Company
elects to withdraw from the auction, or from bidding on any individual auction
license, NWIP will have the right to assume control of the bidding and fund the
cost of the auction (or individual auction license(s), as the case may be)
independent of the Company, in which case NWIP (or another member of the Nextel
Group) will be the licensee of any such license awarded in the auction.
4.7 COOPERATION.
A. NWIP and the Company will cooperate so that, to the maximum
extent possible, those frequencies of each Nextel Subsidiary that become
Partner Frequencies are clear from co-channel interference and existing analog
customers.
B. NWIP, on behalf of the NDS, and the Company (on behalf of itself
and its Subsidiaries) will cooperate with respect to the use of frequencies
along border areas between the
19
NDS ESMR Network and the ESMR Network in the Territory, to make efficient use
of spectrum, to preserve both parties' rights as incumbent licensees 22DBU
service contours and facilitate roaming by subscribers using either party's
service. Such cooperation will include, among other things, agreements between
the parties (or their relevant Subsidiaries) to co-channel short spacing to
make efficient use of spectrum.
4.8 TRANSACTIONS TO CREATE CONTIGUOUS SPECTRUM. The Company will use
its reasonable best efforts and will expend commercially reasonable funds to
achieve contiguous spectrum in the upper 200 block of the SMR Frequency
spectrum (the "Upper 200") in the Territory. The Company hereby engages NWIP,
and NWIP hereby accepts such appointment, to act as the exclusive agent of the
Company to negotiate transactions that, by exchanges of frequencies ("swaps")
or by other arrangements will give the Company (as licensee) the benefit of
additional frequencies in the Upper 200. The Company will make available for
possible exchange all Partner Frequencies that are outside the Upper 200,
except for frequencies that are then required in the existing or contemplated
operation of the ESMR Network in the Territory. NWIP will report to the Company
in writing the proposed terms of any such arrangement or transaction
(including, without limitation, any costs, and the number, location, and
precise frequencies of the Company that are subject to any such transaction),
which terms will be subject to approval by the Company. The Company (or one or
more of its Subsidiaries, and not NWIP or any member of the Nextel Group) will
(i) directly enter into exchange or other transactions affecting frequencies
licensed to the Company, (ii) be responsible for any amounts payable to the
relevant third party, and reasonable out-of-pocket costs or expenses of NWIP,
associated with the exchange or other transaction, and (iii) be entitled to the
benefit of the frequencies obtained in the Upper 200 as a result of such
transaction or arrangement.
4.9 NEXTEL ANALOG OPERATIONS.
A. The Company will be responsible for the migration of any analog
customers from frequencies being used in the Company's ESMR Network as deemed
necessary by the Company. If the Company elects to migrate any such analog
customers, the Company will contract with NWIP to provide migration management
services for a one time fee of $20 per analog unit. Such services would
include, at the Company's request, the mailing of letters to the affected
analog customers stating the terms under which such customers could migrate to
the Company's ESMR Network. The Company will be responsible for all normal
costs (such as trade-in allowances, subsidies, loading expenses, analog unit
returning or refurbishment expenses) associated with any such offers to or
migration of such analog customers, and NWIP will not be entitled to any
commission if such customer is moved to the Company's ESMR Network. NWIP will
be responsible for the operation of the affected analog system in the Territory
during the migration process. Costs, expenses, liabilities and similar amounts
incurred by reason of claims asserted by such analog customers who have been
identified for migration, or by reason of actions taken by such customers to
delay or prevent such migration, shall be divided between and borne equally by
the Company and NWIP.
B. The Company has the right to solicit any analog customer of any
Nextel Subsidiary in the Territory who is not otherwise affected by frequency
migration under
20
Section 4.9A. If the Company converts any such customer to the
Company's ESMR Network, the Company will pay NWIP a one time fee of $150 per
unit as compensation for such customer.
C. Under the Analog Management Agreement, Nextel Subsidiaries will
be entitled to operate Analog Systems and offer Analog Services (on a basis
consistent with Section 2.4B) using any frequencies licensed to License Co. (or
another member of the Company Group) that are not then being used in the ESMR
Network in the Territory.
4.10 RESERVED.
4.11 COMPLIANCE WITH FCC RULES.
A. General. Subject to Section 4.12, the Company will be
responsible for complying with FCC Rules relating to all Partner Frequencies.
The Company will also be responsible for complying with all FCC or state
mandated programs (including, without limitation, federal universal service
fund, enhanced 911, telecommunications relay services for the hearing impaired,
local number portability, potential "calling party pays" services, and
potential priority access services), and for paying all applicable fees,
surcharges or taxes, applicable to or arising out of the Company's operations
in the Territory. Subject to Section 4.12, NWIP will be responsible for
complying with FCC Rules relating to any frequencies used by any Nextel
Subsidiary as part of its analog operations in the Territory.
B. Indemnification.
1. Except as provided in Section 4.12, the Company and Opco
will, jointly and severally, indemnify and hold harmless NWIP and the
other members of the Nextel Group, and their respective directors,
officers, shareholders, employees and agents (collectively, the
"Nextel Indemnitees"), from and against any and all claims,
liabilities, damages, losses and costs ("Losses") that arise under FCC
Rules from the conduct of business activities or other use of Partner
Frequencies by any member of the Company Group in a manner contrary to
law or to such indemnifying party's contractual obligations, except to
the extent that any such Losses arise out of or result from the gross
negligence or willful misconduct of any Nextel Indemnitee.
2. Except as provided in Section 4.12, NWIP will indemnify
and hold harmless the Company and Opco and the other members of the
Company Group, and their respective directors, officers, shareholders,
employees and agents (collectively, the "Company Indemnitees"), from
and against any and all Losses that arise under FCC Rules from the
conduct of business activities or other use of frequencies licensed,
managed or otherwise used by any member of the Nextel Group in a
manner contrary to law or to such indemnifying party's contractual
obligations, except to the extent that any such Losses arise out of or
result from the gross negligence or willful misconduct of any Company
Indemnitee.
21
C. Construction. Except as provided in Section 4.18, the Company
will have the obligations described in Article 6 with respect to all
frequencies in its ESMR Network consistent with the Build-Out schedule of
Exhibit 6, and the Company will be responsible for any construction of Partner
Frequencies required by the FCC Rules. NWIP may from time to time require the
Company to utilize frequencies that are not Partner Frequencies in the
Company's ESMR Network to comply with FCC Rules. In such event, NWIP will grant
to License Co. the right to manage the use of such frequencies under a
management agreement in substantially the form of the Interim Management
Agreement. The Company will not be required to pay any additional consideration
to NWIP for managing the use of such included frequencies. NWIP will have the
right at any time upon ten business days' notice to amend such management
agreement so that such included frequencies are no longer subject to its terms,
except that the Company can acquire such frequencies if the Company so notifies
NWIP of its intention to acquire such frequencies pursuant to Section 4.3 prior
to the expiration of such ten business days.
4.12 FCC PROCEEDINGS.
A. Obligations of Nextel Group. As licensee, NWIP (or another
member of the Nextel Group) will represent License Co. (or other members of the
Company Group) before the FCC with respect to any matters relating to the
licenses for frequencies subject to the Interim Management Agreement (or any
other management agreement between NWIP as licensee and a member of the Company
Group as manager) and will have authority and responsibility for FCC
correspondence and filings with respect to such licenses. NWIP will timely
provide copies of such FCC correspondence and filings to the Company and will
provide a full and comprehensive flow of information on such matters to the
Company in consultation with, and with the cooperation and participation by the
Company, on any issues related to the Interim Management Agreement or any other
Collateral Agreements. The Company will timely provide information to NWIP
necessary for NWIP to make such FCC filings. NWIP (or another member of the
Nextel Group) will have primary responsibility for interacting with the FCC, in
consultation with, and with the cooperation and participation by the Company on
any issues related to frequencies that are subject to the Interim Management
Agreement (or any other management agreement between NWIP as licensee and a
member of the Company Group as manager). NWIP will pay any costs (including any
fines) related to any FCC inquiries or actions related to any breach by any
member of the Nextel Group of its obligations under this Section 4.12A.
B. Obligations of Company Group. As licensee, the Company (or a
Company Subsidiary) will represent NWIP (or other members of the Nextel Group)
before the FCC with respect to any matters relating to the licenses for
frequencies subject to the Analog Management Agreement (or any other management
agreement between NWIP as manager and a member of the Company Group as
licensee) and will have authority and responsibility for FCC correspondence and
filings with respect to such licenses. The Company will timely provide copies
of such FCC correspondence and filings to NWIP and will provide a full and
comprehensive flow of information on such matters to NWIP in consultation with,
and with the cooperation and participation by NWIP, on any issues related to
the Analog Management Agreement or any such other management agreement. NWIP
will timely provide information to the Company necessary for the Company to
make such FCC filings. The Company (or a Company Subsidiary) will have
22
primary responsibility for interacting with the FCC, in consultation with, and
with the cooperation and participation by NWIP (or other members of the Nextel
Group) on any issues related to frequencies that are subject to the Analog
Management Agreement (or any other management agreement between NWIP as manager
and a member of the Company Group as licensee). The Company will pay any costs
(including any fines) related to any FCC inquiries or actions related to any
breach by any member of the Company Group of its obligations under this Section
4.12B.
C. No Unauthorized Change of Control. The parties intend that this
Agreement, either alone or together with the other Collateral Agreements, not
(i) create an unauthorized FCC Change of Control or (ii) otherwise violate the
statutes, rules or regulations administered by the FCC (collectively, "FCC
Rules"). If the FCC formally or informally advises any party that the terms of
the Interim Management Agreement, the Analog Management Agreement or any other
management agreement executed pursuant to this Agreement, either alone or
together with the terms of any of this Agreement or the Collateral Agreements,
constitute in whole or in part, an unauthorized FCC Change of Control, then
such party will promptly notify the other party, and NWIP and the Company will
negotiate (i) to resolve the FCC concerns or directives to the satisfaction of
NWIP, the Company and the FCC, and (ii) to the extent necessary, modify the
terms of any management agreement then in effect between them or this Agreement
or any other Collateral Agreements in a manner most consistent with the
arrangements described herein or therein.
4.13 TRANSFER RESTRICTIONS.
A. Except as contemplated by this Agreement, the Company will not
(and will not permit any Subsidiary to) make any direct or indirect sale,
exchange, assignment, pledge, transfer or other disposition, in whole or in
part, of (i) ownership interests in any Company Subsidiary that holds licenses
for Partner Frequencies or (ii) licenses for, or other rights to use or to
manage the use of, Partner Frequencies. Notwithstanding the provisions of the
foregoing sentence, the Company and its Subsidiaries may (i) pledge ownership
interests in any Company Subsidiary that holds licenses for Partner
Frequencies, grant a security interest in licenses held by any member of the
Company Group, and collaterally assign rights to use or to manage the use of
Partner Frequencies, in each case to senior lenders to the Company or Opco that
have granted to members of the Nextel Group the rights described on Exhibit
4.13 (or other rights as NWIP may agree), (ii) in connection with joint
ventures in which it participates in the Territory, grant rights to use or to
manage the use of Partner Frequencies on terms consistent with the provisions
of this Agreement (including without limitation this Section 4.13 and Section
4.14) and the other Collateral Agreements, and (iii) subject to NWIP's rights
under Section 4.14, sell, transfer or otherwise dispose of 4.1D Frequencies.
B. Except as contemplated by this Agreement, NWIP will not (and
will not permit any member of the Nextel Group to) make any direct or indirect
sale, exchange, assignment, pledge, transfer or other disposition, in whole or
in part, of (i) ownership interests in any member of the Nextel Group that
holds licenses for frequencies or (ii) licenses for, or other rights to use or
rights to manage the use of, frequencies, in each case that are (at the time of
such
23
disposition) subject to the Interim Management Agreement or any other
management agreement with members of the Company Group.
4.14 NWIP RIGHT OF FIRST REFUSAL.
A. If any member of the Company Group (a "Company Transferor")
proposes to assign, directly or indirectly, a license for any frequency in the
Territory to a Person other than another member of the Company Group, the
Company Transferor must give NWIP written notice (the "4.14 Notice") stating
(i) the name and address of the proposed transferee, (ii) a description of the
license and frequency being transferred, (iii) a representation that the
proposed transferee has been informed of the right of first refusal provided in
this Section 4.14 and has agreed to be bound by its terms, (iv) a complete copy
of any related documents, and (v) a description of any common ownership or
other relationships between any member of the Company Group and the proposed
transferee and its Affiliates.
B. For a period of 30 days after delivery of the 4.14 Notice, NWIP
has the right to elect to purchase the license described in the 4.14 Notice on
the terms stated in this Section 4.14B. To exercise this right, NWIP must
deliver to the Company Transferor within such 30-day period a notice stating
that NWIP is irrevocably exercising its option to acquire the licenses for a
purchase price equal to the purchase price to be received from the proposed
transferee or, if less, the aggregate Frequency Value of the frequencies
subject to the license. If NWIP makes such election, within 30 days thereafter
the Company will cause the appropriate filings to made with the FCC to assign
to NWIP (or another member of the Nextel Group) such licenses, and the purchase
and sale will close within 45 days after FCC approval of the assignment of such
license is obtained. If the license covers a 4.1D Frequency, then NWIP will pay
the purchase price in cash. If the license does not cover a 4.1D Frequency, the
purchase price will be paid, at NWIP's election, in shares of Company capital
stock (other than Series B Preferred Stock) valued at the Equity Value or in
shares of Nextel common stock (valued at the average closing price of Nextel
common stock for the ten trading days preceding the date of delivery), or in
cash. If payment of the purchase price in shares of Series C or D Preferred (or
Class B Common Stock) would violate covenants of, or create an event of default
or result in other adverse consequences under any agreement for money borrowed
to which the Company is a party, the purchase price for frequencies that are
not 4.1D Frequencies may be paid in shares of Series B Preferred valued at the
fair market value of such Series B Preferred.
C. If NWIP does not irrevocably elect to acquire any license
described in the 4.14 Notice within such 30-day period, the Company Transferor
may assign such license to the transferee identified in the 4.14 Notice, on
terms that are no more favorable to the proposed transferee than those
described in the 4.14 Notice, so long as the application to transfer such
license is filed with the FCC within 60 days after delivery of the 4.14 Notice
to NWIP.
D. NWIP's rights under this Section 4.14 terminate upon the
consummation of a Section 3.08 Sale (as defined in the Shareholders' Agreement)
or a Section 5.5 Sale (as defined in the Restated Certificate of Incorporation
of the Company).
24
4.15 COMPANY RIGHTS OF FIRST REFUSAL.
A. If any member of the Nextel Group (a "Nextel Transferor")
proposes to assign, directly or indirectly, a license for any 800 MHz frequency
in the Territory or the Option Territory to a Person other than another member
of the Nextel Group, the Nextel Transferor must give the Company written notice
(the "Section 4.15 Notice") stating (i) the name and address of the proposed
transferee, (ii) a description of the license and frequency being transferred,
(iii) a representation that the proposed transferee has been informed of the
right of first refusal provided in this Section 4.15 and has agreed to be bound
by its terms, and (iv) a complete copy of any related documents.
B. For a period of 30 days after delivery of the Section 4.15
Notice, the Company has the right to elect to purchase the license described in
the Section 4.15 Notice on the terms stated in this Section 4.15B. To exercise
this right, the Company must deliver to the Nextel Transferor within such
30-day period a notice stating that the Company is irrevocably exercising its
option to acquire the licenses for a cash purchase price equal to the price
offered by the proposed transferee; provided, that if the Frequency Acquisition
Amount has not then been reduced to zero, the Company may acquire the licenses
by assigning to NWIP (or another member of the Nextel Group) Old Licenses in
accordance with the provisions of Section 4.4.
