MANAGEMENT AGREEMENT
(Interim)
THIS MANAGEMENT AGREEMENT (the "Agreement") is made and entered into as
of January 29, 1999, by and between Nextel Partners Operating Corp., a Delaware
corporation, on behalf of itself and its wholly owned subsidiaries (the
"Manager"), and Nextel WIP Corp., a Delaware corporation (the "Licensee").
Licensee is an indirect wholly owned subsidiary of Nextel Communications, Inc.
("Nextel"). Manager and Licensee are hereinafter collectively referred to as the
"Parties."
RECITALS
A. Licensee has the right to use Federal Communications Commission (the
"FCC") Licenses (as defined below), held by one or more direct or indirect,
wholly owned subsidiaries of Nextel, to operate on the frequencies identified on
Attachment A hereto.
B. Simultaneously with the execution of this Agreement, the Parties and
Nextel Partners, Inc., a Delaware corporation that owns all of the outstanding
stock of Manager ("NPI") will enter into the JV Agreement (as defined below) and
other Operating Agreements (as defined below) to enable Nextel to expand and
enhance the geographic coverage of its existing nationwide digital iDEN
Specialized Mobile Radio ("SMR") network.
C. Pursuant to the Operating Agreements, Manager will expand and market
Nextel's iDEN wireless telecommunications services in certain mid-sized and
smaller cities of the country in which such service would not otherwise be
provided in a comparable time frame.
D. Simultaneously with the execution of the Agreement, Licensee will
file an appropriate application with the FCC for approval to transfer all the
capital stock of License Co. (as defined below) to Manager.
E. Pursuant to other agreements, Nextel will receive an approximate 34
percent equity interest in NPI in exchange for (among other things) authorizing
Manager, pursuant to prescribed terms, conditions, standards and procedures, to
manage the use of the frequencies authorized by the Licenses to build and
operate in the Territory (as defined below) an iDEN digital wireless
communications system interoperable with Nextel's national network, and to
provide roaming services to each other's customers
F. The corporate governance of NPI is by a Board of Directors (the
"Board") with a minimum of five members. Nextel has the right to designate one
Board member and Eagle River Investments, L.L.C., an affiliate of Digital Radio,
L.L.C., the controlling shareholder of Nextel, has the right to designate one
Board member.
G. Pursuant to NPI's Restated Certificate of Incorporation and the JV
Agreement, for so long as Licensee owns an equity interest in NPI, without
Licensee's prior written approval neither NPI nor Manager will make any
decision: (1) to make a material change in technology; (2) to allow a sale,
exchange or other disposition of all or substantially all of its assets; or (3)
to expand or broaden the scope of NPI's business beyond the business described
in Section 2.1 of the
JV Agreement, including without limitation, any decision to make any acquisition
other than 800 MHz or 900 MHz SMR acquisitions within the Term.
H. Licensee has the option to acquire all ownership of NPI under
certain circumstances and Licensee may have the right to acquire additional
equity interests in NPI, or be required to make additional contributions in
exchange for additional equity interests in NPI.
I. Licensee and Manager have each independently determined that their
respective business interests are best served by entering into this Agreement;
that Manager, in accordance with this Agreement, can build and implement iDEN
service in mid-sized and smaller cities more rapidly than Nextel acting alone,
and that the joint venture will expeditiously bring Nextel's unique wireless
communications services to persons living and working in the Territory (as
defined below) thereby facilitating expeditious deployment of Nextel's brand of
services on a ubiquitous nationwide basis.
J. The Parties are familiar with the FCC's rules and policies
concerning the responsibilities of SMR and Commercial Mobile Radio Service
("CMRS") licensees and have structured this Agreement to be in compliance
therewith.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants hereinafter set
forth, the Parties agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
have the meanings set forth or cross-referenced below:
BOARD -- see Recital F.
EFFECTIVE DATE -- see Section 2.
FCC -- see Recital A.
INITIAL TERM -- see Section 2.
JV AGREEMENt means the JV Agreement among Licensee, Manager and
NPI of even date herewith, as it may be amended from time to time.
LICENSE CO. means Nextel WIP License Corp., a Delaware corporation
and wholly owned subsidiary of Nextel WIP Corp.
LICENSEE -- see Preamble.
LICENSES mean the FCC licenses listed on Attachment A as the list
may be amended from time to time pursuant to the JV Agreement.
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MANAGEMENT TERM means the Initial Term together with any Renewal
Terms, until this Agreement is no longer in effect.
MANAGER -- see Preamble.
NEXTEL -- see Preamble
OPERATING AGREEMENTS means the JV Agreement together with the
Collateral Agreements (as defined in the JV Agreement).