C. If the Company does not irrevocably elect to acquire any license
described in the Section 4.15 Notice within such 30-day period, the Nextel
Transferor may assign such license to the transferee identified in the Section
4.15 Notice, on terms that are no more favorable to the proposed transferee
than those described in the Section 4.15 Notice, so long as the application to
transfer such license is filed with the FCC within 60 days after delivery of
the Section 4.15 Notice to the Company.
4.16 NWIP OPTION UPON CHANGE IN CONTROL OF THE COMPANY.
A. If there is a Change in Control of the Company, NWIP has the
option, exercisable within 90 days after such Change in Control, to acquire for
$1.00 the licenses covering all (but not less than all) of the Partner
Frequencies. Not more than 30 days after receiving written notice from NWIP
that it is irrevocably exercising this option, the Company will cause the
appropriate filings to made with the FCC to assign to NWIP (or another member
of the Nextel Group) either (i) the licenses for the Partner Frequencies or
(ii) the stock in License Co. or other Company Subsidiary that is the licensee
of such frequencies. Upon FCC approval of the assignment, and in consideration
thereof, NWIP as licensee and the Company (or a Company Subsidiary) as manager
will enter into a management agreement, substantially in the form of the
Interim Management Agreement, with respect to the Partner Frequencies.
B. "Change in Control of the Company" means the occurrence of any
of the following events:
(a) any person or group (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act and the regulations thereunder)
(i) is or becomes the Beneficial Owner
25
or more than 50% of the total Voting Stock or Total Common Equity of
the Company, or (ii) otherwise has the power to direct the management
and policies of the Company, directly or through one or more
intermediaries, whether through the ownership of voting securities, by
contract or otherwise, except that no change of control will be deemed
to have occurred under this clause (ii) as a result of customary
rights granted (A) in any indenture, credit agreement or other
agreement for borrowed money or (B) to holders of non-convertible,
mandatorily redeemable, preferred stock unless and until action occurs
that would otherwise cause a "Change in Control of the Company" as
herein defined, provided that such rights were granted pursuant to a
transaction in the financial markets and not as part of a strategic
alliance or similar transaction;
(b) the Company sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any
Person in one or a series of related transactions;
(c) the Company, directly or indirectly, consolidates with,
or merges with or into, another Person, or any Person, directly or
indirectly, consolidates with, or mergers with or into, the Company,
and pursuant to such transaction (or series of transactions) either:
(i) the outstanding Voting Stock of the Company is converted into or
exchanged for cash, securities or other property, but excluding a
transaction (or series of transactions) where (A) the outstanding
Voting Stock of the Company is converted into or exchanged for Voting
Stock of the surviving or transferee person and (B) the holders of
Voting Stock of the Company immediately preceding such transaction
received more than 50% of the total Voting Stock and Total Common
Equity of the surviving or transferee person in substantially the same
relative proportions as such holders had prior to such transaction; or
(ii) new shares of Voting Stock of the Company are issued so that
immediately following such transaction, the holders of Voting Stock of
the Company immediately preceding such transaction own less than 50%
of the Voting Stock and Total Common Equity of the surviving person;
or
(d) during any period of two consecutive years after the date
hereof, individuals who at the beginning of such period constituted
the board of directors of the Company (together with any directors who
are members of the board of directors of the Company on the date
hereof, and any new directors whose election by such board of
directors or whose nomination for election by the stockholders of the
Company was approved by a vote of 66-2/3% of the directors then still
in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the board of
directors of the Company then in office; provided, that no change in
the composition of the Board by reason of any substitution of one
director for another so long as both directors are nominated by the
same person, shall constitute a Change in Control of the Company for
purposes of this paragraph (d).
(e) notwithstanding the foregoing, no "Change of Control of
the Company" shall occur merely by reason of a transfer by Eagle River
Investments, LLC ("Eagle
26
River") to another Person of the capital stock of the Company owned by
Eagle River so long as Xxxxx X. XxXxx ("XxXxx") controls (as defined
in Section 4.01(h) of the Shareholders' Agreement) such Person whether
or not XxXxx owns a majority of the equity interests of such Person,
unless such transfer, sale or disposition, alone or in conjunction
with other transactions, results in the occurrence of an event of the
type described in any of clauses (a), (b), (c) or (d) above.
C. NWIP's rights under this Section 4.16 terminate upon the
consummation of a Section 3.08 Sale (as defined in the Shareholders' Agreement)
or a Section 5.5 Sale (as defined in the Restated Certificate of Incorporation
of the Company).
4.17 REPRESENTATIONS AND WARRANTIES. In connection with any assignment
of licenses hereunder from a member of the Nextel Group to a member of the
Company Group, or vice versa, the assignee will be entitled to receive
representations and warranties by the assignor regarding such licenses and the
documents governing such assignment that are substantially identical to the
representations and warranties made by NWIP in Sections 4.01, 4.02, 4.03, 4.04
and 4.11 of the Subscription Agreement (it being understood that for purposes
of Section 4.16A only, if the Company and its Subsidiaries have pledged
ownership interests in any Company Subsidiary that holds licenses for Partner
Frequencies, granted a security interest in licenses held by any member of the
Company Group, or collaterally assigned rights to use or to manage the use of
Partner Frequencies, in each case to the Company's or Opco's senior lenders,
such pledge, security interest or collateral assignment will remain in full
force and effect notwithstanding any assignment of licenses from a member of
the Company Group to a member of the Nextel Group).
4.18 FREQUENCY CONSTRUCTION.
A. For licenses and frequencies in the Territory (licensed to or
managed by any of the Company or a member of the Nextel Group) that are
constructed on the date of this Agreement at their licensed sites with analog
scanning repeaters ( the "Constructed Frequencies"), NWIP hereby leases to the
Company for $1.00 the equipment used to construct any Partner Frequencies at
such sites until such time as such equipment is no longer needed to meet FCC
construction requirements. NWIP and the Company will each pay one half of the
ongoing operating costs associated with the Constructed Frequencies until such
time as the site, or its operation, is no longer necessary to meet FCC
construction requirements.
B. For licenses and frequencies in the Territory (licensed to or
managed by any of Partner or a member of the Nextel Group) that have a
construction deadline under FCC Rules of May 20, 1999 or earlier (the "May 20th
Frequencies"), NWIP and the Company will (a) each pay one half of the
construction or ongoing operational costs to construct and operate such
frequencies at their licensed sites, and (b) construct such frequencies using
analog scanning repeaters in a manner similar to the construction of the
Constructed Frequencies.
C. NWIP and the Company will each use their reasonable best efforts
to (a) seek orders or other action by the FCC that will provide relief from the
construction requirements, and (b) minimize the cost of the construction
required to meet the FCC construction
27
requirements. Unless otherwise agreed between NWIP and the Company, they will
(i) keep all Constructed Frequencies constructed and operating, and (ii)
construct all May 20th Frequencies prior to the construction deadline under the
FCC Rules, and, following construction, will operate such frequencies. NWIP (or
another member of the Nextel Group) will manage the construction and
deconstruction process for the Constructed Frequencies and the May 20th
Frequencies for so long as construction using analog scanning repeaters is
required. Internal costs incurred by any member of the Nextel Group or by the
Company under this Section 4.18 will not be included in the construction or
operating costs to be shared by the parties.
D. If, at any time, for any reason, the parties agree that
construction or operation using analog scanning repeaters is not required or no
longer required for a Constructed Frequency or for a May 20th Frequency (such a
frequency, a "4.18D Frequency"), NWIP will no longer have responsibility for
construction or operating costs associated with a 4.18D Frequency that is a
Partner Frequency, and the Company will no longer have responsibility for
construction or operating costs associated with a 4.18D Frequency that is
licensed to a member of the Nextel Group (other than License Co. if it is still
a member of the Nextel Group).
5. COMPANY ACCESS TO PROPRIETARY
TECHNOLOGY AND NETWORK COMPONENTS
5.1 COORDINATION OF EQUIPMENT ORDERS AND PURCHASES. NWIP (on behalf of
the Nextel Group) and the Company (or Opco, in either case, on behalf of the
Company and its Subsidiaries) will each forecast periodically (not more
frequently than quarterly) its subscriber and infrastructure equipment
requirements and coordinate regarding assumptions and methodologies to create
accurate forecasts to which each will have access. The Company (on behalf of
Opco and its other Subsidiaries) and NWIP (on behalf of the Nextel Group) will
coordinate their equipment orders with the major vendors in order, to the
extent possible, to avoid potential equipment shortages. If such shortages
arise, equipment will be allocated pro-rata, to the Company, based on the
population in the Territory, and to the Nextel Group, based on the population
in the territory in which the Nextel Group has rights to operate ESMR Networks
(worldwide), as adjusted to reflect NWIP's judgment of the realistic needs for
equipment that may be relevant in markets outside the United States. In no
event will NWIP or the Nextel Group have any obligation to pay for or guarantee
purchases of equipment by the Company.
28
5.2 ACCESS TO VENDOR EQUIPMENT AND AGREEMENTS.
A. Upon expiration of the Company's Infrastructure Equipment
Purchase Agreement with Motorola, NWIP will use its best reasonable efforts to
induce Motorola to enter into an agreement with Opco or to extend its agreement
with Opco, which will allow: (i) Opco to obtain the same prices then available
to the NDS for such equipment; (ii) Opco to have rights to use Motorola
trademarks and trade names comparable to those trademark and trade name usage
rights granted by Motorola to the NDS; and (iii) Opco to have access to system
upgrades, improvements and technology enhancements made available by or through
Motorola comparable to those available by or through Motorola to the NDS.
Neither NWIP nor any NDS (nor any other Nextel Subsidiary or Affiliate
operating internationally) will be obligated to make any out-of-pocket payments
or otherwise make any concessions in its agreements with Motorola in order to
achieve the Company's or Opco's objectives. If Motorola seeks to impose such
payments or obtain such concessions in connection with achieving the Company's
or Opco's objectives, NWIP will advise the Company and provide the Company with
a good faith estimate of the aggregate total dollar amount of such payments and
the cost to Nextel (on a consolidated basis) of such concessions. If the
Company indicates that it wants to achieve the objectives, the Company will be
obligated to reimburse NWIP in full for all such payments made and costs
incurred, promptly on demand after payment or incurrence by Nextel or its
Subsidiaries, for all such payments and/or concessions imposed on or incurred
by Nextel or any of its Subsidiaries (or any Nextel Affiliate operating
internationally) and NWIP's obligation to continue performance under this
Section 5.2A is conditioned on NWIP's timely receipt of such reimbursement
amounts.
B. NWIP will use its best reasonable efforts to enable the Company
to obtain from third party vendors (other than Motorola) access to equipment
and services that are of the same quality and functionality and on the same
terms and conditions as the equipment or services being purchased by the NDS
from such third party vendors. If such arrangements are obtained, the Company
will enter into direct contracts with such outside vendors for the purchase of
equipment or services. Neither NWIP nor any other member of the Nextel Group
will be obligated to make any out-of-pocket payments or otherwise make any
concessions in its agreements with such vendors in order to achieve the desired
terms for the Company. If a vendor seeks to impose such payments or obtain such
concessions in connection with achieving the desired terms for the Company,
NWIP will advise the Company and provide to the Company a good faith aggregate
estimate of the total dollar amount of any payments and the cost to the Nextel
Group (on a consolidated basis) of any concessions being sought by such vendor.
If the Company indicates that it wants to achieve the desired terms, then the
Company will be obligated to reimburse NWIP in full for all such payments made
and costs incurred, promptly on demand after payment or incurrence by any
member of the Nextel Group, for all such payments and/or concessions imposed on
or incurred by any member of the Nextel Group, and NWIP's obligation to
continue performance under this Section 5.2B is conditioned on NWIP's timely
receipt of such reimbursement amounts. If the Company is unable to obtain the
NDS terms under a separate contract with a vendor, and if the contract is a
contract for equipment or services that are material to the Company and cannot
be acquired by the Company, after using its best reasonable efforts, from any
other third party vendor on commercially reasonable terms and conditions that
are not materially less favorable than the NDS terms, then: (i) if such action
does not involve any adverse
29
impact or consequence to or breach by an NDS under the terms of the relevant
contracts with such vendors, NWIP will purchase equipment or services on the
Company's behalf in order to make available to the Company the NDS terms; or
(ii) if there is an adverse impact or consequence to NWIP or an NDS, but there
are commercially reasonable accommodations to avoid such adverse impact or
consequence, NWIP will provide the Company with a description of the
commercially reasonable accommodations, and a good faith estimate of the dollar
amount required and a statement of the other actions required from the Company.
If the Company wants the benefit of the NDS terms, then the Company will pay
such amount and take such actions, and NWIP will purchase the equipment or
services on behalf of the Company in order to make available to the Company the
NDS terms. If actions to provide the Company with the benefits of a contract
would cause NWIP or an NDS to breach a contract with a third party, none of
NWIP or the NDS are required to take any action under the preceding sentence.
The Company will pay NWIP for any equipment ordered or services to be provided
through this intermediary process at the time of placing such order to ensure
that neither NWIP nor any other member of the Nextel Group has any economic
exposure to the vendor for the Company's purchases of equipment or services
and, if the amount so paid exceeds $250,000, NWIP will pay to the Company
interest earned on the relevant payment during the period until payment is made
to the vendor.
5.3 FUTURE IMPROVEMENTS AND ENHANCEMENTS TO TECHNOLOGY OR NETWORK.
A. Subject to having access to the enhancements described in this
Section 5.3 or obtained from Motorola (under separate agreements between the
Company and Motorola) or elsewhere as contemplated by Section 5.2, (i) the
Company will be required to implement any changes, modifications, upgrades, or
enhancements to the iDEN technology or other network components
("Improvements") which are also implemented and in use by NDS on a national
level or in Comparable Service Areas and (ii) the Company will be responsible
for the cost of any Improvements in the Territory and will share pro-rata based
on the population in the Territory and in the area served by the NDS (or based
on the population in the area served by Nextel and its Affiliates worldwide, to
the extent any of such Affiliates are implementing, or are planning to
implement, the Improvement outside the United States) in the cost of any
research and development expenditures incurred by the Nextel Group directly in
connection with Improvements (other than Improvements owned solely by the
Nextel Group) that are implemented on a national level or in Comparable Service
Areas (to the extent such research and development expenditures are not
otherwise charged to the Company at a switch level).
B. NWIP will use its best reasonable efforts to enable the Company
to obtain from third parties agreements between the Company and the third party
that will enable the Company to have access to any Improvements used by any of
the NDS in their national network. Only if NWIP provides the Company with
access to Improvements on the same terms as the NDS can NWIP require the
Company to implement such Improvements.
C. NWIP will make available to the Company any Improvements that
the NDS own (or claim ownership of) and are then using on a national level or
in Comparable Service Areas. Whether or not NWIP notifies the Company that the
Company is required to implement such Improvements, such Improvements will be
made available by NWIP to the Company only on
30
an "as is" basis, with all faults, and without any representation or warranty
whether of title or fitness for a particular purpose (even if such Improvements
are being used by the Company for the same purpose as they are used by the NDS)
or otherwise. The Company will use any such Improvements for zero cost but at
its sole risk, and neither NWIP nor any other member of the Nextel Group will
have any liability to the Company in connection therewith, except as provided
in Section 5.3D.
D. If a third party brings a claim against the Company alleging
that the Company's use of any Improvement (other than any Improvement obtained
from Motorola) is contrary to or otherwise infringes on such third party's
rights, then NWIP will not require the Company to continue using such
Improvements unless NWIP agrees to indemnify and hold the Company harmless from
and against the excess of (1) any costs the Company incurs in connection with
such claims, over (2) the benefits (net of costs) the Company realizes through
its use of such Improvement. In addition, in the event of such third party
claims, NWIP also has the right to require the Company to immediately cease
using (upon written notice to that effect given by NWIP to the Company) the
Improvement at issue, so long as NWIP will indemnify and hold the Company
harmless from and against the excess of (i) any costs the Company incurs in
ceasing such use (including removal or decommissioning of any related
equipment), over (ii) the cumulative benefits (net of costs) the Company has
realized through its use of such Improvements prior to the time it ceases to
use them.
E. If a third party brings a claim against the Company, NWIP, or
any other member of the Nextel Group alleging that the Company's use of any
Improvement (other than any Improvement obtained from Motorola) is contrary to
or otherwise infringes on such third party's rights, and the Company is not
required to use the Improvement under this Section 5.3, the Company will
immediately cease using the Improvement if NWIP so requests in writing and, if
NWIP does not so request, and the Company wishes to continue using such
Improvement, the Company will indemnify and hold NWIP and each other member of
the Nextel Group harmless from such continued use.
F. If the Company (or any of its Affiliates) develops any
Improvements for its (or their) use, the Company will make such Improvements
available to the NDS on an "as is" basis, with all faults, and without any
representation or warranty whether of title or fitness for a particular purpose
(even if such Improvements are being used by the NDS for the same purpose as
they are used by the Company) or otherwise. The NDS will be entitled to use
such Improvements for zero cost, but at its (or their) sole risk, and neither
the Company nor any other member of the Company Group will have any liability
to the NDS in connection therewith except as provided in this Section 5.3F. If
the Company (or any of its Affiliates) license from third parties any
Improvements, the Company will use its best reasonable efforts to make those
Improvements available to the NDS on the same terms as the Company obtains the
Improvements from the third party. If a third party brings a claim against the
Company, any of its Affiliates, or any of the NDS alleging that the NDS's use
of any Improvement that is licensed by the Company to the NDS under this
Section 5.3F is contrary to or otherwise infringes on such third party's
rights, then the NDS will immediately cease using the Improvement if the
Company so requests in
31
writing, and, if the Company does not so request, and the NDS wish to continue
using such Improvement, NWIP will indemnify and hold the Company harmless from
such continued use.
G. Notwithstanding anything to the contrary in this Section 5.3,
the Company's obligation to implement any Improvements is subject to Section
7.04 of the Shareholders' Agreement, provided that the Company's obligation to
implement any Improvement and Nextel's obligation to comply with such Section
7.04 terminates when no member of the Nextel Group owns an equity interest in
the Company.
5.4 [RESERVED]
5.5 ACCESS TO NATIONAL SWITCHING NETWORK. NWIP and the Company will
cooperate to establish a switch configuration for the Company's network in the
Territory, and to deploy switches in a manner which best meets the following
objectives: (i) allowing the Company to integrate its cell sites into the NDS's
national switching infrastructure; (ii) allowing both the NDS and the Company
to provide Direct Connect coverage to logical communities of interest; and
(iii) minimizing the costs to both the NDS and the Company and maximizing the
quality of service to subscribers of both the NDS and the Company; provided,
that neither NWIP nor the Company will be required to configure or deploy
switches in a manner that results in degradation of existing service. To
facilitate cooperation in network planning, representatives of the Company will
participate in regular meetings and planning for national network
configuration. The Company will be required to provide to NWIP quarterly
forecasts (or forecasts covering such other period(s) as may from time to time
be generally applicable to forecasts made by the NDS) of expected cell site
build out, traffic growth in the Territory, anticipated timetables for the
implementation of any Company-owned switches, and such other measurement
criteria as are generally supplied in forecasts made by the NDS, covering a
rolling 18-month period (or such other period as may from time to time be
generally applicable to forecasts made by the NDS), in a format and on such
additional terms as agreed to by NWIP and the Company. NWIP will cause the NDS
not to discriminate against the Company in configuring or revising their
switching networks.
5.6 INTEGRATION WITH NEXTEL OWNED SWITCHING FACILITIES. The Company
will have the option to integrate its cell sites with the NDS switching
facilities pursuant to the Switch Sharing Agreement.
5.7 COMPANY OWNED NETWORK SWITCHES AND OTHER FACILITIES.
A. The Company will have the option to install its own switching
facilities within the Territory. This may consist of deployment of a combined
interconnect and dispatch switching facility, an interconnect only switching
facility, or a dispatch only switching facility. Any Company deployment of a
switching facility will require prior coordination with NWIP, and any Company
deployment of a dispatch switching facility will require NWIP approval. NWIP
will not unreasonably withhold such approval; provided, that any switching
configuration changes that adversely impact Direct Connect communities of
interest will be among the bases for withholding approval. The Company will be
responsible for designing, installing, commissioning, managing
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and operating each switching facility that it installs in the Territory and
will be entitled to employ its own switch technicians at any Company-owned
switch. NWIP will be responsible for assuring that the monitoring services are
provided to the Company owned switching facilities for the charges set forth on
Exhibit 5.7A. The parties will agree on any other switch services that each is
to provide to the other. The Company will be responsible for the installation
and any incremental cost of any national management system hardware components
required to be installed in the Company's switch to allow NWIP to arrange for
the switching facility to be monitored on a remote basis, provided that such
equipment is comparable to equipment installed at other switching facilities of
the NDS.
B. In connection with the Company's operation of an ESMR Network in
the Territory, NWIP will provide the Company (or Opco) with access to certain
network elements owned or operated by the NDS in connection with the NDS ESMR
Network, as provided for in this Agreement or certain of the Collateral
Agreements. In light of the forecasted growth of the Company's subscriber base
and operational cell sites in the Territory, and the resulting burden on the
NDS network elements and the NDS ESMR Network, the Company (or its Affiliates)
will, subject to Section 5.5, be required to have in place its own BSC, HLR,
MSO, SMS and VMS when its subscriber unit or cell site levels reach the levels
set forth on Exhibit 5.7B, as amended by the parties from time to time during
the term of this Agreement (each a "Trigger Point"). The parties contemplate
that amendments to Exhibit 5.7B will be made to reflect changes in capacity of
the NDS network elements. At a reasonable time prior to reaching any Trigger
Point, the Company will (or will cause one or more of its Affiliates to) (i)
acquire and install (for the Company's account and at the Company's sole
expense) the appropriate network element(s) and (ii) coordinate with NWIP and
the NDS with respect to the installation and implementation of such network
element(s). At or prior to the time that it reaches any Trigger Point, the
Company will implement (or will cause its Affiliates to implement) such network
element(s). NWIP and the NDS will cooperate with the Company (and its
Affiliates) to facilitate the implementation of all network elements to be
installed by the Company pursuant to this Agreement and the transition of the
Company's subscribers from the appropriate NDS network element(s) to the
network element(s) acquired and installed by the Company and its Affiliates. If
NWIP and the Company agree that it is in the best interests of the subscribers
of the NDS and the Company to delay the Company's acquisition of one or more
network elements or to acquire one network element in lieu of another, NWIP and
the Company will do so.
5.8 ACCESS TO SYSTEMS PLATFORM. To minimize demand on system resources
associated with the accommodation of the Company's systems and to service needs
that are agreed to be met through access to and utilization of the internal
systems developed, operated and maintained by or for NDS, and in order to
maintain a consistent back-office operating process that permits an exchange of
similar network, operating, and customer information between the Company and
NDS, the Company will be required to use certain components of systems
infrastructure used by NDS that are necessary to achieve these objectives. NWIP
will identify, from time to time, the components of the NDS system
infrastructure that are necessary to enable the NDS and the Company (and its
Subsidiaries) to exchange information about their respective networks, customer
provisioning, and system usage, and any other information required to enable
consistent back-office operations (the "Required Systems"). The Company will be
responsible for
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its own internal operating costs and activities necessary to interact with
systems of the NDS. To the extent that certain operating activities, such as
customer provisioning, cannot be performed by the Company, NWIP will make
reasonably suitable arrangements for such services to be provided to or on
behalf of the Company, and the Company will pay for such services based on the
actual costs incurred by the Nextel Group. The monthly charges payable to NWIP
by the Company for Required Services will be revised, from time to time, to
reflect changes agreed to between the Company and NWIP. Other system
infrastructure components that are recommended (but not required) may, by
mutual agreement of NWIP and the Company, be obtained from NWIP on arms-length
terms or the Company may obtain them from third parties. In the future, the
Company will be permitted to implement its own operating systems if such
systems do not adversely impact the Company's interaction with or use of the
Required Systems. If the Company wishes to implement an operating system that
alters or replaces the Required Systems, the Company must first obtain NWIP's
approval, provided that such approval shall not be withheld as long as such
system does not (1) create inconsistencies between the services provided by the
NDS and the Company to their respective customers or result in inconsistencies
in network, operating and customer information exchanged between the NDS and
the Company that adversely impacts operations or ability to serve customers of
the NDS, (2) require the NDS to incur additional systems implementation or
operating costs unless such costs are paid in full by the Company, or (3)
adversely affect the ability of NWIP or any other member of the Nextel Group to
provide or arrange for the provision of any product or services to or for the
Company in accordance with the provisions of this Agreement, any Collateral
Agreement or agreement with a third party vendor or supplier.
5.9 CERTAIN SYSTEM AND NETWORK SERVICES.
A. The Company will have the right to use the NDS's SS7 network at
the price set forth in Exhibit A of the Switch Sharing Agreement.
B. The NDS own and operate backbone networks and in the future
expect to construct and operate additional backbone networks (each, an "NDS
Backbone Network") for the purpose of carrying voice, data or other signals and
traffic.
(i) The Company and Opco hereby grant to NWIP and the NDS the right
to locate NDS Backbone Network equipment in facilities and shelters transferred
by the NDS to Opco or its Affiliates that are located in p arts of the State of
Texas that are, or subsequent to the date hereof may be, part of the Territory
(collectively, the "Transferred Texas Sites"). Representatives of NWIP or the
NDS will be entitled to reasonable access, as and when requested or necessary,
to each of the Transferred Texas Sites to maintain, repair, augment or install
NDS Backbone Network equipment.
(ii) With respect to any shelters and facilities owned, acquired or
leased by Opco or its Affiliates that are now, or subsequent to the date hereof
may be, located in the Territory (collectively, the "Additional Sites"), NWIP
may, upon receipt of Opco's consent, which consent will not be unreasonably
withheld, locate NDS Backbone Network equipment at any Additional Site.
Representatives of NWIP or the NDS will be entitled to reasonable access, as
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and when requested or necessary, to each Additional Site for which consent to
locate NDS Backbone Network equipment has been given, to maintain, repair,
augment or install any such equipment. At no time will Opco or its Affiliates
be required to install additional shelters or facilities solely to accommodate
NDS Backbone Network equipment, nor will Opco or its Affiliates be obligated to
maintain possession of the Transferred Texas Sites or any Additional Sites if
they determine that it is not in their best interest to do so. If Opco decides
that it will no longer retain rights of possession to any such site, it will
promptly notify NWIP of the decision. Notwithstanding anything herein to the
contrary, the Company and Opco will have no obligation to negotiate with the
owner of any tower facilities to provide access on any tower for any NDS
Backbone Network antennas.
(iii) In exchange for the rights provided to NWIP and the NDS under
this Section 5.9B, Opco will be entitled to use each NDS Backbone Network
operating in the Territory if it pays NWIP the service charges detailed on
Exhibit 5.9B. Exhibit 5.9B will be subject to revision annually by mutual
agreement of the parties, provided, however, that in no event will NWIP or the
NDS be obligated to provide service to Opco on any NDS Backbone Network at less
than the cost to the NDS of providing such service.
(iv) Neither Opco nor any of its Affiliates will have any ownership
rights with respect to any NDS Backbone Network equipment or any portion of any
NDS Backbone Network by virtue of the terms of this Section 5.9B or the
location of any NDS Backbone Network equipment at any of the Transferred Texas
Sites or Additional Sites. Neither NWIP nor any of its Affiliates will have any
ownership rights with respect to the Transferred Texas Sites or Additional
Sites by virtue of the terms of this Section 5.9B or the location of any NDS
Backbone Network equipment at any of the Transferred Texas Sites or Additional
Sites.
(v) NWIP and the NDS will be responsible for the maintenance and
operation of the NDS Backbone Networks. Opco and its Affiliates will be
responsible for the maintenance and operation of any other equipment at any of
the Transferred Texas Sites or Additional Sites and the maintenance of the
Transferred Texas Sites and Additional Sites.
(vi) The foregoing provisions of this Paragraph B are subject to
the following: NWIP and the NDS shall exercise the rights and take the actions
permitted hereunder in such manner as shall not interfere with the use by Opco
or its Affiliates of the Transferred Texas Sites and any Additional Sites, and
shall be responsible for any liabilities, costs or expenses asserted against
Opco or any of its Affiliates and arising out of NWIP's or the NDS' exercise of
such rights or taking of such actions.
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6. BUILD-OUT REQUIREMENTS
6.1 REQUIRED SERVICES. The Company will be required to offer all
customers operating in the Territory the products, services and capabilities
identified in Exhibit 6.1, as amended from time to time by NWIP ("Required
Services"). The Company will have an opportunity to participate in and
contribute to discussions regarding modifications to the list of Required
Services, but final decisions relating to such services will be made by NWIP,
in its sole discretion, and will be binding on the Company. If a Required
Service is to be provided nationally by the NDS, the Company must implement the
service. To the extent the NDS elect to offer a Required Service that is
tailored to particular service areas based on geographic location, size, or
other factors, the Company will be required to offer that Required Service in
its service areas that are Comparable Service Areas to those service areas in
which an NDS offers such Required Service. In either case, a Required Service
must be offered by the Company in the Territory as soon as reasonably
practicable, but in no event more than six months from NWIP providing notice to
the Company of NWIP's decision to designate a Required Service, provided that
the Company will not be obligated to offer any Required Service before an NDS
has implemented such Required Service in a Comparable Service Area.
Notwithstanding anything to the contrary in this paragraph, the Company's
obligation under this Section 6.1 to implement any Required Service (not set
forth on Exhibit 6.1 on the date hereof) or to modify a Required Service is
subject to Section 7.04 of the Shareholders' Agreement, provided that the
Company's obligation to implement any Required Service and Nextel's obligation
to comply with such Section 7.04 terminates when no member of the Nextel Group
owns an equity interest in the Company.
6.2 BUILD-OUT REQUIREMENT AND TARGET LAUNCH DATES.
A. The Company must Build Out each Section by the Build Year stated
on Exhibit 6. "Build Out" means the ESMR Network in that Section (i) provides
coverage to the Build Areas for that Section; and (ii) has met the Launch
Criteria for that Section; and (iii) has commenced commercial service in that
Section; and (iv) is capable of serving Nextel subscribers roaming into the
Build Areas for that Section of the Territory. The Company will provide NWIP
with monthly updates on actual and forecasted coverage areas in the Territory.
B. The Company has the right (but not the obligation) to elect by
written notice delivered to NWIP, from time to time (but in any event prior to
the end of the Election Period), to include some or all of the Special Option
Sections in the Territory. In addition, if the Company completes the Build Out
of all Year One Build Areas in the Initial Sections before the end of the 19th
month from the date hereof (such period, as extended by any period of Excusable
Delay that extends the time in which Build Out is to be completed, the
"Election Period"), from the date that such Build Out is complete until the end
of the Election Period, the Company has the right (but not the obligation) to
elect by written notice delivered to NWIP, from time to time, to include some
or all of the Option Sections (other than the Special Option Sections) in the
Territory; provided, that such other Option Sections will be included only if
and to the extent such actions would not involve breach or violation of any
loan agreement or similar debt or related documents to which any member of the
Nextel Group is a party. NWIP shall, and shall cause the Nextel Group to, use
best reasonable efforts to obtain such amendments, waivers or consents as
36
may be required to permit such Option Sections to be included without involving
or resulting in any such breach or violation. Subject to the foregoing, if the
Company elects to include an Option Section in the Territory, (1) the Company
will be required to Build Out all Build Areas in such Option Section in
accordance with Section 6.3; (2) the Company will be entitled to the Initial
Frequency Right as to such Option Section as set out in Section 4.1D; and (3)
any related fixed network equipment and operational contracts existing in or
with respect to such Option Section at the time of the Company's election will
be transferred to the Company upon payment of a cash purchase price calculated
in the same manner as the reimbursement under the Asset Purchase Agreement and
otherwise on the same terms as the Initial Asset Transfer.