PARTIES -- see Preamble.
RENEWAL TERM -- see Section 2.
SMR -- see Recital B.
SHAREHOLDERS' AGREEMENt means the Shareholders' Agreement of even
date herewith by and among Licensee, NPI, and the other stockholders of
NPI.
TERRITORY means the initial territory described on Attachment B as
the same may be amended from time to time pursuant to the JV Agreement.
2. EFFECTIVE DATE, TERM, RENEWALS. (a) This Agreement shall become
effective on the date hereof (the "Effective Date"). Unless terminated pursuant
to the provisions of Section 8 hereof, or the termination provisions of the JV
Agreement, this Agreement shall have an initial term of ten years from the
Effective Date subject to extension for up to an additional 42 months as set
forth in Section 4.03(a) of the Shareholders' Agreement (the "Initial Term").
(b) So long as Manager is in compliance with the requirements of
this Agreement and the JV Agreement and so long as this Agreement remains in
effect, Manager may extend this Agreement for up to four consecutive 10-year
renewal terms (each a "Renewal Term"). To exercise its renewal option, Manager
must give written notice to Licensee, delivered not more than 180 days and not
less 120 days before the Management Term would otherwise end, stating that
Manager is exercising its option to renew for an additional ten year period.
Within 30 days of receipt thereof, Licensee shall give written notice to Manager
of its acknowledgment of such renewal.
3. SYSTEM MANAGEMENT RESPONSIBILITIES. Pursuant to this Agreement,
Licensee grants Manager the right to manage the use of the frequencies
authorized by the Licenses to build out and operate an iDEN system in the
Territory pursuant to the specifications, operating and quality standards and
implementation timelines established by Licensee and set forth in the JV
Agreement and other Collateral Agreements.
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4. BRAND NAME.
a. Manager is required to use the Nextel brand name and other
Nextel trademarks to market digital iDEN services provided on Licensee's
spectrum in the Territory, subject to Nextel's standards and restrictions for
use of this intellectual property. In the event Nextel makes a material change
in its brand identity, Manager is required to implement such change as set
forth in the JV Agreement.
b. Nextel retains the exclusive right to advertise in national
publications or other national media. Manager's advertising is required to be
consistent with specific creative standards for advertising, which will be
substantially identical to those used by Nextel and its subsidiaries operating
an iDEN network in the United States. Manager may not deviate from such
creative standards unless it obtains Licensee's prior approval.
5. LICENSEE'S SYSTEM STANDARDS. In carrying out the responsibilities
described in Paragraph (3) above, Manager must comply with the JV Agreement and
the other Operating Agreements setting forth Licensee's performance standards
and requirements to assure compatibility with Nextel's nationwide iDEN network
and a consistent level of customer service and satisfaction for services and
products using frequencies authorized to the Licensee and using the Nextel
brand. Subject to the more specific terms and conditions set forth in the JV
Agreement and the Collateral Agreements, Manager must comply with the
Licensee-specified standards and requirements described below (as they may be
modified from time to time pursuant to the JV Agreement and the Collateral
Agreements).
a. REQUIRED SERVICES. Manager is required to offer all
customers operating in the Territory the products, services and capabilities
specified in Exhibit 6.1 of the JV Agreement as fundamental to Nextel's overall
product and service strategy. If Nextel provides a required service nationally,
Manager must implement the service; if Nextel provides the service in selected
areas, Manager must provide the service in comparable service areas in the
Territory, in each case no more than six months from Licensee designating it a
required service, or whenever a Nextel subsidiary implements the service in
comparable service areas, whichever occurs last.
b. BUILD-OUT AND TARGET LAUNCH DATES. Manager must comply with
specific target dates for initial build out and for launching service in areas
within the Territory as identified in Section 6.2 and Exhibit 6 of the JV
Agreement. This includes providing coverage to specific areas and corridors.
Prior to offering commercial service in an area, Manager must notify Licensee
at least 60 days prior to the proposed launch date at which time Licensee has
the right to promptly review Manager's operations for that area in order to
validate Manager's compliance with all launch criteria.
c. FREQUENCY DESIGN STANDARDS. Manager is required to adhere to
Nextel- specified standards for use of the radio frequencies subject to the
licenses in the Territory. Licensee has the right to regularly monitor the
frequency designs and actual frequency signal performance levels to assure
compliance with such standards.