C. Before the Election Period has expired, if the NDS wants to
construct Build Areas in an Option Section and the Company has not elected to
include that Option Section in the Territory, NWIP will notify the Company in
writing specifying the Build Areas the NDS desires to build out (the
"Accelerated Areas") and the revised build schedule for the Accelerated Areas
(which must be commercially reasonable in order to trigger NWIP's rights under
this provision). NWIP shall not give such notice unless the Option Section(s)
to which it relates may be included in the Territory without breaching or
violating any loan or debt agreement or similar document to which any member of
the Nextel Group is a party. Not more than 30 days after receiving the notice
from NWIP, the Company can elect to include such Option Sections in the
Territory and build out the Accelerated Areas in accordance with the revised
schedule (and any other Build Areas in that Option Section in accordance with
the original schedule), but the Company will still be obligated to build out
the Initial Sections as described in this Agreement and any relevant Collateral
Agreements. If the Company does not make the election under the preceding
sentence, NWIP or the NDS will be entitled to construct (or to cause the
construction of) that Option Section and such Option Section will no longer be
part of, or subject to inclusion in, the Territory; provided that if NWIP or
the NDS has reacquired rights to an Option Section under this Section 6.2C, but
has failed to build out the Accelerated Areas in that Option Section materially
on the revised schedule (extended by any applicable period of Excusable Delay),
that Option Section will once again become available to the Company under
Section 6.2B.
D. On or after the earlier of (i) the beginning of the 9th month
after NWIP notifies the Company that, notwithstanding a Frequency Delay, a
Build Area affected by a Frequency Delay is to be launched and the related
Build Out completed and (ii) the beginning of the 54th month after the date
hereof, with respect to any service areas within the Territory where the
Company is not providing coverage, NWIP shall have the right to give notice of
service areas for which it wishes coverage to be provided and to identify
reasonable time frames within which coverage should be provided. The Company
will then have ninety days from the date of notice to advise NWIP in writing
whether it elects to provide coverage in accordance with the terms of the
notice from NWIP. If the Company elects to provide coverage by so advising NWIP
in writing, it will diligently proceed in accordance with the schedule set
forth in the initial notice received from NWIP. If the Company elects not to
provide coverage in any of the identified service areas, NWIP or the NDS will
be entitled to do so and, upon NWIP's or the NDS' causing completion of the
Build Out and providing coverage in accordance with the schedule and other
elements of the notice, those service areas shall no longer be part of the
Territory. NWIP will pay cash to the Company, upon the transfer of all licenses
to a member of the Nextel Group designated by NWIP, for any licenses or
frequency rights previously acquired by the Company in any service area that is
37
acquired or reacquired by any member of the Nextel Group pursuant to this
Section 6.2D, at the Company's actual cost to obtain licenses or rights to such
spectrum (including incidental transaction costs and costs of related assets
acquired by the Company and sold to NWIP, if any).
6.3 LAUNCH CRITERIA. Prior to offering commercial service in a
Section, the Company will be required to provide coverage to all the Build
Areas in that Section that have the earliest Build Year and to meet the general
launch criteria that are in effect at the relevant time and applicable
generally to the NDS ESMR Network (the "Launch Criteria"). The Company will
notify NWIP at least 60 days prior to the proposed launch date of any Section,
at which time NWIP will have the right, using such representatives as NWIP
designates for the purpose, promptly to review the Company's operations for
that area in order to validate compliance with all Launch Criteria. In the
event the Company believes it is necessary to launch service in a given area
prior to completing the Build Out of all Build Areas that have the earliest
Build Year in the Section (e.g., in competitive situations), the Company must
obtain NWIP's prior approval, such approval not to be unreasonably withheld,
provided, NWIP's approval of the Company's proposed launch of any Section,
Build Area or other area shall not release or excuse the Company from
satisfying its Build Out obligations with respect thereto as set forth in this
Agreement, and approval of the launch of service of any system in any area
prior to completion of the Build Out of all Build Areas in the Section will not
alter the Company's obligation to complete the Build Out of all Build Areas in
that Section in the Build Year as set out in Exhibit 6. Failure of the Build
Out of the system to comply with the Launch Criteria in the affected area will
be considered a reasonable basis for withholding approval.
6.4 FREQUENCY DESIGN STANDARDS. The Company will be responsible for
the frequency design in the Territory and will be required to adhere to
standards for the use of the radio frequencies in the ESMR Network as in effect
at the relevant time and applicable generally to the NDS ESMR Network
operations. Subject to any restrictions imposed by agreements with third
parties, NWIP will provide the Company with reasonable access to the frequency
design tools and expertise available within or to the NDS in order to
facilitate the Company's compliance with the standards, and the Company will
bear all costs and expenses associated with the Company's obtaining and
utilizing such tools and expertise. The Company will participate in periodic
frequency engineering meetings of the NDS, to the extent such access is
permitted under the terms of relevant agreements with third parties. NWIP,
through such representatives as it designates, will have the right to monitor
the frequency designs and actual frequency signal performance levels in the
Company's service areas on a regular basis in order to ensure compliance with
the required standards. If the Company requests, from time to time, and at
NWIP's sole discretion, NWIP may make suitable arrangements for frequency
design services to be provided to the Company on an arms length basis as will
be agreed between the Company and NWIP. If NWIP requests, the Company will be
required to comply with the terms of any existing regional or national
agreements that impact the Territory related to frequency design services that
are identified on Exhibit 6.4.
6.5 SITE ACQUISITION STANDARDS. The Company will be responsible for
site acquisition activities in the Territory and will be required to adhere to
the site acquisition standards that are in effect at the relevant time and
applicable generally to and followed by the
38
NDS. NWIP has provided and will provide the Company, from time to time, with
standard form leases (that will be substantially identical to the form then
being used by the NDS) to be used when securing lease rights to radio
communications sites. Neither NWIP nor any other member of the Nextel Group
will be required to provide any other services to the Company related to site
acquisition. NWIP, through such representatives as it designates, will have the
right to review internal documents related to such sites, including site
leases, title documents, and other compliance documents, on a regular basis in
order to ensure compliance with the required standards. If the Company
requests, from time to time, and at NWIP's sole discretion, NWIP may make
suitable arrangements for site acquisition services to be provided to the
Company on an arms length basis as will be agreed to between the Company and
NWIP. If NWIP requests, the Company will be required to comply with the terms
of any existing regional or national agreements that impact the Territory
related to site acquisition services that are identified on Exhibit 6.5
6.6 CONSTRUCTION STANDARDS. The Company will be responsible for the
construction of its cell sites in the Territory and will be required to adhere
to the construction standards that are in effect at the relevant time and
applicable generally to construction by the NDS, including the requirement to
select from the group of pre-selected vendors designated for certain types of
equipment needed to construct cell sites; provided, however, that the Company
shall have the right to propose alternative equipment and vendors for approval
by NWIP, which approval will not be unreasonably withheld. NWIP will provide,
from time to time, the standard specifications and drawings for cell sites
(substantially in the form then being used by the NDS) in order to facilitate
the Company's compliance with such standards. Neither NWIP nor any other member
of the Nextel Group will be required to provide any other services to the
Company related to cell site construction. NWIP, through such representatives
as it designates, will have the right to inspect cell sites in the Territory in
order to ensure compliance with the construction standards. If the Company
requests, from time to time, and at NWIP's sole discretion, NWIP may make
suitable arrangements for construction services to be provided to the Company
on an arms length basis as will be agreed to between the Company and NWIP. If
NWIP requests, the Company will be required to comply with the terms of any
existing regional or national construction agreements that impact the Territory
that are identified on Exhibit 6.5.
6.7 TELCO STANDARDS. The Company will be responsible for the
provisioning and maintenance of leased lines to connect its cell sites to the
appropriate switching facility. In so doing, the Company will be required to
adhere to the telco standards that are in effect at the relevant time and
applicable generally to and followed by the NDS, including the types of
connection permitted, the requirements for contracts with other
telecommunications providers, and the manner in which such connections are
required to be brought to a switching facility of the NDS or otherwise
connected to the NDS national ESMR Network. In the event the Company installs
its own switching facility pursuant to Section 5.7, the Company will also be
responsible for all telco connections at that switching facility to the local
landline, public switched telephone network and arranging for local and long
distance origination and termination of interconnect calls being routed through
the Company's switching facility.
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6.8 SWITCHING FACILITY STANDARDS. In the event the Company elects to
purchase and install its own switching facility, the Company will be required
to adhere to the construction and operating standards that are in effect at the
relevant time and applicable generally to and followed by the NDS. The Company
also agrees to provide any operating Subsidiary of Nextel with access to any of
the Company's switching facilities and any related services provided by or for
the Company on the same terms (including at the same prices) as offered by the
NDS to the Company under the Switch Sharing Agreement.
6.9 COMPANY TOWERS.
A. Within 20 days after the beginning of each calendar quarter, the
Company shall give NWIP notice designating the number and general location of
all tower sites that the Company needs to construct as part of the Build Out of
its ESMR Network for that quarter, other than Excepted Tower Sites. As used in
this Agreement, "Excepted Tower Sites" means and tower sites located in the
Build Areas identified on Schedule 6.9. The parties agree that the Site
Acquisition Work and construction of the Excepted Tower Sites identified on
Schedule 6.9 that are located in Kentucky will be performed pursuant to the
Site Commitment Agreement dated as of July 11, 1997 with Castle Tower
Corporation ("Castle"), with such modifications thereto as the Company and
Castle may agree with the consent of NWIP, such consent not to be unreasonably
withheld. The parties agree that the Site Acquisition Work for the Excepted
Tower Sites identified on Schedule 6.9 that are located in Pennsylvania will be
performed by the Company or its contractors and the construction of such sites
will be performed by the tower aggregator or other party designated by NWIP.
When site acquisition work is complete on the Excepted Tower Sites located in
Pennsylvania, the Company shall notify NWIP and NWIP shall purchase such
Excepted Tower Sites from the Company. The purchase price shall be equal to the
Company's cost to perform the Site Acquisition Work. NWIP shall pay the Company
in cash within twenty (20) days after receiving the Company's notice for all
Excepted Tower Sites identified in the notice. Upon payment, the Company will
assign to NWIP each ground lease associated with such Excepted Tower Sites.
NWIP shall, upon completion of construction of each tower relating to each
Excepted Tower Site, allow Opco to lease space on all such Excepted Tower Sites
pursuant the Master Site Lease or a Replacement Lease (as defined below).
B. Except as set forth in Section 6.9A, NWIP will be responsible
for timely completion of all Site Acquisition Work and tower construction
relating to all tower sites designated by the Company under Section 6.9A. NWIP
may, in its discretion, hire third party contractors or consultants to perform
any Site Acquisition Work or construction; provided that NWIP must cause any
such third party contractors or consultants to abide by the terms and
conditions of this Section 6.9. Any delay in Site Acquisition Work or
construction relating to any designated tower site (or any Excepted Tower Site
for which NWIP is responsible for construction) that impedes or disrupts the
Company's Build Out of its ESMR Network in accordance with the Build Out
schedule contained in Exhibit 6 will constitute an Excusable Delay as set forth
in Section 12.5. To the extent that the delays in Site Acquisition Work or
construction of a tower (other than a delay caused by weather, acts of God or
other events beyond the control of the party performing the work) delay launch
or completion of the Build Out in any Build Area for a period of 30 days or
more and such delay is reasonably expected to have
40
(or has had) a material adverse effect on the business, operations, or
financial condition of the Build Area in which the work is being done, the
Company (upon notice in writing given to NWIP) may complete, or may hire third
parties to complete, the Site Acquisition Work or tower construction at the
affected site. To compensate for the unascertainable damages that the Company
will have suffered as a result of such delay, NWIP will pay to the Company a
one time payment equal to 10% of the estimated reasonable cost (under the
circumstances, including recognition of the time constraints on the process) of
completing the Site Acquisition Work or tower construction at the affected
site. NWIP will be entitled to purchase the tower when completed at a price
equal to the Company's actual and reasonable documented out of pocket costs
incurred in order to complete the Site Acquisition Work or tower construction.
If the parties agree that the number of delays in Site Acquisition Work or
tower construction have reached an unreasonable level, then NWIP and the
Company will negotiate in good faith to structure arrangements that will
provide the Company with reasonable assurances of timely completion of any
remaining Site Acquisition Work and tower construction in the Territory while
providing NWIP the right to buy completed towers, all in a manner consistent
with the intent of the parties expressed in this Section 6.9.
C. NWIP shall, and shall cause any third party contractors or
consultants hired by NWIP to perform Site Acquisition Work or tower site
construction to, coordinate all such work with the Company in order to satisfy
the Company's needs and specifications for Build Out of its ESMR system and to
ensure conformity with the site acquisition standards described in Section 6.5
and the construction standards described in Section 6.6. NWIP will take or
cause to be taken all necessary and appropriate actions (including but not
limited to obtaining all necessary consents, permits and approvals) to ensure
that upon completion of each tower site, Opco will be permitted, subject to the
Master Site Lease, to install and locate on or at each tower site all necessary
shelters, cabling, electronics, antennas and other such equipment needed by the
Company to utilize the tower in the Company's ESMR Network. Upon completion of
each such tower site, NWIP will allow Opco to lease space on or at each tower
in accordance with the terms of the Master Site Lease (or a Replacement Lease
(defined below) if NWIP determines that a tower should be subject to a
Replacement Lease, as provided in Section 6.9 E.).
D. The Company's and NWIP's respective obligations under Section
6.9 A.- C. will expire upon that date (the "Build Stop Date") that is the
earlier of (i) the sixth anniversary of the date of this Agreement, or (ii) the
date that any tower build to suit arrangement entered into by NWIP or another
member of the Nextel Group in connection with a tower joint venture arrangement
of the type described in Section 6.9E expires. NWIP shall give the Company
notice of the expiration of the term of any such tower build to suit
arrangement at least 90 days before the expiration of the term of the
arrangement. The expiration of any such tower build to suit arrangement will
not relieve NWIP of its obligations to perform Site Acquisition Work and tower
site construction with respect to any tower site designated by the Company
before the Build Stop Date.
E. The parties contemplate that NWIP or other members of the Nextel
Group will enter into one or more joint venture arrangements with one or more
tower aggregators, and that the towers subject
41
to the Master Site Lease (including any towers to later become subject to the
Master Site Lease under Section 6.9 A.-C.) will become part of those
arrangements. In connection with consummation of each such joint venture, Opco
shall, as directed by NWIP, enter into, with the tower aggregator, a new master
lease or similar agreement (a "Replacement Lease") relating to the tower sites
subject to the joint venture. As a condition to Opco's obligation to enter into
any Replacement Lease, NWIP shall ensure that the terms of the Replacement
Lease are substantially the same as the terms of the equivalent lease or
similar agreement entered into between NWIP and the tower aggregator and NWIP
shall comply with the conditions set forth in Section 6.9F. Concurrently with
the execution of each Replacement Lease, NWIP and Opco shall amend the Master
Site Lease to remove the tower sites subject to the Replacement Lease from the
Site Schedules attached to the Master Site Lease. After any Replacement Lease
has been executed, if Section 6.9 C. requires that a tower be added to the
Master Site Lease, NWIP may direct that the tower instead be added to the
Replacement Lease of NWIP's choosing.
F. Set forth below is a chart of certain financial terms that NWIP
has agreed to make available to Opco, regardless of the requirements of any
Replacement Lease. To the extent that the financial terms of any Replacement
Lease (regardless of the characterization of such financial terms) are less
beneficial to Opco than those shown below, NWIP shall, on a monthly basis,
reimburse Opco for the difference between the amount paid by Opco and the
amount Opco would have paid if the Replacement Lease had instead included the
financial terms listed below. NWIP has no obligations under this Section 6.9 F.
with respect to tower sites that are not first made subject to any Replacement
Lease before the Build Stop Date.
initial Per Site Rental Rate* $1,200 per set of Tenant Facilities*, per month
period during which the initial Per 3 years after the Closing Date*
Site Rental Rate* is applicable
Per Site Rental Rate* on the 3rd the lesser of: (a) $1,600 per set of Tenant Facilities*, per
anniversary of the Closing Date* month, and (b) fair market value rent per set of Tenant
Facilities*, per month
annual increases to Per Site Rental 3%
Rate* beginning on the 4th
anniversary of the Closing Date*
* These terms have the meaning defined in the Master Site Lease Agreement.
G. NWIP, the Company and Opco shall deliver such further documents
or assurances as may be reasonably required by NWIP, the Company, Opco or any
tower aggregator to further confirm the execution of any Replacement Lease or
the applicability of any tower site to any Replacement Lease.
6.10 POTENTIAL RELAXATION OF PERFORMANCE STANDARDS. Without limiting
the provisions of Section 12.5, to the extent the Company, exercising its best
reasonable efforts and complying in good faith with the other provisions of
this Agreement and the Collateral Agreements, is unable to fully comply with
the performance requirements of this Agreement in any one or more international
border service areas within the Territory, due principally to a lack
42
of sufficient available frequencies, the parties will negotiate in good faith
to reach agreement on is appropriate in the circumstances.
7. OPERATIONS
7.1 NETWORK PERFORMANCE REQUIREMENTS. The Company will meet or exceed
the minimum network performance requirements in effect at the relevant time and
applicable generally to the NDS ESMR Network operations, provided that the
Company will not be penalized for failure to meet such requirements to the
extent the average level of performance on such measurements achieved by the
NDS during the same relevant period does not exceed the level of the Company's
performance. Network performance for the first six months following launch in
any service area will not be included in performance measurements for either
party. At reasonable times and with advance notice, NWIP, through such
representatives as it designates, will have the right to monitor system
performance in the Territory in order to determine the Company's compliance
with the required standards.
7.2 CUSTOMER CARE. The Company will provide a minimum standard of care
to its customers as in effect at the relevant time and applicable generally to
the NDS ESMR Network operations, provided that the Company will not be
penalized for failure to meet such requirements to the extent the average level
of performance on such measurements achieved by the NDS during the same
relevant period does not exceed the level of the Company's performance.
Customer care activities, as they relate to any particular service area or
subscribers based in such service area, during the first six months following
launch in such service area, will not be included in performance measurements
for either party. NWIP will make suitable arrangements to provide the Company
access to the NDS' customer care facilities and training sessions at agreed
upon times in order to facilitate the Company's compliance with such standards.
All costs associated with such transfer of operational practices to the
Company, its employees and agents will be paid by the Company. At reasonable
times and with advance notice, NWIP, through such representatives as it
designates, will have the right to monitor the Company's customer care
activities on a regular basis in order to ensure compliance with the customer
care standards. If the Company requests, from time to time, and at NWIP's sole
discretion, NWIP may make suitable arrangements for billing and customer care
services to be provided to the Company on an arms length basis and otherwise on
such terms as the parties may agree. If NWIP requests, the Company will be
required to comply with the terms of any existing regional or national billing
and/or customer care agreements that are identified on Exhibit 7.2.
7.3 CUSTOMER SATISFACTION. Nextel has established minimum criteria
levels of customer loyalty. The Company will adhere in the Territory to the
customer loyalty measurements and targets as in effect at the relevant time and
applicable generally to the NDS ESMR Network operations, provided that the
Company will not be penalized for failure to meet such requirements to the
extent the average level of performance achieved by the NDS during the same
relevant period does not exceed the level of the Company's performance.
43
A. MEASUREMENT. The Company will be required to measure customer
satisfaction within the Territory. The NDS employ a customer satisfaction
monitoring system that uses a Marketing Services Vendor. The Company will enter
into a separate contract to purchase customer satisfaction interviewing from the
Marketing Services Vendor used by the NDS as of the date of this Agreement, or
subject to NWIP's prior written approval, from a Marketing Services Vendor of
the Company's (or Opco's) choosing. NWIP will use its best reasonable efforts to
induce its Marketing Services Vendor to make those services available to the
Company at the same cost per interview as paid by the NDS. The Company and its
Marketing Services Vendor must use the 1998 questionnaire (a copy of which has
been provided to the Company), as updated from time to time by NWIP. Additional
questions may be added at the Company's discretion, but the Company recognizes
that additional questions may cause its cost per interview to be higher than
that paid by the NDS, and any additional questions will not be used for any
measurement or comparison for purposes of Section 7.3C or under the Roaming
Agreement.
B. SAMPLE. The Company will be required to conduct a minimum of 750
interviews per quarter (3,000 per annum). The Company and the NDS must adhere
to random sampling principles and will conduct surveys yielding a confidence
level of plus or minus two percent (2%).
C. TARGETS. The overall measurement of customer loyalty used by the
NDS is called the "Secure Customer Index" or "SCI." SCI is a combination of
three factors: overall customer satisfaction, a customer's willingness to
recommend the service to others, and likelihood of a customer to continue using
the service, and will be more fully defined by agreement of the parties in
accordance with the NDS approach and methodology being employed at the relevant
time. The Company will be required to maintain an SCI equal to or better than
the lesser of the then current NDS SCI goal or the average actual SCI for the
NDS for the comparable period. Survey results during the first six months
following launch in any service area will not be included in the measurement
for either party.
7.4 EMPLOYEES. The Company (on behalf of itself, Opco and other
Subsidiaries) and NWIP (on behalf of itself and other members of the Nextel
Group) agree not to actively solicit the other party's employees, but will be
flexible with regard to employee transfers to the extent they are consistent
with each company's needs and objectives.
44
8. MARKETING AND ADVERTISING
8.1 BRAND IDENTITY.
A. The Company has the right to offer, provide, and market services
using Partner Frequencies, and the NDS national switching networks only under
the Licensed Marks. From time to time, if the NDS use additional trademarks or
service marks owned by any member of the Nextel Group, NWIP will amend Exhibit
A to the Trademark License Agreement to provide the Company with the right to
use such additional marks as provided. In the case of licensed or other
non-owned names or marks, NWIP will provide the Company the right to use such
name or marks, but only to the extent that use by the Company is consistent
with (and will not result in any additional costs or other adverse effects or
consequences to the Nextel Group under) the agreements with the third parties
that own or license the marks or names to Nextel, and subject to the Trademark
License Agreement, or, in the case of non-owned marks, a license agreement in
substantially the same form. If, after using its reasonable best efforts,
neither NWIP nor the Company can obtain for the Company the right to use a name
or xxxx that is not owned by a member of the Nextel Group and if the NDS offers
a service that is distributed and identified primarily with that name or xxxx,
that service cannot be a Required Service unless the Company is afforded the
right to use that name or xxxx on the same terms as the NDS. If Nextel elects
to make a material change in its brand identity, NWIP will notify the Company
and the Company will be required to implement such change in the same manner
and time frame as Comparable Service Areas of the NDS, provided that if such
change is to be implemented in fewer than twelve months, NWIP will compensate
the Company for its reasonable out-of-pocket costs attributable to such change.
B. The Company will have an opportunity to participate in and
contribute to discussions regarding the NDS's future marketing and advertising
plans as they relate to United States marketing, but final decisions relating
to such plans will be made by Nextel, in its sole discretion.
8.2 BRAND AWARENESS. As part of its national branding strategy, Nextel
and the NDS engage in national advertising, promotions, and sponsorships.
Unless NWIP agrees otherwise in writing, Nextel and/or the NDS retains the
exclusive right to advertise in national publications or other national media.
Nextel and the NDS can place advertisements advertising a price structure
consistent with Exhibit 9.1A in regional and/or local publications or other
regional and/or local media anywhere in the United States, but NWIP will
provide the Company advance notice of such advertising, if it is reasonably
intended or designed for circulation or exposure in the Territory.
8.3 CREATIVE SERVICES. The NDS use outside agencies for creative
development of their advertising and direct mail literature. NWIP will make
creative work developed in-house available to the Company for use in local
advertising, and NWIP will use its best reasonable efforts to induce such
outside agencies to agree to permit the Company to use creative work done for
any member of the Nextel Group on the same terms as were extended to the NDS by
the outside agency. The Company's advertising will be consistent with specific
creative standards as will be outlined from time to time by NWIP, so long as
such creative standards are substantially
45
identical to those being adhered to by the NDS. The Company will have the
option to contract with any of the outside agencies used by the NDS for
creation of local advertising or direct mail literature in compliance with NWIP
standards, and the Company may also elect to use another agency provided that
any creative work used by the Company in its advertising or direct mail
literature must meet such NWIP standards. In the event the Company wishes to
deviate from the NDS creative standards for advertisements, the Company must
first obtain NWIP approval. NWIP will use its best reasonable efforts to
respond to such requests as promptly as practicable. The Company will make
available to NWIP (for use by the NDS) any creative work done by or for the
Company on the same terms as NWIP makes available to the Company creative work
done by or for the NDS.
8.4 MEDIA SERVICES. The NDS use an outside agency for planning and
placement of their advertising in the media. The Company will have the option
to contract with that outside agency for such services in the Company's local
service areas, and NWIP will use its best reasonable efforts to induce the
outside agency to agree to permit the Company to obtain the same terms for such
services as were extended to the NDS by the outside agency. The Company may
utilize other media buyers or outlets at its sole discretion. If planning and
placement of advertising are performed in-house, the Company will have access
thereto on the same basis as the NDS. The NDS and the Company each have the
right to advertise in their respective territories. Outside their territories:
A. National advertising, and any advertising, whether national,
regional or local, outside the United States, will be the exclusive right of
the Nextel Group.
B. Each of (a) NWIP, Nextel and the NDS and (b) the Company have
the right to place advertising focused within its territory that results in
incidental or unavoidable extra-territorial publication (e.g., out-of-state
newspaper distribution).
C. National indirect or national retail promotions (e.g., Hello
Direct Catalogs) will be the exclusive right of the Nextel Group.
D. Each of the Nextel Group and the Company may, subject to Section
8.8, maintain world wide website advertising.
8.5 DIRECT MAIL. Subject to the terms of any agreement between Nextel
and/or the NDS and the agency, the Company will have the option to use the
creative work developed for Nextel and the NDS by such agency for direct mail
literature and can purchase direct mail pieces from such agency. The Company
will have the option to contract with the supplier to obtain mailing lists
previously acquired by Nextel and/or the NDS from Dun and Bradstreet or other
sources that contain names of potential subscribers residing in the Territory.
NWIP will use its best reasonable efforts to induce such sources to charge the
Company no more than the same per name cost that is charged to Nextel or the
NDS by Dun and Bradstreet. The Company may use other vendors in its sole
discretion (but any materials sent out must comply with Section 8.7).
46
8.6 TELEMARKETING. The NDS maintain a telemarketing operation that
handles both inbound and outbound calls. Inbound calls are generally in
response to Nextel's national advertising and the use of the 1-800-NEXTEL9
telephone number. The Company will have access to this inbound number and will
be forwarded all calls or leads, which are generated from potential customers
whose billing address is located in the Territory. Beginning one month before
service is expected to launch in a Section of the Territory, the Company will
be required to provide NWIP with contacts within the Company to receive such
leads, and the Company will insure that the designated employees contact these
leads within 72 hours of receipt. The Company may contract with any outside
vendor to handle inbound calls generated by other mediums that have been
specifically tailored by the Company (i.e., non 1-800-NEXTEL9 calls).
8.7 COLLATERAL MARKETING MATERIALS. NWIP will be responsible for
obtaining collateral materials (including, without limitation, sales sheets,
spec sheets, product brochures) that have been designed by or for the NDS, and
will make these designs available to be used by the Company. The Company will
be allowed to use collateral materials that vary materially from those designed
by or for the NDS only with the approval of NWIP. NWIP will use its best
reasonable efforts to respond to any requests for the Company's use of
previously unauthorized designs as promptly as practicable. The Company may
enter into a contract with the vendor used by the NDS for production and
fulfillment of collateral orders. The Company will have the option to contract
with any of the outside agencies used by the NDS for creation of collateral
marketing materials in compliance with the then existing standards that are in
effect with respect to substantially identical collateral marketing materials
of the NDS. NWIP will use its best reasonable efforts to enable the Company to
obtain such work at the same rates as are charged to the NDS. The Company may
elect to use another agency provided that any creative work used by the Company
in its advertising or direct mail literature must meet the then existing
relevant standards for such advertising or direct mail literature of the NDS.
The Company may elect to use another vendor for production and fulfillment
provided the designs used by the Company are approved by NWIP as provided in
this Section 8.7, such approval not to be unreasonably withheld. The Company
will make available to NWIP (for use by the NDS) any collateral marketing
materials developed by or for the Company on the same terms as the materials
available to the NDS are made available to the Company.
8.8 WORLD WIDE WEBSITE. Nextel maintains a site on the world wide web
that provides certain information, including a description of services
available to potential customers. The Company must provide a link to Nextel's
website, and NWIP will cause Nextel to provide a link to the Company's website,
but in each case with a disclaimer that, among other things, expressly
disclaims the referring party's responsibility for the accuracy and
completeness of any information on the other party's website. The Company will
be required to provide on its website and to update on a regular basis,
coverage maps, rate plans, and other relevant information for service areas
that have launched service. Except for the link to the Nextel website, any
description on the Company's website of Nextel or the NDS or services offered
by Nextel or the NDS will be used only with NWIP's prior approval. Any customer
leads that are generated from either party's website that pertain to the
service areas of the other will be forwarded to the other party as promptly as
reasonably possible. The recipient will contact these leads as promptly as
practicable. In the future, Nextel expects to automate its website to
automatically activate and
47
fulfill a customer order placed on the website. If the Company elects to use
Nextel's website activation service, the Company will pay for Nextel's
operational costs of activation of customers in the Territory.
8.9 MARKET RESEARCH. The NDS conduct primary market research,
including research to support product development, market trials, advertising,
promotion, pricing, network deployment, segment identification, billing,
ergonomics, voice quality performance and retention, as they consider
appropriate to the needs, growth, and development of their respective
businesses. In the past, such research has been used to supplement new product
development, identify target customer segments, and to tailor the Nextel brand
message. The Company will have the opportunity to participate in and contribute
to discussions regarding any significant future market researching activities
proposed to be conducted by or for the NDS, but final decisions relating to
such plans will be in NWIP's sole discretion. The Company will be provided with
the results of all such market research conducted by the NDS. If the Company or
any of its Subsidiaries conduct primary market research, NWIP will be provided
with the results of all such market research.
8.10 SUBSCRIBER TRANSFER FEE. In the event a digital subscriber moves
between the territory of any NDS and the Territory and becomes a subscriber of
any NDS or of the Company in the new territory, the recipient of the
subscriber's business shall pay to the other party the sum of $200 for each
such subscriber.
9. SERVICE AND EQUIPMENT PRICING
9.1 SERVICE PRICING STRUCTURE.
A. The Company will adhere to the NDS established nationwide
service pricing structure set forth in Exhibit 9.1A as amended from time to
time by NWIP. The Company will have an opportunity to participate in and
contribute to discussions regarding modifications to the existing specific
pricing structures or introduction of new or replacement specific pricing
structures, but final decisions relating to such pricing structures will be
made by NWIP, in its sole discretion. Subject to the Company's rights to
participate in the relevant pricing structure decision making process described
in the preceding sentence, NWIP or the NDS may revise its service pricing
structure at any time in its sole discretion. The Company is required to
implement in the Territory pricing structures that NWIP or the NDS have
generally implemented in Comparable Service Areas or Comparable Sections. The
Company will be required to implement any pricing structure that is implemented
by the NDS on a national level. Pricing structure for purposes of this Section
9.1 does not include determination of the rates left to the Company's
discretion under Section 9.2. Notwithstanding anything to the contrary in this
paragraph, the Company's obligation under this Section 9.1A to implement any
service pricing structure (not set forth on Exhibit 9.1A on the date hereof) is
subject to Section 7.04 of the Shareholders' Agreement, provided that the
Company's obligation to implement any service pricing structure and Nextel's
obligation to comply with such Section 7.04 terminates when no member of the
Nextel Group owns an equity interest in the Company.