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d. SITE ACQUISITION STANDARDS. Manager must adhere to
Nextel-specified site acquisition standards. Licensee will have the right to
regular review of internal documents relating to such sites, including site
leases, title documents and other compliance documents to assure compliance
with such standards.
e. SYSTEM CONSTRUCTION STANDARDS. Manager must adhere to
Nextel- specific cell site construction standards, and, subject to the
provisions of the JV Agreement, Manager is required to choose from among a
group of Nextel-approved cell site equipment vendors. Licensee has the right to
inspect cell sites in the Territory to ensure compliance.
f. TELCO STANDARDS. Manager is required to comply with
telephone network interconnection requirements including the types of
interconnection permitted, the requirements for contracts with interconnecting
telecommunications providers and the manner in which such interconnections are
made both from cell sites to Nextel's mobile switching centers ("MSCs") and
DAPs, and to the public switched telephone network.
g. ACCESS TO SWITCHING FACILITIES. Manager and Licensee will
cooperate to establish the optimum switch configuration for the Territory and
to deploy DAPs so as to allow both parties to provide seamless Direct Connect
coverage to logical communities of interest. This may include sharing switches
or DAPs. Manager will participate in regular meetings and planning with
Licensee for overall network configuration and will provide monthly forecasts
of expected cell site build out and customer traffic growth in the Territory.
h. NETWORK PERFORMANCE REQUIREMENTS. To maintain the integrity
of Nextel's national network and reputation in the marketplace, Manager must
meet specific criteria as specified in the Collateral Agreement or JV Agreement
related to the performance of the iDEN network and the level of customer
satisfaction in the Territory. Manager will be required to measure and provide
periodic reporting of its performance in a format satisfactory to Licensee.
i. CUSTOMER CARE STANDARDS. Manager is responsible for
providing a minimum level of care to its customers and to use customer
satisfaction monitoring systems or vendors to carry out this function as
specified in the JV Agreement. Additionally, in order to maintain a consistent
"back office" operating process and exchange of network, operating and customer
information, Manager may be required to use Nextel's "back office" systems
platform for activities such as order entry, order management, inventory
management, customer provisioning, and the production of call detail records
for billing purposes.
j. SERVICE AND EQUIPMENT PRICING. Manager is permitted to
manage the use of the Licenses only for services that adhere to the service
pricing structure specified in the JV Agreement that Nextel considers
fundamental to its brand identity and that differentiates Nextel's services
among wireless communications providers. Manager will have the opportunity to
participate in discussions concerning modifications to the specific pricing
structures and introducing new specific pricing structures, but final decisions
relating to pricing structures will be in Licensee's sole discretion. Manager
will be responsible for setting local pricing plans consistent with Licensee's
service pricing structure, as described above.
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6. FCC Compliance. The parties will comply with all applicable FCC
rules and regulations governing the Licenses or the Systems. Without limiting
the generality of the foregoing:
a. Licensee, at all times during which it continues to hold the
Licenses through its ownership of all of the capital stock of License Co.,
retains ultimate supervisory control over the use of the Licenses. Manager will
not represent itself as the federal licensee of SMR service offered on the iDEN
systems in the Territory or otherwise on Nextel's nationwide iDEN network.
b. With appropriate notice to, consultation with and
participation by Manager, Licensee will represent Manager (i) before all state
regulatory agencies with respect to matters within such agencies' jurisdiction
that require the representation or appearance of the owner of the Licenses and
that have not been or cannot be delegated to Manager pursuant to paragraph c.
below; and (ii) before the FCC with respect to any matters relating to the
Licenses, the operation of the systems in the Territory as it relates to any
FCC rules, regulations, policies or provisions of the Communications Act of
1934, as amended, and any FCC correspondence and filings. Licensee will, with
the assistance and cooperation of Manager, take all actions necessary to keep
the Licenses in force and shall timely prepare and submit to the FCC or any
other relevant governmental authority all reports, applications, renewals,
filings or other documents necessary to keep the Licenses and any certificates
of public convenience and necessity or other state regulatory approvals in
force and in good standing.
c. Nothing in the preceding paragraph precludes Licensee from
delegating to Manager responsibility to obtain and maintain in good standing
all business licenses required by state, local or municipal governments, to
file annual or other reports required by such governments, and to prepare and
file all federal, state and local tax returns and tax payments. Additionally,
Licensee will require Manager to assure that the iDEN systems in the Territory
comply with all applicable governmentally-mandated regulatory programs
including, but not limited to, Federal Universal Service Fund assessments,
state universal service programs, Enhanced 911, Telecommunications Relay
Services for the Speech and Hearing Impaired, local number portability, calling
party pays services, and priority access requirements. Such compliance may
include collecting applicable fees from subscribers and payment of governmental
assessments for such programs.
d. Nothing in this Agreement or the Operating Agreements is
intended to diminish or restrict Licensee's (or any other wholly owned Nextel
subsidiary's) obligations as an FCC licensee and both parties desire that this
Agreement be in compliance with the rules and regulations of the FCC. In the
event that the FCC determines that any provision of this Agreement violates any
FCC rule, policy or regulation, both parties will implement in good faith the
provisions of the Operating Agreements consistent with the intent of this
Agreement to be in compliance with FCC rules, policies and regulations. In the
event of a dispute between the parties about such implementation, the dispute
will be resolved under the applicable provisions of the JV Agreement (which
may, depending on the relevant circumstances, include Section 4.12C and/or
Article 12 of the JV Agreement).