48
B. The Company may, from time to time, propose to NWIP the adoption
of a service pricing structure that is outside the framework of Exhibit 9.1A.
The proposal must include (i) the proposed pricing structure, (ii) a plan to
test the proposed pricing structure in up to two Build Areas in the Territory,
(iii) the schedule for the test and the Company's proposed criteria and
methodology for determining and interpreting the results of the test. The
Company will supplement its proposal and provide such additional detail as NWIP
may reasonably request. NWIP's approval of the proposed test plan will not be
unreasonably withheld, but NWIP's approval of the test plan is not concurrence
by NWIP that the results of the test demonstrate that the proposed pricing
structure is acceptable. If NWIP approves the test plan, the Company may
implement the plan, but the Company can make no material change in the test
plan without obtaining NWIP's prior approval (which will not be unreasonably
withheld). Promptly following the conclusion of the test, the Company will
report the test results to NWIP. If the Company and NWIP agree that the test
demonstrates that the proposed pricing structure is acceptable, the Company may
implement the proposed pricing structure in the Territory. Testing or
implementation of a pricing structure that has been approved by NWIP under this
Section 9.1B will not affect (1) the service(s) that the Company is required to
provide to a customer of the NDS in the Territory, (2) the service(s) that an
NDS is required to provide to a Company customer in the service area of that
NDS, nor (3) the charges that NWIP and the Company will pay to each other for
such services under the this Agreement or any of the relevant Collateral
Agreements.
9.2 SERVICE PRICING PLANS - LOCAL. The Company will be responsible for
developing and executing local pricing plans in the Territory that are
consistent with the service pricing structure established under Section 9.1 as
well as with the capabilities of the information systems platform used by the
NDS (more specifically addressed in Section 5.8). The Company will be
responsible for setting local rates for basic monthly access and air time,
determining the number of minutes included with various plans, and determining
the price points for enhanced services (including, without limitation, voice
mail and short message service). The Company is also responsible for setting
the local price points for additional services (including, without limitation,
installation, repair, and warranty prices), and service add-ons (including,
without limitation, fees for joining DAP affinity groups, and disabling
cellular capability). Along border areas between the service areas of the
Company and NDS territories, NWIP (by coordination with the NDS) and the
Company (by coordination with Opco and its other Subsidiaries) will cooperate
with each other to promote Nextel services (whether provided by the Company or
the NDS) as opposed to the services of competitors, including avoiding the use
or implementation of pricing plans that might result in customers switching
between the Company and the NDS territories.
9.3 SERVICE PRICING PLANS - NATIONAL. The NDS enter into contracts
with customers requiring service in multiple service areas across the country
("National Accounts"). The Company will have the opportunity to participate in
and contribute to discussions regarding National Account pricing plans, but
final decisions relating to such contracts will be made by NWIP (or another
member of the Nextel Group) in its sole discretion. To maintain consistent
pricing for National Accounts, the Company will be required to honor the
pricing plans established by the NDS for National Accounts and will be entitled
to obtain the benefit of those plans in the Territory, provided that the rate,
or the negotiated discount to local rates, is the same
49
for both the Company and NDS service areas except that the Company will not be
required to provide service to such customers at less than the Company's cost
of service. In the event the Company or any of its Subsidiaries fulfills the
requirements set forth in Sections 11.A and 11.B and the Company establishes
National Accounts, the NDS will be required to honor the pricing plans
established by the Company or any of its Subsidiaries for National Accounts and
will be entitled to obtain the benefit of those plans in the Territory,
provided that the rate, or the negotiated discount to local rates, is the same
for both the Company and NDS service areas, and provided that the NDS will not
be required to provide service to such customers at less than the NDS' cost of
service. If the NDS acquires a local customer, which requires service in the
Company's service area in addition to service in the NDS' service area(s), the
NDS will be permitted to establish a National Account rate plan that is
consistent with the National Accounts pricing schedule that is then in effect
and being utilized by the Company (as the same may be amended from time to
time). The National Account pricing schedule(s) in effect from time to time
will be honored by the Company and by all of the NDS; provided, that the rate,
or the negotiated discount to local rates, is the same for all of the NDS' and
the Company's service areas.
9.4 SERVICE PRICING PLANS - INTERNATIONAL. Nextel and the NDS have and
expect to continue to enter into reciprocal agreements with international
wireless carriers to further the goal of worldwide contiguous service. If such
agreements do not discriminate against the Company and the Company is entitled
to all rights and other privileges granted as part of such agreements to the
Nextel Group member that is the relevant contracting party, then after any such
agreement has been provided to the Company (if NWIP is able to make suitable
arrangements, using its best reasonable efforts with the relevant international
carrier), the Company will become a signatory party (by amendment, addendum or
other suitable means) to such agreement and thereafter will honor the terms of
such agreement. If at any time (i) none of the Company, Opco, or the Company's
other Subsidiaries are sharing elements of the NDS ESMR Network, (ii) the
Company or Opco has its own service provider code, (iii) the Company, Opco or
the Company's other Subsidiaries enter into reciprocal agreements with
international wireless carriers, and (iv) such agreements do not discriminate
against any member of the Nextel Group and the members of the Nextel Group are
entitled to all rights and other privileges granted as part of such agreements
to the Company or the Subsidiary of the Company that is the relevant
contracting party, then, after any such agreement has been provided to the
members of the Nextel Group (if the Company is able to make suitable
arrangements, using its best reasonable efforts with the relevant international
wireless carrier), the members of the Nextel Group will become signatory
parties (by amendment, addendum or other suitable means) to such agreement, and
thereafter will honor the terms of such agreements. The Company shall have no
liability under any of the agreements described in this Section 9.4 for any act
or activity thereunder involving any member of the Nextel Group or its
customers, and no member of the Nextel Group shall have any liability under any
such agreement for any act or activities thereunder involving the Company or
any of its Subsidiaries or any of their customers.
9.5 SUBSCRIBER EQUIPMENT PRICING. The Company will be responsible for
determining the price points for sale of subscriber equipment, including
handsets and accessories, for both direct and indirect distribution outlets of
the Company in the Territory, provided, that indirect dealers and national
retailers will be allowed to determine their own price points for such
50
equipment. The price for equipment and accessories to be sold to National
Accounts covered by Sections 11 A-C must be consistent with Nextel's National
Accounts pricing schedule that is then in effect and is being utilized by the
NDS, as updated from time to time. The Company will purchase equipment and
accessories manufactured by or for Motorola directly from Motorola as discussed
in Section 5.2A. Except for authorized National Accounts (as discussed in
Section 11), other sales as discussed in Section 10, and as otherwise is
provided in this Section 9.5, the Company and each NDS each has the exclusive
right to sell ESMR Network subscriber equipment and accessories in its
geographic territory and neither of them will sell ESMR Network subscriber
equipment or accessories outside its territory without prior approval of the
other.
10. SALES AND DISTRIBUTION
10.1 OBJECTIVE. The sales and distribution objective of the NDS and
the Company is to maximize product placement within their respective
territories to allow them to more effectively compete with other
telecommunications service providers.
10.2 LOCAL SALES AND DISTRIBUTION. Subject to the Company's
obligations under Section 10.3 and the last sentence of this Section 10.2, the
Company will have complete flexibility in the Territory to develop and manage
both direct and indirect distribution channels at the local level. The Company
will require local indirect dealers to adhere to the same terms and conditions
as are generally applicable to any "Nextel Communications" authorized local
indirect dealer. The Company will not establish any indirect distribution
channel that will result in distribution in both NDS and the Company territory,
unless NWIP has approved such action.
10.3 NATIONAL INDIRECT DISTRIBUTION. The NDS have and expect to
continue to enter into contracts with both national authorized dealers (e.g.,
Hello Direct) and national retailers (e.g., Ritz Camera). The Company will have
the opportunity to participate in and contribute to discussions regarding
contracts with national authorized dealers and national retailers, but final
decisions relating to such contracts will be made by NWIP (or another member of
the Nextel Group) in its sole discretion. The Company will share in the
benefits available under such agreements on a basis that is equitable under the
circumstances and be required to support any national indirect distribution
outlets in the Territory that are covered by a contract with any member of the
Nextel Group. NWIP will be responsible for supporting the operational aspects
of these contracts on a national level, in effect at the relevant time and
applicable generally to the NDS, including activation and fulfillment in all
territories and management of commission payments to the national distributors.
The Company will be responsible for the costs of equipment subsidies,
commissions, and all operational costs for subscriber unit sales and activation
under these contracts in the Territory. The Company will also be responsible
for providing local training and operational support of national promotions
with such distributors and providing service that meets or exceeds the minimum
performance standards set forth in this Agreement (and the relevant Collateral
Agreements) to the customers of the distribution channel.
10.4 WEBSITES AND TELEMARKETING. The Company and NWIP (on behalf of
the NDS) will cooperate so that any sales made over the internet or using
telemarketing are made by the Company if the purchaser is in the Territory and
are made by the NDS if the subscriber is outside
51
the Territory. To the extent this does not occur, the parties will make
appropriate adjustments so that the subscriber receives service from the party
with operations where the subscriber is located.
11. NATIONAL ACCOUNTS/PRIVATE SYSTEMS
A. With the Nextel national network, the NDS have a unique
opportunity to attract National Accounts and private systems users who are
national in scope and size. These accounts and users vary from time to time and
the NDS will have and exercise "exclusive" national negotiation rights to such
accounts and users as NWIP has identified in writing to date and thereafter
those that NWIP will periodically identify in writing to the Company, subject
to the Company's approval, which shall not be unreasonably withheld. The
Company is not permitted to market to these accounts or users without prior
approval from NWIP.
B. If a customer in the Territory requires multi-service-area
coverage and requests a single point of contact for fulfillment and ongoing
maintenance of the customer relationship, the Company may serve as the single
point of contact if (i) the Company is able to provide the required service at
a level at least equal to that provided by the NDS that would otherwise serve
as the single point of contact; and (ii) the Company adheres to the established
NDS National Accounts activation and fulfillment process. Otherwise, the
Company will transfer such customers to the National Accounts group or one of
the regional markets of the NDS for fulfillment and ongoing maintenance of the
customer relationship. Subject to the Company's meeting the service
requirements and adherence to the activation and fulfillment requirements set
forth above, the Company and NWIP will exercise reasonable judgment as to which
party should logically be the point of contact for a customer based on, among
other factors, location of traffic generated by the customer and location of
the customer's headquarters.
C. Each subscriber handset that is part of a National Account will
be treated as a subscriber of either the Company (or one of its Subsidiaries)
or one of the NDS based on the telephone number of the handset. Calls made by
that handset will be treated accordingly, and each of the Company and the NDS
will include in its revenue the revenue from subscribers with phone numbers
based within their respective service areas without regard to whether the xxxx
is prepared and sent by Nextel (or an NDS) or the Company (or one of its
Subsidiaries).
D. In addition to National Accounts, NWIP has identified a category
of customers who have traditionally built and operated private communications
systems for internal use. As part of their marketing effort, the NDS typically
seek to provide a virtual private network ("VPN") solution for such customers,
which blends the private system control and exclusivity with the national ESMR
Network of the NDS. Nextel has had discussions with Motorola regarding a
contract that would permit Motorola to market and serve specific customers who
are interested in a VPN solution on an exclusive basis. Should the Company
elect to provide a VPN solution to its customers, it will be required to do so
under the terms of any contract between any member of the Nextel Group and
Motorola and/or one or more of its Subsidiaries.
52
12. BREACH; DEFAULT; DISPUTE RESOLUTION
12.1 NON-MATERIAL BREACH. Remedies for breaches of this Agreement or
any of the Collateral Agreements that are not Material Breaches as defined in
Section 12.2 or 12.3 shall be governed by this Section 12.1. If either party
gives notice to the other of a breach that is governed by this Section 12.1,
the breaching party must either (i) remedy the breach within 15 days of
receiving notice, (ii) if the breach cannot be remedied in 15 days, formulate a
reasonable plan to remedy the breach as promptly as practicable and deliver a
copy of such plan to the other party within 15 days (a "Remedial Plan") and
commence implementation of the Remedial Plan as promptly as reasonably possible
or (iii) dispute the occurrence of a breach in accordance with Sections 12.6
and 12.7 and prevail in the assertion that no breach has occurred. If the party
receiving a Remedial Plan believes that the length of time provided for remedy
of the relevant breach is unreasonably long, such party may request that a
reasonable time to effect such remediation be determined in accordance with
Sections 12.6 and 12.7. If at the expiration of the period for cure (under
clause (i) or (iii) of the preceding sentence, 15 days; under clause (ii) the
time period stated in the Remedial Plan or the time period determined pursuant
to Sections 12.6 and/or 12.7, as applicable) no cure has been accomplished, the
non-breaching party will have the right to remedy the breach with its own or
third party forces and to recover its costs of doing so from the breaching
party, or, where such a remedy is not practical, to recover damages for the
breach and to pursue any other remedy at law or under this Agreement or the
Collateral Agreements, provided, however, that in the case of a dispute under
clause (iii), the ultimate rights and obligations of the parties will be
determined pursuant to Sections 12.6 and 12.7. Notwithstanding the foregoing,
in no event will the Company be permitted to operate or to exercise any control
over the business or systems of Nextel or any of its Affiliates (other than the
Company's own business and systems), and in no event, except as provided in
this Agreement or the Collateral Agreements, is any member of the Nextel Group
permitted to operate or to exercise any control over the business or systems of
the Company. Notwithstanding anything in this Section 12.1 to the contrary, in
the event of any conflict or inconsistency, relating to or arising from any
breach involving the provision of goods, services or systems pursuant to this
Agreement or any of the Collateral Agreements, between the provisions of this
Section 12.1 and Section 2.6, the parties agree and acknowledge that Section
2.6 shall govern.
12.2 COMPANY'S MATERIAL BREACH. The Company's failure to comply with
provisions of this Agreement or any of the Collateral Agreements in any of the
following ways shall be deemed to be a Material Breach:
A. in any Build Year, a delay of 180 days or more (based on the
Schedule set out on Exhibit 6) of (i) the launch for any two Sections, or (ii)
the completion of the Build Out in any two Sections;
B. materially failing to offer a Required Service as set out in
Section 6.1;
C. failing to meet either the network performance requirements set
out in Section 7.1 or the customer care standards set out in Section 7.2 for 3
consecutive months or for 6 months in any 12-month period;
53
D. failing to a material degree to adhere to the Pricing Structure
set out in Section 9.1 or to the brand strategy set out in Section 8.1;
E. repeatedly failing to pay amounts due to NWIP under this
Agreement or any of the Collateral Agreements where the cumulative amount due
is greater than $1,000,000;
F. failing to take actions or taking actions in breach of its
contractual obligations to NWIP that (i) adversely affects Partner Frequencies
and materially and adversely affects the Company's ability to launch service or
operate two or more Sections of the Territory or that (ii) adversely affects
Partner Frequencies with a fair market value of $10 million or more;
G. failing, after notice and an opportunity to cure under Section
12.1, in any other material respect to construct and operate the ESMR Network
in the Territory in compliance with its contractual obligations to NWIP;
H. any other act or omission in breach of its contractual
obligations to NWIP that, following notice and failure to cure under Section
12.1, prevents NWIP from realizing a material benefit of any of this Agreement
or any of the Transaction Documents or other agreements between the Company or
any of its Subsidiaries and NWIP or any other Transaction Documents between
NWIP and any other holder of Equity in the Company relating to the transactions
contemplated hereby.
12.3 NWIP'S MATERIAL BREACH. The Nextel Agreement no longer being in
full force and effect (or any assertion by Nextel to such effect) or NWIP's
failure to comply with provisions of this Agreement or any of the Collateral
Agreements in any of the following ways shall be deemed to be a Material
Breach:
A. materially failing to provide spectrum, access to network
systems or services, including switch access, or to Nextel developed technology
as required herein or pursuant to the terms of the relevant Transaction
Documents, as appropriate;
B. committing any act or omission in breach of its contractual
obligations to the Company that materially adversely affects the Company's
ability to operate an ESMR Network in the Territory in a manner consistent with
the ESMR Network in areas in the United States served by NWIP or the NDS;
C. committing any act or omission in breach of its contractual
obligations to the Company, including failure to timely supply spectrum, access
to network systems or services or to any Nextel developed technology required
by this Agreement or any of the Collateral Agreements, that materially delays
or otherwise materially adversely affects the Company's ability to achieve
Build Out or to launch service;
54
D. repeatedly failing to pay amounts due to the Company under
this Agreement, any of the Collateral Agreements or Sections 7.03 or 7.04 of
the Shareholders' Agreement where the cumulative amount due is greater than
$1,000,000;
E. any other act or omission in violation of this Agreement,
any of the relevant Collateral Agreements, or Sections 7.03 or 7.04 of the
Shareholders' Agreement that, following notice and failure to cure under
Section 12.1, prevents the Company from realizing a material benefit of any of
this Agreement or any of the Transaction Documents or other agreements between
the Company or any of its Subsidiaries and NWIP, or any other Transaction
Documents between the Company and any other holders of Equity in the Company
relating to the transactions contemplated hereby.
12.4 PROCEDURES FOR A MATERIAL BREACH. In the event of a Material
Breach, after written notice of such a Material Breach, the breaching party
must (i) remedy the breach within 15 days of receiving notice, (ii) if the
breach cannot be remedied in 15 days, formulate a Remedial Plan and deliver a
copy of such Remedial Plan to the non-breaching party within 15 days and
commence implementation of the Remedial Plan as promptly as reasonably possible
or (iii) dispute the occurrence of a Material Breach in accordance with
Sections 12.6 and 12.7 and prevail in the assertion that no Material Breach has
occurred. If the party receiving a Remedial Plan believes that the length of
time provided for remedy of the relevant breach is unreasonably long, such
party may request that a reasonable time to effect such remediation be
determined in accordance with Sections 12.6 and 12.7. If at the expiration of
the period for cure (under clause (i) or (iii) of the preceding sentence, 15
days; under clause (ii) the time period stated in the Remedial Plan or the time
period determined pursuant to Sections 12.6 and/or 12.7, as applicable) no cure
has been accomplished, the non-breaching party will have the right to remedy
the breach with its own or third party forces and to recover its costs of doing
so from the breaching party, or, where such a remedy is not practical, to
recover damages for the breach and to pursue any other remedy at law or under
this Agreement or the relevant Collateral Agreements, provided, however, that
in the case of a dispute under clause (iii), the ultimate rights and
obligations of the parties will be determined pursuant to Sections 12.6 and
12.7. Notwithstanding the foregoing, in no event will the Company be permitted
to operate or to exercise any control over the business or systems of the
Nextel Group (other than the Company's own business and systems), and in no
event, except as provided in this Agreement or the relevant Collateral
Agreements, shall any member of the Nextel Group be permitted to operate or to
exercise any control over the business or systems of the Company.
12.5 EXCUSABLE DELAY/TIME EXTENSION. An Excusable Delay in either
party's performance of any obligation under this Agreement or any of the
relevant Collateral Agreements means any delay caused by an event that is
beyond the reasonable control of the party with the duty of performance (which
shall include the duty to exercise reasonable foresight and/or precautions) and
is not primarily attributable to the fault or negligence of that party,
including any delay arising from one of the following: acts of any government
in its sovereign capacity, which shall include zoning or licensing actions; war
or insurrection; strike or work slowdown; extreme weather; fire, earthquake,
flood, epidemic, or quarantine restriction; and acts of God. To the extent that
any delay in NWIP's or the Company's performance of any of its own obligations
55
under this Agreement or any of the Collateral Agreements is proximately caused
by inability or failure of the other party or its Affiliates to fulfill its
obligations under such agreement, such delay shall also be an Excusable Delay.
Excusable Delay includes delay caused by the inability to acquire rights to use
or manage the use of frequencies but only if all commercially reasonable
efforts have been made to mitigate the consequences, including, without
limitation, construction of additional cell sites to maximize use of
frequencies that are available to the Company (such delay, a "Frequency
Delay"). Where performance is delayed by reason of an Excusable Delay, the time
for performance, and any otherwise applicable time limit, schedule or deadline,
shall be extended for a period of time equal to the period of Excusable Delay.
12.6 ALTERNATE DISPUTE RESOLUTION.
A. In the case of any dispute arising between the parties in
connection with the interpretation or performance of this Agreement, or with
the interpretation or performance of any Collateral Agreement, or any other
dispute between the parties relating to this contractual joint venture, before
either party may initiate a formal proceeding in any tribunal, including
arbitration or judicial proceedings, the parties will exhaust the Alternate
Dispute Resolution Process provided in this Section 12.6. The party wishing to
initiate a proceeding shall provide written notice to the other party that
includes all elements required to be included in the arbitration demand under
Section 12.7.
B. Within five business days of receipt of the notice, one or more
executives of each party, including at least one executive from each party not
lower than the first executive tier below President or Chief Executive Officer,
will meet and seek to resolve the dispute. Not less than 30 days after the
notice is given under Section 12.6A, if either party determines that further
progress toward resolution is not taking place at that level, that party can
give written notice to that effect, and within five business days of that
notice the executive of each party at the highest level below the Board of
Directors will meet and confer to seek to resolve the dispute. Following at
least one such meeting, upon either party's determining that no further
progress toward resolution is occurring at the highest executive level, and
providing written notice to that effect, the Alternate Dispute Resolution
Process will be concluded. Thereafter, any dispute in connection with the
interpretation or performance of this Agreement, or with the interpretation or
performance of any Collateral Agreement, or any other dispute between the
parties relating to this contractual joint venture, shall be resolved by
arbitration using the arbitration procedure set forth in Section 12.7.
12.7 ARBITRATION. If the parties are unable to resolve a dispute under
Section 12.6, either party may serve a demand for arbitration in accordance
with the Center for Public Resources Non-Administered Arbitration Rules
("Arbitration Rules") in which, in addition to any other requirements of those
Rules, the party serving the demand states the specific nature of the claimed
breach and the specific nature of and period for the cure allegedly required,
and demands a determination by the arbitrators of the parties' rights together
with any other relief sought (subject to the provisions of Sections 2.6 and
12.9F). Three arbitrators shall be chosen, and the proceedings conducted, in
general accordance with the Arbitration Rules; provided, however, (i) the
parties shall choose three arbitrators through a self-administered process of
striking names
56
from a list of potential arbitrators and shall not employ the method provided
for in the Arbitration Rules; (ii) the rules of evidence employed in the
federal courts at the time shall apply; and (iii) discovery shall be permitted
in accordance with the Federal Rules of Civil Procedure. The decision of the
arbitrators will be final and binding on the parties to the maximum extent
permitted under applicable law, and a final judgment may be entered on the
award in any court of competent jurisdiction.
12.8 EQUITABLE REMEDIES.
A. The rights and obligations of the parties enumerated in this
Section 12.8 are deemed by the parties to be so unique and fundamental to their
bargain that, in the event of non-performance, it is agreed that the
appropriate remedy is injunctive or other equitable relief. With respect to
these obligations, the parties agree that damages alone are an inadequate
remedy because not all damages will be ascertainable with any reasonable degree
of certainty, and because the essence of the parties' bargain is for
performance of these obligations. With respect to these obligations, the
complex interrelationship of the elements of the parties' bargain is such that
only performance (coupled with such other relief, including, without
limitation, money damages, as any court, arbitration panel, or other
appropriate tribunal may, subject to Sections 2.6 and 12.9F, deem appropriate)
can restore the benefit of the bargain to the non- breaching party. The parties
stipulate that, in the event of a dispute over any of the items enumerated
below, neither party will urge, argue or claim that damages alone are an
adequate remedy or should be the preferred remedy if the tribunal should
determine that non-performance has occurred. The rights and obligations are:
1. NWIP's and the Company's rights to the operation of an ESMR
Network in their respective territories in accordance with this Agreement or
any of the relevant Collateral Agreements and to performance of all actions
provided for in this Agreement or in such Collateral Agreements that are
necessary to achieve such operation.
2. The Company's and NWIP's rights to the use of spectrum as
provided herein and in any applicable Collateral Agreement, where the failure
to honor such rights (following notice and an opportunity to cure) materially
and adversely affects either (i) the Company realizing the benefits of NWIP's
obligation to provide spectrum as described in Article 4 or the Interim
Management Agreement or (ii) NWIP's (or other members of the Nextel Group's)
realizing the benefits of the Company's obligation to (a) provide spectrum as
described in the Analog Management Agreement or (b) transfer to NWIP (or its
designee) any SMR Frequencies as required pursuant to Section 4.14 or 4.16, as
appropriate.
3. NWIP's obligations to provide access to network systems and
services, including switch access, and access to any Nextel developed
technology where the failure to do so (following notice and an opportunity to
cure) materially and adversely affects the Company's ability to achieve the
Build Out schedule or performance requirements required by this Agreement or
any of the relevant Collateral Agreements, provided that the Company's failure
to avail itself of opportunities to obtain equivalent technology or network
systems and services from other sources
57
in a timely manner will be considered in determining whether a material,
adverse effect has resulted from NWIP's failure to perform.
4. The Company's rights (subject to its compliance with the
requirements of this Agreement or any of the relevant Collateral Agreements) to
be the exclusive operator in the Territory of a digital wireless communication
system using the Partner Frequencies.
5. NWIP's approval rights under this Agreement and any such
approval rights so designated under the Transaction Documents.
6. The Company's obligations to (i) timely meet its Build Out
obligations under Section 6.2, (ii) adhere to service pricing structures as
required by Section 9.1, (iii) take or refrain from taking particular actions
relating to the acquisition, maintenance, disposition, preservation and use of
frequencies in the Territory in accordance with Article 4, and NWIP's rights
related to each of the foregoing.
B. Where the non-breaching party cannot be fully restored to the
position it would have enjoyed in the event of timely performance of the
obligation to which an order of specific performance relates without additional
relief, including monetary compensation (subject to Sections 2.6 and 12.9F),
this subsection shall not preclude the award of such supplemental relief in
addition to (but in any event not in lieu of) specific performance. This
subsection is also not intended to limit judicial or arbitrator discretion in
ordering specific performance with respect to other obligations of the parties
where such a remedy is determined by the tribunal to be appropriate in the
circumstances.
12.9 DAMAGES AND TERMINATION FOR MATERIAL BREACH.
A. PROCEDURE. If a Material Breach occurs and is not timely cured
or disputed under clause (iii) of Section 12.4 or if the breach is not capable
of cure, then, in addition to its other remedies as provided herein, the
non-breaching party ("Claimant") may terminate this Agreement and all other
agreements in force between the parties other than the Shareholders' Agreement,
but only strictly in accordance with this subsection and subject to the
limitations on remedy provided for in this Section. Following the expiration of
the applicable notice period, Claimant must proceed as follows in order to
exercise any right of termination: (1) pursue the Alternate Dispute Resolution
Process described in Section 12.6; and (2) at the conclusion of that Process
proceed with arbitration under Section 12.7. In addition to resolving any other
issues presented by the parties, the arbitrators shall determine whether a
Material Breach has occurred, whether additional time should be allowed for
cure, whether damages should be awarded and whether and under what
circumstances a right of termination shall exist under the criteria of this
Section 12.9. Only upon and in accordance with a determination by the
arbitrators that a right of termination exists shall Claimant exercise, or
purport to exercise, any such right, and no such right shall exist except as
specifically provided in this Agreement or in the relevant Collateral
Agreements.
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B. RIGHT TO NEXTEL NAME AND TRADEMARKS. In the event the
arbitrators determine that the Company has committed a Material Breach, NWIP
shall be entitled to terminate the Trademark License Agreement and, subject to
the provisions of the Trademark License Agreement, withdraw any right the
Company has to the continued use of the Nextel name and Nextel trademarks, if
the arbitrators determine, taking into account the harm that the Material
Breach caused to the licensed marks, that termination of the Trademark License
Agreement is an appropriate remedy in the circumstances. In the event the
arbitrators determine that NWIP has committed a Material Breach, the Company
shall be entitled to maintain the Trademark License Agreement if,
notwithstanding the termination of this Agreement and all other Collateral
Agreements, the arbitrators determine that continuation of the Trademark
License is appropriate in the circumstances.
C. DETERMINATION REQUIRED FOR TERMINATION REMEDY. Termination shall
be an available remedy only if the procedure of Section 12.7 is followed and
the arbitrators make the following determinations:
(i) There has been a Material Breach.
(ii) Neither an order of specific performance nor an award of
damages nor a combination of the two will substantially restore the benefit of
the bargain to the non- breaching party in the absence of termination.
(iii) Termination is an equitable remedy under all of the facts
and circumstances, including any conditions or limitations the arbitrators
impose in connection with termination to achieve equity.
D. TERMINATION AWARDED TO NWIP. If NWIP is the Claimant and NWIP
has sought and has been awarded termination of all the agreements in force
between the parties as a remedy, then, if at that time any member of the Nextel
Group owns an equity interest in the Company, NWIP must acquire pursuant to
Section 5.1(a)(i)(C) of the Company's Restated Certificate of Incorporation for
a price equal to 80% of the Company Equity Value as described in the last
sentence of Section 5.1(a)(iii) thereof all outstanding capital stock
(excluding any shares of the Company's Series B Preferred Stock owned by any
member of the Nextel Group) and any other equity interests in the Company. The
balance of the Company Equity Value, under such Section 5.1(a)(iii) will be
retained by NWIP as liquidated damages for any breach occurring prior to or in
connection with the events giving rise to such termination and to compensate
for the unascertainable damages arising from such termination, and no
additional compensation shall be owing for any damages resulting from such a
breach or termination.
E. TERMINATION AWARDED TO THE COMPANY. If the Company is the
Claimant, and the Company has sought and has been awarded termination of all
the agreements in force between the parties as a remedy, and if at that time
any member of the Nextel Group owns an equity interest in the Company, as
liquidated damages for all breaches occurring prior to or in connection with
the events giving rise to termination and to compensate for the unascertainable
damages arising from such termination, the Company will be entitled at its
option, to entry of an
59
order requiring that NWIP must pay pursuant to Section 5.1(b)(i)(D) of the
Company's Restated Certificate of Incorporation a sum equal to the amount
described in Section 5.1(b)(iii)(D) thereof and no additional compensation will
be owing for any damages from such termination, or for any breach occurring
prior to or in connection with the events giving rise to such termination. In
the event that the Company requests a ruling on its right to terminate and is
determined to be entitled to terminate one or more Substantial Agreements, but
elects not to terminate, then the Company will be entitled to entry of an order
requiring the price to be paid by NWIP upon the subsequent exercise of the NWIP
Call Right to be no less than (x) the Company Equity Value determined under the
Shareholders' Agreement as of a point in time immediately prior to the
breach(es) that resulted in the termination, plus (y) an amount equal to 20% of
the amount described in clause (x) (the "Premium"), minus (z) NWIP's
proportionate share of such sum (but the decision whether or not to exercise
such option shall remain in the sole discretion of NWIP). The Premium amount
included in the price paid by NWIP will constitute liquidated damages for any
breach occurring prior to or in connection with the events giving rise to the
right to terminate, and to compensate for the unascertainable damages arising
from such termination, and no additional compensation shall be owing for any
damages resulting from such a breach or for any breach occurring prior to or in
connection with the events giving rise to the order.