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7. SYSTEMS REVENUES AND EXPENSES. Manager will independently finance
its build-out and operations. Manager will collect all revenues from the
operation of the iDEN systems in the Territory, subject to the terms of the
Operating Agreements. Licensee will benefit from these revenues by virtue of its
equity interest in NPI.
8. TERMINATION. This Agreement will terminate upon the occurrence of
any of the following:
(a) If Licensee acquires all equity ownership of the NPI under
the Shareholders' Agreement, or the charter documents of NPI or otherwise.
(b) Termination of the JV Agreement.
(c) The FCC approves the transfer of all of the capital stock
of License Co. to Manager, or Manager otherwise becomes the holder, or the
beneficial owner of all of the capital stock of the holder, of the Licenses.
9. NOTICES. Any notice, request or other communication required or
permitted hereunder must be in writing and shall be deemed given: (a) when
received if personally delivered; (b) within 5 days after being sent by
registered or certified mail, return receipt requested, postage prepaid; (c)
within 12 hours after being sent by telecopy, with confirmed answerback; or (d)
within 1 business day of being sent by priority delivery by established
overnight courier, to the parties at their respective addresses set forth below.
Any party by written notice to the others given in accordance with this Section
9 may change the address or the persons to whom notices or copies thereof are to
be directed.
a. If to Licensee, to:
Nextel WIP Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
b. If to Manager, to:
Nextel Partners Operating Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
10. WAIVERS; AMENDMENT. Except as otherwise provided in this Agreement,
any party may waive, in writing, compliance by the other party 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 violations of, breach of,
or default under, any provision of any of this Agreement, by any other
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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. This Agreement may be amended only by a
writing executed by the parties.
11. SUCCESSORS AND ASSIGNS. Manager's rights and obligations under this
Agreement are personal to Manager and Manager may not assign any rights or
delegate any duties under this Agreement except to a direct or indirect wholly
owned subsidiary (with which Manager agrees to remain jointly and severally
liable for performance of its obligations hereunder). Licensee may not assign
its rights herein except to a wholly-owned subsidiary of Licensee, or in
accordance with the provisions of Section 13.7 of the JV Agreement.
12. GOVERNING LAW; SEVERABILITY. This Agreement is governed by and is
to be construed in accordance with the laws of the State of New York, except as
to matters governed by the rules and regulations of the FCC or the
Communications Act of 1934, as amended, which shall be governed thereby. In the
event that any provision herein is held to be invalid, void or illegal by the
FCC or any court of competent jurisdiction, the remaining provisions of this
Agreement shall remain in full force and effect and this Agreement is to be
construed to preserve the original intent of the parties hereto insofar as
practical.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which is an original, but all of which together constitute
one and the same instrument.
14. INTERPRETATION. (a) This Agreement has been prepared and
negotiations in connection herewith have been carried on by the joint efforts of
the parties. This Agreement is to be construed fairly and simply and not
strictly for or against either of the parties hereto.
(b) The headings contained in this Agreement are solely for
convenience of reference and are not given any effect in the construction or
interpretation of this Agreement.
(c) This Agreement, including, without limitation, Sections 4
and 5, contains descriptions of certain rights and obligations of the parties
that are more specifically detailed in the JV Agreement, the Operating
Agreements and the Shareholders' Agreement (together with the JV Agreement and
the Operating Agreements, the "Other Agreements"). In the event of any
inconsistency between the summary descriptions (including, without limitation,
those in Sections 4 and 5 of this Agreement), and the corresponding provisions
in the Other Agreements, the provisions of the Other Agreements control. In the
event that there are additional provisions in the Other Agreements that
supplement the summary descriptions of this Agreement, the additional
provisions of the Other Agreements control.
15. ENTIRE AGREEMENT. This Agreement and the Other Agreements embody
the entire agreement and understanding between the parties hereto relating to
the subject matter hereof and supersede all prior agreements and understandings
relating to the subject matter hereof.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
NEXTEL PARTNERS OPERATING CORP.
(as Manager)
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer and
Treasurer
NEXTEL WIP CORP. (as Licensee)
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