F. LIMITATIONS ON DAMAGES. Neither NWIP (nor any other member of
the Nextel Group) nor the Company (nor Opco, nor any other Affiliate of the
Company) is entitled to seek or recover consequential, punitive or exemplary
damages in respect of this Agreement or the Collateral Agreements or any other
agreement between the Company or any of its Subsidiaries, on the one hand, and
NWIP or any other member of the Nextel Group, on the other, under any
circumstances or for any reason including, without limitation, upon or in
connection with any termination of this Agreement or any of such other
agreements. Consequential damages are, without limitation, lost profits, lost
revenue and the like but do not include the actual costs incurred in obtaining
substitute performance where there has been a failure to perform an obligation
under an agreement. This Section 12.9F shall not limit any party's right to
full recovery of liquidated damages as provided in Section 12.9E.
13. MISCELLANEOUS
13.1 CHOICE OF LAW. This Agreement and each of the Collateral
Agreements shall be governed by New York law, provided that those portions of
this Agreement, the Interim Management Agreement and the Analog Management
Agreement that involve topics covered by FCC Rules shall be governed thereby.
13.2 ATTORNEYS FEES. If a dispute relating to this Agreement or any
Collateral Agreement, or any transaction or matter contemplated hereby or
thereby, results in any proceeding (arbitration, litigation or other
proceeding), the judge's, arbitrator's or panel's decision or award may provide
that the prevailing party shall be entitled to recover reasonable attorneys'
fees, expenses and costs from the non-prevailing party, and the amount of the
fees, expenses or costs so recoverable.
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13.3 PASS-THROUGHS. If the Company cannot obtain from a third party
any product or service that is necessary for the Company to perform its
obligations under one or more of this Agreement or any of the Collateral
Agreements, then, as an accommodation to the Company, NWIP will make available
to the Company the product or services that is available to the NDS that the
Company has been unable to obtain. NWIP will have no obligation to make this
accommodation if it would breach the terms of or would otherwise result in any
adverse effect or consequence (other than any additional costs or charges that
the Company will pay as required by the last sentence of this Section) to NWIP
or to any member of the Nextel Group under any agreement with a third party.
NWIP and the other members of the Nextel Group retain the right to modify or
terminate their agreements with third parties, in their sole discretion and
without any liability or responsibility to the Company. If any product or
service is made available to the Company by a pass-through as contemplated by
this Section, the Company will look solely to the third party for performance.
Neither NWIP nor any member of the Nextel Group makes any representation or
warranty and none of them will have any liability for the failure of the third
party to perform. If there is any cost or charge to any member of the Nextel
Group for a pass-through arrangement, NWIP need not make it available to the
Company until the Company has paid such cost or charge.
13.4 [RESERVED]
13.5 MONITORING. In addition to specific monitoring rights
contemplated elsewhere, the Company and NWIP will have the right to such
periodic reports from each other as they may reasonably request from time to
time, and NWIP has the right (which may be exercised at reasonable times and on
reasonable advance notice by appropriate representatives) to inspect and audit
the Company's operations to confirm compliance with this Agreement or any of
the Collateral Agreements (and the Company will have the right of access to the
NWIP and/or NDS operations also at reasonable times and on reasonable advance
notice, in order to permit the Company and its personnel to understand such
operations in order that the Company may comply with the terms of this
Agreement or any of the relevant Collateral Agreements). Absent an emergency,
inspections and audits shall be during normal business hours.
13.6 PAYMENT.
A. NWIP will submit to the Company after the end of each calendar
month a reasonably detailed invoice listing (i) all charges due and payable by
the Company or Opco to NWIP under this Agreement or any Collateral Agreement
for the prior month (including pass-throughs for telco or other third party
charges, if any), and (ii) all charges due and payable by NWIP to the Company
or Opco under this Agreement or any Collateral Agreement for the prior month.
After the amounts under clause (i) and (ii) of the preceding sentence have been
netted against each other, the party that owes the other will pay such invoice
in full within thirty (30) days of receipt thereof, without deduction or
offset.
B. In the event a billing dispute arises between the parties, the
party with an amount owing will pay 100% of the disputed amount by the payment
due date. If the Company believes that any invoice is incorrect, not more than
30 days after the date of the invoice, it will
61
provide NWIP with a written explanation of the discrepancy or claimed error.
NWIP will review any written explanation received from the Company within ten
business days of receipt thereof and respond thereto by either (i) making an
appropriate correction, or (ii) sending to the Company a written explanation
with reasonably detailed supporting information describing why NWIP does not
believe a billing error has been made. If, upon review of NWIP's response, the
Company reasonably still believes that a billing error exists, the parties will
resolve their dispute under Article 12.
C. A late payment charge of the greater of one and one-half percent
(1-1/2%) per month or the maximum interest rate permitted by law will be
applied to any unpaid balance of any invoice delivered under this Section 13.6,
if the payment is not paid by the due date. Late payment charges will be
calculated by multiplying the total unpaid amount carried forward to a
subsequent invoice by the applicable interest rate. The late payment charges
hereunder are a penalty for a default of non-payment of any payment when due
and will not be deemed interest payments. This late payment charge will be in
addition to and not in lieu of any other remedies available to the party
entitled to payment.
13.7 COMPANY AUDIT RIGHT. If the Company or Opco is charged by NWIP
either based on a pass-through of charges imposed by a third party on NWIP (or
any other member of the Nextel Group) or based on a portion of the charges that
any member on the Nextel Group pays to third parties, the Company will have the
right, on reasonable advance notice and during regular business hours, to
review the books and records of the NWIP (or the Nextel Group) relating to such
third-party charges. The Company agrees that any information provided to it
pursuant to this Section 13.7 (other than that relating solely to actual pass
through charges billed to the Company) is confidential information to which
Section 13.10 shall apply.
13.8 COMPANY PERSONAL OBLIGATION.
A. All of the Company's rights under this Agreement or any of the
Collateral Agreements entered into as contemplated herein, including the
Company's rights to use any frequencies made available by any member of the
Nextel Group in the Territory and the rights to own and operate the ESMR
Network in the Territory are personal to the Company. Subject to the foregoing
and the approval of NWIP, the Company may (i) assign its rights and delegate
its duties to wholly owned direct or indirect Subsidiaries, or (ii) subcontract
or obtain from others products and services necessary to perform its
obligations under this Agreement or any of the Collateral Agreements, but, in
either case, the Company shall be and remain responsible and liable for the
due, proper, full and timely performance of such obligations. The Company is
jointly and severally liable for all obligations and liabilities of Opco and
any other Company Subsidiary arising under this Agreement or any Collateral
Agreement. If NWIP has consented to an assignment or confirmed in writing that
a particular group of the Company's or Opco's senior secured lender(s) have
complied with the requirements of Section 4.13A, the Company and Opco may make
a collateral assignment of their respective right, title and interest under
(but not any of their obligations, liabilities or duties with respect to this
Agreement and (notwithstanding any provisions of any of the Collateral
Agreements to the contrary) any of the Collateral Agreements to such lenders.
No more than one such assignment will be in effect at any time.
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B. Any assignment by the Company and/or Opco of rights under this
Agreement and any of the Collateral Agreements permitted pursuant to clause (i)
of the first sentence of paragraph A hereunder to wholly owned direct or
indirect subsidiaries must by its terms cease to be effective at any time that
the assignee ceases to be a wholly owned direct or indirect subsidiary of the
Company. No assignment of this Agreement or any Collateral Agreement (except as
expressly provided otherwise therein) by any party shall release the assignor
of any obligations, duties or liabilities hereunder or thereunder and the
assignor shall be and remain directly and fully liable, on a primary basis
together with the assignee, for all such matters. Such direct, primary
obligations, liabilities and duties of the assignor shall remain in effect and
shall not be reduced, diminished, avoided or released, in whole or in part,
notwithstanding any insolvency, bankruptcy or reorganization of any assignee.
C. Except for the Company's rights under clause (i) of paragraph A
and the last sentence of paragraph A, neither party may assign this Agreement
or any of the Collateral Agreements without the consent of the other, except
that NWIP may assign an agreement to any wholly owned direct or indirect
Subsidiary of Nextel that assumes NWIP's obligations and is approved by the
Company, provided that the Company may withhold such approval based only on the
Company's reasonable determination that the assignee lacks financial or other
capacity to perform equivalent to that of NWIP.
13.9 DISCLAIMER OF PARTNERSHIP. Neither this Agreement nor any of the
Collateral Agreements contemplated hereby, nor any other agreement between the
parties, or any action or relationship contemplated therein, creates a
partnership or any other fiduciary relationship between the parties, nor
between NWIP and any of the other stockholders of the Company. It is expressly
understood and agreed that the obligations and relationships so created are
contractual in nature, are for the benefit of and may be enforced only by the
parties signatory thereto and their permitted assignees and successors, and are
subject to the limitations on liability and disclaimers set forth therein
including those set forth in the Nextel Agreement.
13.10 CONFIDENTIALITY.
A. Except (i) for the use of information as required in connection
with any filing with the Securities and Exchange Commission, (ii) for any other
governmental filing required in order to complete the transactions contemplated
by this Agreement or by any of the Collateral Agreements, and (iii) as NWIP and
the Company may agree or consent in writing, all information received by NWIP
and the Company and their respective representatives pursuant to the terms of
this Agreement and each of the Collateral Agreements shall be kept in strictest
confidence by the receiving party and its representatives. Neither NWIP nor the
Company will make any press release or other disclosure of the transactions
contemplated in this Agreement or in any of the Collateral Agreements without
the prior written consent of the other party. Notwithstanding the foregoing, if
counsel for either NWIP or the Company advises that a press release or public
disclosure is required by law or the rules of any stock exchange or the NASDAQ
National Market, then that party must notify the other, and the parties shall
use their best reasonable efforts to cause a mutually acceptable press release
to be issued, and in all events the
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party required to make such disclosure will be free to do so. Any party may
disclose the existence and terms of this Agreement and any of the Collateral
Agreements and the transactions contemplated hereby and thereby to financial
institutions in connection with financings or as required under any agreements,
provided that confidential treatment is requested from any such person to whom
such information is disclosed.
B. The foregoing confidentiality provisions shall not apply to such
portions of the information received which (i) are or become generally
available to the public through no action by the receiving party or by such
party's representatives or (ii) are or become available to the receiving party
on a nonconfidential basis from a source, other than the disclosing party or
its Affiliates or its representatives, which the receiving party believes,
after reasonable inquiry, is not prohibited from disclosing such portions to it
by a contractual, legal or fiduciary obligation.
C. If a party or its Affiliates or representatives becomes legally
compelled by law, process or order of any court or governmental agency or
otherwise to disclose any confidential information, such party will give the
disclosing party prompt notice thereof to permit the disclosing party to seek a
protective order or to take other appropriate action. A party will be relieved
of its confidentiality obligations under this Section 13.10 only to the extent
that it becomes legally compelled to disclose confidential information, subject
to protective orders or other restrictions imposed on or granted by the court,
governmental agency or other entity receiving the confidential information. If
requested by the disclosing party, the compelled party will cooperate in
seeking to obtain protective treatment for any confidential information that
the compelled party is legally compelled to disclose.
D. NWIP and the Company hereby acknowledge that as a result of
disclosures by Nextel, NWIP, and the Company contemplated under this Agreement
and certain of the Collateral Agreements, the parties and their Affiliates may,
from time to time, have material, non-public information concerning Nextel, the
Company, and other companies. Nextel, NWIP, and the Company confirm that each
of them and their Affiliates are aware and each of them has advised their
representatives that (i) the United States securities laws may prohibit a
person who has material, non-public information from purchasing or selling
securities of any company to which such information relates, and (ii) material
non-public information shall not be communicated to any other person except as
permitted herein.
13.11 AMENDMENTS. This Agreement may be amended only by a writing
executed by the parties.
13.12 ENTIRE AGREEMENT. This Agreement and the other Transaction
Documents set forth the entire understanding of the parties hereto and thereto
with respect to the subject matter hereof and thereof, and supersede all prior
contracts, agreements, arrangements, communications, discussions,
representations and warranties, whether oral or written, between the parties,
including, but not limited to, the Memorandum of Agreement, dated as of May 1,
1998, among Wireless Investment Partners, L.L.C., NWIP and Nextel, as amended,
the letter agreement dated August 13, 1998, among DLJ Merchant Banking II, Inc.,
DLJ Capital Corp., Nextel, the Company and Eagle River Investments, LLC., and
the letter agreement dated December 4, 1998,
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among DLJ Merchant Banking II, Inc., DLJ Capital Corp., Nextel, the Company,
Eagle River Investment, LLC, and Motorola, Inc.
13.13 NOTICES. Any notice, request or other communication required or
permitted hereunder must be in writing and will be duly given: (a) when
received if personally delivered; (b) within 12 hours after being sent by
telecopy, with confirmed answerback; or (c) within 1 business day of being sent
by priority delivery by established overnight courier, to the parties at their
respective addresses set forth below.
To NWIP: Nextel WIP Corp.
0000 Xxxx Xxxxxx Xxxxx
XxXxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
With a copy to:
Xxxxx Day Xxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
To the Company: Nextel Partners, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
To Opco: Nextel Partners Operating Corp.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
With a copy to: Xxxxxxxx Xxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Any party by written notice to the others given in accordance with this Section
13.13 may change the address or the persons to whom notices or copies thereof
and to be directed.
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13.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, and all of which
together will constitute one and the same instrument.
13.15 WAIVER. Except as otherwise provided in this Agreement, any
party may waive, in writing, compliance by the other parties thereto (to the
extent such compliance is for the benefit of the party giving such waiver) with
any of the terms, covenants or conditions contained in this Agreement (except
as may be imposed by law). Any waiver by any party of any violation of, breach
of, or default under, any provision of any of this Agreement, by any other
party will not be construed as, or constitute, a continuing waiver of such
provision, or waiver of any other violation of, breach of, or default under,
any other provision of this Agreement.
13.16 THIRD PARTIES. Nothing expressed or implied in this Agreement is
intended, or may be construed, to confer upon or give any person or entity
other than the parties hereto (and the indemnified persons referred to in
Sections 4.11 and 5.3) any rights or remedies hereunder or by reason of the
Collateral Agreements or any other agreement between the Company or any of its
Subsidiaries, on the one hand and NWIP or any other member of the Nextel Group,
on the other.
13.17 SCHEDULES AND EXHIBITS. The schedules and exhibits attached to
this Agreement (as the same may be amended, supplemented or otherwise modified
from time to time as provided herein) are incorporated herein and are part of
this Agreement for all purposes. Unless otherwise stated, any reference in this
Agreement to an exhibit, section or schedule is to an exhibit, section or
schedule of this Agreement.
13.18 HEADINGS. The headings in this Agreement are solely for
convenience of reference and are not to be given any effect in the construction
or interpretation of this Agreement.
13.19 SEVERABILITY. If any provision of this Agreement or the
application of such provision is invalid, illegal or unenforceable in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision of this Agreement or invalidate or render unenforceable
such provision in any other jurisdiction. The parties will, to the extent
lawful and practicable, use their best reasonable efforts to enter into
arrangements to reinstate the intended benefits of any provision held invalid,
illegal or unenforceable.
13.20 JURISDICTION. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby may only be brought in
the United States District Court for the Southern District of New York or any
New York State court sitting in New York City, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient forum. Process in any
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such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 13.12 shall be deemed effective service of process on
such party.
13.21 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Joint Venture
Agreement to be executed this 29th day of January, 1999.
NEXTEL PARTNERS, INC.
By: /s/ Xxxx Xxxxxxx
-------------------------------------------
Xxxx Xxxxxxx, President and Chief Executive
Officer
NEXTEL PARTNERS OPERATING CORP.
By: /s/ Xxxx Xxxxxxxx
-------------------------------------------
Xxxx Xxxxxxxx, Chief Financial Officer
NEXTEL WIP CORP.
By:/s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxx, President
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